We have audited the accompanying statement of assets and liabilities of the Trusts, including the portfolio of investments, as of August 31, 2005, 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 five years in the period then ended. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to provide reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trusts are not required to have, nor were we engaged to perform audits of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trusts’ 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 disclosure 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 include confirmation of the securities owned as of August 31, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit 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 aspects, the financial position of each of the Trusts as of August 31, 2005, the results of their operations for the year then ended, 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 five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
|
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 do 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, which 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.
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BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENTS |
|
At a meeting held on May 26, 2005, the board of trustees (the “Board” or the “Trustees”) of each trust (each a “Trust”), including the independent trustees (the “Independent Trustees”), unanimously approved the continuance of an Investment Management Agreement between each Trust and BlackRock Advisors, Inc. (the “Advisor”). For each Investment Management Agreement, the Boards also approved a related Sub-Investment Advisory Agreement, when applicable, among each respective Trust, the Advisor and BlackRock Financial Management, Inc. (the “Sub-Advisor”). The Investment Management Agreements and the Sub-Investment Advisory Agreements sometimes are referred to herein collectively as the “Agreements”. The Advisor and the Sub-Advisor sometimes are referred to herein collectively as “BlackRock”.
Information Received by the Boards
To assist each Board in its evaluation of the Agreements, the Independent Trustees received information from BlackRock on or about April 27, 2005 which detailed, among other things: the organization, business lines and capabilities of BlackRock, including the responsibilities of various departments and key personnel and biographical information relating to key personnel; financial statements for BlackRock, Inc., the PNC Financial Services Group, Inc. and each Trust; the advisory and/or administrative fees paid by each Trust to BlackRock, including comparisons, compiled by an independent third party, with the management fees of funds with similar investment objectives (“Peers”); the profitability of BlackRock and certain industry profitability analyses for advisors to registered investment companies; the expenses of BlackRock in providing the various services; non-investment advisory reimbursements and “fallout” benefits to BlackRock; the expenses of each Trust, including comparisons of the respective Trust’s expense ratios (both before and after any fee waivers) with the expense ratios of its Peers; and each Trust’s performance for the past one-, three-, five- and ten-year periods, when applicable, as well as each Trust’s performance compared to its Peers. This information supplemented the information received by each Board throughout the year regarding each Trust’s performance, expense ratios, portfolio composition, trade execution and compliance.
In addition to the foregoing materials, independent legal counsel to the Independent Trustees provided a legal memorandum outlining, among other things, the duties of the Boards under the 1940 Act as well as the general principles of relevant law in reviewing and approving advisory contracts, the requirements of the 1940 Act in such matters, an advisor’s fiduciary duty with respect to advisory agreements and compensation, and the standards used by courts in determining whether investment company boards of directors have fulfilled their duties and factors to be considered by the boards in voting on advisory agreements.
Prior to the Board meeting, the Independent Trustees reviewed a preliminary binder of information, and, in consultation with independent counsel, submitted a memorandum on May 12, 2005, to BlackRock setting forth certain questions and requests for additional information.
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BlackRock responded to these questions in writing on May 24, 2005 and May 25, 2005. The Independent Trustees reviewed these responses with independent counsel on May 25, 2005.
At the Board meeting on May 26, 2005, BlackRock made a presentation to and responded to additional questions from the Boards. After the presentations and after reviewing the written materials, the Independent Trustees met in executive session with their legal counsel to review the Boards’ duties in reviewing the Agreements and to consider the renewal of the Agreements. With this background, the Boards considered each Agreement and, in consultation with independent counsel, reviewed the factors set out in judicial decisions and Securities and Exchange Commission statements relating to the renewal of the Agreements.
Matters Considered by the Boards
In connection with their deliberations, the Boards considered all factors they believed relevant with respect to each Trust, including the following: the nature, extent and quality of the services to be provided by BlackRock; the investment performance of each Trust; the costs of the services to be provided and profits to be realized by BlackRock and its affiliates from their relationship with the Trusts; the extent to which economies of scale would be realized as the BlackRock closed-end complex grows; and whether BlackRock realizes other benefits from its relationship with the Trusts.
