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
The BlackRock Insured Municipal 2008 Term Trust Inc. (“Municipal Insured 2008”), The BlackRock Insured Municipal Term Trust Inc. (“Insured Municipal”), The BlackRock Municipal Target Term Trust Inc. (“Municipal Target”), The BlackRock California Insured Municipal 2008 Term Trust Inc. (“California Insured 2008”) and The BlackRock New York Insured Municipal 2008 Term Trust Inc. (“New York Insured 2008”) were organized as Maryland corporations. BlackRock Municipal 2018 Term Trust (“Municipal 2018”), BlackRock Municipal 2020 Term Trust (“Municipal 2020”), The BlackRock Strategic Municipal Trust (“Municipal Strategic”), BlackRock California Municipal 2018 Term Trust (“California 2018”), BlackRock Florida Municipal 2020 Term Trust (“Florida 2020”), BlackRock New York Municipal 2018 Term Trust (“New York 2018”) and The BlackRock Pennsylvania Strategic Municipal Trust (“Pennsylvania Strategic”) were organized as Delaware statutory trusts. The BlackRock Florida Insured Municipal 2008 Term Trust (“Florida Insured 2008”) was organized as a Massachusetts business trust. Municipal Insured 2008, Insured Municipal, Municipal 2018, Municipal 2020, Municipal Target and Municipal Strategic are registered as diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. California Insured 2008, California 2018, Florida Insured 2008, Florida 2020, New York Insured 2008, New York 2018 and Pennsylvania Strategic are registered as non-diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. Municipal Insured 2008, California Insured 2008, Florida Insured 2008 and New York Insured 2008 are herein referred to as the 2008 Trusts. Municipal 2018, California 2018 and New York 2018 are herein referred to as the 2018 Trusts. Municipal 2020 and Florida 2020 are herein referred to as the 2020 Trusts. Municipal Strategic and Pennsylvania Strategic are herein referred to as the Strategic Trusts.
The following is a summary of significant accounting policies followed by the Trusts.
Investments Valuation: Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services selected under the supervision of each Trust’s Board of Trustees or Board of Directors as the case may be (each, a “Board”). In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from bond dealers, market transactions in comparable investments and various relationships between investments. A futures contract is valued at the last sale price as of the close of the commodities exchange on which it trades. Short-term securities may be valued at amortized cost. Investments in other investment companies are valued at net asset value. Any investments or other assets for which such current market quotations are not readily available are valued at fair value as determined in good faith under procedures established by, and under the general supervision and responsibility of, each Trust’s Board.
Investments Transactions and Investment Income: Investments transactions are recorded on trade date. Realized and unrealized gains and losses are calculated on the identified cost basis. Each Trust also records interest income on an accrual basis and amortizes premium and/or accretes discount on securities purchased using the interest method.
Financial Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument for a set price on a future date. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Trust records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Trust’s basis in the contract.
Financial futures contracts, when used by the Trusts, help in maintaining a targeted duration. Futures contracts can be sold to effectively shorten an otherwise longer duration portfolio. In the same sense, futures contracts can be purchased to lengthen a portfolio that is shorter than its duration target. Thus, by buying or selling futures contracts, the Trusts may attempt to manage the duration of positions so that changes in interest rates do not change the duration of the portfolio unexpectedly.
Segregation: In cases in which the Investment Company Act of 1940, as amended, and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that each Trust segregate assets in connection with certain investments (e.g., when-issued securities, reverse repurchase agreements or futures contracts), each Trust will, consistent with certain interpretive letters issued by the SEC, designate on its books and records cash or other liquid debt securities having a market value at least equal to the amount that would otherwise be required to be physically segregated.
Federal Income Taxes: It is each Trust’s intention to continue to be treated as a regulated investment company under the Internal Revenue Code and to distribute sufficient net income to shareholders. For this reason and because substantially all of the gross income of each Trust consists of tax-exempt interest, no Federal income tax provisions are required.
Dividends and Distributions: Each Trust declares and pays dividends and distributions to common shareholders monthly from net investment income, net realized short-term capital gains and other sources, if necessary. Net long-term capital gains, if any, in excess of loss car-ryforwards may be distributed annually. Dividends and distributions are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. Dividends and distributions to preferred shareholders are accrued and determined as described in Note 4.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by the Trust’s Board, non-interested Trustees/Directors (“Trustees”) are required to defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of other BlackRock closed-end trusts selected by the Trustees. This has the same economic effect for the Trustees as if the Trustees had invested the deferred amounts in such Trusts.
78
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 the 2018 Trusts and 2020 Trusts. BlackRock, Inc. is an indirect majority owned subsidiary of The PNC Financial Services Group, Inc. The Investment Management Agreements for the 2018 Trusts, 2020 Trusts and Strategic Trusts cover both investment advisory and administration services. Each 2008 Trust, Insured Municipal Trust and Municipal Target Trust has an Administration Agreement with the Advisor.
