--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
--------------------------------------------------------------------------------
May 31, 2000
Dear Shareholder:
The Federal Reserve continued to aggressively tighten in an attempt to
achieve its objective of a soft-landing for the explosive U.S. economy. As a
result, the Federal Reserve tightened short-term rates by 0.75% during the
period and raised rates by another 0.50% at the May FOMC meeting to 6.50%. In
the first four months of the new millennium we have been witness to
unprecedented volatility in both the Treasury yield curve and the spread
sectors. The Treasury curve inverted sharply as expectations of continued Fed
tightening in the wake of an insatiable U.S. economy, while anticipation of a
significant buyback at the long end of the maturity spectrum led to lower
yields on long Treasuries. The yield curve inversion along with the premium
placed on the dwindling outstanding Treasuries caused a dramatic
underperformance of spread sectors relative to the performance of the Treasury
sectors, especially in the 10- to 30-year part of the curve.
At this juncture, the general implication for spread product is negative,
but the potential for spread widening is more limited. Most of the negatives
for high quality spread product in terms of relative supply differentials
between Treasuries and non-Treasuries as well as equity market volatility have
been priced into the market. Given current market conditions, we maintain a
significant overweight in high quality spread product. Treasuries are fully
valued even considering the strong technicals in the market. While near-term
volatility is virtually guaranteed by an active Federal Reserve, a successful
soft landing of the economy would ultimately result in a healthier U.S.
economy.
This report contains a summary of market conditions during the semi-annual
period and a review of portfolio strategy by your Trust's managers in addition
to the Trust's unaudited financial statements and a detailed list of the
portfolio's holdings. Continued thanks for your confidence in BlackRock. We
appreciate the opportunity to help you achieve your long-term investment goals.
Sincerely,
/s/ LAURENCE D. FINK /s/ RALPH L. SCHLOSSTEIN
-------------------- ------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
May 31, 2000
Dear Shareholder:
We are pleased to present the unaudited semi-annual report for The
BlackRock High Yield Trust ("the Trust") for the period ending April 30, 2000.
We would like to take this opportunity to review the Trust's stock price and
net asset value (NAV) performance, summarize market developments and discuss
recent portfolio management activity.
The Trust is a non-diversified, actively managed closed-end bond fund
whose shares are traded on the New York Stock Exchange under the symbol "BHY".
The Trust's primary investment objective is to provide high current income, and
its secondary objective is capital appreciation. The Trust seeks to achieve
this objective by investing at least 80% of the portfolio in high yield or
"junk bonds" (rated "BB" or below by a major rating agency or of equivalent
quality).
The table below summarizes the changes in the Trust's stock price and NAV
over the period.
----------------------------------------------------
4/30/00 10/31/99 CHANGE HIGH LOW
--------------------------------------------------------------------------------
STOCK PRICE $12.25 $12.50 (2.00%) $13.50 $11.25
--------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $12.47 $13.58 (8.17%) $13.81 $12.45
--------------------------------------------------------------------------------
10-YEAR U.S. TREASURY NOTE 6.22% 6.02% 3.32% 6.79% 5.77%
--------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
The dynamic expansion of the U.S. economy continues undaunted by Federal
Reserve Chairman Greenspan's attempt to brake the economy, short of stalling it
into a recession. The labor markets remain tight, growth remains strong with
5%+ annualized growth rates and inflation pressures continue to be offset by
increased productivity. However, the Fed remains cautious, in their February
minutes it was noted that: "Other members acknowledged that the Committee might
need to move more aggressively at a later meeting should imbalances continue to
build and inflation expectations clearly begin to pick up." At the Federal
Reserve meeting in November, February and March the Fed raised the discount
rate by 0.25% at each meeting and a 0.50% increase was made in May to bring the
current discount rate to 6.50%.
The Treasury Yield curve experienced a complex set of dynamics, which has
inverted the curve and may continue to invert the curve for the foreseeable
future. The yields on the short-end of the curve increased sharply during the
period in response to three Federal Reserves increases to the discount rate and
perceived future Fed actions in the coming months. The long-end of the curve is
reacting to the "official" announcement that the Treasury will buy back $30
billion of Treasuries with maturities ranging 10 to 30 years. With a decreasing
supply of available Treasuries, a balanced budget, and an unchanged demand for
longer maturity Treasuries, we would anticipate this condition to continue.
This condition is further augmented by Treasury auction activity, as they
reduce the available bonds on the long end of the curve they continue to add
supply in the 1-10 year range through periodic auctions. For the semi-annual
period, the yield of the 10-year Treasury security rose from 6.02% on October
31, 1999 to 6.22% on April 30, 2000.
During the period high yield spreads widened as compared to Treasuries and
the broader market. The combination of cash exiting high yield open-end mutual
funds ($-3.1 billion versus $+3.0 billion a year ago), interest rate concerns
and rising volatility in the U.S. equity markets, caused high yield performance
to suffer. Investors, in response to the less than ideal environment, continued
their aversion to risk, and favored higher quality issues. The BB segment
outperformed B and CCC tiers. In addition, in the first quarter of 2000 Moody's
default rate was 5.64% versus 3.97% for the same period in 1999. Investors
narrowed their focus and favored very few high yield industries. Energy,
information technology and the utility sector outperformed, while service,
healthcare and food/tobacco under performed. New issue volume fell to $16.8
billion in the first quarter versus $28.3 billion in the first quarter of 1999.
At this pace the high yield market would have its lowest level of new issuance
since 1996. For the first quarter of the year, high yield bonds as measured by
the LEHMAN BROTHERS HIGH YIELD INDEX returned 0.08%, versus a return of 1.42%
for the LEHMAN BROTHERS AGGREGATE INDEX.