Nature and Quality of Investment Advisory and Sub-Advisory Services. In evaluating the nature, extent and quality of BlackRock’s services, the Boards reviewed information concerning the types of services that BlackRock provides and is expected to provide to each Trust, narrative and statistical information concerning each Trust’s performance record and how such performance compares to each Trust’s Peers, information describing BlackRock’s organization and its various departments, the experience and responsibilities of key personnel and available resources. The Boards further noted the willingness of the personnel of BlackRock to engage in open, candid discussions with the Boards. The Boards further considered the quality of BlackRock’s investment process in making portfolio management decisions. Given the Boards’ experience with BlackRock, the Boards noted that they were familiar with and continue to have a good understanding of the organization, operations and personnel of BlackRock.
In addition to advisory services, the Independent Trustees considered the quality of the administrative or non-investment advisory services provided to the Trusts. In this regard, BlackRock provides each Trust with such administrative and other services (exclusive of, and in addition to, any such services provided by others for the Trusts) and officers and other personnel as are necessary for the operations of the respective Trust. In addition to investment management services, BlackRock and its affiliates provide each Trust with a wide range of services, including: preparing shareholder reports and communications, including annual and semi-annual financial statements and Trust web sites; communications with analysts to support secondary market trading; assisting with daily accounting and pricing; preparing periodic filings with regulators and stock exchanges; overseeing and coordinating the activities of other service providers; administering and organizing Board meetings and preparing the Board materials for such meetings; providing legal and compliance support (such as helping to prepare proxy statements and responding to regulatory inquiries); and performing other Trust administrative tasks necessary for the operation of the respective Trust (such as tax reporting and fulfilling regulatory filing requirements). In addition, in evaluating the administrative services, the Boards considered, in particular, BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations in light of the new Securities and Exchange Commission regulations governing compliance. The Boards noted BlackRock’s focus on compliance and its compliance systems. The Independent Trustees noted that BlackRock’s commitment to supporting the secondary market for the common shares of its closed-end funds is particularly noteworthy.
The Investment Performance of the Trusts. As previously noted, the Boards received myriad performance information regarding each Trust and its Peers. Among other things, the Boards received materials reflecting each Trust’s historic performance and each Trust’s performance compared to its Peers. More specifically, each Trust’s one-, three-, five- and ten-year total returns (when applicable) were evaluated relative to its respective Peers (including the performance of individual peers as well as the Peers’ average performance).
The Boards also reviewed a narrative analysis of the Peer rankings that was prepared by an independent third party and summarized by BlackRock at the Boards’ request. The summary placed the Peer rankings into context by analyzing various factors that affect these comparisons. In evaluating the performance information, in certain limited instances, the Boards noted that the Peers most similar to a given Trust still would not adequately reflect such Trust’s investment objectives and strategies, thereby limiting the usefulness of the comparisons of such Trust’s performance with that of its Peers. The Boards noted the quality of information provided by BlackRock throughout the year with respect to the performance of the Trusts. The Boards considered this information in connection with its deliberations as to whether the level of management services provided to each Trust, in light of all the other facts and circumstances relating to that Trust, supports a conclusion that the Trust’s Agreement should be renewed.
Fees and Expenses. In evaluating the management fees and expenses that a Trust is expected to bear, the Boards considered each Trust’s current management fee structure and the Trust’s expected expense ratios in absolute terms as well as relative to the fees and expense ratios of applicable Peers. In reviewing fees, the Boards, among other things, reviewed comparisons of each Trust’s gross management fees before and after any applicable reimbursements and fee waivers and total expense ratios before and after any applicable waivers with those of the applicable Peers. The Boards also reviewed a narrative analysis of the Peer rankings that was prepared by an independent third party and summarized by BlackRock at the request of the Boards. This summary placed the rankings into context by analyzing various factors that affect these comparisons.
