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 period 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.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization & Accounting Policies
BlackRock Insured Municipal Income Trust (“Insured Municipal”), BlackRock California Insured Municipal Income Trust (“California Insured”), BlackRock Florida Insured Municipal Income Trust (“Florida Insured”), BlackRock New York Insured Municipal Income Trust (“New York Insured”) (collectively the “Insured Trusts”), BlackRock Municipal Bond Trust (“Municipal Bond”), BlackRock California Municipal Bond Trust (“California Bond”), BlackRock Florida Municipal Bond Trust (“Florida Bond”), BlackRock Maryland Municipal Bond Trust (“Maryland Bond”), BlackRock New Jersey Municipal Bond Trust (“New Jersey Bond”), BlackRock New York Municipal Bond Trust (“New York Bond”), BlackRock Virginia Municipal Bond Trust (“Virginia Bond”) (collectively the “Bond Trusts”), BlackRock Municipal Income Trust II (“Municipal Income II”), BlackRock California Municipal Income Trust II (“California Income II”) and BlackRock New York Municipal Income Trust II (“New York Income II”) (collectively the “Income II Trusts”) (collectively the “Trusts”) are organized as Delaware statutory trusts. The Insured Trusts were organized on August 19, 2002. They had no transactions until October 19, 2002, when each of the Insured Trusts sold 8,028 common shares for $115,001 to BlackRock Funding, Inc. Investment operations for the Insured Trusts commenced on October 31, 2002. Insured Municipal, Municipal Bond and Municipal Income II are registered as diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. California Insured, California Bond, California Income II, Florida Insured, Florida Bond, Maryland Bond, New Jersey Bond, New York Insured, New York Bond, New York Income II and Virginia Bond are registered as non-diversified closed-end management investment companies under the Investment Company Act of 1940, as amended.
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 other 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 as determined in good faith under procedures established by, and under the general supervision and responsibility of, each Trust’s Board.
Investments Transactions and Investment Income: Investments 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 (“SEC”) require that each Trust segregate assets in connection with certain investments (e.g., when-issued securities, reverse repurchase agreements or futures contracts), each Trust will, consistent with certain interpretive letters issued by the SEC, 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 car-ryforwards 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.
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.
70
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):
| Trust | | UNII | | Accumulated Gain |
| |
|
|
| |
|
|
|
| Insured Municipal | | $ | (845 | ) | | $ | 845 | |
| Municipal Bond | | | (1,505 | ) | | | 1,505 | |
| Municipal Income II | | | (340 | ) | | | 340 | |
| California Insured | | | (42 | ) | | | 42 | |
| California Bond | | | 103 | | | | (103 | ) |
| California Income II | | | (32 | ) | | | 32 | |
| Florida Insured | | | (215 | ) | | | 215 | |
| Florida Bond | | | (99 | ) | | | 99 | |
| Maryland Bond | | | (8 | ) | | | 8 | |
| New Jersey Bond | | | (103 | ) | | | 103 | |
| New York Insured | | | — | | | | — | |
| New York Bond | | | (1,040 | ) | | | 1,040 | |
| New York Income II | | | — | | | | — | |
| Virginia Bond | | | (290 | ) | | | 290 | |
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 each Trust. BlackRock, Inc. is an indirect majority owned subsidiary of The PNC Financial Services Group, Inc. The investment management agreement covers both investment advisory and administration services.
Each Trust’s investment advisory fee paid to the Advisor is computed weekly, accrued daily and payable monthly based on an annual rate, 0.55% for the Insured Trusts and Income II Trusts and 0.65% for the Bond Trusts, of each 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 of each Trust. With respect to the Insured Trusts the waiver, as a percentage of managed assets, is as follows: 0.20% for the first 5 years of each Trust’s operations, 0.15% in year 6, 0.10% in year 7, and 0.05% in year 8. With respect to the Bond Trusts the waiver, as a percentage of managed assets, is as follows: 0.30% for the first 5 years of each Trust’s operations, 0.25% in year 6, 0.20% in year 7, 0.15% in year 8, 0.10% in year 9 and 0.05% in year 10. With respect to the Income II Trusts the waiver, as a percentage of managed assets, is as follows: 0.15% for the first 5 years of each Trust’s operations, 0.10% in year 6 through year 7, 0.05% in year 8 through year 10.
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, 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 certain operational support services provided to each Trust.
Pursuant to the terms of each Trust’s custody agreement, each Trust received earnings credits from its custodian for positive cash balances maintained, which are used to offset custody fees.
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments and U.S. government securities, for the year ended August 31, 2004, were as follows:
| Trust | | Purchases | | Sales | | Trust | | Purchases | | Sales |
| |
|
| |
|
| |
| |
|
| |
|
|
| Insured Municipal | | $ | 339,530,512 | | $ | 341,402,950 | | Florida Bond | | $ | 7,996,800 | | $ | 9,039,224 |
| Municipal Bond | | | 150,745,874 | | | 158,296,154 | | Maryland Bond | | | 6,059,315 | | | 5,738,181 |
| Municipal Income II | | | 330,918,641 | | | 325,626,628 | | New Jersey Bond | | | 10,630,440 | | | 11,145,530 |
| California Insured | | | 4,905,326 | | | 5,224,177 | | New York Insured | | | 15,592,141 | | | 15,949,025 |
| California Bond | | | 18,192,960 | | | 20,116,059 | | New York Bond | | | 10,598,462 | | | 10,256,029 |
| California Income II | | | 33,864,263 | | | 37,875,235 | | New York Income II | | | 15,889,323 | | | 15,391,640 |
| Florida Insured | | | 3,031,763 | | | 5,371,047 | | Virginia Bond | | | 5,123,960 | | | 5,187,806 |
There were no purchases or sales of U.S. government securities.