Each Trust’s investment advisory fee paid to the Advisor is computed weekly and payable monthly based on an annual rate, 0.35% for the 2008 Trusts, Insured Municipal and Municipal Target, 0.40% for the 2018 Trusts, 0.50% for the 2020 Trusts and 0.60% for the Strategic Trusts, of the Trust’s average weekly managed assets. “Managed assets” means the total assets of a Trust (including any assets attributable to any preferred shares that may be outstanding) minus the sum of accrued liabilities (other than debt representing financial leverage). The Advisor has voluntarily agreed to waive a portion of the investment advisory fee or other expenses on the Strategic Trusts as a percentage of managed assets as follows: 0.25% for the first five years of each of the Trust’s operations, 0.20% in year six, 0.15% in year seven, 0.10% in year eight and 0.05% in year nine.
The administration fee paid to the Advisor by the 2008 Trusts, Insured Municipal Trust and Municipal Trust is computed weekly and payable monthly based on an annual rate, 0.10% for each 2008 Trust and Insured Municipal Trust and 0.07% for Municipal Target Trust, of the Trust’s average weekly managed assets.
Pursuant to the agreements, the Advisor provides continuous supervision of the investment portfolio and pays the compensation of officers of each Trust who are affiliated persons of the Advisor, occupancy and certain clerical and accounting costs of each Trust. Each Trust bears all other costs and expenses, which include reimbursements to the Advisor for certain operational support services provided to each Trust.
Pursuant to the terms of the custody agreement, each Trust received earning 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 June 30, 2004, were as follows:
Trust | | Purchases | | Sales | | Trust | Purchases | | Sales | |
| |
| |
|
| |
|
| |
| |
| Municipal Insured 2008 | | $ | 20,558,516 | | $ | 55,120,166 | | California 2018 | $ | — | | $ | — | |
| Insured Municipal | | | 3,737,110 | | | 9,565,730 | | Florida Insured 2008 | | — | | | 7,539,650 | |
| Municipal 2018 | | | 37,689,108 | | | 29,271,447 | | Florida 2020 | | 20,576,612 | | | 5,019,980 | |
| Municipal 2020 | | 183,205,336 | | | 113,165,237 | | New York Insured 2008 | | — | | | 18,849,900 | |
| Municipal Target | | | — | | | 37,179,050 | | New York 2018 | | — | | | — | |
| Municipal Strategic | | | 4,823,462 | | | 3,997,140 | | Pennsylvania Strategic | | — | | | 975,463 | |
| California Insured 2008 | | | — | | | 8,850,450 | | | | | | | | |
There were no purchases or sales of U.S. government securities for the six months ending June 30, 2004.
Details of open financial futures contracts at June 30, 2004 were as follows:
| | Number of | | | | Expiration | | Value at | | Value at | | Unrealized | |
Trust | Contracts | | Type | | Date | | Trade Date | | June 30, 2004 | | Depreciation | |
|
| |
| |
| |
| |
| |
| |
| Short Positions: | | | | | | | | | | | | | | | |
| Municipal 2018 | 856 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | $ | 92,398,394 | | $ | 93,584,879 | | $ | (1,186,485 | ) |
| Municipal 2020 | 1,075 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | 116,037,759 | | | 117,527,735 | | | (1,489,976 | ) |
| Municipal Strategic | 369 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | | 39,830,449 | | | 40,342,079 | | | (511,630 | ) |
| California 2018 | 311 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | | 33,570,152 | | | 34,001,049 | | | (430,897 | ) |
| Florida 2020 | 288 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | | 31,087,646 | | | 31,486,500 | | | (398,854 | ) |
| New York 2018 | 177 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | | 19,105,862 | | | 19,351,069 | | | (245,207 | ) |
| Pennsylvania Strategic | 83 | | 10 Yr. U.S. T-Note | | Sept. ’04 | | | 8,959,033 | | | 9,074,235 | | | (115,202 | ) |
At June 30, 2004, the total cost of securities for Federal income tax purposes and the aggregate gross unrealized appreciation and depreciation for securities held by each Trust were as follows:
Trust | | Cost | | Appreciation | | Depreciation | | Net | |
| |
| |
| |
| |
| |
| Municipal Insured 2008 | | $ | 682,935,401 | | $ | 32,680,677 | | $ | 1,128,644 | | $ | 31,552,033 | |