The Boards also compared the management fees charged to the Trusts by BlackRock to the management fees BlackRock charges other types of clients (such as open-end investment companies and institutional separately managed accounts). With respect to open-end investment companies, the management fees charged to the Trusts generally were higher than those charged to the open-end investment companies. The Boards
78
also noted that BlackRock provides the Trusts with certain services not provided to open-end funds, such as leverage management in connection with the issuance of preferred shares, stock exchange listing compliance requirements, rating agency compliance with respect to the leverage employed by the Trusts and secondary market support and other services not provided to the Trusts, such as monitoring of subscriptions and redemptions. With respect to separately managed institutional accounts, the management fees for such accounts were generally lower than those charged to the comparable Trusts. The Boards noted, however, the various services that are provided and the costs incurred by BlackRock in managing and operating the Trusts. For instance, BlackRock and its affiliates provide numerous services to the Trusts that are not provided to institutional accounts including, but not limited to: preparing shareholder reports and communications, including annual and semi-annual financial statements; preparing periodic filings with regulators and stock exchanges; overseeing and coordinating the activities of other service providers; administering and organizing Board meetings and preparing the Board materials for such meetings; income monitoring; expense budgeting; preparing proxy statements; and performing other Trust administrative tasks necessary for the operation of the respective Trust (such as tax reporting and fulfilling regulatory filing requirements). Further, the Boards noted the increased compliance requirements for the Trusts in light of new Securities and Exchange Commission regulations and other legislation. These services are generally not required to the same extent, if at all, for separate accounts.
The Boards considered this information in connection with its deliberations as to whether the fees paid by each Trust under its Agreements, in light of all the other facts and circumstances relating to that Trust, supports a conclusion that the Trust’s Agreements should be renewed.
Profitability. The Trustees also considered BlackRock’s profitability in conjunction with their review of fees. The Trustees reviewed BlackRock’s revenues, expenses and profitability margins on an after-tax basis. In reviewing profitability, the Trustees recognized that one of the most difficult issues in determining profitability is establishing a method of allocating expenses. The Trustees also reviewed BlackRock’s assumptions and methodology of allocating expenses. In this regard, the methods of allocation used appeared reasonable but the Boards noted the inherent limitations in allocating costs among various advisory products. The Boards also recognized that individual fund or product line profitability of other advisors is generally not publicly available.
The Boards recognized that profitability may be affected by numerous factors including, among other things, the types of funds managed, expense allocations and business mix, and therefore comparability of profitability is somewhat limited. Nevertheless, to the extent available, the Boards considered BlackRock’s pre-tax profit margin compared to the pre-tax profitability of various publicly-traded investment management companies and/or investment management companies that publicly disclose some or all of their financial results.
In evaluating the reasonableness of BlackRock’s compensation, the Boards also considered any other revenues paid to BlackRock, including partial reimbursements paid to BlackRock for certain non-investment advisory services. The Boards noted that these payments were less than BlackRock’s costs for providing these services. The Boards also considered indirect benefits (such as soft dollar arrangements) that BlackRock and its affiliates are expected to receive that are attributable to their management of the Trusts.
In reviewing each Trust’s fees and expenses, the Boards examined the potential benefits of economies of scale, and whether any economies of scale should be reflected in the Trust’s fee structures, for example through the use of breakpoints. In this connection, the Boards reviewed information provided by BlackRock, noting that most closed-end fund complexes do not have fund-level breakpoints, as closed-end funds generally do not experience substantial growth after their initial public offering and each fund is managed independently consistent with its own investment objectives. The information also revealed that only one closed-end fund complex used a complex-level breakpoint structure, and that this complex generally is homogeneous with regard to the types of funds managed and is about four times as large as the Trust’s complex. The Boards concluded that breakpoints were not warranted at this time.
Other Benefits. In evaluating fees, the Boards also considered indirect benefits or profits BlackRock or its affiliates may receive as a result of their relationships with the Trusts. The Trustees, including the Independent Trustees, considered the intangible benefits that accrue to BlackRock and its affiliates by virtue of their relationships with the Trusts, including potential benefits accruing to BlackRock and its affiliates as a result of potentially stronger relationships with members of the broker-dealer community, increased name recognition of BlackRock and its affiliates, enhanced sales of other investment funds and products sponsored by BlackRock and its affiliates and increased assets under management which may increase the benefits realized by BlackRock from soft dollar arrangements with broker-dealers. The Boards also considered the unquantifiable nature of these potential benefits.
