--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
--------------------------------------------------------------------------------
July 31, 2000
Dear Shareholder:
In the first half of the year, fears of an open-ended tightening policy by
the Federal Reserve peaked in May, which resulted in a subsequent relief in the
market as the U.S. economy seemed to decelerate significantly. During the
period, the Federal Reserve tightened short-term rates by 1.00% in an attempt
to engineer a "soft landing" for the U.S. economy. In the first six months of
the new millennium we have witnessed unprecedented volatility in both the
Treasury yield curve and the spread sectors. The Treasury curve inverted
sharply in the first quarter, but as weak economic data emerged in the second
quarter, market participants embraced an economic "soft landing" scenario
causing the yield curve to steepen. The downward revision in growth
expectations allowed spread sectors to rally in the month of June, but
year-to-date their performance still trails Treasuries.
While fears of a hawkish Federal Reserve and consequent risks of a
"hard-landing" may not materialize immediately, the risks are skewed in that
direction. A longer period of subdued financial market performance is necessary
to enable the labor markets to build up slack, which is an important
pre-condition for the Fed to achieve its goal.
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>
July 31, 2000
Dear Shareholder:
We are pleased to present the unaudited semi-annual report for The
BlackRock Pennsylvania Strategic Municipal Trust (the "Trust") for the six
months ended June 30, 2000. We would like to take this opportunity to review
the Trust's stock price and net asset value (NAV) performance, summarize
developments in the fixed income markets and discuss recent portfolio
management activity.
The Trust is a non-diversified closed-end bond fund whose shares are
traded on the American Stock Exchange under the symbol "BPS." The Trust's
investment objective is to provide current income that is exempt from federal
and Pennsylvania State income tax. The Trust seeks to achieve this objective by
investing 80% of its total assets in investment grade (rated "AAA" to "BBB" by
a major rating agency or of equivalent quality), and may invest up to 20% of
its total assets in non-investment grade (rated Ba/BB or B by a major rating
agency or of equivalent quality) Pennsylvania tax-exempt general obligation and
revenue bonds issued by city, county and state municipalities.
The table below summarizes the changes in the Trust's stock price and NAV
since December 31, 1999:
<TABLE>
<CAPTION>
-----------------------------------------------------------
6/30/00 12/31/99 CHANGE HIGH LOW
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK PRICE $13.6875 $13.375 2.34% $14.50 $11.5625
-----------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $13.90 $13.40 3.73% $14.00 $13.04
-----------------------------------------------------------------------------------
</TABLE>
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 Reserve 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 from 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 declined from
6.44% on December 31, 1999 to 6.03% on June 30, 2000.
Municipal bonds outperformed the taxable domestic bond market during the
past six months, returning 4.49% (as measured by the LEHMAN MUNICIPAL INDEX)
versus the LEHMAN AGGREGATE INDEX's 3.98% on a pre-tax basis. Overall, the tone
in the market during the period was extremely positive as the result of
continued strong demand from individual/retail investors coupled with a
slowdown in new issuance. During 1999, households increased their holdings of
individual municipal bonds by over $40 billion while mutual funds saw net
outflows. Offsetting the large amount of mutual fund outflows during the first
quarter of 2000 was a 22% decline in overall new municipal bond issuance YTD
for the same period, led by a 68% drop in refunding volume. Refunding volume
was down due to the relatively higher interest rates experienced during the
first half of
2
<PAGE>
2000 when compared to the first half of 1999, while new money issuance has
declined because the strong economy has led to full coffers at most
municipalities.
The Commonwealth of Pennsylvania's creditworthiness has steadily improved
over the past decade. This state's highly urban population, with nearly 12
million residents, has remained stable while the economy has been in transition
from heavily manufacturing based employment to a more diversified economic
foundation with trade and service sector jobs now accounting for the majority
of jobs. More recently, the spring's higher interest rates have started to slow
Pennsylvania's housing market while the service industry's growth has not been
as robust. However, this eight year transition combined, with approximately 1%
average annual employment growth, have resulted in the Commonwealth's slowly
declining unemployment rate which continues to mirror that of the country, 3.9%
in May 2000.