| Insured Municipal | | | 425,924,627 | | | 20,955,903 | | | 246,870 | | | 20,709,033 | |
| Municipal 2018 | | | 374,860,862 | | | 8,924,334 | | | 7,538,082 | | | 1,386,252 | |
| Municipal 2020 | | | 471,172,605 | | | 1,167,086 | | | 10,200,509 | | | (9,033,423 | ) |
| Municipal Target | | | 747,739,159 | | | 26,988,945 | | | 209,702 | | | 26,779,243 | |
| Municipal Strategic | | | 162,680,386 | | | 11,323,079 | | | 5,991,149 | | | 5,331,930 | |
| California Insured 2008 | | | 261,122,912 | | | 12,334,767 | | | 461,648 | | | 11,873,119 | |
| California 2018 | | | 147,575,043 | | | 3,068,258 | | | 4,279,121 | | | (1,210,863 | ) |
| Florida Insured 2008 | | | 211,476,770 | | | 6,348,606 | | | 240,870 | | | 6,107,736 | |
| Florida 2020 | | | 126,564,817 | | | 324,769 | | | 2,722,337 | | | (2,397,568 | ) |
| New York Insured 2008 | | | 273,040,936 | | | 14,267,937 | | | 186,416 | | | 14,081,521 | |
| New York 2018 | | | 82,631,691 | | | 2,748,039 | | | 960,925 | | | 1,787,114 | |
| Pennsylvania Strategic | | | 43,614,712 | | | 2,758,695 | | | 58,008 | | | 2,700,687 | |
79
For Federal income tax purposes, the following Trusts had capital loss carryforwards at December 31, 2003, the Trusts’ last tax year-end (other than the Strategic Trusts, each of which has a tax year-end of June 30th). These amounts may be used to offset future realized capital gains, if any:
| | | Capital Loss | | | | | Capital Loss | | |
Trust | | Carryforward Amount | | Expires | | Trust | Carryforward Amount | | Expires |
| |
| |
| |
|
| |
|
| Insured Municipal | | $ | 1,308 | | 2011 | | New York 2018 | $ | 668,608 | | 2010 |
| | |
| | | | | | 431,368 | | 2010 |
| Municipal 2018 | | $ | 2,036,899 | | 2010 | | |
| | |
| | |
| | | | | $ | 1,099,976 | | |
| Municipal 2020 | | $ | 273,311 | | 2012 | | |
|
| | |
| | |
|
| | | | Pennsylvania Strategic | 87,517 | | 2009 |
| Municipal Strategic | | $ | 78,019 | | 2008 | | | 408,700 | | 2010 |
| | | 1,802,842 | | 2009 | | |
|
| | |
| | | 760,288 | | 2010 | | | $ | 496,217 | | |
| | | 2,477,786 | | 2012 | | |
|
| | |
| | |
| | | | | | | | |
| | | $ | 5,118,935 | | | | | | | | |
| | |
|
| | | | | | | | |
| California 2018 | | $ | 1,287,186 | | 2010 | | | | | |
| | |
| | | | | | | |
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. Each of the Strategic Trusts has a tax year-end of June 30th.
Note 4. Distributions to Shareholders
The tax character of distributions paid during the six months ended June 30, 2004 and the year ended December 31, 2003 were as follows:
| | Six months ended June 30, 2004 | |
| |
| |
| | Tax-exempt | | Ordinary | | Long-term | | Total | |
| Distributions Paid From: | Income | | Income | | Capital Gains | | Distributions | |
|
| |
| |
| |
| |
| Municipal Insured 2008 | $ | 12,038,606 | | $ | — | | $ | — | | $ | 12,038,606 | |
| Insured Municipal | | 8,243,331 | | | — | | | — | | | 8,243,331 | |
| Municipal 2018 | | 6,850,638 | | | — | | | — | | | 6,850,638 | |
| Municipal 2020 | | 10,358,348 | | | — | | | — | | | 10,358,348 | |
| Municipal Target | | 12,953,389 | | | — | | | — | | | 12,953,389 | |
| Municipal Strategic | | 3,747,643 | | | — | | | — | | | 3,747,643 | |
| California Insured 2008 | | 4,475,202 | | | — | | | — | | | 4,475,202 | |
| California 2018 | | 2,593,948 | | | — | | | — | | | 2,593,948 | |
| Florida Insured 2008 | | 3,647,644 | | | — | | | — | | | 3,647,644 | |
| Florida 2020 | | 2,746,570 | | | — | | | — | | | 2,746,570 | |
| New York Insured 2008 | | 4,697,843 | | | — | | | — | | | 4,697,843 | |
| New York 2018 | | 1,467,912 | | | — | | | — | | | 1,467,912 | |
| Pennsylvania Strategic | | 975,942 | | | — | | | — | | | 975,942 | |
| | | | | | | | | | | | | |
| | Year ended December 31, 2003 | |
| |
| |
| | Tax-exempt | | Ordinary | | Long-term | | | Total | |
| Distributions Paid From: | Income | | Income | | Capital Gains | | Distributions | |
|
| |
| |
| |
| |
| Municipal Insured 2008 | $ | 29,760,739 | | $ | 66,619 | | $ | 3,886,669 | | $ | 33,714,027 | |
| Insured Municipal | | 17,947,109 | | | — | | | 727,198 | | | 18,674,307 | |
| Municipal 2018 | | 13,745,221 | | | — | | | — | | | 13,745,221 | |