71
| Details of open financial futures contracts at August 31, 2004 were as follows: | | | | | | | | | | |
| | | | | | | | Value at | | Value at | | | | |
| | Number of | | | | Expiration | | Trade | | August 31, | | Unrealized |
| Trust | Contracts | | Type | | Date | | Date | | 2004 | | Depreciation |
|
| |
| |
| |
|
| |
|
| |
|
|
|
| Short Positions: | | | | | | | | | | | | | | | |
| Insured Municipal | 1,683 | | 10 Yr. U.S. T-Note | | Dec ’04 | | $ | 187,707,670 | | $ | 189,021,968 | | $ | (1,314,298 | ) |
| Municipal Bond | 607 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 67,700,078 | | | 68,173,691 | | | (473,613 | ) |
| Municipal Income II | 1,406 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 156,814,125 | | | 157,911,402 | | | (1,097,277 | ) |
| California Insured | 359 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 40,039,978 | | | 40,320,192 | | | (280,214 | ) |
| California Bond | 216 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 24,090,832 | | | 24,259,502 | | | (168,670 | ) |
| California Income II | 581 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 64,799,981 | | | 65,253,568 | | | (453,587 | ) |
| Florida Insured | 507 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 56,546,480 | | | 56,942,447 | | | (395,967 | ) |
| Florida Bond | 173 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 19,295,081 | | | 19,430,066 | | | (134,985 | ) |
| Maryland Bond | 107 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 11,934,027 | | | 12,017,430 | | | (83,403 | ) |
| New Jersey Bond | 152 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 16,952,931 | | | 17,071,502 | | | (118,571 | ) |
| New York Insured | 381 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 42,493,556 | | | 42,791,068 | | | (297,512 | ) |
| New York Bond | 143 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 15,949,357 | | | 16,060,694 | | | (111,337 | ) |
| New York Income II | 255 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 28,440,444 | | | 28,639,692 | | | (199,248 | ) |
| Virginia Bond | 94 | | 10 Yr. U.S. T-Note | | Dec ’04 | | | 10,483,892 | | | 10,557,377 | | | (73,485 | ) |
At August 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 |
| |
|
| |
|
| |
|
| |
|
|
|
| Insured Municipal | | $ | 588,046,425 | | $ | 28,161,379 | | $ | 796,693 | | $ | 27,364,686 | |
| Municipal Bond | | | 232,918,116 | | | 10,196,481 | | | 1,677,596 | | | 8,518,885 | |
| Municipal Income II | | | 507,145,985 | | | 18,245,259 | | | 2,903,200 | | | 15,342,059 | |
| California Insured | | | 119,223,258 | | | 2,032,559 | | | 2,292,647 | | | (260,088 | ) |
| California Bond | | | 75,027,777 | | | 3,345,670 | | | 399,089 | | | 2,946,581 | |
| California Income II | | | 177,882,011 | | | 5,023,851 | | | 3,189,422 | | | 1,834,429 | |
| Florida Insured | | | 196,369,826 | | | 3,211,030 | | | 891,655 | | | 2,319,375 | |
| Florida Bond | | | 76,393,937 | | | 4,220,646 | | | 30,532 | | | 4,190,114 | |
| Maryland Bond | | | 45,857,219 | | | 2,199,337 | | | 93,689 | | | 2,105,648 | |
| New Jersey Bond | | | 51,802,395 | | | 2,048,633 | | | 1,179,662 | | | 868,971 | |
| New York Insured | | | 144,672,488 | | | 2,534,879 | | | 1,410,312 | | | 1,124,567 | |
| New York Bond | | | 61,660,652 | | | 2,970,928 | | | 493,208 | | | 2,477,720 | |
| New York Income II | | | 111,963,390 | | | 2,715,452 | | | 806,585 | | | 1,908,867 | |
| Virginia Bond | | | 34,686,295 | | | 1,788,990 | | | — | | | 1,788,990 | |
For Federal income tax purposes, the following Trusts had capital loss carryforwards as of their last respective tax year end (the Bond Trusts’ have a tax year end of October 31st and the Income II Trusts’ have 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 | | CarryforwardAmount | | Expires | | Trust | | Carryforward Amount | | Expires |
| |
|
| |
| |
| |
|
| |
|
| Municipal Bond | | $ | 338,279 | | 2011 | | Maryland Bond | | $ | 4,564 | | 2011 |
| | |
|
| | | | | |
|
| | |
| Municipal Income II | | $ | 1,338,302 | | 2011 | | New York Bond | | $ | 142,736 | | 2011 |
| | | | 5,200,107 | | 2012 | | | |
|
| | |
| |
|
| | | | New York Income II | | $ | 722,685 | | 2012 |
| | | $ | 6,538,409 | | | | | |
|
| | |
| | |
|
| | | | Virginia Bond | | $ | 48,573 | | 2011 |
| | | | | | | | | |
|
| | |
| California Income II | | $ | 1,454,313 | | 2011 | | | | | | | |
| | | | 1,163,822 | | 2012 | | | | | | | |
| |
|
| | | | | | | | | |
| | | $ | 2,618,135 | | | | | | | | | |
| |
|
| | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
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.