Miscellaneous. During the Boards’ deliberations in connection with the Agreements, the Boards were aware that the Advisor pays compensation, out of its own assets, to the lead underwriter and to certain qualifying underwriters of many of its closed-end funds, and to employees of BlackRock and its affiliates that participated in the offering of such funds. The Boards considered whether the management fee met applicable standards in light of the services provided by BlackRock, without regard to whether BlackRock ultimately pays any portion of the anticipated compensation to the underwriters.
Conclusion
The Trustees did not identify any single factor discussed above as all-important or controlling. The Trustees, including a majority of Independent Trustees, determined that each of the factors described above, in light of all the other factors and all of the facts and circumstances applicable to each respective Trust, was acceptable for each Trust and supported the Trustees’ conclusion that the terms of each Agreement were fair and reasonable, that the respective Trust’s fees are reasonable in light of the services provided to the respective Trust, and that the renewal of each Agreement should be approved.
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|
ADDITIONAL INFORMATION (Unaudited) |
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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, 2005, all dividends paid by the Insured Trusts (the only Trusts with September 30th tax year-ends) were federally tax-exempt interest dividends.
The Joint Annual Meeting of Shareholders was held on May 26, 2005, to elect a certain number of Directors/Trustees for each of the following Trusts to three year terms, unless otherwise indicated, expiring in 2008:
| | | | | | | | |
Insured Municipal | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 25,238,259 | | | 270,555 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 25,236,633 | | | 272,181 | | |
Kent Dixon | | 25,250,959 | | | 257,855 | | |
Robert S. Kapito | | 25,261,260 | | | 247,554 | | |
| | | | | | | |
Municipal Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 9,509,900 | | | 160,506 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 9,503,952 | | | 166,454 | | |
Kent Dixon | | 9,516,512 | | | 153,894 | | |
Robert S. Kapito | | 9,516,815 | | | 153,591 | | |
| | | | | | | |
Municipal Income II | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 21,512,173 | | | 279,160 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 21,511,746 | | | 279,587 | | |
Kent Dixon | | 21,543,058 | | | 248,275 | | |
Robert S. Kapito | | 21,530,970 | | | 260,363 | | |
| | | | | | | |
California Insured | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 5,027,090 | | | 22,262 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 5,014,490 | | | 34,862 | | |
Kent Dixon | | 5,026,090 | | | 23,262 | | |
Robert S. Kapito | | 5,024,290 | | | 25,062 | | |
| | | | | | | |
California Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 3,093,647 | | | 11,331 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 3,083,097 | | | 21,881 | | |
Kent Dixon | | 3,093,547 | | | 11,431 | | |
Robert S. Kapito | | 3,094,547 | | | 10,431 | | |
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| | | | | | | | |
California Income II | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 7,513,984 | | | 35,896 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 7,511,452 | | | 38,428 | | |
Kent Dixon | | 7,514,344 | | | 35,536 | | |
Robert S. Kapito | | 7,515,684 | | | 34,196 | | |
| | | | | | | |
Florida Insured | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 8,493,948 | | | 108,346 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 8,487,420 | | | 114,874 | | |
Kent Dixon | | 8,495,027 | | | 107,267 | | |
Robert S. Kapito | | 8,487,495 | | | 114,799 | | |
| | | | | | | |
Florida Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 2,896,576 | | | 23,281 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 2,894,409 | | | 25,448 | | |
