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THE BLACKROCK TARGET TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
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January 31, 1996
Dear Shareholder,
Since the inception of The BlackRock Target Term Trust Inc. in 1988, the
market for investments in fixed income securities has witnessed an unprecedented
amount of interest rate volatility, which has changed the landscape for fixed
income investors. 1995 was a great year for investments in the bond market
following the disappointments of 1994, as yields declined and the value of fixed
income securities increased dramatically.
Looking forward, we maintain a positive outlook for the market's performance
in 1996. The economy currently appears to be growing at a steady rate and
inflation appears to be under control. Market participants are beginning to
agree that the Federal Reserve has achieved the "soft landing" that they set out
to accomplish through a series of interest rate increases last year, and are
optimistic for a further ease in the Fed's monetary policy should a budget
accord emphasizing fiscal restraint be reached in Washington.
BlackRock Financial Management, Inc. is completing its first year as part of
PNC Bank Corporation, becoming an essential part of PNC's Asset Management Group
by taking a leadership role in their fixed income management operations. We have
witnessed consistent growth of our assets under management, which now stand at
approximately $34 billion, as both retail and institutional fixed income
investors continue to recognize the value of our risk management capabilities
and long term investment philosophy.
We look forward to maintaining your respect and confidence and to serving
your financial needs in the coming year.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
January 31, 1996
Dear Shareholder:
We are pleased to present the annual report for The BlackRock Target Term
Trust Inc. (NYSE symbol: "BTT") for the year ended December 31, 1995. The past
year has been an exciting and challenging time to be participating in the fixed
income markets, and we would like to take this opportunity to review the Trust's
strong performance from both a stock price and net asset value (NAV)
perspective, as well as to discuss the opportunities available to the Trust in
the current lower interest rate environment.
The Trust is a diversified, closed-end bond fund whose investment objective
is to manage a portfolio of investment grade fixed income securities that will
return $10 per share (an amount equal to the Trust's initial public offering
price) to investors on or about December 31, 2000, while providing high current
income. The Trust seeks to meet this objective through investments in a broad
array of fixed income products including agency mortgage-backed securities
(Fannie Mae, Freddie Mac or Ginnie Mae), U.S. Treasury and agency securities,
asset-backed securities and investment grade corporate debt securities.
The table below summarizes the performance of the Trust's stock price and
net asset value (the market value of its portfolio holdings per share) over the
fiscal year:
-----------------------------------------------------
12/31/95 12/31/94 Change High Low
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Stock Price $8.75 $8.125 7.69% $9.375 $8.125
- -------------------------------------------------------------------------------
Net Asset Value (NAV) $10.02 $9.01 11.32% $10.03 $9.00
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Premium/(Discount) to NAV (12.67%) (9.82%) (2.94%) (5.23%) (13.66%)
- -------------------------------------------------------------------------------
The Fixed Income Markets
The dramatic rally in the fixed income markets, which caused interest rates
to fall and prices of fixed income securities to rise since late 1994 has
changed the market landscape for fixed income investors. A deceleration in
economic growth from the torrid pace of 1994 as well as continued signs of
subdued inflation led to a substantial decrease in interest rates across the
Treasury yield curve. At the end of December, the yield of the Treasury 30-year
bond fell below 6.00% for the first time since October 1993, closing the year at
5.95%, while the yield of the 5-year Treasury fell approximately 2.50% to end
1995 at 5.37%.
The Federal Reserve reversed its policy of "tight" monetary control for the
first time in almost two years by lowering the Fed funds target rate by 25 basis
points (0.25%) on July 7, in response to economic reports expressing moderate
but sustainable economic growth in the first half of the year. During July and
early August, the bond market rally temporarily halted as stronger economic data
dampened expectations for a follow-up reduction in short-term rates. However, as
the fourth quarter began, the economy again showed signs of sluggish growth and
interest rates returned to their 1995 lows in anticipation of another
2
<PAGE>
Fed ease by year end. Indeed, the Fed made two quarter-point reductions in the
Fed funds rate on December 19 and January 31. These reductions could make the
Trust's use of leverage more profitable, as the Treasury yield curve is expected
to steepen, resulting in a wider differential (or "spread") between the Trust's
borrowing costs and the rates at which the Trust can invest the borrowed funds.