The Commonwealth's prudent fiscal management, in response to the FY 1991
operating deficit, accompanied the transition in employment structure. Since
1991 tax changes, financial controls and limited borrowing combined with the
changing and slowly growing economy have resulted in General fund surpluses and
an annually increasing rainy day fund, nearly $1 billion or approximately 5% of
FY 1999 revenues. In FY 2000, year to date, General Fund collections are 4.5%
above the estimate. Corporate, personal income and sales tax receipts are all
ahead of the Commonwealth's conservative projections. Today, Pennsylvania's
sound financial position provides above average bondholder security, which is
also reflected in its Aa/AA bond ratings.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and security types. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors and
coupons.
Since inception, the Trust sought to take advantage of tight municipal
credit spreads to build a strong credit profile. Specifically, the Trust
emphasized higher rated securities over lower rated securities. Additionally,
the Trust maintained a defensive coupon structure, which was achieved by adding
premium coupons, which positively contributed to the Trust's total returns as
interest rates rose during the period.
Additionally, the Trust employs leverage to enhance its income by
borrowing at short-term municipal rates and investing the proceeds in longer
maturity issues that have higher yields. The degree to which the Trust can
benefit from its use of leverage may affect its ability to pay high monthly
income. As of June 30, 2000, the Trust's leverage amount was 38% of total
assets.
The following charts show the Trust's current and December 31, 1999 asset
composition and credit quality allocations:
-----------------------------------------------------------------------
SECTOR BREAKDOWN
-----------------------------------------------------------------------
SECTOR JUNE 30, 2000 DECEMBER 31, 1999
-----------------------------------------------------------------------
City, County & State 36% 43%
-----------------------------------------------------------------------
Housing 13% 13%
-----------------------------------------------------------------------
Hospital 12% 13%
-----------------------------------------------------------------------
Water & Sewer 12% 10%
-----------------------------------------------------------------------
Transportation 10% 13%
-----------------------------------------------------------------------
Power 5% 6%
-----------------------------------------------------------------------
Industrial & Pollution Control 3% 2%
-----------------------------------------------------------------------
Other 9% -
-----------------------------------------------------------------------
3
<PAGE>
-----------------------------------------------------
CREDIT RATING* JUNE 30, 2000 DECEMBER 31, 1999
-----------------------------------------------------
AAA/Aaa 57% 68%
-----------------------------------------------------
AA/Aa 15% 12%
-----------------------------------------------------
A/A 9% 4%
-----------------------------------------------------
BBB/Baa 3% 3%
-----------------------------------------------------
Not Rated 16% 13%
-----------------------------------------------------
----------
* Using the higher of Standard & Poor's or Moody's rating.
We look forward to managing the Trust to benefit from the opportunities
available in the fixed income markets and to meet its investment objectives. We
thank you for your investment in the BlackRock Pennsylvania Strategic Municipal
Trust. Please feel free to contact our marketing center at (800) 227-7BFM
(7236) if you have specific questions which were not addressed in this report.
Sincerely,
/s/ ROBERT S. KAPITO /s/ KEVIN KLINGERT
------------------- -------------------
Robert S. Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Advisors, Inc. BlackRock Advisors, Inc.
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
--------------------------------------------------------------------------------
Symbol on American Stock Exchange: BPS
--------------------------------------------------------------------------------
Initial Offering Date: 8/25/99
--------------------------------------------------------------------------------
Closing Stock Price as of June 30, 2000: $13.6875
--------------------------------------------------------------------------------
Net Asset Value as of June 30, 2000: $13.90
--------------------------------------------------------------------------------
Yield on Closing Stock Price as of June 30, 2000 ($13.6875)1: 6.71%
--------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $ 0.076563
--------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $ 0.918756
--------------------------------------------------------------------------------
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 The distribution is not constant and is subject to change.