| Municipal 2020 | | 3,374,772 | | | — | | | — | | | 3,374,772 | |
| Municipal Target | | 28,819,211 | | | — | | | 1,244,095 | | | 30,063,306 | |
| Municipal Strategic | | 7,322,693 | | | — | | | — | | | 7,322,693 | |
| California Insured 2008 | | 11,089,340 | | | — | | | 1,069,223 | | | 12,158,563 | |
| California 2018 | | 5,197,098 | | | — | | | — | | | 5,197,098 | |
| Florida Insured 2008 | | 7,606,766 | | | 164,752 | | | 874,481 | | | 8,645,999 | |
| Florida 2020 | | 893,572 | | | — | | | — | | | 893,572 | |
| New York Insured 2008 | | 9,757,880 | | | 108,699 | | | 408,189 | | | 10,274,768 | |
| New York 2018 | | 2,957,322 | | | — | | | — | | | 2,957,322 | |
| Pennsylvania Strategic | | 1,893,236 | | | — | | | — | | | 1,893,236 | |
80
As of June 30, 2004, the components of distributable earnings on a tax basis were as follows:
| | Undistributed | | Undistributed | | Undistributed | | | |
| | Tax-exempt | | Ordinary | | Long-term | | Unrealized Net | |
| | Income | | Income | | Gains | | Appreciation | |
| |
| |
| |
| |
| |
| Municipal Insured 2008 | $ | 31,729,795 | | $ | — | | $ | 774,885 | | $ | 31,552,033 | |
| Insured Municipal | | 20,063,723 | | | — | | | 124,429 | | | 20,709,033 | |
| Municipal 2018 | | 14,283,831 | | | — | | | — | | | 1,386,252 | |
| Municipal 2020 | | 1,805,640 | | | — | | | — | | | — | |
| Municipal Target | | 28,826,736 | | | — | | | 479,036 | | | 26,779,243 | |
| Municipal Strategic | | 5,597,286 | | | — | | | — | | | 5,331,930 | |
| California Insured 2008 | | 10,343,316 | | | — | | | 324,226 | | | 11,873,119 | |
| California 2018 | | 3,944,589 | | | — | | | — | | | — | |
| Florida Insured 2008 | | 7,828,341 | | | — | | | 446,371 | | | 6,107,736 | |
| Florida 2020 | | 214,443 | | 183,445 | | | 172,541 | | | — | |
| New York Insured 2008 | | 12,112,825 | | | — | | | 627,251 | | | 14,081,520 | |
| New York 2018 | | 2,249,137 | | | — | | | — | | | 1,787,114 | |
| Pennsylvania Strategic | | 1,129,826 | | | — | | | — | | | 2,700,687 | |
Note 5. Capital
There are 200 million of $0.01 par value common shares authorized for each of the 2008 Trusts, Insured Municipal and Municipal Target. There are an unlimited number of $0.001 par value common shares authorized for each of the 2018 Trusts, 2020 Trusts and Strategic Trusts. Each Trust may classify or reclassify any unissued common shares into one or more series of preferred shares. At June 30, 2004, the common shares outstanding and the shares owned by affiliates of the Advisor of each Trust were as follows:
| | Common | | Common | | | Common | | Common | |
| | Shares | | Shares | | | Shares | | Shares | |
Trust | Outstanding | | Owned | | Trust | Outstanding | | Owned | |
|
| |
| |
|
| |
| |
| Municipal Insured 2008 | 27,207,093 | | — | | California 2018 | 6,433,028 | | — | |
| Insured Municipal | 25,885,639 | | — | | Florida Insured 2008 | 8,707,093 | | — | |
| Municipal 2018 | 15,908,028 | | — | | Florida 2020 | 5,562,128 | | 8,028 | |
| Municipal 2020 | 20,236,628 | | 8,028 | | New York Insured 2008 | 11,257,093 | | — | |
| Municipal Target | 45,410,639 | | — | | New York 2018 | 3,633,028 | | — | |
| Municipal Strategic | 7,242,261 | | — | | Pennsylvania Strategic | 2,015,492 | | — | |
| California Insured 2008 | 10,407,093 | | — | | | | | | |
There were no transactions in common shares of beneficial interest for the six months ended June 30, 2004. Transactions in common shares of beneficial interest for the period ended December 31, 2003 were as follows:
| | Shares from | | | |
| |
| | | |
| | | | Underwriters’ | | | | | |
| | | | Exercising the | | | | Net Increase | |
| | Initial Public | | Over-allotment | | Reinvestment | | in Shares | |
Trust | Offering | | Option | | of Dividends | | Outstanding | |
|
| |
| |
| |
| |
| Municipal 2020 | 18,508,028 | | 1,728,600 | | — | | 20,236,628 | |
| Florida 2020 | 5,008,028 | | 554,100 | | — | | 5,562,128 | |
Offering costs incurred in connection with the offering of common shares for the Municipal 2020 Term Turst and Florida Municipal 2020 Term Trust have been charged against the proceeds from the initial common share offering of the common shares in the amounts of $540,000 and $135,000, respectively.