Market participants remain attentive to the politically-charged debate
surrounding Federal budget proposals. Congressional and White House leaders have
been unable to fashion a credible 7-year balanced budget agreement, and appear
resigned to let the debate linger as we move into the election year. As such,
fixed income investors are concerned about a potential credit downgrade or
technical default on certain U.S. Treasury issues should policy-makers be unable
to reach an agreement on extending the Federal debt-ceiling until a budget
accord is struck later in the year.
BlackRock Financial Management is attuned to these continuing political
issues, but we remain positive on the fixed income markets in early 1996 as
moderate economic and inflationary data have set the stage for continued strong
performance for fixed income securities.
The Trust's Portfolio and Investment Strategy
BlackRock has been actively managing the Trust's portfolio holdings
consistent with BlackRock's overall market outlook and the Trust's investment
objectives. The chart below illustrates the Trust's portfolio compositions as of
December 31, 1995 and December 31, 1994.
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The BlackRock Target Term Trust Inc.
------------------------------------------------------------------
Composition December 31, 1995 December 31, 1994
------------------------------------------------------------------
Taxable Zero-Coupon Bonds 52% 49%
------------------------------------------------------------------
Mortgage Pass-Throughs 13% 29%
------------------------------------------------------------------
Corporate Bonds 9% 0%
------------------------------------------------------------------
Adjustable Rate Mortgages 6% 4%
------------------------------------------------------------------
Agency Multiple Class Pass-Throughs 6% 2%
------------------------------------------------------------------
Non-Agency Multiple Class Pass-Throughs 4% 4%
------------------------------------------------------------------
Stripped Mortgage-Backed Securities 3% 1%
------------------------------------------------------------------
Asset-Backed Securities 3% 1%
------------------------------------------------------------------
CMO Residuals 2% 3%
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U.S. Government Securities 1% 1%
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Municipal Bonds 1% 4%
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Commercial Mortgage-Backed Securities 0% 2%
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The most significant shift in the Trust's portfolio over the fiscal year has
been an increased exposure to the corporate debt sector and a corresponding
decrease in allocations to mortgage pass-through securities. Since first
obtaining the broadened investment authority from shareholders in May 1995 to
purchase and hold investment grade corporate debt, the Trust has increased its
holdings of these securities to 9% as of year end. The Trust may continue to
increase its allocation to corporate debt
3
<PAGE>
securities upon opportunity, as these securities offer a higher degree of cash
flow stability and call protection than mortgage securities, and could provide
the Trust with a more stable income over time. BlackRock Financial Management
remains confident in the Trust's ability to return $10 per share to shareholders
at its slated termination date in 2000.
We look forward to managing the Trust in the coming year to benefit from the
opportunities available to investors in the fixed income markets as well as to
maintain the Trust's ability to meet its investment objectives. We thank you for
your investment in the BlackRock Target Term Trust Inc. and extend our continued
commitment to addressing your questions and concerns. Please feel free to
contact our marketing center at (800) 227-7BFM (7236) if you have questions
which were not addressed in this report.
Sincerely,
Robert S.Kapito Keith T. Anderson
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
- -------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
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Symbol on New York Stock Exchange: BTT
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Initial Offering Date: November 17, 1988
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Closing Stock Price as of 12/31/95: $8.75
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Net Asset Value as of 12/31/95: $10.02
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Yield on Closing Stock Price as of 12/31/95 ($8.75)1: 6.57%
- -------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.047917 3
- -------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.575 3
- -------------------------------------------------------------------------------
- -------------
1Yield on Closing Stock Price is calculated by dividing the current annualizing
distribution per share and dividing it by the closing stock price per share.
2Dividend is not constant and is subject to change.
3New distribution rate effective with the January 1996 payment.
4
<PAGE>
(Left column)
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The BlackRock Target Term Trust Inc.