4
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
=================================================================================================================================
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS-158.5%
PENNSYLVANIA-150.9%
AAA $2,150 Allegheny Cnty. Port Auth. Spec. Rev. Trans., 6.125%, 3/01/29, MBIA ......... 03/09 @ 101 $ 2,191,839
AAA 1,800 Allegheny Cnty. San. Auth. Swr. Rev., 5.375%, 12/01/24, MBIA ................ 12/07 @ 102 1,705,176
1,250 Dauphin Cnty. Gen. Auth., Hotel & Conf. Ctr., Hyatt Regency,
6.20%, 1/01/19 .............................................................. 01/09 @ 102 1,141,625
NR 2,500 Delaware Cnty. Auth. Rev., Hlth. Facs. Mercy Hlth. Corp. Proj.,
Ser. A, 6.00%, 12/15/26 ..................................................... ETM 2,548,150
AAA 1,250 Delaware Cnty. Ind. Dev. Auth. Rev., Wtr. Facs., 6.00%, 6/01/29, FGIC ....... 06/09 @ 101 1,256,700
Lehigh Cnty. Gen. Purp. Auth. Rev., Kidspeace Oblig. Group,
NR 1,250 6.00%, 11/01/23 ............................................................ 11/08 @ 102 1,088,562
NR 1,250 6.20%, 11/01/14 ............................................................ 11/09 @ 102 1,160,400
A- 1,250 Montgomery Cnty. Ind. Dev. Auth. Rev., Retirement Life Cmnty.,
5.25%, 11/15/28 ............................................................ 11/08 @ 101 1,019,963
NR 4,000 MuniMae TE Bond Subsidiary, LLC, Ser. A, 6.875%, 6/30/09++ .................. No Opt. Call 3,930,880
BBB+ 1,625 Pennsylvania Econ. Dev. Fin. Auth., Solid Waste Disp. Rev.,
USG Corp. Proj., 6.00%, 6/01/31 ............................................ 06/09 @ 102 1,471,275
Pennsylvania Hsg. Fin. Agcy. Rev.,
AA+ 3,200 Sngl. Fam. Mtge., Ser. 68A, 6.10%, 4/01/21 ................................. 10/09 @ 100 3,196,096
AA+ 1,250 Sngl. Fam. Mtge., Ser. 60A, 5.85%, 10/01/27 ................................ 04/07 @ 101.5 1,205,475
AAA 1,750 Pennsylvania St. Higher Ed. Ass. Agy. Std. Loan Rev.,
7.437%, 3/01/20, MBIA ...................................................... 04/01 @ 101 1,890,297
Pennsylvania St. Higher Edl. Fac. Auth. Rev.,
AA- 1,250 Lafayette Coll. Proj., 6.00%, 5/01/30 ...................................... 05/10 @ 100 1,267,762
AA 850 Philadelphia Univ., 6.10%, 6/01/30 ......................................... 06/10 @ 100 835,100
A 1,000 Univ. of Pennsylvania Hlth. Svcs., Ser. A, 5.75%, 1/01/22 .................. 01/06 @ 101 867,770
AAA 1,250 Philadelphia Pkg. Auth. Rev., Arpt., 5.625%, 9/01/18, FSA ................... 09/09 @ 101 1,243,413
AAA 1,250 Philadelphia Arpt. Rev., Phil. Arpt. Sys., Ser. B, 5.40%, 6/15/27, FGIC ..... 06/07 @ 102 1,150,375
Philadelphia Sch. Dist. G.O.,
AAA 1,190 Ser. B, 5.50%, 9/01/25, AMBAC .............................................. 09/05 @ 101 1,141,472
AAA 2,800 Ser. C, 5.50%, 3/01/24, MBIA ............................................... 03/10 @ 100 2,688,896
AAA 3,050 Ser. C, 5.75%, 3/01/29, MBIA ............................................... 03/10 @ 100 3,024,746
AAA 2,350 Philadelphia Wtr. & Wastewtr. Rev., 5.00%, 6/15/16, FSA ..................... 06/03 @ 100 2,209,023
AAA 2,250 Southeastern Pennsylvania Trans. Auth. Spec. Rev.,
5.375%, 3/01/17, FGIC ...................................................... 03/07 @ 102 2,190,262
AAA 1,750 Washington Cnty. Auth. Rev., Cap. Fdg. & Equip. Proj.,
6.15%, 12/01/29, AMBAC ..................................................... No Opt. Call 1,841,298
-----------
42,266,555
-----------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
=================================================================================================================================
<S> <C> <C> <C> <C>
U. S. VIRGIN ISLANDS-7.6%
A $2,100 Virgin Islands Pub. Fin. Auth. Rev., Gross Receipts Tax, Ser. A,
6.125%, 10/01/29 .............................................. 10/10 @ 101 $ 2,125,221
------------
TOTAL LONG-TERM INVESTMENTS (COST $44,502,098).................. 44,391,776
SHORT-TERM INVESTMENT**-0.2%
A1+ 50 Long Island Pwr. Auth. Elec. Sys. Rev., FRDD, 4.40%, 7/03/00,
(amortized cost $50,000)........................................ N/A 50,000
------------
TOTAL INVESTMENTS-158.7% (COST $44,552,098)..................... 44,441,776
Liquidation value of preferred stock-(62.5)% ................... (17,500,000)
Other assets in excess of liabilities-3.8% ..................... 1,069,458
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS-100% .............. $ 28,011,234
============
</TABLE>
----------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** For purposes of amortized cost valuation, the maturity of this instrument is
considered to be the earlier of the next date on which the security can be
redeemed at par, or the next date on which the rate of interest is
adjusted.