2
<PAGE>
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust has focused on non-cyclical companies that offer stable cash
flow. In particular, the Trust has focused on telecom, and cable issues that
have benefited from strong investor demand. Particular emphasis has been placed
on these sectors as improving fundamentals and the potential for consolidation
continues to be a major contributor to their performance. The Trust increased
positions in the Oil & Gas and Non-ferrous Metals and Minerals industries. The
Trust reduced positions in the Clothing and Textiles, Steel, Electronics, and
Utilities industries. The Trust continued to focus on strong credits, as CCC
rated securities have under performed with the markets lack of appetite for
additional credit risk. The following charts show the Trust's current asset
composition and credit quality allocations:
The following charts show the Trust's current and October 31, 1999 credit
quality allocation:
-----------------------------------------------------------------
STANDARD & POOR'S/MOODY'S
CREDIT RATING APRIL 30, 2000 OCTOBER 31, 1999
-----------------------------------------------------------------
BB/Ba 25% 11%
-----------------------------------------------------------------
B/B 60% 64%
-----------------------------------------------------------------
CCC/Caa 9% 7%
-----------------------------------------------------------------
Not Rated 6% 18%
-----------------------------------------------------------------
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock High
Yield Trust. Please feel free to call our marketing center at (800) 227-7BFM
(7236) if you have any specific questions which were not addressed in this
report.
Sincerely,
/s/ Robert S. Kapito /s/ Dennis Schaney
-------------------- ------------------
Robert S. Kapito Dennis Schaney
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Advisors, Inc. BlackRock Advisors, Inc.
-------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
-------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BHY
-------------------------------------------------------------------------------
Initial Offering Date: December 12, 1998
-------------------------------------------------------------------------------
Closing Stock Price as of 4/30/00: $ 12.25
-------------------------------------------------------------------------------
Net Asset Value as of 4/30/00: $ 12.47
-------------------------------------------------------------------------------
Yield on Closing Stock Price as of 4/30/00 ($12.25)1: 13.16%
-------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $ 0.134375
-------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $ 1.612500
-------------------------------------------------------------------------------
1 Yield on closing stock price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 Distribution is not constant and is subject to change.
3
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
PORTFOLIO OF INVESTMENTS
APRIL 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
--------------------------------------------------------------------------------
LONG-TERM INVESTMENTS-143.5%
CORPORATE BONDS-138.0%
AERO & DEFENSE-1.6%
B- $1,000 Condor Systems, Inc.**,
Sr. Sub. Note,
11.88%, 5/1/09 ....................... $ 485,000
B 1,000 Worldwide Flight Services Inc.**,
Sr. Note,
12.25%, 8/15/07 ...................... 800,000
----------
1,285,000
----------
AIR TRANSPORT-3.4%
Amtran, Inc., Sr. Notes,
B+ 2,000 9.63%, 12/15/05 ...................... 1,780,000
B+ 1,000 10.50%, 8/1/04 ....................... 890,000
----------
2,670,000
----------
AUTOMOTIVE-6.9%
B 2,000 Group 1 Automotive, Inc.,
Sr. Sub. Note,
10.88%, 3/1/09 ....................... 1,760,000
B 4,000 Sonic Automotive, Inc.,
Sr. Sub. Note,
11.00%, 8/1/08 ....................... 3,640,000
----------
5,400,000
----------
BEVERAGE & TOBACCO-2.4%
B- 2,000 Triarc Consumer Products Group LLC,
Sr. Sub. Note,
10.25%, 2/15/09 ...................... 1,880,000
----------
BUILDING & DEVELOPMENT-9.3%
Ba1 3,000 D.R. Horton, Inc., Sr. Note,
8.38%, 6/15/04 ....................... 2,767,500
BB+ 1,800 Toll Corp., Sr. Sub. Note,
8.00%, 5/1/09 ........................ 1,548,000
BB- 3,000 United States Home Corp., Sr. Sub.
Note, 8.88%, 2/15/09 ................. 3,030,000
----------
7,345,500
----------
CABLE TV-12.7%
B+ 1,500 Adelphia Communications Corp.,
Sr. Note, 9.25%, 10/1/02 ............. 1,485,000
Echostar DBS Corp., Sr. Note,
B 400 9.25%, 2/1/06 ........................ 386,000
B 1,000 9.38%, 2/1/09 ........................ 967,500
B+ 2,000 James Cable Partners LP,
Sr. Note, Ser. B,
10.75%, 8/15/04 ...................... 1,970,000
NR 3,000 Knology Holdings, Inc., Sr. Note,
(11.875% commencing 10/15/02),
Zero Coupon, 10/15/07 ................ 1,860,000
B 3,000 United Pan-Europe **, Sr. Notes,
11.25%, 2/1/10 ....................... 2,790,000
B+ 500 Worldwide Fiber Inc., Sr. Note,
12.50%, 12/15/05 ..................... 500,000
----------
9,958,500
----------
CHEMICAL-1.3%
B+ $1,000 Lyondell Chemical Co., Sr. Sec. Note,
10.88%, 5/1/09 ....................... $ 982,500
----------
CLOTHING & TEXTILES-4.1%
NR 3,500 Kasper ASL Ltd., Sr. Note,
12.75%, 3/31/04 ...................... 2,275,000
B- 1,000 St. John Knits International Inc.**,
Sr. Sub. Note,
12.50%, 7/1/09 ....................... 935,000
----------
3,210,000
----------
CONGLOMERATES-0.6%
B- 1,000 Px Escrow Corp.,
Sr. Sub. Note,
(9.625% commencing 2/1/02)
Zero Coupon, 2/1/06 .................. 510,000
----------
COSMETICS & TOILETRIES-2.0%
CCC 3,250 Revlon Consumer Products Corp.,
Sr. Sub Note,
8.63%, 2/1/08 ........................ 1,608,750
----------
ELECTRONICS-2.8%
B- 2,000 Knowles Electronics Inc.**,
Sr. Sub Note,
13.13%, 10/15/09 ..................... 1,780,000
B- 500 PSINet Inc., Sr. Note,
10.50%, 12/1/06 ...................... 445,000
----------
2,225,000
----------
FARMING & AGRICULTURE-2.0%
B 1,500 Ainsworth Lumber Co. Ltd.,
Sr. Sec. Note,
12.50%, 7/15/07 ...................... 1,567,500
----------
FINANCIAL INTERMEDIARIES-14.4%
Ba3 2,500 First Dominion Funding II**,
Series 1-A, Class D-1,
11.61%, 4/25/14 ...................... 2,250,000
CCC+ 2,000 Madison River Capital Corp.**,
13.25%, 3/1/10 ....................... 1,860,000
Ba3 1,500 Orion Power Holdings, Inc.**, Sr.