72
Note 4. Distributions to Shareholders
The tax character of distributions paid during the year ended August 31, 2004 and the period ended August 31, 2003, were as follows:
| | | Year ended August 31, 2004 |
| |
|
| | | Tax-exempt | | Ordinary | | Long-term | | Total |
| Distributions Paid From: | | Income | | Income | | Capital Gains | | Distributions |
| |
|
| |
| |
| |
|
|
| Insured Municipal | | $ | 26,673,933 | | $ — | | $ — | | $ | 26,673,933 |
| Municipal Bond | | | 11,334,330 | | — | | — | | | 11,334,330 |
| Municipal Income II | | | 24,882,207 | | — | | — | | | 24,882,207 |
| California Insured | | | 5,137,946 | | 73,705 | | — | | | 5,211,651 |
| California Bond | | | 3,444,704 | | 233,112 | | 9,008 | | | 3,686,824 |
| California Income II | | | 8,419,618 | | — | | — | | | 8,419,618 |
| Florida Insured | | | 8,495,387 | | 719,040 | | — | | | 9,214,427 |
| Florida Bond | | | 3,358,938 | | 80,766 | | — | | | 3,439,704 |
| Maryland Bond | | | 1,887,652 | | — | | — | | | 1,887,652 |
| New Jersey Bond | | | 2,304,183 | | 121,320 | | — | | | 2,425,503 |
| New York Insured | | | 6,272,601 | | — | | — | | | 6,272,601 |
| New York Bond | | | 2,693,108 | | — | | — | | | 2,693,108 |
| New York Income II | | | 5,074,526 | | — | | — | | | 5,074,526 |
| Virginia Bond | | | 1,430,624 | | — | | — | | | 1,430,624 |
| |
| | | Period ended August 31, 2003 |
| |
|
| | | Tax-exempt | | Ordinary | | Long-term | | | Total |
| Distributions Paid From: | | Income | | Income | | Capital Gains | | | Distributions |
| |
|
| |
| |
| |
|
|
| Insured Municipal | | $ | 20,038,910 | | $ — | | $ — | | $ | 20,038,910 |
| Municipal Bond | | | 11,285,924 | | 597,573 | | — | | | 11,883,490 |
| Municipal Income II | | | 25,082,459 | | — | | — | | | 25,082,459 |
| California Insured | | | 3,860,751 | | — | | — | | | 3,860,751 |
| California Bond | | | 3,437,724 | | 314,651 | | — | | | 3,752,375 |
| California Income II | | | 8,464,717 | | — | | — | | | 8,464,717 |
| Florida Insured | | | 6,444,887 | | — | | — | | | 6,444,887 |
| Florida Bond | | | 3,332,440 | | 211,968 | | — | | | 3,544,408 |
| Maryland Bond | | | 1,889,456 | | 83,572 | | — | | | 1,973,020 |
| New Jersey Bond | | | 2,305,459 | | 159,954 | | — | | | 2,465,413 |
| New York Insured | | | 4,747,699 | | — | | — | | | 4,747,699 |
| New York Bond | | | 2,725,834 | | 176,602 | | — | | | 2,902,435 |
| New York Income II | | | 5,138,475 | | — | | — | | | 5,138,475 |
| Virginia Bond | | | 1,410,553 | | 174,265 | | — | | | 1,584,783 |
| |
| As of August 31, 2004, the components of distributable earnings on a tax basis were as follows: |
| |
| | | Undistributed | | Undistributed | | Undistributed | | | |
| | | Tax-exempt | | Ordinary | | Long-term | | Unrealized Net |
| Trust | | Income | | Income | | Gains | | Appreciation |
| |
|
| |
| |
| |
|
|
| Insured Municipal | | $ | 4,691,837 | | $ — | | $ — | | $ | 27,334,835 |
| Municipal Bond | | | 4,073,085 | | — | | — | | | 8,504,578 |
| Municipal Income II | | | 5,971,844 | | — | | — | | | 15,314,103 |
| California Insured | | | 919,485 | | — | | — | | | — |
| California Bond | | | 1,234,685 | | — | | — | | | 2,940,403 |
| California Income II | | | 770,059 | | — | | — | | | 1,826,863 |
| Florida Insured | | | 1,317,127 | | — | | — | | | 2,311,286 |
| Florida Bond | | | 1,182,093 | | — | | — | | | 4,185,326 |
| Maryland Bond | | | 712,563 | | — | | — | | | 2,099,827 |
| New Jersey Bond | | | 795,712 | | — | | — | | | 862,400 |
| New York Insured | | | 870,642 | | — | | — | | | 1,120,304 |
| New York Bond | | | 887,422 | | — | | — | | | 2,472,552 |
| New York Income II | | | 316,284 | | — | | — | | | 1,903,809 |
| Virginia Bond | | | 621,632 | | — | | — | | | 1,784,180 |
73
Note 5. Capital
There are an unlimited number of $0.001 par value common shares of beneficial interest authorized for each Trust. Each Trust may classify or reclassify any unissued common shares into one or more series of Auction Market Preferred Shares (“preferred shares”). At August 31, 2004, the shares outstanding and the shares owned by affiliates of the Advisor of each Trust were as follows:
| | | Common | | | | | | Common | | |
| | | Shares | | Common | | | | Shares | | Common |
| Trust | | Outstanding | | Shares Owned | | Trust | | Outstanding | | Shares Owned |
| |
| |
| |
| |
| |
|
| Insured Municipal | | 26,149,334 | | — | | Florida Municipal | | 3,309,483 | | — |
| Municipal Bond | | 10,123,055 | | — | | Maryland Municipal | | 2,015,154 | | — |
| Municipal Income II | | 22,781,072 | | — | | New Jersey Municipal | | 2,269,366 | | — |
| California Insured | | 5,268,785 | | — | | New York Insured | | 6,436,539 | | — |
| California Municipal | | 3,351,150 | | — | | New York Bond | | 2,700,991 | | — |
| California Municipal II | | 7,984,696 | | — | | New York Income II | | 4,935,268 | | — |
| Florida Insured | | 8,718,823 | | — | | Virginia Bond | | 1,521,015 | | — |