+ Option call provisions: date (month/year) and price of the earliest call or
redemption. There may be other call provisions at varying prices at later
dates.
++ Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exemp from
registration to qualified institutional buyers.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
<S> <C> <C> <C>
AMBAC -- American Municipal Bond Assurance Corporation FSA -- Financial Security Assurance
ETM -- Escrowed to Maturity G.O. -- General Obligation
FGIC -- Financial Guaranty Insurance Company MBIA -- Municipal Bond Insurance Association
FRDD -- Floating Rate Daily Demand
-----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA
STRATEGIC MUNICIPAL TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $44,552,098) (Note 1).......... $44,441,776
Cash ...................................................... 721,890
Interest receivable ....................................... 614,668
Other assets .............................................. 238
-----------
45,778,572
-----------
LIABILITIES
Dividends payable-common stock ............................ 154,311
Offering costs payable (Note 4) ........................... 69,256
Investment advisory fee payable (Note 2) .................. 13,003
Dividends payable-preferred stock ......................... 4,458
Accrued expenses and other liabilities .................... 26,310
-----------
267,338
-----------
NET INVESTMENT ASSETS ..................................... $45,511,234
===========
Net investment assets were comprised of:
Common shares of beneficial interest:
Par value (Note 4) ...................................... $ 2,015
Paid-in capital in excess of par ........................ 28,373,578
Preferred shares of beneficial interest (Note 4) ......... 17,500,000
-----------
45,875,593
Distributions in excess of net investment income ......... (114,982)
Accumulated net realized loss ............................ (139,055)
Net unrealized depreciation .............................. (110,322)
-----------
Net investment assets, June 30, 2000 ...................... $45,511,234
===========
Net assets applicable to common shareholders .............. $28,011,234
===========
Net asset value per common shares of
beneficial interest:
($28,011,234 / 2,015,492 common shares of
beneficial interest issued and outstanding) ............. $13.90
======
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA
STRATEGIC MUNICIPAL TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned ..................... $1,370,392
----------
Expenses
Investment advisory .............................. 133,874
Auction agent .................................... 21,800
Reports to shareholders .......................... 10,000
Custodian ........................................ 9,100
Transfer agent ................................... 8,000
Independent accountants .......................... 6,800
Trustees ......................................... 6,000
Legal ............................................ 3,700
Miscellaneous .................................... 7,749
----------
Total expenses ................................... 207,023
Less expenses waived by advisor (Note 2) ......... (55,778)
----------
Net expenses ..................................... 151,245
----------
Net investment income .............................. 1,219,147
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss on investments ................... (131,361)
Net change in unrealized depreciation
on investments ................................... 1,213,241
----------
Net gain on investments ............................ 1,081,880
----------
NET INCREASE IN NET INVESTMENT ASSETS
RESULTING FROM OPERATIONS .......................... $2,301,027
==========
See Notes to Financial Statements.
7
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
STATEMENT OF CHANGES IN NET INVESTMENT ASSETS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS ENDED AUGUST 25, 1999*
JUNE 30, THROUGH
2000 DECEMBER 31, 1999
------------------ -----------------
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................... $ 1,219,147 $ 531,156
Net realized loss on investments ................................................ (131,361) (7,694)
Net change in unrealized depreciation on investments ............................ 1,213,241 (1,323,563)
----------- -----------
Net increase (decrease) in net investment assets resulting from operations ..... 2,301,027 (800,101)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS:
To common shareholders from net investment income ............................... (843,390) (428,386)
To common shareholders in excess of net investment income ....................... (82,429) (34,430)
To preferred shareholders from net investment income ............................ (333,067) (102,770)
To preferred shareholders in excess of net investment income .................... (32,553) (8,260)
----------- -----------
Total dividends and distributions .............................................. (1,291,439) (573,846)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from initial public offering of Trust's common stock ............... -- 25,016,041
Net proceeds from underwriters' over-allotment option ........................... -- 3,688,110
Net proceeds from preferred stock issuance ...................................... -- 17,064,454
Common shares issued in connection with the reinvestment of common dividends
and distributions ............................................................... 6,985 --
----------- -----------
Net proceeds from capital stock transactions .................................. 6,985 45,768,605
----------- -----------
Total increase .............................................................. 1,016,573 44,394,658
NET INVESTMENT ASSETS
Beginning of period .............................................................. 44,494,661 100,003
----------- -----------
End of period .................................................................... $45,511,234 $44,494,661
=========== ===========
</TABLE>
--------------------
*Commencement of investment operations (Note 1).