Note, 12.00%, 5/1/10 ................. 1,503,750
B- 1,500 Penhall International Corp., Sr. Note,
12.00%, 8/1/06 ....................... 1,485,000
Ba3 3,000 Willis Corroon Group, Sr. Note,
9.00%, 2/1/09 ........................ 2,265,000
Baa3 2,000 Zais Investment Grade Ltd.**,
Note, Class C, 9.95%, 9/23/14 ........ 1,966,400
----------
11,330,150
----------
FOOD PRODUCTS-0.0%
C 1,200++ Nebco Evans Holding Co.,
Sr. Sub. Note,
(12.375% commencing 7/15/02),
Zero Coupon, 7/15/07 ................. 1
----------
See Notes to Financial Statements.
4
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
--------------------------------------------------------------------------------
FOOD SERVICE-1.4%
Caa1 $ 500++ Ameriserve Food Distribution Inc.**,
Sr. Sub. Note, 12.00%, 9/15/06 ....... $ 90,000
BB- 1,000 Sbarro Inc.**, Sr. Note,
11.00%, 9/15/09 ...................... 1,000,000
-----------
1,090,000
-----------
FOREST PRODUCTS-2.9%
B 1,140 Doman Industries Ltd., Sr. Note,
8.75%, 3/15/04 ....................... 1,003,200
CCC+ 1,360 Repap New Brunswick, Inc., 2nd,
Priority Sr. Sec. Note,
10.63%, 4/15/05 ...................... 1,251,200
-----------
2,254,400
-----------
HEALTH CARE-5.9%
B- 2,000 Concentra Operating Corp.,
Sr. Sub. Note, Ser. A,
13.00%, 8/15/09 ...................... 1,500,000
CCC+ 2,035 Fountain View, Inc., Sr. Sub. Note,
11.25%, 4/15/08 ...................... 1,119,250
BB- 2,000 Polaroid Corp., Note,
11.50%, 2/15/06 ...................... 2,045,000
-----------
4,664,250
-----------
HOME FURNISHING-1.2%
B 1,000 Mattress Discounters Corp.**, Note,
12.63%, 7/15/07 ...................... 910,000
-----------
HOTELS & CASINO-3.5%
B 2,000 Meristar Hospitality Corp.,
Sr. Sub Note,
8.75%, 8/15/07 ....................... 1,750,000
B- 1,000 Venetian Casino Resort LLC,
Mtg. Note,
12.25%, 11/15/04 ..................... 980,000
-----------
2,730,000
-----------
INDUSTRIAL EQUIPMENT-9.1%
B- 1,500 Muzak LP, Sr. Sub. Note,
9.88%, 3/15/09 ....................... 1,410,000
B 3,000 National Equipment Services, Inc.,
Sr. Sub. Note, Ser.
C, 10.00%, 11/30/04 .................. 2,700,000
B- 1,000 Precision Partners, Inc.**,
Sr. Sub. Note,
12.00%, 3/15/09 ...................... 650,000
B- 500 Verio Inc.**, Sr. Note,
10.63%, 11/15/09 ..................... 485,000
BB+ 1,000 Veritas DGC Inc.,
Sr. Note, Ser. C, 9.75%, 10/15/03 .... 1,000,000
B 1,000 WEC Co., Inc., Sr. Note,
12.00%, 7/15/09 ...................... 880,000
-----------
7,125,000
-----------
LEISURE-5.2%
B 3,000 Alliance Atlantis Commerce Inc.,
Sr. Sub. Note,
13.00%, 12/15/09 ..................... 3,000,000
B- 2,000 AMC Entertainment Inc., Sr. Sub. Note,
9.50%, 3/15/09 ....................... 1,100,000
-----------
4,100,000
-----------
NONFERROUS METALS & MINERALS-5.9%
BB- $2,000 Golden Northwest Aluminum Inc.,
1st Mtg. Note, 12.00%, 12/15/06 ...... $ 2,085,000
B 2,000 Republic Technologies International,
Sr. Sec. Note,
13.75%, 7/15/09 ...................... 500,000
B+ 2,250 Wheeling Pittsburgh Corp., Sr. Note,
9.25%, 11/15/07 ...................... 2,047,500
-----------
4,632,500
-----------
OIL & GAS-8.5%
B 700 Chesapeake Energy Corp., Sr. Note,
9.13%, 4/15/06 ....................... 637,000
BB- 2,000 Pogo Producing Co., Sr. Sub. Note,
10.38%, 2/15/09 ...................... 2,040,000
Ba3 3,000 R&B Falcon Corp., Sr. Note,
12.25%, 3/15/06 ...................... 3,270,000
B2 775 Swift Energy Co., Sr. Sub. Note,
10.25%, 8/1/09 ....................... 755,625
-----------
6,702,625
-----------
RETAILERS-4.4%
B- 4,000 Hollywood Entertainment Corp.,
Sr. Sub. Note, Ser. B,
10.63%, 8/15/04 ...................... 3,500,000
-----------
TELECOMMUNICATION-24.1%
B 1,000 Flag Telecom Holdings Ltd.**,
Sr. Note, 11.63%, 3/30/10 ............ 930,000
B 3,500 IPC Information Systems Inc., Sr. Note,
(10.875% commencing 11/1/03),
Zero Coupon, 5/1/08 .................. 3,132,500
B- 3,000 MGC Communications Inc.**, Sr.