As of June 30, 2004, each Trust had the following series of preferred shares outstanding as listed in the table below. The preferred shares have a liquidation value of $25,000 per share plus any accumulated unpaid dividends.
Underwriting discounts and offering costs incurred in connection with the 2020 Trust’s preferred share offering have been charged to paid-in capital in excess of par of the common shares.
81
Trust | | Series | | Shares | | Trust | | Series | | Shares | |
| |
| |
| |
| |
| |
| |
| Municipal Insured 2008 | | T7 | | 4,660 | | Municipal Strategic | | W7 | | 2,480 | |
| | | R7 | | 2,060 | | California Insured 2008 | | W7 | | 2,622 | |
| | | T28 | | 2,060 | | | | W28 | | 1,560 | |
| | | R28 | | 2,060 | | California 2018 | | M7 | | 2,221 | |
| Insured Municipal | | M7 | | 4,216 | | Florida Insured 2008 | | R7 | | 3,366 | |
| | | M28 | | 2,600 | | | | | | | |
| | | | | | | Florida 2020 | | F7 | | 1,956 | |
| Municipal 2018 | | W7 | | 2,752 | | New York Insured 2008 | | F7 | | 2,672 | |
| | | R7 | | 2,752 | | | | F28 | | 1,710 | |
| Municipal 2020 | | M7 | | 2,368 | | New York 2018 | | T7 | | 1,256 | |
| | | W7 | | 2,368 | | Pennsylvania Strategic | | W7 | | 700 | |
| | | F7 | | 2,368 | | | | | | | |
| Municipal Target | | W7 | | 5,964 | | | | | | | |
| | | F7 | | 3,000 | | | | | | | |
| | | W28 | | 3,000 | | | | | | | |
| Underwriting | | Offering | | | | Underwriting | | Offering | | | |
| Trust | | Discount | | Cost | | Trust | | Discount | | Cost | |
| |
| |
| |
| |
| |
| |
| Municipal 2020 | | $1,776,000 | | $320,320 | | Florida 2020 | | $489,000 | | $130,560 | |
Dividends on 7-day preferred shares are cumulative at a rate which is reset every seven days based on the results of an auction. Dividends on 28-day preferred shares are cumulative at a rate which is reset every 28 days based on the results of an auction. The dividend ranges on the preferred shares for each of the Trusts for the period ended June 30, 2004, were as follows:
Trust | Low | | High | | Trust | Low | | High | |
|
| |
| |
|
| |
| |
| Municipal Insured 2008 | 0.49 | % | 1.48 | % | California 2018 | 0.45 | % | 1.05 | % |
| Insured Municipal | 0.68 | | 1.25 | | Florida Insured 2008 | 0.59 | | 1.15 | |
| Municipal 2018 | 0.75 | | 1.28 | | Florida 2020 | 0.85 | | 1.25 | |
| Municipal 2020 | 0.73 | | 1.30 | | New York Insured 2008 | 0.60 | | 1.15 | |
| Municipal Target | 0.60 | | 1.22 | | New York 2018 | 0.45 | | 1.03 | |
| Municipal Strategic | 0.69 | | 1.15 | | Pennsylvania Strategic | 0.60 | | 1.18 | |
| California Insured 2008 | 0.45 | | 1.40 | | | | | | |
A Trust may not declare dividends or make other distributions on common shares or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding preferred shares would be less than 200%.
The preferred shares are redeemable at the option of each Trust, in whole or in part, on any dividend payment date at $25,000 per share plus any accumulated or unpaid dividends whether or not declared. The preferred shares are also subject to mandatory redemption at $25,000 per share plus any accumulated or unpaid dividends, whether or not declared, if certain requirements relating to the composition of the assets and liabilities of a Trust, as set forth in each Trust’s Declaration of Trust/Articles Supplementary are not satisfied.
The holders of preferred shares have voting rights equal to the holders of common shares (one vote per share) and will vote together with holders of common shares as a single class. However, holders of preferred shares, voting as a separate class, are also entitled to elect two Directors/Trustees for each Trust. In addition, the Investment Company Act of 1940, as amended, requires that along with approval by shareholders that might otherwise be required, the approval of the holders of a majority of any outstanding preferred shares, voting separately as a class, would be required to (a) adopt any plan of reorganization that would adversely affect the preferred shares, (b) change a Trust’s sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.