See Notes to Financial Statements.
8
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS ENDED AUGUST 25, 1999**
JUNE 30, THROUGH
2000 DECEMBER 31, 1999
------------------ ------------------
<S> <C> <C>
PER COMMON SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............................. $ 13.40 $ 14.33#
-------- -------
Net investment income ........................................... 0.60 0.27
Net realized and unrealized gain (loss) on investments .......... 0.54 (0.66)
-------- --------
Net increase (decrease) from investment operations ............... 1.14 (0.39)
-------- --------
Dividends and distributions:
Dividends from net investment income to:
Common shareholders ............................................ (0.42) (0.21)
Preferred shareholders ......................................... (0.16) (0.06)
Distributions in excess of net investment income to:
Common shareholders ............................................ (0.04) (0.02)
Preferred shareholders ......................................... (0.02) -
-------- -------
Total dividends and distributions ............................... (0.64) (0.29)
-------- -------
Capital charge with respect to issuance of common shares ......... -- (0.03)
Capital charge with respect to issuance of preferred shares ...... -- (0.22)
-------- -------
Total capital charges ............................................ -- (0.25)
-------- -------
Net asset value, end of period* .................................. $ 13.90 $ 13.40
======== =======
Market value, end of period* ..................................... $13.6875 $13.375
======== =======
TOTAL INVESTMENT RETURN+ ......................................... 6.06% (9.34)%
======== =======
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:***
Expenses after fee waiver ........................................ 1.12% 1.20%##
Expenses before fee waiver++ ..................................... 1.53% 1.61%##
Net investment income before preferred stock dividends++.......... 9.04% 5.63%
Preferred stock dividends ........................................ 2.71% 1.17%
Net investment income available to common shareholders ........... 6.33% 4.46%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) ......... $ 27,123 $26,882
Portfolio turnover ............................................... 29% 1%
Net assets of common shareholders, end of period (in thousands) .. $ 28,011 $26,995
Preferred stock outstanding (in thousands) ....................... $ 17,500 $17,500
Asset coverage per share of preferred stock, end of period ....... $ 71,079 $63,571
</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)
*** Annualized.
+ 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,
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 a
period less than one year is not annualized.
++ Ratios are calculated on the basis of income and expenses applicable to both
the common and preferred shares relative to the average net assets of common
shareholders.
# Net asset value immediately after the closing of the first public offering
was $14.30.
## Restated to conform with current period presentation.
The information above represents the unaudited operating performance for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the period 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 PENNSYLVANIA
STRATEGIC MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION & ACCOUNTING POLICIES
The BlackRock Pennsylvania Strategic Municipal Trust (the "Trust") was organized
in Delaware on June 30, 1999 as a non-diversified, closed-end management
investment company. The Trust had no transactions until August 19, 1999 when it
sold 6,981 Common Shares for $100,003 to BlackRock Advisors, Inc. Investment
operations commenced on August 25, 1999. The Trust's investment objectives are
to provide current income exempt from regular Federal and Pennsylvania state
income taxes and to invest in municipal bonds that over time will perform better
than the broader Pennsylvania municipal bond market. The ability of issuers of
debt securities held by the Trust to meet their obligations may be affected by
economic developments in the state, 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: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
provided by dealers or pricing services approved by the Trustees. In
determining the value of a particular security, pricing services may use
certain information with respect to transactions in such securities, quotations
from bond dealers, market transactions in comparable securities and various
relationships between securities in determining values. Short-term securities
are valued at amortized cost. 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 Trustees.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on 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 original issue discount and amortizes premium on
securities purchased using the interest method.