Note,
13.00%, 4/1/10 ....................... 2,872,500
B 1,500 Nextel Communications, Inc.,
Sr. Note, 9.38%, 11/15/09 ............ 1,428,750
B3 3,250 Nextel Partners Inc.**, Sr. Notes,
(14.80% commencing 2/1/04),
Zero Coupon, 2/1/09 .................. 2,161,250
B3 1,000 11.00%, 3/15/10 ...................... 982,500
B 2,000 Nextlink Communications, Sr. Note,
12.50%, 4/15/06 ...................... 2,080,000
NR 3,000 Northeast Optic, Sr. Note,
12.75%, 8/15/08 ...................... 2,820,000
CCC 3,000 Teligent, Inc., Sr. Note,
11.50%, 12/1/07 ...................... 2,580,000
-----------
18,987,500
-----------
UTILITIES-2.4%
BB- 2,000 Atlantic Methanol Capital Co.**,
Sr. Sec. Note,
10.88%, 12/15/04 ..................... 1,920,000
-----------
Total Corporate Bonds-138.0%
(cost $120,486,056)................... 108,589,176
-----------
SENIOR BANK LOANS-2.6%
HEALTH CARE-2.6%
B3 2,000 Oxford Health Plans, Inc.,
9.65%, 5/13/03
(cost $2,007,478) .................... 2,002,500
-----------
See Notes to Financial Statements.
5
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE
RATING* (000) DESCRIPTION (NOTE 1)
--------------------------------------------------------------------------------
PREFERRED STOCK-2.9%
TELECOMMUNICATION-2.9%
B- 1,265 Adelphia Business Solutions**,
Ser. B, 12.88%, 10/15/07, PIK .......... $ 1,072,204
CCC+ 1,267 Nextel Communications, Inc.**,
Ser. E, 11.13%, 2/15/10, PIK ........... 1,217,280
-----------
Total Preferred Stock-2.9%
(cost $2,215,094)....................... 2,289,484
-----------
WARRANTS+
2 Republic Technologies International
Inc.**, Expires 7/15/09 ................ 20
1 Worldwide Flight Services Inc.**,
Expires 8/15/07 ........................ 1,000
-----------
Total Warrants (cost $218,100)............ 1,020
-----------
TOTAL INVESTMENTS-143.5%
(cost $124,926,728)..................... 112,882,180
Liabilities in excess of other
assets-(43.5)% ......................... (34,209,579)
-----------
Net Assets-100% .......................... $78,672,601
===========
---------------------
*Using the higher of Standard & Poor's, Moody's or Fitch's rating.
**Security is exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration to qualified institutional buyers.
+Non-income producing securities
++Issuer is technically in default; non-income producing security
------------------------------------------------------
KEY TO ABBREVIATIONS:
PIK - Payment In Kind
------------------------------------------------------
See Notes to Financial Statements.
6
<PAGE>
----------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (UNAUDITED)
----------------------------------------------------------------
ASSETS
Investments, at value (cost $124,926,728)
(Note 1) ....................................... $112,882,180
Cash ............................................. 58,627
Receivable for investments sold .................. 3,659,299
Interest receivable .............................. 2,926,715
Other assets ..................................... 71,837
------------
119,598,658
------------
LIABILITIES
Loan payable (Note 4) ............................ 39,000,000
Reverse repurchase agreements (Note 4) ........... 990,000
Payable for investments purchased ................ 523,958
Interest payable ................................. 210,275
Investment advisory fee payable (Note 2) ......... 109,537
Administration fee payable (Note 2) .............. 10,432
Other accrued expenses ........................... 81,855
------------
40,926,057
------------
NET ASSETS ....................................... $ 78,672,601
============
Net assets were comprised of:
Common stock, at par (Note 5) .................. $ 6,307
Paid-in capital in excess of par ............... 94,467,560
------------
94,473,867
Undistributed net investment income ............. 871,805
Accumulated net realized loss ................... (4,628,523)
Net unrealized depreciation ..................... (12,044,548)
------------
Net assets, April 30, 2000 ....................... $ 78,672,601
============
NET ASSET VALUE PER SHARE:
($78,672,601 [division sign] 6,306,667 shares of
common stock issued and outstanding) ............ $12.47
======
----------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
----------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest earned (net of premium amortization of
$42,457 and interest expense of $1,300,765) ......... $ 5,886,164
Dividends ........................................... 132,921
-----------
6,019,085
-----------
Expenses
Investment advisory ................................. 658,779
Administration ...................................... 62,741
Reports to shareholders ............................. 25,000
Custodian ........................................... 22,000
Independent accountants ............................. 11,000
Legal ............................................... 10,000
Directors ........................................... 8,000
Transfer agent ...................................... 5,000
Miscellaneous ....................................... 19,713
-----------
Total operating expenses ............................. 822,233
-----------
Net investment income ................................. 5,196,852
-----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Net realized loss on investments ...................... (936,847)
Net change in unrealized depreciation on
investments ......................................... (6,154,820)
-----------
Net loss on investments ............................... (7,091,667)
-----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................. $(1,894,815)
===========
See Notes to Financial Statements.