Portfolio of Investments
December 31, 1995
- --------------------------------------------------------------------------------
Principal
Amount Value
Rating* (000) Description (Note 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS-147.6%
Mortgage Pass-Throughs-28.5%
$ 5,000 Federal Home Loan Bank,
8.73%, 10/30/97 ........................$ 5,162,500
Federal Home Loan Mortgage Corporation,
12,038 5.00%, 11/01/00 - 5/01/01,
7 Year ............................... 11,488,243
2,442 7.50%, 2/01/07 - 6/01/09,
15 Year .............................. 2,509,519
706 7.50%, 10/01/23 ........................ 724,011
18,364 7.77%, 12/01/00, Multifamily ........... 19,523,016
13,753 8.00%, 9/01/19 - 12/01/23 .............. 14,389,663
740 8.50%, 2/01/00, 15 Year ................ 743,641
65,219+ 9.00%, 1/01/09 - 9/01/16,
15 Year .............................. 68,979,402
713 11.00%, 9/01/00, 15 Year ............... 763,863
Federal National Mortgage Association,
10,000 7.00%, 1/01/99, 7 Year ................. 10,181,200
5,099 8.00%, 3/01/02, 7 Year ................. 5,238,032
2,995 8.00%, 10/01/08 - 2/01/25 .............. 3,101,403
6,765 8.025%, 7/01/00, Multifamily ........... 7,221,638
18,904 8.50%, 12/01/20 - 9/01/21 .............. 19,731,236
Government National Mortgage
Association,
26,603+ 6.50%, 4/20/25 - 5/20/25,
1 Year CMT (ARM) ..................... 27,147,668
65,271+ 7.00%, 10/20/24 - 6/20/25,
1 Year CMT (ARM) ..................... 66,372,153
8,273 8.50%, 9/15/16 - 8/15/21 ............... 8,757,548
775 9.00%, 6/15/09 - 4/15/13 ............... 847,104
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272,881,840
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Multiple Class Mortgage
Pass-Throughs-14.3%
AAA 183 Countrywide Funding Corp.,
Series 1994-10, Class A-1,
5/25/09 .............................. 182,472
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
25 Series 1067, Class 1067-J,
4/15/21 (I) .......................... 591,146
53 Series 1149, Class1 1149-IC,
10/15/21 (I) ......................... 1,327,519
2,690 Series 1425, Class 1425-G,
8/15/06 .............................. 2,739,631
6,835 Series 1516, Class 1516-S,
6/15/00 (ARM) ........................ 6,322,150
5,298 Series 1564, Class 1564-I,
5/15/07 (I) .......................... 609,564
1,000 Series 1580, Class 1580-S,
9/15/00 (ARM) ........................ 825,930
2,783 Series 1566, Class 1566-SC,
9/15/00 (ARM) ........................ 2,566,141
10,000 Series 1700, Class 1700-B,
7/15/23 (P) .......................... 8,725,000
(Right Column)
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Principal
Amount Value
Rating* (000) Description (Note 1)
- --------------------------------------------------------------------------------
Federal National Mortgage
Association, REMIC Pass-
Through Certificates,
$ 4,481 Trust 1990-35, Class 35-E,
4/25/20 ..............................$ 4,884,973
16 Trust 1991-29, Class 29-J,
4/25/21 (I) .......................... 433,680
3,517 Trust 1992-23, Class 23-D,
2/25/21 (P) .......................... 2,159,541
9,167 Trust 1992-140, Class 140-HD,
11/25/06 (P) ......................... 6,648,675
15,325+ Trust 1993-7, Class 7-S, 2/25/00
(ARM) ................................ 15,191,019
21,334 Trust 1993-11, Class 11-M,
2/25/08 (I) .......................... 3,146,755
4,964 Trust 1993-G12, Class 12-E,
2/25/23 .............................. 2,007,162
16,258 Trust 1993-23, Class 23-P,
2/25/21 (I) .......................... 2,235,407
6,000 Trust 1993-G26, Class 26-PT,
12/25/17 (I) ......................... 1,415,191
20,679 Trust 1993-34, Class G34-PV,
2/25/17 (I) .......................... 2,429,744
46,578 Trust 1993-G35, Class G35-S,
1/25/22 (ARM) ........................ 2,911,104
4,500 Trust 1993-169, Class 169-SA,
9/25/00 (ARM) ........................ 3,993,750
1,500 Trust 1993-227, Class 227-G,
12/25/00 ............................. 1,475,160
AAA 6,749 Goldman Sachs Collateralized
Mortgage Obligations,
Trust 8, Class A, 3/25/18 .............. 6,902,317
5,000 Government National Mortgage
Association, Series 1994-1,
Class 1-PC, 12/16/16 ................... 5,193,350
AAA 22 Prudential Securities, Collateralized
Mortgage Obligations, Series 16,
Class 16-P, 10/25/21 (I) ............... 3,643,141
AA- 11,315 Resolution Trust Corporation,
Series 1992-C6, Class B, 7/25/24 ....... 11,565,795
AAA 2,000 Ryland Acceptance Corp.,
Collateralized Mortgage Bonds,
Series 1972, Class D, 12/01/16 ......... 2,084,360
AAA 28,133 Salomon Capital Access Corp.,
Series 1986-1, Class C, 9/01/15 ........ 28,695,460
AAA 6,360 Structured Asset Securities Corp.,
Collateralized Mortgage
Obligations, Series 1989-1,
Class D, 7/01/19 ....................... 6,360,000
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137,266,137
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See Notes to Financial Statements.