FEDERAL INCOME TAXES: It is the Trust's intention to elect 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 Trust's gross income consists of tax-exempt interest,
no Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Net
long-term capital gains, if any, in excess of loss carryforwards may be
distributed annually. Dividends and distributions are recorded on the
ex-dividend date. 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 those estimates.
DEFERRED COMPENSATION PLAN: Under a deferred compensation plan approved by the
Board of Trustees on February 24, 2000, non-interested Trustees 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
Trustees. This has the same economic effect as if the Trustees 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 Trustees in order to match its deferred compensation obligations.
10
<PAGE>
NOTE 2. AGREEMENTS
The Fund has an Investment Advisory Agreement with BlackRock Advisors, Inc. (the
"Advisor"), a wholly owned subsidiary of BlackRock, Inc., which in turn is an
indirect majority-owned subsidiary of PNC Financial Services Group, Inc. The
investment management agreement covers both investment advisory and
administration services.
The investment advisory fee paid to the Advisor is computed weekly and
payable monthly at an annual rate of 0.60% of the Trust's average weekly net
investment assets. The Advisor has undertaken to waive fees and expenses as
follows: through year ended 12/31/04 by 0.25%, for year ended 12/31/05 by
0.20%, for year ended 12/31/06 by 0.15%, for year ended 12/31/07 by 0.10% and
for year ended 12/31/08 by 0.05%. Pursuant to the agreement, the Advisor waived
fees of $55,778 during the period ended June 30, 2000.
Pursuant to the agreements, the Advisor provides continuous supervision
of the investment portfolio, pays the compensation of officers of the Trust who
are affiliated persons of the Advisor and pays occupancy and certain clerical
and accounting costs. 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 period ended June 30, 2000, aggregated $16,489,950 and $13,099,437,
respectively.
The federal income tax basis of the Trust's investments at June 30, 2000
was the same as the basis for financial reporting and accordingly, net
unrealized depreciation was $110,322 (gross unrealized appreciation-$378,281,
gross unrealized depreciation-$488,603).
For Federal income tax purposes, the Trust had a capital loss
carryforward at December 31, 1999 of approximately $7,700 which will expire in
2007. Accordingly, no capital gain distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amount.
NOTE 4. CAPITAL
There are an unlimited number of $.001 par value common shares of beneficial
interest authorized. Of the 2,014,981 common shares of beneficial interest
outstanding at June 30, 2000, the Advisor owned 6,981 shares.
Transactions in common shares of beneficial interest for the period
August 25, 1999 (commencement of investment operations) to December 31, 1999
were as follows:
Shares issued in connection with initial
public offering .......................... 1,750,000
Shares issued in connection with the
exercise of the underwriters'
over-allotment option .................... 258,000
---------
Net increase in shares outstanding ......... 2,008,000
=========
During the six months ended June 30, 2000 the Trust issued 511 common
shares of beneficial interest under the terms of its Dividend Reinvestment
Plan.
Underwriting discounts of $1,355,400 and offering costs of $60,449
incurred in connection with the Trust's offering of common shares have been
charged to paid-in capital in excess of par of the common shares.
The Trust may classify or reclassify any unissued common shares of
beneficial interest into one or more series of preferred shares of beneficial
interest. On November 5, 1999 the Trust reclassified 700 shares of common stock
of beneficial interest and issued a series of Auction Market Preferred Stock
("Preferred Stock") Series W7. The Preferred Shares have a liquidation value of
$25,000 per share plus any accumulated but unpaid dividends. Underwriting
discounts of $175,000 and offering costs of $260,546 incurred in connection
with the Preferred Share offering have been charged to paid-in capital in
excess of par of the common shares.
Dividends on Series W7 are cumulative at a rate which is reset every 7
days based on the results of an auction. Dividend rates ranged from 3.70% to
4.90% during the period ended June 30, 2000.
The Trust may not declare dividends or make other distributions to
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 the 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
11
<PAGE>
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 the
Trust as set forth in the Declaration of Trust are not satisfied.
The holders of Preferred Shares have voting rights equal to the holders
of common stock (one vote per share) and will vote together with holders of
shares of common stock as a single class. However, holders of Preferred Shares
are also entitled to elect two of the Trust's directors. In addition, the
Investment Company Act of 1940 requires that, along with approval by
stockholders 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, and (b) take any action requiring a vote of
security holders, including, among other things, changes in the Trust's
subclassification as a closed-end investment company or changes in its
fundamental investment restrictions.