7
<PAGE>
------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
APRIL 30, 2000 (UNAUDITED)
------------------------------------------------------------------------
RECONCILIATION OF NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET CASH FLOWS
PROVIDED BY OPERATING ACTIVITIES
Net decrease in net assets resulting from operations ..... $(1,894,815)
-----------
Decrease in investments .................................. 4,170,213
Net realized loss ........................................ 936,847
Increase in unrealized depreciation ...................... 6,154,820
Increase in interest receivable .......................... (206,936)
Increase in receivable for investments sold .............. (3,659,299)
Increase in payable for investments purchased ............ 523,958
Decrease in interest payable ............................. (5,671)
Decrease in other assets ................................. 315,353
Decrease in accrued expenses and other liabilities ....... (181,093)
-----------
Total adjustments ...................................... 8,048,192
-----------
Net cash flows provided by operating activities .......... $ 6,153,377
===========
INCREASE (DECREASE) IN CASH
Net cash flows provided by operating activities .......... $ 6,153,377
-----------
Cash flows used for financing activities:
Decrease in loans ...................................... (2,000,000)
Increase in reverse repurchase agreements .............. 990,000
Cash dividends paid .................................... (5,084,750)
-----------
Net cash flows used for financing activities ............. (6,094,750)
-----------
Net increase in cash ................................... 58,627
Cash at beginning of period ............................ -
-----------
Cash at end of period .................................. $ 58,627
===========
------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
STATEMENTS OF CHANGES
IN NET ASSETS
SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
------------------------------------------------------------------------
FOR THE PERIOD
DECEMBER 23,
1998*
SIX MONTHS ENDED THROUGH
APRIL 30, OCTOBER 31,
2000 1999
------------------ ---------------
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income ........... $ 5,196,852 $ 8,140,475
Net realized loss ............... (936,847) (3,691,676)
Net change in unrealized
depreciation ................... (6,154,820) (5,889,728)
------------ ------------
Net decrease in
net assets resulting from
operations ..................... (1,894,815) (1,440,929)
Dividends from
net investment income ........... (5,084,750) (7,380,771)
Net proceeds from public offering
of Trust shares ................. - 94,373,866
------------ ------------
Total increase (decrease) ......... (6,979,565) 85,552,166
------------ ------------
NET ASSETS
Beginning of period ............... 85,652,166 100,000
------------ ------------
End of period (including
undistributed net investment
income of $871,805 and
$759,204, respectively).......... $ 78,672,601 $ 85,652,166
============ ============
--------------------
*Commencement of investment operations (Note 1).
See Notes to Financial Statements.
8
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 23, 1998**
SIX MONTHS ENDED THROUGH
APRIL 30, OCTOBER 31,
2000 1999
---------------------- ----------------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C>
Net asset value, beginning of period ............................................. $ 13.58 $ 15.00
---------- ----------
Net investment income (net of interest expense of $0.21 and $0.26, respectively) .82 1.29
Net realized and unrealized loss on investments ................................. ( 1.12) ( 1.52)
---------- ----------
Net decrease from investment operations .......................................... ( 0.30) ( 0.23)
---------- ----------
Dividends from net investment income ............................................. ( 0.81) ( 1.17)
---------- ----------
Capital charge with respect to issuance of shares ................................ - ( .02)
---------- ----------
Net asset value, end of period* .................................................. $ 12.47 $ 13.58
========== ==========
Per share market value, end of period* ........................................... $ 12.25 $ 12.50
========== ==========
TOTAL INVESTMENT RETURN+ ........................................................ ( 4.59)% ( 9.68)%
========== ==========
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ............................................................... 2.00%+++ 1.98%+++
Operating expenses and interest expense .......................................... 5.17%+++ 4.08%+++
Net investment income ............................................................ 12.64%+++ 10.34%+++
SUPPLEMENTAL DATA:
Average net assets (in thousands) ................................................ $ 82,652 $ 92,116
Portfolio turnover ............................................................... 49% 121%
Net assets, end of period (in thousands) ......................................... $ 78,673 $ 85,652
Borrowings outstanding, end of period (in thousands) ............................. $ 39,990 $ 41,000
Asset coverage++ .... ........................................................... $ 2,973 $ 3,094
</TABLE>
----------
* Net asset value and market value are published in BARRON'S on Saturday and
THE WALL STREET JOURNAL on Monday.
** Commencement of investment operations (Note 1).
+ Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of the period reported. Dividends and distributions,
if any, are assumed for purposes of this calculation to be reinvested at
prices obtained under the Trust's dividend reinvestment plan. Total
investment return does not reflect brokerage commissions. Total investment
return for periods less than one full year is not annualized.
++ Per $1,000 of borrowings outstanding.
+++ Annualized.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the periods indicated. This
information has been determined based upon financial information provided in
the financial statements and market value data for the Trust's shares.
See Notes to Financial Statements.
9
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION & ACCOUNTING POLICIES
The BlackRock High Yield Trust (the "Trust"), was organized on August 10, 1998
as a Delaware business trust, and is registered as a diversified, closed-end
management investment company under the Investment Company Act of 1940. The
Trust had no transactions until December 15, 1998 when it sold 6,667 shares of
common stock for $100,000 to BlackRock Financial Management, Inc. Investment
operations commenced on December 23, 1998. The investment objective of the Trust
is to generate high current income with a secondary objective of capital
appreciation. The ability of issuers of debt securities held by the Trust to
meet their obligations may be affected by economic developments in a specific
industry or region. No assurance can be given that the Trust's investment
objective will be achieved.
The following is a summary of significant accounting policies followed by
the Trust.
SECURITIES VALUATION: The Trust values debt securities and service bank loans
on the basis of current market quotations provided by dealers or pricing
services approved by the Trust's Board of Directors. In determining the value
of a particular security, pricing services may use certain information with
respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities, various relationships observed in the
market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Any securities
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 the
Trust's Board of Directors.
Short-term securities which mature in 60 days or less are valued at
amortized cost, if their term to maturity from date of purchase is 60 days or
less. Short-term securities with a term to maturity greater than 60 days from
the date of purchase are valued at current market quotations until maturity or
disposition.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes discount or amortizes premium on
securities purchased using the interest method. Dividend income is recorded on
the ex-dividend date.
FEDERAL INCOME TAXES: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient amounts of its taxable income to
shareholders. Therefore, no Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions monthly, first from net investment income, then from realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards are distributed at least
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 generally accepted accounting
principles.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles 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 those estimates.
DEFERRED COMPENSATION PLAN: Under a deferred compensation plan approved by the
Board of Directors on February 24, 2000, non-interested Directors may elect to
defer receipt of all or a portion of their annual compensation.
