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.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS (unaudited)
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. 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 (each, a “Board”). In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from bond dealers, market transactions in comparable investments and various relationships between investments. A futures contract is valued at the last sale price as of the close of the commodities exchange on which it trades. Short-term securities may be valued at amortized cost. Investments in open-end investment companies are valued at net asset value. Any investments or other assets for which such current market quotations are not readily available are valued at fair value (“Fair Value Assets”) as determined in good faith under procedures established by, and under the general supervision and responsibility of, each Trust’s Board. The investment Advisor and/or Sub-Advisor will submit its recommendations regarding the valuation and/or valuation methodologies for Fair Value Assets to a valuation committee. The valuation committee may accept, modify or reject any recommendations. The pricing of all Fair Value Assets shall be subsequently reported to and ratified by the Board.
When determining the price for a Fair Value Asset, the investment advisor and/or sub-advisor shall seek to determine the price that the Trust might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that BlackRock Advisors, Inc. deems relevant.
Investment Transactions and Investment Income: Investment transactions are recorded on trade date. Realized and unrealized gains and losses are calculated on the identified cost basis. Each Trust also records interest income on an accrual basis and amortizes premium and/or accretes discount on securities purchased using the interest method.
Financial Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument for a set price on a future date. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Trust records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Trust’s basis in the contract.
Financial futures contracts, when used by the Trusts, help in maintaining a targeted duration. Futures contracts can be sold to effectively shorten an otherwise longer duration portfolio. In the same sense, futures contracts can be purchased to lengthen a portfolio that is shorter than its duration target. Thus, by buying or selling futures contracts, the Trusts may attempt to manage the duration of positions so that changes in interest rates do not change the duration of the portfolio unexpectedly.
Segregation: In cases in which the Investment Company Act of 1940, as amended, and the interpretive positions of the Securities and Exchange Commission (the “Commission”) require that each Trust segregate assets in connection with certain investments (e.g., when-issued securities or futures contracts), each Trust will, consistent with certain interpretive letters issued by the Commission, designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated.
Federal Income Taxes: It is each Trust’s intention to continue to be treated as a regulated investment company under the Internal Revenue Code and to distribute sufficient net income to shareholders. For this reason and because substantially all of the gross income of each Trust consists of tax-exempt interest, no Federal income tax provisions are required.
Dividends and Distributions: Each Trust declares and pays dividends and distributions to common shareholders monthly from net investment income, net realized short-term capital gains and other sources, if necessary. Net long-term capital gains, if any, in excess of loss carryforwards may be distributed annually. Dividends and distributions are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Dividends and distributions to preferred shareholders are accrued and determined as described in Note 4.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
70
Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by each Trust’s Board, non-interested Trustees are required to defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of other BlackRock closed-end trusts selected by the Trustees. This has the same economic effect for the Trustees as if the Trustees had invested the deferred amounts in such Trusts.
The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of the Trust. Each Trust may, however, elect to invest in common shares of those Trusts selected by the Trustees in order to match its deferred compensation obligations.
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 yyear 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, as well as occupancy and certain clerical and accounting costs of each Trust. Each Trust bears all other costs and expenses, which include reimbursements to the Advisor for cost of employees that provide pricing, secondary market support, and compliance services to each Trust. For the six months ended February 28, 2005, the Trusts reimbursed the Advisor the following amounts:
| Trust | | Amount | | Trust | | Amount |
| |
|
| |
| |
|
|
| Insured Municipal | | $ | 12,109 | | | Florida Bond | | $ | 1,539 | |
| Municipal Bond | | | 4,778 | | | Maryland Bond | | | 970 | |
| Municipal Income II | | | 10,245 | | | New Jersey Bond | | | 644 | |
| California Insured | | | 2,407 | | | New York Insured | | | 1,736 | |
| California Bond | | | 1,539 | | | New York Bond | | | 992 | |
| California Income II | | | 3,530 | | | New York Income II | | | 2,259 | |
| Florida Insured | | | 4,051 | | | Virginia Bond | | | 738 | |
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 six months ended February 28, 2005, were as follows:
| Trust | | Purchases | | Sales | | Trust | Purchases | | Sales |
| |
|
| |
|
| |
|
| |
|
|
|
| Insured Municipal | | $ | 149,792,562 | | | $ | 153,969,890 | | | Florida Bond | $ | — | | | $ | 1,260,610 | |
| Municipal Bond | | | 93,969,889 | | | | 101,049,357 | | | Maryland Bond | | 750,000 | | | | 600,364 | |
| Municipal Income II | | | 102,620,957 | | | | 110,517,290 | | | New Jersey Bond | | 2,958,100 | | | | 2,321,884 | |
| California Insured | | | 4,094,040 | | | | 15,574,206 | | | New York Insured | | 12,848,410 | | | | 12,855,645 | |
| California Bond | | | 4,327,581 | | | | 8,780,660 | | | New York Bond | | 522,890 | | | | 21,239 | |
| California Income II | | | 12,719,071 | | | | 16,264,877 | | | New York Income II | | 6,094,780 | | | | 6,592,260 | |
| Florida Insured | | | — | | | | 756,377 | | | Virginia Bond | | — | | | | 14,989 | |
There were no purchases or sales of U.S. government securities.