Note 6. Dividends
Subsequent to June 30, 2004, the Board of each Trust declared dividends from undistributed earnings per common share payable August 2, 2004, to shareholders of record on July 15, 2004. The per share common dividends declared were:
| | Common Dividend | | | Common Dividend | |
Trust | Per Share | | Trust | Per Share | |
|
| |
|
| |
| Municipal Insured 2008 | $ | 0.066250 | | California 2018 | $ | 0.061250 | |
| Insured Municipal | | 0.047917 | | Florida Insured 2008 | | 0.062500 | |
| Municipal 2018 | | 0.065000 | | Florida 2020 | | 0.075000 | |
| Municipal 2020 | | 0.078125 | | New York Insured 2008 | | 0.062500 | |
| Municipal Target | | 0.040000 | | New York 2018 | | 0.061250 | |
| Municipal Strategic | | 0.079585 | | Pennsylvania Strategic | | 0.073965 | |
| California Insured 2008 | | 0.064375 | | | | | |
82
The dividends declared on preferred shares for the period July 1, 2004 to July 31, 2004, for each of the Trusts were as follows:
| | | | Dividends | | | | | Dividends | |
Trust | Series | | Declared | | Trust | Series | | Declared | |
|
| |
| |
|
| |
| |
| Municipal Insured 2008 | T7 | | $ | 75,073 | | California Insured 2008 | W7 | | $ | 30,494 | |
| | R7 | | | 42,766 | | | W28 | | | 35,334 | |
| | T28 | | | 47,401 | | California 2018 | M7 | | | 34,403 | |
| | R28 | | | 46,618 | | Florida Insured 2008 | R7 | | | 80,818 | |
| Insured Municipal | M7 | | | 83,645 | | Florida 2020 | F7 | | | 51,756 | |
| | M28 | | | 62,530 | | New York Insured 2008 | F7 | | | 46,707 | |
| Municipal 2018 | W7 | | | 54,985 | | | F28 | | | 37,706 | |
| | R7 | | | 69,460 | | New York 2018 | T7 | | | 21,729 | |
| Municipal 2020 | M7 | | | 51,504 | | Pennsylvania Strategic | W7 | | | 11,606 | |
| | W7 | | | 48,899 | | | | | | | |
| | F7 | | | 59,697 | | | | | | | |
| Municipal Target | W7 | | | 94,410 | | | | | | | |
| | F7 | | | 66,360 | | | | | | | |
| | W28 | | | 62,700 | | | | | | | |
| Municipal Strategic | W7 | | | 50,493 | | | | | | | |
83
DIVIDEND REINVESTMENT PLANS
Pursuant to each Trust’s Dividend Reinvestment Plan (the “Plan”), common shareholders of the 2008 Trusts, Insured Municipal and Municipal Target may elect, while the common shareholders of the 2018 Trusts, 2020 Trusts and Strategic Trusts are automatically enrolled, to have all distributions of dividends and capital gains reinvested by EquiServe Trust Company, N.A. (the “Plan Agent”) in the respective Trust’s shares pursuant to the Plan. Shareholders who do not participate in the Plan will receive all distributions in cash paid by check and mailed directly to the shareholders of record (or if the shares are held in street or other nominee name, then to the nominee) by the Plan Agent, which serves as agent for the shareholders in administering the Plan.
After a 2008 Trust, Insured Municipal, 2018 Trust, 2020 Trust and/or Municipal Target declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ account, by the purchase of outstanding shares on the open market, on the Trust’s primary exchange or elsewhere (“open market purchases”). These Trusts will not issue any new shares under the Plan.
After a Strategic Trust declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ account, depending upon the circumstances described below, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares”) or (ii) by open market purchases. If, on the dividend payment date, the NAV is equal to or less than the market price per share plus estimated brokerage commissions (such condition being referred to herein as “market premium”), the Plan Agent will invest the dividend amount in newly issued shares on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the payment date, the dollar amount of the dividend will be divided by 95% of the market price on the payment date. If, on the dividend payment date, the NAV is greater than the market value per share plus estimated brokerage commissions (such condition being referred to herein as “market discount”), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open market purchases.
Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Administrator prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.
The Plan Agent’s fees for the handling of the reinvestment of dividends and distributions will be paid by each Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open market purchases in connection with the reinvestment of dividends and distributions. The automatic reinvestment of dividends and distributions will not relieve participants of any Federal income tax that may be payable on such dividends or distributions.
Each Trust reserves the right to amend or terminate the Plan. There is no direct service charge to participants in the Plan; however, each Trust reserves the right to amend the Plan to include a service charge payable by the participants. Participants that request a sale of shares through the Plan Agent are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission. All correspondence concerning the Plan should be directed to the Plan Agent at 250 Royall Street, Canton, MA 02021, or by calling (800) 699-1BFM.
84
ADDITIONAL INFORMATION (Unaudited)
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 June 30, 2003, all dividends paid by the Strategic Trusts (the only Trusts with June 30th tax year-ends) were federally tax-exempt interest dividends.