Kent Dixon | | 2,894,726 | | | 25,131 | | |
Robert S. Kapito | | 2,901,576 | | | 18,281 | | |
| | | | | | | |
Maryland Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 1,992,223 | | | 16,073 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 1,993,523 | | | 14,773 | | |
Kent Dixon | | 1,995,556 | | | 12,740 | | |
Robert S. Kapito | | 1,995,556 | | | 12,740 | | |
| | | | | | | |
New Jersey Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 2,141,281 | | | 48,744 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 2,141,085 | | | 48,940 | | |
Kent Dixon | | 2,143,385 | | | 46,640 | | |
Robert S. Kapito | | 2,143,385 | | | 46,640 | | |
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| | | | | | | | |
New York Insured | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 6,125,657 | | | 128,567 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 6,124,380 | | | 129,844 | | |
Kent Dixon | | 6,123,377 | | | 130,847 | | |
Robert S. Kapito | | 6,123,757 | | | 130,467 | | |
| | | | | | | |
New York Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 2,304,703 | | | 25,470 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| �� |
Andrew F. Brimmer | | 2,303,703 | | | 26,470 | | |
Kent Dixon | | 2,305,261 | | | 24,912 | | |
Robert S. Kapito | | 2,304,703 | | | 25,470 | | |
| | | | | | | |
New York Income II | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 4,655,924 | | | 50,441 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 4,652,974 | | | 53,391 | | |
Kent Dixon | | 4,653,324 | | | 53,041 | | |
Robert S. Kapito | | 4,653,924 | | | 52,441 | | |
| | | | | | | |
Virginia Bond | | | | | | | |
Elected the Class II Trustee as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Kathleen F. Feldstein1 | | 1,173,896 | | | 20,070 | | |
| | | | | | | |
Elected the Class III Trustees as follows: | | | | | | | |
| | | | | | | |
Trustee | | Votes For | | Votes Withheld | |
| | |
| |
| |
Andrew F. Brimmer | | 1,175,845 | | | 18,121 | | |
Kent Dixon | | 1,178,442 | | | 15,524 | | |
Robert S. Kapito | | 1,174,102 | | | 19,864 | | |
| |
|
1 | Ms. Feldstein will serve until the end of the term for the Class of Directors/Trustees to which she was elected. |
The following Trusts had an additional proposal (Proposal #2A) to amend its respective Declaration of Trust in order to change the maximum number of permitted Trustees allowed on its respective Board to 11:
| | | | | | | | | | | | |
| | Votes For | | Votes Against | | Votes Withheld | |
| |
| |
| |
| |
Insured Municipal | | | 24,741,476 | | | 572,169 | | | | 195,169 | | |
Municipal Bond | | | 9,331,987 | | | 247,806 | | | | 90,613 | | |
Municipal Income II | | | 21,192,518 | | | 403,594 | | | | 195,221 | | |
California Insured | | | 4,900,186 | | | 91,470 | | | | 57,696 | | |
California Bond | | | 3,005,857 | | | 74,027 | | | | 25,094 | | |
California Income II | | | 7,428,164 | | | 80,757 | | | | 40,958 | | |
Florida Insured | | | 8,293,263 | | | 174,040 | | | | 134,991 | | |
Florida Bond | | | 2,816,968 | | | 58,628 | | | | 44,261 | | |
Maryland Bond | | | 1,940,402 | | | 29,794 | | | | 38,100 | | |
New Jersey Bond | | | 2,107,913 | | | 61,912 | | | | 20,200 | | |
New York Insured | | | 6,048,404 | | | 139,354 | | | | 66,466 | | |
New York Bond | | | 2,297,560 | | | 24,040 | | | | 8,573 | | |
New York Income II | | | 4,620,675 | | | 65,739 | | | | 19,951 | | |
Virginia Bond | | | 1,160,168 | | | 12,966 | | | | 20,832 | | |
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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 the AMEX’s listing standards. All of theTrusts 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.
During the period, there were no material changes in any Trust’s investment objective or policies or to any Trust’s charters or by-laws that were not approved by the shareholders 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’ portfolios.
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, James Kong and Vincent Tritto—Managing Directors of the Sub-Advisor, and Brian P. Kindelan—Managing Director of the Advisor.