Details of open financial futures contracts at February 28, 2005 were as follows:
| | | | | | | | | | | | | Value at | | | |
| | | Number of | | | | Expiration | | Value at Trade | | February 28, | | Unrealized |
| Trust | | Contracts | | Type | | Date | | Date | | 2005 | | Appreciation |
| |
| |
| |
| |
| |
| |
|
| Short Positions: | | | | | | | | | | | | | | | | |
| Insured Municipal | | 1,683 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | $185,738,643 | | | $184,919,625 | | | $819,018 | |
| Municipal Bond | | 607 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 66,989,372 | | | 66,694,125 | | | 295,247 | |
| Municipal Income II | | 1,406 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 155,168,611 | | | 154,484,250 | | | 684,361 | |
| California Insured | | 359 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 39,619,727 | | | 39,445,125 | | | 174,602 | |
| California Bond | | 216 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 23,837,989 | | | 23,733,000 | | | 104,989 | |
71
| | | | | | | | | | | | | Value at | | | |
| | | Number of | | | | Expiration | | Value at Trade | | February 28, | | Unrealized |
| Trust | | Contracts | | Type | | Date | | Date | | 2005 | | Appreciation |
| |
| |
| |
| |
| |
| |
|
| California Income II | | 581 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 64,120,018 | | | 63,837,375 | | | 282,643 | |
| Florida Insured | | 507 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 55,953,307 | | | 55,706,625 | | | 246,682 | |
| Florida Bond | | 173 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 19,092,459 | | | 19,008,375 | | | 84,084 | |
| Maryland Bond | | 107 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 11,808,575 | | | 11,756,625 | | | 51,950 | |
| New Jersey Bond | | 152 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 16,774,928 | | | 16,701,000 | | | 73,928 | |
| New York Insured | | 381 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 42,047,590 | | | 41,862,375 | | | 185,215 | |
| New York Bond | | 143 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 15,781,597 | | | 15,712,125 | | | 69,472 | |
| New York Income II | | 255 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 28,142,155 | | | 28,018,125 | | | 124,030 | |
| Virginia Bond | | 94 | | | 10 Yr. U.S. T-Note | | Jun ’04 | | 10,373,906 | | | 10,328,250 | | | 45,656 | |
At February 28, 2005, 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 | | | $585,209,817 | | | $36,638,657 | | | $ | — | | | $36,638,657 | |
| Municipal Bond | | | 237,148,480 | | | 14,720,873 | | | | 22,125 | | | 14,698,748 | |
| Municipal Income II | | | 516,697,486 | | | 31,073,914 | | | | 418,435 | | | 30,655,479 | |
| California Insured | | | 118,980,816 | | | 4,445,155 | | | | — | | | 4,445,155 | |
| California Bond | | | 78,777,174 | | | 4,969,072 | | | | 8,123 | | | 4,960,949 | |
| California Income II | | | 177,440,252 | | | 10,428,798 | | | | 430,720 | | | 9,998,078 | |
| Florida Insured | | | 196,239,877 | | | 7,281,206 | | | | 41,051 | | | 7,240,155 | |
| Florida Bond | | | 75,748,261 | | | 5,625,004 | | | | 10,583 | | | 5,614,421 | |
| Maryland Bond | | | 46,046,209 | | | 3,122,445 | | | | 7,312 | | | 3,115,133 | |
| New Jersey Bond | | | 52,031,488 | | | 3,185,508 | | | | 186,643 | | | 2,998,865 | |
| New York Insured | | | 146,081,013 | | | 5,650,749 | | | | 13,497 | | | 5,637,252 | |
| New York Bond | | | 62,043,643 | | | 4,138,415 | | | | — | | | 4,138,415 | |
| New York Income II | | | 112,413,815 | | | 5,371,238 | | | | 5,196 | | | 5,366,042 | |
| Virginia Bond | | | 34,724,877 | | | 2,573,321 | | | | — | | | 2,573,321 | |
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 | | Carryforward Amount | | Expires | | Trust | | Carryforward Amount | | Expires |
| |
|
| |
| |
| |
|
| |
|
| Insured Municipal | | $ | 5,849,709 | | 2012 | | Maryland Bond | | $ | 4,564 | | | 2011 |
| | |
|
| | | | | | | 577,920 | | | 2012 |