The Joint Annual Meeting of Shareholders was held on May 26, 2004, to elect a certain number of Directors/Trustees for each of the following Trusts to three-year terms, unless otherwise indicated, expiring in 2007:
| Municipal Insured 2008 | | | | | |
| | | | | |
| Elected the Class II Directors as follows: | | | | |
| Director | | Votes for | | Votes Withheld | |
| |
| |
| |
| Frank J. Fabozzi1 | | 10,236 | | 44 | |
| Walter F. Mondale | | 20,265,760 | | 556,078 | |
| Ralph L. Schlosstein | | 20,374,819 | | 447,019 | |
| Insured Municipal | | | | | |
| | | | | |
| Elected the Class III Directors as follows: | | | | |
| Director | | Votes for | | Votes Withheld | |
| |
| |
| |
| Andrew F. Brimmer | | 22,008,977 | | 244,156 | |
| Kent Dixon | | 22,031,965 | | 221,168 | |
| Robert S. Kapito | | 22,044,458 | | 208,675 | |
| Municipal 2018 | | | | | |
| | | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | | Votes for | | Votes Withheld | |
| |
| |
| |
| Andrew F. Brimmer | | 11,975,601 | | 166,303 | |
| Kent Dixon | | 11,983,296 | | 158,608 | |
| Robert S. Kapito | | 11,986,708 | | 155,196 | |
| Municipal 2020 | | | | | |
| | | | | |
| Elected the Class I Trustees as follows: | | | | |
| Trustee | | Votes for | | Votes Withheld | |
| |
| |
| |
| Richard E. Cavanagh1 | | 7,074 | | 8 | |
| James Clayburn La Force, Jr. | | 15,778,107 | | 141,744 | |
| Municipal Target | | | | | |
| | | | | |
| Elected the Class III Directors as follows: | | | | |
| Director | | Votes for | | Votes Withheld | |
| |
| |
| |
| Andrew F. Brimmer | | 37,055,882 | | 534,704 | |
| Kent Dixon | | 37,160,178 | | 430,408 | |
| Robert S. Kapito | | 37,159,221 | | 431,365 | |
| Municipal Strategic | | | | | |
| | | | | |
| Elected the Class I Trustees as follows: | | | | |
| Trustee | | Votes for | | Votes Withheld | |
| |
| |
| |
| Richard E. Cavanagh1 | | 2,435 | | 9 | |
| James Clayburn La Force, Jr. | 6,842,251 | | 110,104 | |
| California Insured 2008 | | | | | |
| | | | | |
| Elected the Class II Directors as follows: | | | | |
| Director | | Votes for | | Votes Withheld | |
| |
| |
| |
| Frank J. Fabozzi1 | | 4,036 | | 19 | |
| Walter F. Mondale | | 8,383,927 | | 272,836 | |
| Ralph L. Schlosstein | | 8,454,951 | | 201,812 | |
1 Voted on by holders of preferred shares only.85
ADDITIONAL INFORMATION (Unaudited)
| California 2018 | | | | |
| | | | |
| Elected Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld | |
|
| |
| |
| Andrew F. Brimmer | 5,324,139 | | 48,150 | |
| Kent Dixon | 5,325,114 | | 47,175 | |
| Robert S. Kapito | 5,326,639 | | 45,650 | |
| Florida Insured 2008 | | | | |
| | | | |
| Elected the Class II Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld | |
|
| |
| |
| Frank J. Fabozzi1 | 3,187 | | 5 | |
| Walter F. Mondale | 6,764,734 | | 178,550 | |
| Ralph L. Schlosstein | 6,814,631 | | 128,653 | |
| Florida 2020 | | | | |
| | | | |
| Elected the Class I Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld | |
|
| |
| |
| Richard E. Cavanagh1 | 1,912 | | 4 | |
| James Clayburn La Force, Jr. | 4,481,053 | | 49,961 | |
| New York Insured 2008 | | | | |
| | | | |
| Elected the Class II Directors as follows: | | | | |
| Director | Votes for | | Votes Withheld | |
|
| |
| |
| Frank J. Fabozzi1 | 4,247 | | 41 | |
| Walter F. Mondale | 9,140,992 | | 96,419 | |
| Ralph L. Schlosstein | 9,161,660 | | 75,751 | |
| New York 2018 | | | | |
| | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld | |
|
| |
| |
| Andrew F. Brimmer | 2,861,507 | | 52,186 | |
| Kent Dixon | 2,861,507 | | 52,186 | |
| Robert S. Kapito | 2,854,953 | | 58,740 | |
| Pennsylvania Strategic | | | | |
| | | | |
| Elected the Class I Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld | |
|
| |
| |
| Richard E. Cavanagh1 | 546 | | 19 | |
| James Clayburn La Force, Jr. | 1,887,455 | | 11,483 | |
In addition to the election of Directors/Trustees, the following Trusts had an additional proposal (Proposal #2) to amend their respective Articles Supplementary in order to require an annual, instead of a quarterly, valuation date in connection with certain asset coverage tests:
| | Votes for | | Votes Against | | Votes Withheld | |
| |
| |
| |
| |
| Municipal Insured 2008 | 17,784,763 | | 2,717,300 | | 319,775 | |
| Insured Municipal | 21,473,606 | | 429,206 | | 350,321 | |
| Municipal Target | 34,854,629 | | 2,214,474 | | 521,483 | |
| California Insured 2008 | 8,260,565 | | 307,540 | | 88,658 | |
| New York Insured 2008 | 7,493,081 | | 1,646,368 | | 97,962 | |
Quarterly performance and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com/funds/cefunds/index.html. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended, to incorporate BlackRock’s website into this report.