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DIRECTORS/TRUSTEES INFORMATION (Unaudited) |
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Name, address, age | | Current positions held with the Trusts | | Term of office and length of time served | | Principal occupations during the past five years | | Number of portfolios overseen within the fund complex1 | | Other Directorships held outside the fund complex1 | | Events or transactions by reason of which the Trustee is an interested person as defined in Section 2(a) (19) of the 1940 Act |
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Interested Directors/Trustees2 |
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Ralph L. Schlosstein BlackRock, Inc. 40 East 52nd Street New York, NY10022 Age: 54 | | Chairman of the Board3 | | 3 years4 / since inception | | Director since 1999 and President of BlackRock, Inc. since its formation in 1998 and of BlackRock, Inc.’s predecessor entities since 1988. Member of the Management Committee and Investment Strategy Group of BlackRock, Inc. Formerly, Managing Director of Lehman Brothers, Inc. and Co-head of its Mortgage and Savings Institutions Group. Chairman and President of the BlackRock Liquidity Funds and Director of several of BlackRock’s alternative investment vehicles. | | 66 | | Member of the Visiting Board of Overseers of the John F. Kennedy School of Government at Harvard University, a member of the board of the Financial Institutions Center of The Wharton School of the University of Pennsylvania, a trustee of the 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 of The Public Theater in New York City and the James Baird Foundation. 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. | | Director and President of the Advisor |
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Robert S. Kapito BlackRock, Inc. 40 East 52nd Street New York, NY 10022
Age: 48 | | President and Trustee | | 3 years4 / since August 22, 2002 | | Vice Chairman of BlackRock, Inc. Head of the Portfolio Management Group. Also a member of the Management Committee, the Investment Strategy Group, the Fixed Income and Global Operating Committees and the Equity Investment Strategy Group. Responsible for the portfolio man- agement of the Fixed Income, Domestic Equity and International Equity, Liquidity, and Alternative Investment Groups of BlackRock. | | 56 | | Chairman of the Hope and Heroes Children’s Cancer Fund. President of the Board of Directors of the Periwinkle National Theatre for Young Audiences. | | Director and Vice Chairman of the Advisor |
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DIRECTORS/TRUSTEES INFORMATION (Unaudited) (Continued) |
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Name, address, age | | Current positions held with the Trusts | | Term of office and length of time served | | Principal occupations during the past five years | | Number of portfolios overseen within the fund complex1 | | Other Directorships held outside the fund complex |
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Independent Trustees |
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Andrew F. Brimmer P.O. Box 4546
New York, NY 10163-4546
Age: 78 | | Lead Trustee Audit Committee Chairman5 | | 3 years4 / since inception | | President of Brimmer & Company, Inc., a Washington, D.C.-based economic and financial consulting firm, also Wilmer D. Barrett Professor of Economics, University of Massachusetts – Amherst. Formerly member of the Board of Governors of the Federal Reserve System. Former Chairman, District of Columbia Financial Control Board. | | 56 | | Director of CarrAmerica Realty Corporation and Borg-Warner Automotive. Formerly Director of Airborne Express, BankAmerica Corporation (Bank of America), BellSouth 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). |
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Richard E. Cavanagh P.O. Box 4546
New York, NY 10163-4546
Age: 58 | | Trustee Audit Committee Member | | 3 years4 / since inception | | President and Chief Executive Officer of The Conference Board, Inc., a leading global business research organization, from 1995-present. Former Executive Dean of the John F. Kennedy School of Government at Harvard University from 1988-1995. Acting Director, Harvard Center for Business and Government (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 PERFORMANCE (best selling management book published in 13 national editions). | | 56 | | Trustee: Aircraft Finance Trust (AFT) and Educational Testing Service (ETS). Director, Arch Chemicals, Fremont Group and The Guardian Life Insurance Company of America. |
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Kent Dixon P.O. Box 4546 New York, NY
10163-4546