| | | | | | | | |
|
| | | |
| Municipal Bond | | $ | 338,279 | | 2011 | | | | $ | 582,484 | | | |
| | | | 3,044,444 | | 2012 | | | |
|
| | | |
| |
|
| | | | | | | | | | |
| | | | 3,382,723 | | | | New Jersey Bond | | $ | 327,635 | | | 2012 |
| |
|
| | | | | |
|
| | | |
| |
| Municipal Income II | | $ | 1,338,302 | | 2011 | | New York Insured | | $ | 103 | | | 2012 |
| | | | 5,200,107 | | 2012 | | | |
|
| | | |
| |
|
| | | | | | | | | | |
| | | $ | 6,538,409 | | | | | | | | | | |
| |
|
| | | | New York Bond | | $ | 142,736 | | | 2011 |
| California Insured | | $ | 8,282 | | 2012 | | | | | 634,713 | | | 2012 |
| |
|
| | | | | |
|
| | | |
| | | | | | | | | | $ | 777,449 | | | |
| | | | | | | | |
|
| | | |
| California Bond | | $ | 2,491,829 | | 2012 | | | | | | | | |
| | |
|
| | | | New York Income II | | $ | 722,685 | | | 2012 |
| | | | | | | | |
|
| | | |
| California Income II | | $ | 1,454,313 | | 2011 | | | | | | | | |
| | | | 1,163,822 | | 2012 | | | | | | | | |
| |
|
| | | | | | | | | | |
| | | $ | 2,618,135 | | | | Virginia Bond | | $ | 48,573 | | | 2011 |
| |
|
| | | | | | | 331,975 | | | 2012 |
| | | | | | | | |
|
| | | |
| Florida Bond | | $ | 758,206 | | 2012 | | | | $ | 380,548 | | | |
| |
|
| | | | | |
|
| | | |
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 estimated tax character of distributions paid during the six months ended February 28, 2005 were as follows:
| | | | | Six months ended February 28, 2005 | | |
| |
|
|
|
|
|
| | | Tax-exempt | | Ordinary | | Long-term | | Total |
| Distributions Paid from: | | Income | | Income | | Capital Gains | | Distributions |
| |
| |
| |
| |
|
| Insured Municipal | | $13,943,912 | | $ — | | $— | | $13,943,912 |
| Municipal Bond | | 5,934,906 | | — | | — | | 5,934,906 |
| Municipal Income II | | 13,041,335 | | — | | — | | 13,041,335 |
| California Insured | | 2,684,958 | | — | | — | | 2,684,958 |
| California Bond | | 1,804,390 | | — | | — | | 1,804,390 |
| California Income II | | 4,363,509 | | — | | — | | 4,363,509 |
| Florida Insured | | 4,422,481 | | — | | — | | 4,422,481 |
| Florida Bond | | 1,737,056 | | — | | — | | 1,737,056 |
| Maryland Bond | | 995,647 | | — | | — | | 995,647 |
| New Jersey Bond | | 1,208,667 | | — | | — | | 1,208,667 |
| New York Insured | | 3,267,181 | | — | | — | | 3,267,181 |
| New York Bond | | 1,416,488 | | — | | — | | 1,416,488 |
| New York Income II | | 2,623,797 | | — | | — | | 2,623,797 |
| Virginia Bond | | 757,812 | | — | | — | | 757,812 |
| |
| The tax character of distributions paid during the year ended August 31, 2004 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 |
| |
| As of February 28, 2005, 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 | | $4,363,315 | | $— | | $— | | $36,604,690 |
| Municipal Bond | | 4,258,887 | | — | | — | | 14,682,449 |
| Municipal Income II | | 6,644,277 | | — | | — | | 30,624,005 |
| California Insured | | 899,378 | | — | | — | | 4,439,654 |
| California Bond | | 1,348,596 | | — | | — | | 4,953,249 |
| California Income II | | 795,440 | | — | | — | | 9,988,856 |
| Florida Insured | | 1,361,099 | | — | | — | | 7,230,396 |
| Florida Bond | | 1,357,355 | | — | | — | | 5,608,160 |
| Maryland Bond | | 797,127 | | — | | — | | 3,107,769 |
| New Jersey Bond | | 911,279 | | — | | — | | 2,990,778 |
| New York Insured | | 865,193 | | — | | — | | 5,631,497 |
| New York Bond | | 997,178 | | — | | — | | 4,131,811 |
| New York Income II | | 283,862 | | — | | — | | 4,359,492 |
| Virginia Bond | | 693,478 | | — | | — | | 2,567,107 |
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 February 28, 2005, 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 Bond | | 3,309,483 | | | — | |
| Municipal Bond | | 10,123,055 | | | — | | | Maryland Bond | | 2,015,589 | | | — | |
| Municipal Income II | | 22,781,072 | | | — | | | New Jersey Bond | | 2,269,366 | | | — | |
| California Insured | | 5,270,479 | | | — | | | New York Insured | | 6,448,651 | | | — | |