During the year ended August 31, 2004, Insured Municipal, Municipal Income II, California Insured, California Income II, Maryland Bond, New Jersey Bond, New York Insured and Virginia Bond issued additional shares under their dividend reinvestment plans of 23,876, 7,680, 4,760, 10,283, 1,033, 1,848, 12,431 and 3,974, respectively. Transactions in common shares of beneficial interest for the period ended August 31, 2003, were as follows:
| | Shares from | | |
| |
| | |
| | Initial | | Underwriters’ Exercising | | | | |
| | Public Offering | | the Over-allotment | | Reinvestment | | Net Increase in |
| Trust | October 31, 2002 | | Option | | of Dividends | | Shares Outstanding |
|
| |
| |
| |
|
| Insured Municipal | 24,008,028 | | 2,000,000 | | 117,430 | | 26,125,458 |
| Municipal Bond | — | | — | | 12,096 | | 12,096 |
| Municipal Income II | — | | 300,000 | | 15,364 | | 315,364 |
| California Insured | 5,008,028 | | 250,000 | | 5,997 | | 5,264,025 |
| California Bond | — | | — | | 840 | | 840 |
| California Income II | — | | 150,000 | | 16,385 | | 166,385 |
| Florida Insured | 8,008,028 | | 700,000 | | 10,795 | | 8,718,823 |
| Florida Bond | — | | — | | 1,232 | | 1,232 |
| Maryland Bond | — | | — | | 1,240 | | 1,240 |
| New Jersey Bond | — | | — | | 5,212 | | 5,212 |
| New York Insured | 6,008,028 | | 400,000 | | 16,080 | | 6,424,108 |
| New York Bond | — | | — | | — | | — |
| New York Income II | — | | 75,000 | | 2,240 | | 77,240 |
| Virginia Bond | — | | — | | 4,017 | | 4,017 |
Offering costs incurred in connection with the Trusts’ offering of common shares have been charged against the proceeds from the initial common share offering of the common shares were as follows:
| Trust | | Offering Costs |
| |
|
|
| Insured Municipal | | $ | 765,000 |
| California Insured | | | 142,500 |
| Florida Insured | | | 246,000 |
| New York Insured | | | 177,000 |
74
As of August 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 |
| |
| |
| |
| |
| |
|
| Insured Municipal | | M7 | | 3,053 | | California Income II | | T7 | | 1,439 |
| | | R7 | | 3,053 | | | | R7 | | 1,439 |
| | | F7 | | 3,053 | | Florida Insured | | M7 | | 3,040 |
| Municipal Bond | | T7 | | 1,810 | | Florida Bond | | W7 | | 1,191 |
| | | R7 | | 1,810 | | Maryland Bond | | R7 | | 720 |
| Municipal Income II | | M7 | | 2,055 | | New Jersey Bond | | M7 | | 809 |
| | | T7 | | 2,056 | | New York Insured | | R7 | | 2,240 |
| | | W7 | | 2,055 | | New York Bond | | T7 | | 968 |
| | | R7 | | 2,056 | | New York Income II | | W7 | | 1,786 |
| California Insured | | F7 | | 1,860 | | Virginia Bond | | R7 | | 541 |
| California Bond | | F7 | | 1,199 | | | | | | |
Underwriting discounts and offering costs incurred in connection with the preferred share offerings for the year ended August 31, 2004, and the period ended August 31, 2003, have been charged to paid-in capital in excess of par of the common shares as follows.
| | Underwriting | | Offering | | | Underwriting | | Offering |
| Trust | Discount | | Cost | | Trust | Discount | | Cost |
|
|
| |
|
|
| |
|
|
| |
|
|
| Insured Municipal | $ | 2,289,750 | | $ | 369,482 | | | Florida Bond | $ | — | | $ | 28,492 |
| Municipal Bond | | — | | | (128,162 | ) | | Maryland Bond | | — | | | 50,675 |
| Municipal Income II | | 2,055,500 | | | 239,168 | | | New Jersey Bond | | — | | | 48,427 |
| California Insured | | 465,000 | | | 144,518 | | | New York Insured | | 560,000 | | | 151,970 |
| California Bond | | — | | | 21,849 | | | New York Bond | | — | | | 37,459 |
| California Income II | | 719,500 | | | 129,975 | | | New York Income II | | 446,500 | | | 120,782 |
| Florida Insured | | 760,000 | | | 184,848 | | | Virginia Bond | | — | | | 58,033 |
Dividends on seven-day preferred shares are cumulative at a rate which is reset every seven days based on the results of an auction. The dividend ranges on the preferred shares for each of the Trusts for the year ended August 31, 2004, were as follows:
| Trust | Low | | High | | Trust | Low | | High |
|
|
| |
|
| |
|
|
| |
|
|
| Insured Municipal | 0.60 | % | | 1.30 | % | | Florida Bond | 0.45 | % | | 1.40 | % |
| Municipal Bond | 0.43 | | | 1.35 | | | Maryland Bond | 0.60 | | | 1.30 | |
| Municipal Income II | 0.45 | | | 1.40 | | | New Jersey Bond | 0.40 | | | 2.10 | |
| California Insured | 0.54 | | | 1.07 | | | New York Insured | 0.45 | | | 1.20 | |
| California Bond | 0.40 | | | 1.93 | | | New York Bond | 0.40 | | | 1.16 | |
| California Income II | 0.45 | | | 1.40 | | | New York Income II | 0.62 | | | 1.28 | |
| Florida Insured | 0.45 | | | 1.97 | | | Virginia Bond | 0.20 | | | 1.10 | |
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 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, 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 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 subclassification as a closed-end investment company or change its fundamental investment restrictions and (c) change its business so as to cease to be an investment company.