5
<PAGE>
(Left Column)
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Principal
Amount Value
Rating* (000) Description (Note 1)
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Corporate Bonds-12.8%
Finance & Banking-10.3%
A+ $ 6,070 American Express, 11.63%,
12/12/00 ...............................$ 6,817,217
AA- 5,000 Associates Corporation North
America, 6.35%, 6/29/00 ................ 5,057,812
Finance & Banking-con't
A+ 10,000 Goldman Sachs Group L. P.,
6.20%, 12/15/00 ........................ 10,068,144
A 5,000 Household Finance Corporation,
6.89%, 5/11/98 ......................... 5,112,500
International Lease Finance Corporation,
A+ 3,000 6.30%, 11/01/99 ........................ 3,045,937
A+ 6,000 6.63%, 4/01/99 ......................... 6,129,900
BBB- 3,000 Meditrust, 7.25%, 8/16/99 ................ 3,063,750
BBB+ 4,000 Meridian Bancorp Incorporated,
6.63%, 6/15/00 ......................... 4,114,059
Baa3 6,000 New American Capital Incorporated,
7.25%, Series C, 4/12/00 ............... 6,000,000
AA- 5,000 Norwest Corporation,
7.70%, 11/15/97 ........................ 5,194,600
PaineWebber Group Incorporated,
BBB+ 7,305 6.31%, 7/22/99 ......................... 7,401,572
BBB+ 4,000 7.00%, 3/01/00 ......................... 4,102,616
BBB 5,100 Provident Bank Cincinnati Ohio,
Trust 3, 6.13%, 12/15/00 ............... 5,125,109
Salomon Incorporated,
BBB+ 6,300 7.59%, 1/28/00 ......................... 6,562,395
BBB 4,000 7.75%, 5/15/00 ......................... 4,163,075
Smith Barney Holdings Inc.,
A3 1,950 6.63%, 6/01/00 ......................... 1,997,515
A 10,000@ Transamerica Finance Corporation,
6.75%, 6/01/00 ......................... 10,315,047
BBB- 4,000 Transport Financial Bank,
6.32%, 10/17/97 ........................ 4,024,960
-------------
98,296,208
-------------
Industrials-2.5%
AA- 3,000 BP America Incorporated,
9.75%, 3/01/99 ......................... 3,346,912
BBB 5,000 Columbia Gas Systems
Incorporated, Debenture, 6.39%,
11/28/00 ............................... 5,073,544
A- 10,000 General Motors Acceptance
Corporation, 6.13%, 9/18/98 ............ 10,099,000
BBB 5,000 News America Holdings Inc.,
7.50%, 3/01/00 ......................... 5,256,074
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23,775,530
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(Right column)
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Principal
Amount Value
Rating* (000) Description (Note 1)
- --------------------------------------------------------------------------------
Asset-Backed Securities-4.2%
AAA $13,745 Daimler Benz Auto Grantor Trust,
Series 1995-A Class A,
5.85%, 5/15/02 .........................$ 13,777,469
Ford Credit Grantor Trust,
AAA 11,332 Series 1995-B Class A,
5.90%, 10/15/00 ........................ 11,384,950
AAA 15,010 Series 1995-A Class A, 5.90%,
5/15/00 ................................ 15,066,156
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40,228,575
-------------
Stripped Mortgage-Backed
Securities-4.2%
AAA 1,498 DBL, Inc., Trust V, Class 1,
9/01/18 (P/O) .......................... 1,146,347