Deferred amounts earn a return as though equivalent dollar amounts had
been invested in common shares of other BlackRock funds selected by the
Directors. This has the same economic effect as if the Directors had invested
the deferred amounts in such other BlackRock funds.
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the Trust. The
Trust may, however, elect to invest in common shares of those funds selected by
the Directors in order to match its deferred compensation obligations.
NOTE 2. AGREEMENTS
The Trust has an Investment Advisory Agreement with BlackRock Advisors, Inc.
(the "Advisor"), which is a wholly-owned subsidiary of BlackRock, Inc., which in
turn is an indirect majority-owned subsidiary of PNC Financial Services Group,
Inc. The Trust has an Administration Agreement with Prudential Investments Fund
Management LLC ("PIFM") (collectively with the Advisor, the "Administrators"), a
wholly-owned subsidiary of The Prudential Insurance Co. of America.
10
<PAGE>
The investment advisory fee paid to the Advisor is computed weekly and
payable monthly at an annual rate of 1.05% of the Trust's managed assets. The
administration fee paid to Administrator is also computed weekly and payable
monthly at an annual rate of 0.05% of the Trust's managed assets, or net assets
plus leverage.
Pursuant to the agreements, the Advisor provides continuous supervision
of the investment portfolio and pays the compensation of officers of the Trust.
The Administrator pay occupancy and certain clerical and accounting costs of
the Trust. The Trust bears all other costs and expenses.
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments
for the six months ended April 30, 2000 aggregated $58,710,663 and $63,384,713,
respectively.
The Trust may invest in securities which are not readily marketable,
including those which are restricted as to disposition under securities law
("restricted securities"). At April 30, 2000, the Trust held 30% of its
portfolio assets in securities restricted as to resale.
The federal income tax basis of the Trust's investments at April 30, 2000
was $124,951,947, and, accordingly, net unrealized depreciation for federal
income tax purposes was $12,069,767 (gross unrealized appreciation--$1,238,808;
gross unrealized depreciation--$13,308,575).
NOTE 4. BORROWINGS
LOAN PAYABLE: The Trust has a $47 million dollar committed credit facility (the
"facility"). Under the terms of the facility, the fund borrows at the London
Interbank Overnight Rate ("LIBOR") plus facility and administrative fees. In
addition, the fund pays a liquidity fee on the unused portion of the facility.
The fund may borrow up to 33 1/3% of its total assets up to the committed
amount. In accordance with the terms of the debt agreement, the fund has pledged
its portfolio assets as collateral for the borrowing.
For the six months ended April 30, 2000, the Fund borrowed a daily
weighted average balance of $40,109,890 at a weighted average interest rate at
6.46%. The maximum amount of borrowing outstanding at any month end during the
period was $41,000,000 as of November 30, 1999 which was 34% of total assets.
REVERSE REPURCHASE AGREEMENTS: The Trust may enter into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and
under the direction of the Trust's Board of Directors. Interest on the value of
reverse repurchase agreements issued and outstanding is based upon competitive
market rates at the time of issuance. At the time the Trust enters into a
reverse repurchase agreement, it establishes and maintains a segregated account
with the lender, containing liquid investment grade securities having a value
not less than the repurchase price, including accrued interest of the reverse
repurchase agreement.
The average daily balance of reverse repurchase agreements outstanding
during the six months ended April 30, 2000 was approximately $132,692 at a
weighted average interest rate of 6.80%. The maximum amount of reverse
repurchase agreements outstanding at any month end during the period was
$990,000 as of April 30, 2000, which was 0.83% of total assets.
NOTE 5. CAPITAL
There are an unlimited amount of $.01 par value common stock authorized. Of the
6,306,667 shares outstanding at April 30, 2000, the Advisor owned 6,952 shares.
During the period ended April 30, 2000 the Trust issued 5,800,000 shares in
connection with it's initial public offering and 500,000 shares in connection
with the exercise of the underwriters over allotment option. Offering costs of
$126,133 incurred in connection with the public offering of common stock have
been charged to paid-in capital in excess of par. Prudential Securities Inc., an
affiliate of PIFM, advised the Trust that it received approximately $621,000 in
underwriting fees.
NOTE 6. DIVIDENDS
Subsequent to April 30, 2000, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.134375 per share payable May 26, 2000
to shareholders of record on May 12, 2000.
11
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders are automatically enrolled to have all distributions of dividends
and capital gains reinvested by State Street Bank and Trust Company (the "Plan
Agent") in Trust shares pursuant to the Plan. Shareholders who elect not to
participate in the Plan will receive all distributions in cash paid by check in
United States dollars 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
transfer agent, as dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the 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
New York Stock Exchange or elsewhere ("open-market purchases"). If, on the
dividend payment date, the net asset value per share 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 transfer 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 net asset
value per share (but in no event less than 95% of the then current market price
per share) on the date the shares are issued. If, on the dividend payment date,
the net asset value per share is greater than the market value per share (such
condition being referred to herein as "market discount"), the transfer agent
will invest the dividend amount in shares acquired on behalf of the
participants in open-market purchases.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends
and distributions will be paid by the 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, state or local income taxes that
may be payable on such dividends or distributions.
The Trust reserves the right to amend or terminate the Plan as applied to
any dividend or distribution paid subsequent to written notice of the change
sent to all shareholders of the Trust at least 90 days before the record date
for the dividend or distribution. The Plan also may be amended or terminated by
the Plan Agent upon at least 90 days' written notice to all shareholders of the
Trust. All correspondence concerning the Plan should be directed to the Plan
Agent at (800) 699-1BFM. The addresses are on the front of this report.