NOTE 5. DIVIDENDS
Subsequent to June 30, 2000, the Board of Trustees of the Trust declared a
dividend from undistributed earnings of $0.076563 per common share payable
August 1, 2000, to shareholders of record on July 14, 2000.
For the period July 1, 2000 through July 31, 2000, dividends declared on
Preferred Stock totalled $62,664.
12
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL 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 transfer 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
American 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 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 income tax 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 address is on the front of this report.
13
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST INC.
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 all eight Trustees as follows:
DIRECTORS CLASS TERM EXPIRING
--------- ----- ---- --------
Andrew F. Brimmer ..................... III 3 years 2003
Richard E. Cavanagh ................... I 1 years 2001
Kent Dixon ............................ III 3 years 2003
Frank J. Fabozzi ...................... II 2 years 2002
Lawrence D. Fink ...................... III 3 years 2003
James Clayburn La Force, Jr. .......... I 1 years 2001
Walter F. Mondale ..................... II 2 years 2002
Ralph L. Schlosstein .................. II 2 years 2002
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 2000.
Shareholders elected the eight Trustees and ratified the selection of
Deloitte & Touche LLP. The results of the voting was as follows:
<TABLE>
<CAPTION>
VOTES FOR* VOTES AGAINST* ABSTENTIONS*
------------ ---------------- -------------
<S> <C> <C> <C>
Andrew F. Brimmer .............................. 1,977,133 -- 10,580
Richard E. Cavanagh ............................ 440 -- -
Kent Dixon ..................................... 1,977,133 -- 10,580
Frank J. Fabozzi ............................... 440 -- -
Lawrence D. Fink ............................... 1,977,133 -- 10,580
James Clayburn La Force, Jr. ................... 1,977,133 -- 10,580
Walter F. Mondale .............................. 1,977,133 -- 10,580
Ralph L. Schlosstein ........................... 1,977,133 -- 10,580
Ratification of Deloitte & Touche LLP .......... 1,977,133 -- 10,580
</TABLE>
----------
* The votes represent common and preferred shareholders voting as a single
class except for the election of Richard E. Cavanagh and Frank J. Fabozzi
who were elected by the preferred shareholders.
14
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
INVESTMENT SUMMARY
--------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVES
The BlackRock Pennsylvania Strategic Municipal Trust's investment objectives
are to provide current income exempt from regular Federal and Pennsylvania
state income tax consistent with the preservation of capital and invest in
municipal bonds that will perform better than the Pennsylvania municipal bond
market.
WHO MANAGES THE TRUST?
BlackRock Advisors, Inc. (the"Advisor") is an SEC-registered investment
advisor. As of June 30, 2000, BlackRock and its affiliates (together,
"BlackRock") managed $177 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 manages twenty-two closed-end funds that are traded on either the New
York or American stock exchanges, and a $28 billion family of open-end equity
and bond funds. BlackRock manages over 629 accounts, domiciled in the United
States and overseas.
WHAT CAN THE TRUST INVEST IN?
Under normal conditions, the Trust expects to continue to manage its assets so
that at least 80% of its investments are rated at least investment grade ("BBB"
by Standard & Poor's or "Baa" by Moody's Investor Services) and up to 20% of
its assets are rated below investment grade (Ba/BB or B) or that are unrated
but deemed to be of comparable quality by the Advisor. The Trust intends to
invest primarily all of the assets in a portfolio of investment grade
Pennsylvania Municipal Obligations, which include debt obligations issued by
the State of Pennsylvania, its political subdivisions, agencies and
instrumentalities and by other qualifying issuers that pay interest which, in
the opinion of the bond counsel of the issuer, is exempt from Federal and
Pennsylvania income taxes.
WHAT IS THE ADVISOR'S INVESTMENT STRATEGY?
The Advisor will manage the assets of the Trust in accordance with the Trust's
investment objective and policies to seek to achieve its objective by investing
in investment grade Pennsylvania Municipal Obligations or other municipal
bonds. As such, the Advisor actively manages the assets in relation to market
conditions and interest rate changes. Depending on yield and portfolio
allocation considerations, the Advisor may choose to invest a portion of the
Trust's assets in securities which pay interest that is subject to AMT
(alternative minimum tax). The Trust intends to invest primarily in long-term
bonds and expects bonds in its portfolio to maintain an average portfolio
maturity of 10-15 years, but the average maturity may be shortened or
lengthened from time to time depending on market conditions.