75
Note 6. Dividends
Subsequent to August 31, 2004, the Board of each Trust declared dividends from undistributed earnings per common share payable October 1, 2004, to shareholders of record on September 13, 2004. The per share common dividends declared were as follows:
| | | Common Dividend | | | | Common Dividend |
| Trust | | Per Share | | Trust | | Per Share |
| |
|
| |
| |
|
|
| Insured Municipal | | $ | 0.078125 | | Florida Bond | | $ | 0.077808 |
| Municipal Bond | | | 0.086375 | | Maryland Bond | | | 0.071350 |
| Municipal Income II | | | 0.083750 | | New Jersey Bond | | | 0.078582 |
| California Insured | | | 0.075000 | | New York Insured | | | 0.075000 |
| California Bond | | | 0.079656 | | New York Bond | | | 0.077099 |
| California Income II | | | 0.081250 | | New York Income II | | | 0.078750 |
| Florida Insured | | | 0.075000 | | Virginia Bond | | | 0.072428 |
The dividends declared on preferred shares for the period September 1, 2004 to September 30, 2004, for each of the Trusts were as follows:
| | | | | Dividends | | | | | | Dividends |
| Trust | | Series | | Declared | | Trust | | Series | | Declared |
| |
| |
|
| |
| |
| |
|
|
| Insured Municipal | | M7 | | $ | 71,288 | | California Income II | | T7 | | $ | 32,493 |
| | | R7 | | | 85,728 | | | | R7 | | | 44,336 |
| | | F7 | | | 67,258 | | Florida Insured | | M7 | | | 68,187 |
| Municipal Bond | | T7 | | | 52,743 | | Florida Bond | | W7 | | | 35,623 |
| | | R7 | | | 54,680 | | Maryland Bond | | R7 | | | 21,254 |
| Municipal Income II | | M7 | | | 50,717 | | New Jersey Bond | | M7 | | | 13,931 |
| | | T7 | | | 65,381 | | New York Insured | | R7 | | | 53,290 |
| | | W7 | | | 60,787 | | New York Bond | | T7 | | | 28,208 |
| | | R7 | | | 64,641 | | New York Income II | | W7 | | | 40,417 |
| California Insured | | F7 | | | 32,476 | | Virginia Bond | | R7 | | | 14,629 |
| California Bond | | F7 | | | 19,879 | | | | | | | |
76
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of:
BlackRock Municipal Bond Trust
BlackRock California Municipal Bond Trust
BlackRock Florida Municipal Bond Trust
BlackRock Maryland Municipal Bond Trust
BlackRock New Jersey Municipal Bond Trust
BlackRock New York Municipal Bond Trust
BlackRock Virginia Municipal Bond Trust
BlackRock Municipal Income Trust II
BlackRock California Municipal Income Trust II
BlackRock New York Municipal Income Trust II
BlackRock Insured Municipal Income Trust
BlackRock California Insured Municipal Income Trust
BlackRock Florida Insured Municipal Income Trust
BlackRock New York Insured Municipal Income Trust
(collectively the “Trusts”)
We have audited the accompanying statements of assets and liabilities of the Trusts, including the portfolios of investments, as of August 31, 2004, the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Trusts’ 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 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 August 31, 2004, the results of their operations for the year then ended, and the changes in their net assets and financial highlights for each of the periods presented in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
October 25, 2004
77
TRUSTEES INFORMATION (Unaudited)
|
| Independent Trustees |
|
| Name, address, age | | | | Andrew F. Brimmer | | | | Richard E. Cavanagh | | | | Kent Dixon |
| | | | | P.O. Box 4546 | | | | P.O. Box 4546 | | | | P.O. Box 4546 |
| | | | | New York, NY 10163-4546 | | | | New York, NY 10163-4546 | | | | New York, NY 10163-4546 |
| | | | | Age: 77 | | | | Age: 58 | | | | Age: 67 |
|
| Current positions held with | | | | Lead Trustee | | | | Trustee | | | | Trustee |
| the Trusts | | | | Audit Committee Chairman2 | | | | Audit Committee Member | | | | Audit Committee Member2 |
|
| Term of office and length | | | | 3 years5 / since inception | | | | 3 years5 / since inception | | | | 3 years5 / since inception |
| of time served | | | | | | | | | | | | |
|
| Principal occupations | | | | President of Brimmer & Company, Inc., a | | | | President and Chief Executive Officer of | | | | Consultant/Investor. Former President and |
| during the past five years | | | | Washington, D.C.-based economic and | | | | The Conference Board, Inc., a leading | | | | Chief Executive Officer of Empire Federal |
| | | | | financial consulting firm, also Wilmer D. | | | | global business research organization, | | | | Savings Bank of America and Banc PLUS |
| | | | | Barrett Professor of Economics, University | | | | from 1995-present. Former Executive | | | | Savings Association, former Chairman of |
| | | | | of Massachusetts – Amherst. Formerly | | | | Dean of the John F. Kennedy School of | | | | the Board, President and Chief Executive |
| | | | | member of the Board of Governors of the | | | | Government at Harvard University from | | | | Officer of Northeast Savings. |
| | | | | Federal Reserve System. Former | | | | 1988-1995. Acting Director, Harvard | | | | |
| | | | | Chairman, District of Columbia Financial | | | | Center for Business and Government | | | | |
| | | | | Control Board. | | | | (1991-1993). 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 PER- | | | | |
| | | | | | | | | FORMANCE (best selling management | | | | |
| | | | | | | | | book published in 13 national editions). | | | | |
|
| Number of portfolios | | | | 52 | | | | 52 | | | | 52 |
| overseen within the fund | | | | | | | | | | | | |
| complex | | | | | | | | | | | | |
|
| Other Directorships held | | | | Director of CarrAmerica Realty | | | | Trustee: Aircraft Finance Trust (AFT) and | | | | Former Director of ISFA (the owner of |
| outside of the fund | | | | Corporation and Borg-Warner Automotive. | | | | Educational Testing Service (ETS). | | | | INVEST, a national securities brokerage |
| complex | | | | Formerly Director of Airborne Express, | | | | Director, Arch Chemicals, Fremont Group | | | | service designed for banks and thrift |
| | | | | BankAmerica Corporation (Bank of | | | | and The Guardian Life Insurance | | | | institutions). |
| | | | | America), BellSouth Corporation, College | | | | Company of America. | | | | |
| | | | | 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). | | | | | | | | |