12
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
ANNUAL MEETING OF TRUST SHAREHOLDERS. There have been no material changes
in the Trust's investment objectives or policies that have not been approved by
the shareholders or to its charter or by-laws or in the principal risk factors
associated with investment in the Trust. There have been no changes in the
persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 18, 2000 to vote on
the following matters:
(1) To elect two Directors as follows:
DIRECTOR CLASS TERM EXPIRING
-------- ----- ---- --------
Richard E. Cavanagh ................. I 3 years 2003
James Clayburn La Force, Jr. ........ I 3 years 2003
Directorswhose term of office continues beyond this meeting are Andrew
F. Brimmer, Kent Dixon, Frank J. Fabozzi, Laurence D. Fink, Walter F.
Mondale and Ralph L. Schlosstein.
(2) To ratify the selection of Deloit & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 2000.
Shareholders elected the two Directors and ratified the selection of Deloitte
& Touche LLP. The results of the voting was as follows:
VOTES FOR VOTES AGAINST ABSTENTIONS
--------- ------------- -----------
Richard E. Cavanagh 5,857,559 - 101,280
James Clayburn La Force, Jr. 5,856,436 - 102,403
Ratification of Deloitte & Touche LLP 5,850,654 38,705 69,480
13
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--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
INVESTMENT SUMMARY
--------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock High Yield Trust's primary investment objective is to provide
high current income with a secondary objective of capital appreciation. To this
end, the Trust will be invested primarily in a diversified portfolio of high
yield bonds and other income securities.
WHO MANAGES THE TRUST?
BlackRock Advisors, Inc. ("BlackRock") is an SEC-registered investment advisor.
As of March 31, 2000, the Advisors and its affiliates (together, "BlackRock")
managed $173 billion on behalf of taxable and tax-exempt clients worldwide.
Strategies include fixed income, equity and cash and may incorporate both
domestic and international securities. Domestic fixed income strategies utilize
the government, mortgage, corporate and municipal bond sectors. BlackRock
managed twenty-two closed-end funds that are traded on either the New York or
American stock exchanges, and a $29 billion family of open-end funds. BlackRock
manages over 590 accounts, domiciled in the United States and overseas.
WHAT CAN THE TRUST INVEST IN?
Under normal market conditions, the Trust will invest at least 80% of its
assets in high yield securities. High yield securities are generally income
securities which, if rated, are rated lower than Baa by Moody's Investors
Service (or "Moody's") , lower than BBB by Standard & Poor's Ratings Group (or
"S&P") or similarly rated by other rating agencies. These securities may
include corporate bonds, zero coupon bonds, bank loans, mezzanine investments,
collateralized bond obligations, mortgage-related, asset-backed securities and
foreign securities.
WHAT IS THE ADVISOR'S INVESTMENT STRATEGY?
In pursuing the Trust's investment objective by investing in high yield
securities, the Advisor will seek to identify issuers and industries that it
believes are likely to experience stable or improving financial conditions. The
Advisor will also consider relative value among issuers based on anticipated
cash flow, interest or dividend coverage, asset coverage and earnings
prospects. The Advisor will apply its risk management framework by using
proprietary technology and value-oriented security selection to identify the
securities that are expected to deliver the highest yield for the amount of
risk assumed. The Trust's investment strategy emphasizes risk management
through the following: creating a diversified portfolio of securities within
various sectors of the high yield market; performing individual,
company-by-company credit research to seek the selection of securities which
the Advisor believes will be able to meet its debt obligations; performing
sector analysis to determine the sectors which the Advisor expects to have
stable or improving credit quality in the future; and utilizing the expertise
and experience of the management team to make investment decisions.
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The
Trust pays monthly dividends which are typically paid on the last business day
of the month. For shares held in the shareholder's name, dividends may be
reinvested in additional shares of the fund through the Trust's transfer agent,
State Street Bank & Trust Company. Investors who wish to hold shares in a
brokerage account should check with their financial adviser to determine
whether their brokerage firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN THE TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the utilization of its
committed credit facility. Leverage permits the Trust to borrow money at
short-term rates and reinvest that money in longer-term assets which typically
offer higher interest rates. The difference between the cost of the borrowed
funds and the income earned on the proceeds that are invested in longer term
assets is the benefit to the Trust from leverage. In general, the portfolio is
typically leveraged at approximately 33 1/3% of total assets.
14
<PAGE>
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the Trust in a declining rate
environment, but can cause net assets to decline faster than the market in a
rising environment. BlackRock's portfolio managers continuously monitor and
regularly review the Trust's use of leverage and the Trust may reduce, or
unwind, the amount of leverage employed should the Advisor consider that
reduction to be in the best interests of the shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO THE TRUST
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
INVESTMENT OBJECTIVE. Although the investment objective of the Trust is to
provide high current income, there can be no assurance that this objective will
be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to vary over time as fixed income market conditions change. Future dividends
may be higher or lower than the dividend the Trust is currently paying.
LOWER-GRADE SECURITIES. As a "high yield fund," the majority of the Trust's
assets will be invested in high-risk, high yield securities of lower grade
quality, which are commonly referred to as "junk bonds." With its portfolio
consisting predominantly of lower grade securities, the Trust is exposed to
greater risks than a fund that owns higher grade securities. Because of the
substantial risks associated with lower grade securities, an investor could
lose money on an investment in Shares of the Trust, both in the short-term and
the long-term. An investor should consider some risks including, but not
limited to, credit risk.
CREDIT RISK. Credit risk refers to an issuer's ability to make payments of
principal and interest when they are due. Because the Trust will own securities
with low credit quality, it will be subject to a high level of credit risk. The
credit quality of such securities is considered speculative by rating agencies
with respect to the issuer's ability to pay interest or principal. The prices
of lower grade securities are more sensitive to negative corporate
developments, such as a decline in profits, or adverse economic conditions,
such as recession, than are the prices of higher grade securities. Securities
that have longer maturities or that do not make regular interest payments also
fluctuate more in price in response to negative corporate or economic news.