| California Bond | | 3,351,150 | | | — | | | New York Bond | | 2,700,991 | | | — | |
| California Income II | | 7,984,696 | | | — | | | New York Income II | | 4,937,652 | | | — | |
| Florida Insured | | 8,721,409 | | | — | | | Virginia Bond | | 1,524,794 | | | — | |
During the six months ended February 28, 2005, California Insured, Florida Insured, Maryland Bond, New York Insured, NewYork Income II and Virginia Bond issued additional shares under their dividend reinvestment plans of 1,694, 2,586, 435, 12,112, 2,384 and 3,779 respectively. Transactions in common shares of beneficial interest for the year ended August 31, 2004 were as follows:
| | | Shares from | | | |
| | |
| | | |
| | | Initial | | | | | | | | | |
| | | Public Offering | | Underwriters’ Exercising | | Reinvestment | | Net Increase in |
| Trust | | October 31, 2002 | | the Over-allotment 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 and 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 February 28, 2005, 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 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 six months ended February 28, 2005 were as follows: | |
| | | | | | | | | | | | | | | |
| Trust | | Low | | High | | Trust | | Low | | High |
| |
|
| |
|
| |
| |
|
| |
|
|
| Insured Municipal | | 0.63 | % | | 1.21 | % | | Florida Bond | | 0.45 | % | | 1.18 | % |
| Municipal Bond | | 0.43 | | | 1.16 | | | Maryland Bond | | 0.60 | | | 1.08 | |
| Municipal Income II | | 0.75 | | | 2.00 | | | New Jersey Bond | | 0.40 | | | 1.00 | |
| California Insured | | 0.59 | | | 1.06 | | | New York Insured | | 0.50 | | | 1.03 | |
| California Bond | | 0.40 | | | 1.06 | | | New York Bond | | 0.45 | | | 1.16 | |
| California Income II | | 0.75 | | | 1.85 | | | New York Income II | | 0.65 | | | 1.73 | |
| Florida Insured | | 0.45 | | | 1.15 | | | 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 February 28, 2005, the Board of each Trust declared dividends from undistributed earnings per common share payable April 1, 2005, to shareholders of record on March 13, 2005. 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 March 1, 2005 to March 31, 2005 for each of the Trusts were as follows:
| | | | | Dividends | | | | | | Dividends |
| Trust | | Series | | Declared | | Trust | | Series | | Declared |
| |
| |
| |
| |
| |
|
| Insured Municipal | | M7 | | $143,460 | | | California Income II | | T7 | | $58,639 | |
| | | R7 | | 147,185 | | | | | R7 | | 60,222 | |
| | | F7 | | 116,533 | | | Florida Insured | | M7 | | 144,461 | |
| Municipal Bond | | T7 | | 82,446 | | | Florida Bond | | W7 | | 58,145 | |
| | | R7 | | 87,477 | | | Maryland Bond | | R7 | | 35,150 | |
| Municipal Income II | | M7 | | 94,879 | | | New Jersey Bond | | M7 | | 35,216 | |
| | | T7 | | 93,157 | | | New York Insured | | R7 | | 87,091 | |
| | | W7 | | 97,345 | | | New York Bond | | T7 | | 36,523 | |
| | | R7 | | 98,811 | | | New York Income II | | W7 | | 59,063 | |
| California Insured | | F7 | | 63,147 | | | Virginia Bond | | R7 | | 25,162 | |
| California Bond | | F7 | | 42,600 | | | | | | | | |
76
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 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’ account, depending upon the circumstances described below, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by open market purchases. If, on the dividend payment date, the Net Asset Value (“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 participants’ 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 who 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.
77
ADDITIONAL INFORMATION
There has been no material changes in the Trusts’ investment objective or policies that have not been approved by the shareholders or to their charters or by-laws or in the principle risk factors associated with investment in the Trusts. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts’ portfolio.