|
| For “Interested Director/ | | | | | | | | | | | | |
| Trustee” relationships, | | | | | | | | | | | | |
| events or transactions by | | | | | | | | | | | | |
| reason of which the Trustee | | | | | | | | |
| is an interested person as | | | | | | | | | | | | |
| defined in Section | | | | | | | | | | | | |
| 2(a)(19)(1940 Act) | | | | | | | | | | | | |
|
1 Interested Trustee as defined by Section 2(a)(19) of the Investment Company Act of 1940.
2 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.
3 Appointed Audit Committee Member on May 25, 2004.
4 Trustee since inception; appointed Chairman of the Board on August 22, 2002.
5 The Board is classified into three classes of which one class is elected annually. Each Trustee serves a three year term concurrent with the class from which he is elected.
6 Except during the period 10/31/02 through 11/11/02 for all of the Trusts.
7 Appointed Trustee on August 22, 2002, for the Bond Trusts and Income II Trusts. Trustee since inception for the Insured Trusts.
8 Effective 12/11/03.
78
|
|
|
|
Independent Trustees (continued) | Interested Trustees1 |
|
|
|
|
| Frank J. Fabozzi | | James Clayburn La Force, Jr. | | | | Walter F. Mondale | Ralph L. Schlosstein | | | | Robert S. Kapito |
| P.O. Box 4546 | | P.O. Box 4546 | | | | P.O. Box 4546 | BlackRock, Inc. | | | | BlackRock, Inc. |
| New York, NY 10163-4546 | | New York, NY 10163-4546 | | | | New York, NY 10163-4546 | 40 East 52nd Street | | | | 40 East 52nd Street |
| Age: 56 | | Age: 75 | | | | Age: 76 | New York, NY 10022 | | | | New York, NY 10022 |
| | | | | | | | Age: 53 | | | | Age: 47 |
|
| Trustee | | Trustee | | | | Trustee | Chairman of the Board 4 | | | | President and Trustee |
| Audit Committee Member 3 | | | | | | | | | | | |
|
| 3 years5 / since inception | | 3 years5 / since inception | | | | 3 years5 / since inception6 | 3 years5 / since inception | | | | 3 years5 / since August 22, |
|
| Consultant. Editor of THE | | Dean Emeritus of the John E. | | | | Senior Counsel, Dorsey & | Director since 1999 and | | | | Vice Chairman of BlackRock, |
| JOURNAL OF PORTFOLIO | | Anderson Graduate School of | | | | Whitney, LLP, a law firm | President of BlackRock, Inc. | | | | Inc. Head of the Portfolio |
| MANAGEMENT and | | Management, University of | | | | (January 2004-present); | since its formation in 1998 and | | | | Management Group. Also a |
| Frederick Frank Adjunct | | California since July 1, 1993. | | | | Partner, Dorsey & Whitney, | of BlackRock, Inc.’s predeces- | | | | member of the Management |
| Professor of Finance at the | | Acting Dean of the School of | | | | LLP, (December 1996- | sor entities since 1988. Member | | | | Committee, the Investment |
| School of Management at Yale | | Business, Hong Kong | | | | December 2003, September | of the Management Committee | | | | Strategy Group, the Fixed |
| University. Author and editor | | University of Science and | | | | 1987-August 1993). Formerly | and Investment Strategy Group | | | | Income and Global Operating |
| of several books on fixed | | Technology 1990-1993. From | | | | U.S. Ambassador to Japan | of BlackRock, Inc. Formerly, | | | | Committees and the Equity |
| income portfolio management. | | 1978 to September 1993, Dean | | | | (1993-1996). Formerly Vice | Managing Director of Lehman | | | | Investment Strategy Group. |
| Visiting Professor of Finance | | of the John E. Anderson | | | | President of the United States, | Brothers, Inc. and Co-head of | | | | Responsible for the portfolio |
| and Accounting at the Sloan | | Graduate School of | | | | U.S. Senator and Attorney | its Mortgage and Savings | | | | management of the Fixed |
| School of Management, | | Management, University of | | | | General of the State of | Institutions Group. Currently, | | | | Income, Domestic Equity and |
| Massachusetts Institute of | | California. | | | | Minnesota. 1984 Democratic | Chairman and a Trustee of each | | | | International Equity, Liquidity, |
| Technology from 1986 to | | | | | | Nominee for President of the | of the closed-end Trusts in | | | | and Alternative Investment |
| August 1992. | | | | | | United States. | which BlackRock Advisors, | | | | Groups of BlackRock. Currently |
| | | | | | | | Inc. acts as investment advisor. | | | | President and a Director/Trustee |
| | | | | | | | | | | | of each of the closed-end Trusts |
| | | | | | | | | | | | in which BlackRock Advisors, |
| | | | | | | | | | | | Inc. acts as investment advisor. |
|
| 52 | | 52 | | | | 52 | 52 | | | | 52 |
|
| Director, Guardian Mutual | | Payden & Rygel Investment | | | | Director of United Health | Chairman and President of the | | | | Chairman of the Hope and |
| Funds Group (18 portfolios). | | Trust, Metzler-Payden | | | | Foundation and the Japan | BlackRock Liquidity Funds (10 | | | | Heroes Children’s Cancer |
| | | Investment Trust, Advisors | | | | Society. Member of the Hubert | portfolios), Director of | | | | Fund. President of the Board |