Age: 67 | | Trustee Audit Committee Member5 | | 3 years4 / since inception | | Consultant/Investor. Former President and Chief Executive Officer of Empire Federal Savings Bank of America and Banc PLUS Savings Association, former Chairman of the Board, President and Chief Executive Officer of Northeast Savings. | | 56 | | Former Director of ISFA (the owner of INVEST, a national securities broker- age service designed for banks and thrift institutions). |
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Frank J. Fabozzi P.O. Box 4546 New York, NY
10163-4546
Age: 57 | | Trustee Audit Committee Member5 | | 3 years4 / since inception | | Consultant. Editor of THE JOURNAL OF PORTFOLIO MANAGEMENT and Frederick Frank Adjunct Professor of Finance at the School of Management at 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. | | 56 | | Director, Guardian Mutual Funds Group (18 portfolios). |
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DIRECTORS/TRUSTEES INFORMATION (Unaudited) (Continued) |
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Name, address, age | | Current positions held with the Trusts | | Term of office and length of time served | | Principal occupations during the past five years | | Number of portfolios overseen within the fund complex1 | | Other Directorships held outside the fund complex |
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Independent Trustees (continued) |
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Kathleen F. Feldstein P.O. Box 4546 New York, NY
10163-4546
Age: 63 | | Trustee | | 3 years4 / since January 19, 2005 | | President of Economics Studies, Inc., a Belmont, MA-based private economic consulting firm, since 1987; Chair, Board of Trustees, McLean Hospital in Belmont, MA. | | 56 | | Director of BellSouth Inc. and Knight Ridder, Inc.; Trustee of the Museum of Fine Arts, 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. |
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R. Glenn Hubbard P.O. Box 4546 New York, NY
10163-4546
Age: 46 | | Trustee | | 3 years4 / since November 16, 2004 | | Dean of Columbia Business School since July 1, 2004. Columbia faculty member since 1988. Co-director of Columbia Business School’s Entrepreneurship Program 1994-1997. Visiting professor at the John F. Kennedy School of Government at Harvard and the Harvard Business School, as well as the University of Chicago. Visiting scholar at the American Enterprise Institute in Washington and member of International Advisory Board of the MBA Program of Ben-Gurion University. Deputy assistant secretary of the U.S. Treasury Department for Tax Policy 1991-1993. Chairman of the U.S. Council of Economic Advisers under the President of the United States 2001–2003. | | 56 | | Director of ADP, Dex Media, Duke Realty, KKR Financial Corporation, and Ripplewood Holdings. Advisory boards of the Congressional Budget Office, the Council on Competitiveness, the American Council on Capital Formation, the Tax Foundation and the Center for Addiction and Substance Abuse. Trustee of Fifth Avenue Presbyterian Church of New York. |
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James Clayburn La Force, Jr. P.O. Box 4546 New York, NY
10163-4546
Age: 76 | | Trustee | | 3 years4 / since inception | | Dean Emeritus of the John E. Anderson Graduate School of Management, University of California since July 1, 1993. Acting Dean of the School of Business, Hong Kong University of Science and Technology 1990-1993. From 1978 to September 1993, Dean of the John E. Anderson Graduate School of Management, University of California. | | 56 | | Director of Payden & Rygel Investment Trust, Metzler- Payden Investment Trust, Advisors Series Trust, Arena Pharmaceuticals, Inc. and CancerVax Corporation. Former director of First Nationwide Bank, Eli Lilly & Company, National Intergroup, Rockwell International, Cyprus Mines, Getty Oil Company, The Timken Company, Jacobs Engineering Group, and Motor Cargo Industries. |
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Walter F. Mondale P.O. Box 4546 New York, NY
10163-4546
Age: 77 | | Trustee | | 3 years4 / since inception6 | | Senior Counsel, Dorsey & Whitney, LLP, a law firm (January 2004-present); Partner, Dorsey & Whitney, LLP, (December 1996- December 2003, September 1987-August 1993). Formerly U.S. Ambassador to Japan (1993-1996). Formerly Vice President of the United States, U.S. Senator and Attorney General of the State of Minnesota. 1984 Democratic Nominee for President of the United States. | | 56 | | Chairman of Panasonic Foundation’s Board of Directors and Director of United Health Foundation. Member of the Hubert H. Humphrey Institute of Public Affairs Advisory Board, The Mike and Maureen Mans- field Foundation and the Dean’s Board of Visitors of the Medical School at the University of Minnesota. |