Certain of the officers of the Trusts listed on the inside back cover of this Report to Shareholders are also officers of the Advisor or Sub-Advisor. They serve in the following capacities for the Advisor or Sub-Advisor: Robert S. Kapito—Director and Vice Chairman of the Advisor and the Sub-Advisor, Kevin M. Klingert, Henry Gabbay and Anne Ackerley—Managing Directors of the Advisor and the Sub-Advisor, Richard M. Shea and James Kong—Managing Directors of the Sub-Advisor, Vincent B. Tritto—Director of the Sub-Advisor, and Brian P. Kindelan—Director of the Advisor.
1 Voted on by holders of preferred shares only.86
BlackRock Closed-End Funds
| Director/Trustees | Transfer Agent |
| | Ralph L. Schlosstein, Chairman | | EquiServe Trust Company, N.A. |
| | Andrew F. Brimmer | | 250 Royall Street |
| | Richard E. Cavanagh | | Canton, MA 02021 |
| | Kent Dixon | | (800) 699-1BFM |
| | Frank J. Fabozzi | |
| | Robert S. Kapito | Auction Agent1 |
| | James Clayburn La Force, Jr. | | Bank of New York |
| | Walter F. Mondale | | 100 Church Street, 8th Floor |
| | | New York, NY 10286 |
| Officers | | |
| | Robert S. Kapito, President | Auction Agent2 |
| | Henry Gabbay, Treasurer | | Deutsche Bank Trust Company Americas |
| | Anne Ackerley, Vice President | | 60 Wall Street, 27th Floor |
| | Kevin M. Klingert, Vice President | | New York, NY 10005 |
| | Richard M. Shea, Vice President/Tax | | |
| | James Kong, Assistant Treasurer | Independent Accountants |
| | Vincent B. Tritto, Secretary | | Deloitte & Touche LLP |
| | Brian P. Kindelan, Assistant Secretary | | 200 Berkeley Street |
| | | Boston, MA 02116 |
| Investment Advisor | | |
| | BlackRock Advisors, Inc. | Legal Counsel |
| | 100 Bellevue Parkway | | Skadden, Arps, Slate, Meagher & Flom LLP |
| | Wilmington, DE 19809 | | Four Times Square |
| | (800) 227-7BFM | | New York, NY 10036 |
| | | |
| Sub-Advisor1 | Legal Counsel – Independent Trustees |
| | BlackRock Financial Management, Inc. | | Debevoise & Plimpton LLP |
| | 40 East 52nd Street | | 919 Third Avenue |
| | New York, NY 10022 | | New York, NY 10022 |
| | | |
| Custodian | This report is for shareholder information. This is not a prospectus |
| | State Street Bank and Trust Company | intended for use in the purchase or sale of Trust shares. |
| | 225 Franklin Street | Statements and other information contained in this report are as |
| | Boston, MA 02110 | dated and are subject to change. |
| | | | |
|
| BlackRock Closed-End Funds |
| 1 | For the 2018 Trusts and 2020 Trusts. | c/o BlackRock Advisors, Inc. |
| 2 | For the Trusts except the 2018 Trusts and 2020 Trusts. | 100 Bellevue Parkway |
| | | Wilmington, DE 19809 |
| | | (800) 227-7BFM |
The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Trusts at (800)227-7BFM.
The Trusts have delegated to the Advisor the voting of proxies relating to their voting securities pursuant to the Advisor’s proxy voting policies and procedures. You may obtain a copy of these proxy voting policies and procedures, without charge, by calling (800) 699-1236. These policies and procedures are also available on the website of the Securities and Exchange Commission at http://www.sec.gov.
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. CLF-SEMI-4 | | |
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
Not applicable for reports for periods ending on or before July 9, 2004.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable for semi-annual reports.
Item 8. Purchases of Equity Securities by Closed-End Management Company and
Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures.
(a) The Registrant's principal executive officer and principal financial officer have evaluated the Registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the Registrant's disclosure controls and procedures are effective, as of a date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The Registrant's principal executive officer and principal financial officer are aware of no changes in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 11. Exhibits.
(a)(1) Not applicable.
(a)(2) Separate certifications of Principal Executive and Financial Officers pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(a)(3) Not applicable.
(b) Certification of Principal Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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 2020 Term Trust |
| |
|
| By: | /s/ Henry Gabbay | |
| |
| |
| Name: | Henry Gabbay | |
| Title: | Treasurer | |
| Date: | September 8, 2004 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Robert S. Kapito | |
| |
| |
| Name: | Robert S. Kapito | |
| Title: | Principal Executive Officer | |
| Date: | September 8, 2004 | |
| By: | /s/ Henry Gabbay | |
| |
| |
| Name: | Henry Gabbay | |
| Title: | Principal Financial Officer | |
| Date: | September 8, 2004 | |