| | | Series Trust, Arena | | | | H. Humphrey Institute of | Anthracite Capital, Inc.8 and | | | | of Directors of the Periwinkle |
| | | Pharmaceuticals, Inc. and | | | | Public Affairs Advisory Board, | Director of several of | | | | National Theatre for Young |
| | | CancerVax Corporation. | | | | The Mike and Maureen | BlackRock’s alternative invest- | | | | Audiences. Director of |
| | | | | | | Mansfield Foundation, Dean’s | ment vehicles. Currently, a | | | | icruise.com, Corp. |
| | | | | | | Board of Visitors of the | Member of the Visiting Board | | | | |
| | | | | | | Medical School at the | of Overseers of the John F. | | | | |
| | | | | | | University of Minnesota, and | Kennedy School of Government | | | | |
| | | | | | | the Mayo Foundation Advisory | at Harvard University, the | | | | |
| | | | | | | Council to the President. | Financial Institutions Center | | | | |
| | | | | | | | Board of the Wharton School of | | | | |
| | | | | | | | the University of Pennsylvania, a | | | | |
| | | | | | | | trustee of the American Museum | | | | |
| | | | | | | | of Natural History, a trustee of | | | | |
| | | | | | | | the Public Theatre in New York | | | | |
| | | | | | | | City, a trustee of Trinity School | | | | |
| | | | | | | | in New York City and a Trustee | | | | |
| | | | | | | | of New Visions for Public | | | | |
| | | | | | | | Education in New York City. | | | | |
| | | | | | | | Formerly, a Director of Pulte | | | | |
| | | | | | | | Corporation and a Member of | | | | |
| | | | | | | | Fannie Mae’s Advisory Council. | | | | |
|
| | | | | | | | Director and President of the | | | | Director and Vice Chairman of |
| | | | | | | | Advisor | | | | the Advisor. |
|
79
DIVIDEND REINVESTMENT PLANS
Pursuant to each Trust’s Dividend Reinvestment Plan (the “Plan”), common shareholders 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 elect not to 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.
The Plan Agent serves as agent for the shareholders in administering the Plan. After a Trust declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by purchase of outstanding shares on the open market, on the Trust’s primary exchange or elsewhere (“open-market purchases”). If, on the dividend payment date, the net asset value per share (“NAV”) is equal to or less than the market price per share plus estimated brokerage commissions (such 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
We are required by the Internal Revenue Code to advise you within 60 days of a Trust’s tax year-end as to the Federal tax status of dividends paid by the Trusts during such tax year. Accordingly, during the tax year-ended September 30, 2004, all dividends paid by the Insured Trusts (the only Trusts with September 30th tax year-ends) were federally tax-exempt interest dividends with the exception of California Insured and Florida Insured which had ordinary income dividends of $0.0129 and $0.0754 per share, respectively.
The Joint Annual Meeting of Shareholders was held on May 26, 2004, to elect Class II Trustees for each of the following Trusts to three year terms, expiring in 2007:
| | | Frank J. Fabozzi | | Walter F. Mondale | | Ralph L. Schlosstein |
| |
| |
| |
|
| Trust | | Votes For | | Votes Withheld | | Votes For | | Votes Withheld | | Votes For | | Votes Withheld |
| |
| |
| |
| |
| |
| |
|
| Insured Municipal | | 8,496 | | 30 | | 22,217,085 | | 458,440 | | 22,358,848 | | 316,677 |
| Municipal Bond | | 3,346 | | 77 | | 8,690,713 | | 196,988 | | 8,769,746 | | 117,955 |
| Municipal Income II | | 7,501 | | 17 | | 19,650,525 | | 468,298 | | 19,735,985 | | 382,838 |
| California Insured | | 1,750 | | 54 | | 4,732,764 | | 46,166 | | 4,738,189 | | 40,741 |
| California Bond | | 1,170 | | — | | 3,020,165 | | 31,884 | | 3,030,297 | | 21,752 |
| California Income II | | 2,750 | | 10 | | 6,992,733 | | 103,209 | | 7,042,515 | | 53,427 |
| Florida Insured | | 2,774 | | 19 | | 7,805,034 | | 129,861 | | 7,839,068 | | 95,827 |
| Florida Bond | | 1,074 | | — | | 2,588,030 | | 75,474 | | 2,604,984 | | 58,520 |
| Maryland Bond | | 716 | | 4 | | 1,641,720 | | 44,904 | | 1,663,865 | | 22,759 |
| New Jersey Bond | | 603 | | 2 | | 1,880,997 | | 20,864 | | 1,885,206 | | 16,655 |
| New York Insured | | 2,184 | | 10 | | 5,608,300 | | 79,591 | | 5,616,289 | | 71,602 |
| New York Bond | | 954 | | — | | 2,325,141 | | 26,542 | | 2,326,645 | | 25,038 |
| New York Income II | | 1,761 | | — | | 4,340,802 | | 58,798 | | 4,352,144 | | 47,456 |
| Virginia Bond | | 538 | | 3 | | 1,071,649 | | 31,447 | | 1,092,586 | | 10,510 |
Quarterly performance and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com/funds/cefunds/index.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, Henry Gabbay and Anne Ackerley—Managing Directors of the Advisor and the Sub-Advisor, Richard M. Shea and James Kong—Managing Directors of the Sub-Advisor, Vincent B. Tritto—Director of the Sub-Advisor, and Brian P. Kindelan—Director of the Advisor.