Under current market conditions the use of leverage increases the income earned
by the Trust. The Trust employs leverage primarily through the issuance of
preferred shares. Preferred shareholders will receive dividends based on
short-term rates in exchange for allowing the Trust to borrow additional
assets. These assets will be invested in longer-term assets which typically
offer higher interest rates and the difference between the cost of the
dividends paid to preferred shareholders and the interest earned on the
longer-term securities will provide higher income levels for common
shareholders in most interest rate environments. The Trust issued preferred
Shares to leverage the portfolio. See "Leverage Considerations in the Trust"
below.
15
<PAGE>
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the American 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 first 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 and Trust Company. Investors who wish to hold shares in a
brokerage account should check with their financial advisor to determine
whether their brokerage firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN THE TRUST
Leverage increases the duration (or price sensitivity of the net assets with
respect to changes in interest rates) of the Trust, which can improve the
performance of the Trust in a declining rate environment, but can cause net
assets to decline faster in a rapidly rising interest rate environment. 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 Trust. The Advisor's
portfolio managers continuously monitor and regularly review the Trust's use of
leverage and maintain the ability to unwind the leverage if that course is
chosen.
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 OBJECTIVES. Although the objectives of the Trust are to provide
current income that is exempt from regular Federal and Pennsylvania income
taxes and to invest in municipal bonds that over time will perform better than
the broader Pennsylvania Municipal bond market, 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.
LEVERAGE. The Trust utilizes leverage through the issuance of preferred stock,
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 American Stock Exchange (AMEX symbol: BPS) 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.
MUNICIPAL OBLIGATIONS. The value of municipal debt securities generally varies
inversely with changes in prevailing market interest rates. Depending on the
amount of call protection that the securities in the Trust have, the Trust may
be subject to certain reinvestment risks in environments of declining interest
rates.
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.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trustees and may have the effect of depriving shareholders of an opportunity to
sell their shares at a premium above the prevailing market price.
16
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK PENNSYLVANIA STRATEGIC MUNICIPAL TRUST
GLOSSARY
--------------------------------------------------------------------------------
CLOSED-END FUND: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange. The
Trust invests in a portfolio of securities in
accordance with its stated investment objectives and
policies.
DISCOUNT: When a Trust'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 to
common shareholders on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may have all dividends and distributions
of capital gains automatically reinvested into
additional shares of a Trust.
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 Trust's stock price is greater than its net
asset value, the Tr
ust is said to be trading at a
premium.
PREREFUNDED BONDS: These securities are collateralized by U.S. Government
securities which are held in escrow and are used to pay
principal and interest on the tax exempt issue and
retire the bond in full at the date indicated,
typically at a premium to par.
17
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
SUMMARY OF CLOSED-END FUNDS
--------------------------------------------------------------------------------
TAXABLE TRUSTS
--------------------------------------------------------------------------------
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS ---------- --------
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
TAX-EXEMPT TRUSTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
-------- ---------
<S> <C> <C>
PERPETUAL TRUSTS
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.
18
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
AN OVERVIEW
--------------------------------------------------------------------------------
BlackRock Advisors, Inc. (the "Advisor") is an SEC-registered investment
advisor. As of June 30, 2000, BlackRock and its affiliates (together,
"BlackRock") managed $177 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 $28 billion family of open-end equity and bond funds.
BlackRock manages over 629 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 are 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
19
<PAGE>
---------
BlackRock
---------
TRUSTEES
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
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Kevin M. Klingert, 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
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
AUCTION AGENT
Deutsche Bank
4 Albany Street
New York, NY 10006
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 June 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 PENNSYLVANIA STRATEGIC
MUNICIPAL TRUST
c/o BlackRock Advisors, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
(800) 227-7BFM
[RECYCLE LOGO] Printed on recycled paper
---------
BlackRock
THE ---------
PENNSYLVANIA
STRATEGIC
MUNICIPAL TRUST
=====================
SEMI-ANNUAL REPORT
JUNE 30, 2000
[Graphic omitted]