Therefore, lower grade securities may experience high default rates, which
would mean that the Trust may lose some of its investment in such securities,
which would adversely affect the Trust's net asset value and ability to make
distributions. The effects of this default risk are significantly greater for
the holders of lower grade securities often are unsecured and subordinated to
the payment rights of other creditors of the issuer.
LEVERAGE. The Trust utilizes leverage through its committed credit facility,
which involves special risks. The Trust's net asset value and market value may
be more volatile due to its use of leverage.
MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange (NYSE symbol: BHY) and as such
are subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value.
CORPORATE DEBT SECURITIES. The value of corporate debt securities generally
varies inversely with changes in prevailing market interest rates. The Trust
may be subject to certain reinvestment risks in environments of declining
interest rates.
ZERO COUPON SECURITIES. Such securities receive no cash flows prior to
maturity; therefore, interim price movement on the securities are generally
more sensitive to interest rate movements then securities that make periodic
coupon payments. These securities appreciate in value over time and can play an
important role in helping the Trust achieve its primary objectives.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
NON-U.S. SECURITIES. The Trust may invest less than 35% of its total assets in
non-U.S. dollar-denominated securities which involve special risks such as
currency, political and economic risks.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
15
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK HIGH YIELD TRUST
GLOSSARY
--------------------------------------------------------------------------------
CLOSED-END FUND: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange.
The fund invests in a portfolio of securities in
accordance with its stated investment objectives
and policies.
COMMERCIAL MORTGAGE Mortgage-backed securities secured or backed by
BACKED SECURITIES (CMBS): mortgage loans on commercial properties.
DISCOUNT: When a fund's net asset value is greater than its
stock price the fund is said to be trading at a
discount.
DIVIDEND: Income generated by securities in a portfolio and
distributed to shareholders after the deduction of
expenses. This Trust declares and pays dividends on
a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all distributions of
dividends and capital gains automatically
reinvested into additional shares of the Trust.
GOVERNMENT SECURITIES: Securities issued or guaranteed by the U.S.
government, or one of its agencies or
instrumentalities, such as GNMA, FNMA and FHLMC .
MARKET PRICE: Price per share of a security trading in the
secondary market. For a closed-end fund, this is
the price at which one share of the fund trades on
the stock exchange. If you were to buy or sell
shares, you would pay or receive the market price.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities and other assets held by the Trust, plus
income accrued on its investments, minus any
liabilities including accrued expenses, divided by
the total number of outstanding shares. It is the
underlying value of a single share on a given day.
Net asset value for the Trust is calculated weekly
and published in BARRON'S on Saturday and THE WALL
STREET JOURNAL on Monday.
PREMIUM: When a fund's stock price is greater than its net
asset value, the fund is said to be trading at a
premium.
16
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
SUMMARY OF CLOSED-END FUNDS
--------------------------------------------------------------------------------
TAXABLE TRUSTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS ---------- ---------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
The BlackRock High Yield Trust BHY N/A
TERM TRUSTS
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BTM 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
</TABLE>
TAX-EXEMPT TRUSTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS --------- ---------
<S> <C> <C>
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
The BlackRock Pennsylvania Strategic Municipal Trust BPS N/A
The BlackRock Strategic Municipal Trust BSD N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE DO NOT HESITATE TO CALL BLACKROCK
AT (800) 227-7BFM (7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
17
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
AN OVERVIEW
--------------------------------------------------------------------------------
BlackRock Advisors, Inc. (the "Advisor") is an SEC-registered investment
advisor. As of March 31, 2000, the Advisor and its affiliates (together,
"BlackRock") $173 billion on behalf of taxable and tax-exempt clients
worldwide. Strategies include fixed income, equity and cash and may incorporate
both domestic and international securities. BlackRock manages twenty-two
closed-end funds that are traded on either the New York or American stock
exchanges, and a $29 billion family of open-end funds. BlackRock manages over
590 accounts, domiciled in the United States and overseas.
BlackRock's fixed income product was introduced in 1988 by a team of
highly seasoned fixed income professionals. These professionals had extensive
experience creating, analyzing and trading a variety of fixed income
instruments, including the most complex structured securities. In fact, several
individuals at BlackRock were responsible for developing many of the major
innovations in the mortgage-backed and asset-backed securities markets,
including the creation of the first CMO, the floating rate CMO, the
senior/subordinated pass-through and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
emphasis it places on the development of proprietary analytical capabilities.
Over one quarter of the firm's professionals is dedicated to the design,
maintenance and use of these systems, which are not otherwise available to
investors. BlackRock's proprietary analytical tools are used for evaluating,
and designing fixed income investment strategies for client portfolios.
Securities purchased include mortgages, corporate bonds, municipal bonds and a
variety of hedging instruments.
BlackRock has developed investment products that respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. In fact, BlackRock introduced the first closed-end mortgage fund, the
first taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
Currently, BlackRock's closed-end funds have dividend reinvestment plans, which
are designed to provide ongoing demand for the stock in the secondary market.
BlackRock manages a wide range of investment vehicles, each having specific
investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions.
The number is (800) 227-7BFM (7236). We encourage you to call us with any
questions that you may have about your BlackRock funds and we thank you for the
continued trust that you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
18
<PAGE>
------------------
BlackRock
------------------
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
Scott Amero, VICE PRESIDENT
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Dennis Schaney, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
Karen H. Sabath, SECRETARY
INVESTMENT ADVISOR
BlackRock Advisors, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
(800) 227-7BFM
ADMINISTRATOR
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
LEGAL COUNSEL - INDEPENDENT DIRECTORS
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
The accompanying financial statements as of April 30, 2000 were not audited
and, accordingly, no opinion is expressed on them.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of any securities.
THE BLACKROCK HIGH YIELD TRUST
c/o Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry St.
Newark, NJ 07102-4077
(800) 227-7BFM
[RECYCLE LOGO] Printed on recycled paper 092472-10-6
THE Blackrock
HIGH YIELD
TRUST
=======================
Semi-Annual Report
April 30, 2000