80
BlackRock Closed-End Funds
| 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 | |
| Robert S. Kapito | Auction Agent1 |
| James Clayburn La Force, Jr. | Bank of New York |
| Walter F. Mondale | 100 Church Street, 8th Floor |
| | New York, NY 10286 |
| Officers | |
| Robert S. Kapito, President | Auction Agent2 |
| Henry Gabbay, Treasurer | Deutsche Bank Trust Company Americas |
| Bartholomew Battista, Chief Compliance Officer | 60 Wall Street, 27th Floor |
| Anne Ackerley, Vice President | New York, NY 10005 |
| Kevin M. Klingert, Vice President | |
| Richard M. Shea, Vice President/Tax | Independent Registered Public Accountants |
| James Kong, Assistant Treasurer | Deloitte & Touche LLP |
| Vincent B. Tritto, Secretary | 200 Berkeley Street |
| Brian P. Kindelan, Assistant Secretary | Boston, MA 02116 |
| | |
| Investment Advisor | Legal Counsel |
| BlackRock Advisors, Inc. | Skadden, Arps, Slate, Meagher & Flom LLP |
| 100 Bellevue Parkway | Four Times Square |
| Wilmington, DE 19809 | New York, NY 10036 |
| (800) 227-7BFM | |
| | Legal Counsel – Independent Trustees |
| Sub-Advisor1 | Debevoise & Plimpton LLP |
| BlackRock Financial Management, Inc. | 919 Third Avenue |
| 40 East 52nd Street | New York, NY 10022 |
| New York, NY 10022 | |
| | This report is for shareholder information. This is not a prospec- |
| Custodian | tus intended for use in the purchase or sale of Trust shares. |
| State Street Bank and Trust Company | Statements and other information contained in this report are as |
| 225 Franklin Street | dated and are subject to change. |
| Boston, MA 02110 | |
| | BlackRock Closed-End Funds |
| ____________ | c/o BlackRock Advisors, Inc. |
| 1 For the Insured Trusts and Bond Trusts. | 100 Bellevue Parkway |
| 2 For the Income II Trusts. | Wilmington, DE 19809 |
| | (800) 227-7BFM |
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)227-7BFM.
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) 699-1236. 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 June 30th is available, upon request, by calling (800) 699-1236 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 1-800-SEC-0330. Each Trust’s Form N-Q, when available, may also be obtained, upon request, by calling (800) 699-1236.
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. | |
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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. |
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| (b) Not applicable. |
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| (c) The Registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. |
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| (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. |
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| (e) Not applicable. |
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| (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" Trustees: 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 Trust'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 $25,400 for the fiscal year ended August 31, 2004 and $30,400 for the fiscal year ended August 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 Trust's financial statements and are not reported
| above in Item 4(a) were $2,100 for the fiscal year ended August 31, 2004 and $6,000 for the fiscal year ended August 31, 2003. The nature of these services was attest services not required by statute or regulation, overhead and out-of-pocket expenses. |
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| (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 $8,100 for the fiscal year ended August 31, 2004 and $7,400 for the fiscal year ended August 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. |
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| (d) �� All Other Fees. The 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). |
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| (e) Audit Committee Pre-Approval Policies and Procedures. |
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(i) The Trust has polices and procedures (the "Policy") for the pre-approval by the Trust'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 Trust 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 Aud it 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.)
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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| (ii) All 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. |
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| (f) Not applicable. |
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| (g) The non-audit fees billed by the Trust's accountant for services rendered to the Trust, the Advisor or any entity controlling, controlled by, or under common control with the Advisor that provides ongoing services to the registrant (except for any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) that directly impacted the Trust for each of the last two fiscal years were $10,100 for the fiscal year ended August 31, 2004 and $13,500 for the fiscal year ended August 31, 2003. |
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| (h) Not applicable. |
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Item 5. Audit Committee of Listed Registrants.
The Trust 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
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| of the Trust is comprised of: Dr. Andrew F. Brimmer; Richard E. Cavanagh; Kent Dixon and Frank Fabozzi. |
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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. |
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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. |
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Item 8. Purchases of Equity Securities by Closed-End Management Companies and Affiliated Purchasers.
Not applicable. |
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Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable. |
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| Item 10. 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 within 90 days of this filing and have concluded that the Registrant’s disclosure controls and procedures are effective, as of a date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. |
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| (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 most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
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| Item 11. Exhibits. |
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| (a) | (1) Code of Ethics attached as EX-99.CODE ETH. |
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| (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. |
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| (a) | (3) Not applicable. |
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| (b) | Certification of Principal Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 furnished as EX-99.906CERT. |
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| | 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 Florida Municipal Bond Trust___________
| By: | /s/ Henry Gabbay |
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| | Name: Henry Gabbay |
| | Title: Treasurer |
| | Date: October 25, 2004 |
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.
Signatures
| By: | /s/ Robert S. Kapito |
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| | Name: Robert S. Kapito |
| | Title: Principal Executive Officer |
| | Date: October 25, 2004 |
Signatures
| By: | /s/ Henry Gabbay |
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| | Name: Henry Gabbay |
| | Title: Principal Financial Officer |
| | Date: October 25, 2004 |
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