Quarterly performance and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com/indiv/products/closedendfunds/funds.html. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended, to incorporate BlackRock’s website into this report.
Certain of the officers of the Trusts listed on the inside back cover of this Report to Shareholders are also officers of the Advisor or Sub-Advisor. They serve in the following capacities for the Advisor or Sub-Advisor: Robert S. Kapito—Director and Vice Chairman of the Advisor and the Sub-Advisor, Kevin M. Klingert—Director of BlackRock Advisors, Inc. and Managing Director of the Advisor and the Sub-Advisor, Henry Gabbay, Anne Ackerley and Bartholomew Battista—Managing Directors of the Advisor and the Sub-Advisor, Richard M. Shea, James Kong and Vincent Tritto—Managing Directors of the Sub-Advisor, and Brian P. Kindelan—Managing Director of the Advisor.
78
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 | | | | |
| R. Glenn Hubbard | | | | Auction Agent2 |
| Robert S. Kapito | | | | Bank of New York |
| Kathleen F. Feldstein1 | | | | 100 Church Street, 8th Floor |
| James Clayburn La Force, Jr. | | | | New York, NY 10286 |
| Walter F. Mondale | | | | |
| | | | | Auction Agent3 |
| Officers | | | | Deutsche Bank Trust Company Americas |
| Robert S. Kapito, President | | | | 60 Wall Street, 27th Floor |
| Henry Gabbay, Treasurer | | | | New York, NY 10005 |
| Bartholomew Battista, Chief Compliance Officer | | | | |
| Anne Ackerley, Vice President | | | | Independent Registered Public Accounting Firm |
| Kevin M. Klingert, Vice President | | | | Deloitte & Touche LLP |
| Richard M. Shea, Vice President/Tax | | | | 200 Berkeley Street |
| James Kong, Assistant Treasurer | | | | Boston, MA 02116 |
| Vincent B. Tritto, Secretary | | | | |
| Brian P. Kindelan, Assistant Secretary | | | | Legal Counsel |
| | | | | Skadden, Arps, Slate, Meagher & Flom LLP |
| Investment Advisor | | | | Four Times Square |
| BlackRock Advisors, Inc. | | | | New York, NY 10036 |
| 100 Bellevue Parkway | | | | |
| Wilmington, DE 19809 | | | | Legal Counsel – Independent Trustees |
| (800) 227-7BFM | | | | Debevoise & Plimpton LLP |
| | | | | 919 Third Avenue |
| Sub-Advisor2 | | | | New York, NY 10022 |
| BlackRock Financial Management, Inc. | | | | |
| 40 East 52nd Street | | | | This report is for shareholder information. This is not a prospec- |
| New York, NY 10022 | | | | tus intended for use in the purchase or sale of Trust shares. |
| | | | | Statements and other information contained in this report are as |
| Custodian | | | | dated and are subject to change. |
| State Street Bank and Trust Company | | | | |
| 225 Franklin Street | | | | BlackRock Closed-End Funds |
| Boston, MA 02110 | | | | c/o BlackRock Advisors, Inc. |
| | | | | 100 Bellevue Parkway |
| | | | | Wilmington, DE 19809 |
| | | | | (800) 227-7BFM |
| 1 | Appointed on January 19, 2005 as an Advisory Trustee. |
| 2 | For the Income II Trusts. |
| 3 | 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) 699-1BFM.
The Trusts have delegated to the Advisor the voting of proxies relating to their voting securities pursuant to the Advisor’s proxy voting policies and procedures. You may obtain a copy of these proxy voting policies and procedures, without charge, by calling (800) 699-1BFM. These policies and procedures are also available on the website of the Securities and Exchange Commission (the “Commission”) at http://www.sec.gov.
Information on how proxies relating to the Trusts’ voting securities were voted (if any) by the Advisor during the most recent 12-month period ended December 31st is available, upon request, by calling (800) 699-1BFM or on the website of the Commission at http://www.sec.gov.
The Trusts file their complete schedule of portfolio holdings for the first and third quarters of their respective fiscal years with the Commission on Form N-Q. Each Trust’s Form N-Q will be available on the Commission’s website at http://www.sec.gov. Each Trust’s Form N-Q, when available, may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information regarding the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Each Trust’s Form N-Q, when available, may also be obtained, upon request, by calling (800) 699-1BFM.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of Trust shares. Statements and other
information contained in this report are as dated and are subject to change.
CEF-SEMI-1 | |
Item 2. Code of Ethics.
Not applicable for semi-annual reports.(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