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1 | The Fund Complex means two or more registered investments companies that: (1) hold themselves out to investors as related companies for purposes 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 three Audit Committee financial experts serving on its Audit Committee, Dr. Brimmer, Mr. Dixon and Mr. Fabozzi, each of whom are independent for the purpose of the definition of Audit Committee financial expert as applicable to the Trusts. |
6 | Except during the periods October 31, 2002 through November 11, 2002 for all of the Trusts. |
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BlackRock Closed-End Funds
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Trustees | Transfer Agent |
Ralph L. Schlosstein, Chairman | EquiServe Trust Company, N.A. |
Andrew F. Brimmer | c/o Computershare Investor Services |
Richard E. Cavanagh | 250 Royall Street |
Kent Dixon | Canton, MA 02021 |
Frank J. Fabozzi | (800) 699-1BFM |
Kathleen F. Feldstein | |
R. Glenn Hubbard | Auction Agent1 |
Robert S. Kapito | Bank of New York |
James Clayburn La Force, Jr. | 101 Barclay Street, 7 West |
Walter F. Mondale | New York, NY 10286 |
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Officers | Auction Agent2 |
Robert S. Kapito, President | Deutsche Bank Trust Company Americas |
Henry Gabbay, Treasurer | 60 Wall Street, 8th Floor |
Bartholomew Battista, Chief Compliance Officer | New York, NY 10286 |
Anne Ackerley, Vice President | |
Kevin M. Klingert, Vice President | Independent Registered Public Accounting Firm |
James Kong, Assistant Treasurer | Deloitte & Touche LLP |
Vincent B. Tritto, Secretary | 200 Berkeley Street |
Brian P. Kindelan, Assistant Secretary | Boston, MA 02116 |
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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 | |
Accounting Agent and Custodian
State Street Bank and Trust Company
225 Franklin Street
| This report is for shareholder information. This is not a prospec tus intended for use in the purchase or sale of Trust shares. Statements and other information contained in this report are dated and are subject to change. |
Boston, MA 02110 |
BlackRock Closed-End Funds
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| c/o BlackRock Advisors, Inc. |
| 100 Bellevue Parkway |
| Wilmington, DE 19809 |
| (800) 227-7BFM |
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1 | For the Insured Trusts and Bond Trusts. |
2 | For the Income II 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)669-1BFM.
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 June 30th 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, 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, may also be obtained upon request without charge by calling (800) 699-1BFM.
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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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CEF-ANN-1 | |
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 three audit committee financial experts serving on its audit committee, each of whom is an "independent" Trustee: Dr. Andrew F. Brimmer, Mr. Kent Dixon and Mr. Frank Fabozzi. 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 $25,740 for the fiscal year ended August 31, 2005 and $25,400 for the fiscal year ended August 31, 2004.
(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 $2,418 for the fiscal year ended August 31, 2005 and $2,100 for the fiscal year ended August 31, 2004. 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 $7,678 for the fiscal year ended August 31, 2005 and $8,100 for the fiscal year ended August 31, 2004. 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 $10,097 for the fiscal year ended August 31, 2005 and $10,200 for the fiscal year ended August 31, 2004.
(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.
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Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have evaluated the Registrant's disclosure controls and procedures within 90 days of this filing and have concluded, as of that date, that the Registrant’s disclosure controls and procedures were reasonably designed to ensure that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized, and reported within the required time periods and that information required to be disclosed by the Registrant in this Form N-CSR was accumulated and communicated to the Registrant’s management, including its principle executive and principle financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant's last fiscal half-year that have materially affected, or are 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 Florida Municipal Bond Trust
By: /s/ Henry Gabbay
Name: Henry Gabbay
Title: Treasurer
Date: October 28, 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: Principal Executive Officer
Date: October 28, 2005
By:: /s/ Henry Gabbay
Name: Henry Gabbay
Title: Principal Financial Officer
Date: October 28, 2005
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