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
13,609 Series 1440 Class PK,
8/15/18 (I/O) ........................ 1,530,977
599 Series 1664, Class 1664-A,
12/15/23 (P/O) ....................... 571,925
2,442 Series 1790C, Class 1790C-K,
5/15/23 (P/O) ........................ 1,081,178
Federal National
Mortgage Association, REMIC
Pass-Through Certificates,
13,281 Trust 1, Class 2, 2/01/17 (I/O) ........ 3,187,335
6,868 Trust 2, Class 2, 2/01/17 (l/O) ........ 1,766,490
5,943 Trust 3, Class 2, 2/01/17 (l/O) ........ 1,446,804
20,222 Trust 4, Class 2, 2/01/17 (l/O) ........ 4,802,702
9,649 Trust 6, Class 2, 1/01/17 (I/O) ........ 2,315,867
3,417 Trust 9, Class 2, 2/01/17 (l/O) ........ 820,059
5,947 Trust 14, Class 2, 2/01/17 (I/O) ....... 1,419,893
232 Trust 18, Class 2, 2/01/17 (l/O) ....... 57,808
4,443 Trust 19, Class 1, 6/01/17 (P/O) ....... 3,598,741
1,475 Trust 34, Class 2, 5/01/18 (l/O) ....... 368,748
2,288 Trust 95, Class 2, 10/01/20 (l/O) ...... 567,592
2,287 Trust 225, Class 1, 2/01/23 (P/O) ...... 1,827,444
15,775 Trust 226, Class 2, 6/01/23 (I/O) ...... 3,786,037
168 Trust 1991-79, Class 79-B
7/25/98 (P/O) ........................ 145,996
1,617 Trust 1991-121, Class 121-B,
9/25/98 (P/O) ........................ 1,442,809
2,876 Trust 1993-G35, Class G35-N,
11/25/23 (P/O) ....................... 1,229,701
2,362 Trust 1993-88, Class C,
6/25/00 (P/O) ........................ 1,842,003
AAA 5,751 Prudential-Bache Collateralized
Mortgage Obligation Trust, Series
10, Class 10-H, 4/01/19 (P/O) .......... 4,334,477
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39,290,933
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See Notes to Financial Statements.
6
<PAGE>
(Left Column)
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Principal
Amount Value
Rating* (000) Description (Note 1)
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligation
Residuals**-2.7%
AAA $ 5 American Housing Trust V, Senior-
Mortgage Pass-Through
Certificates, Series A, Class R,
4/25/21 (REMIC)# ....................... $ 500
Collateralized Mortgage Securities
Corporation, Collateralized
Mortgage Obligations,
AAA 10 Series 1989-2, Class I, 6/25/19 ........ 327,735
AAA 1 Series 1990-3, Class R,
5/25/20 .............................. 487,089
Federal Home Loan Mortgage
Corporation, REMIC Multiclass
Mortgage Participation
Certificates,
450 Series 32, Class 32-R, 3/15/20 ......... 512,089
3 Series 88, Class 88-R, 10/15/20 ........ 368,498
10 Series 98, Class 98-R, 11/15/20 ........ 1,725,000
1 Series 119, Class 119-R, 1/15/21 ....... 2,030,461
100 Series 153, Class 153-R, 4/15/21 ....... 1,800,000
Federal National Mortgage
Association, REMIC Pass-
Through Certificates,
10,000 Trust 1989-31, Class 31-R,
6/25/19 .............................. 643,467
13 Trust 1989-66, Class 66-R,
9/25/19 .............................. 1,875,990
1 Trust 1989-70, Class 70-R, 10/25/19 .... 1,243,140
50 Trust 1989-85, Class 85-R, 11/25/19 .... 2,171,591
1 Trust 1989-89, Class 89-R, 11/25/19 .... 205,549
1 Trust 1989-100, Class 100-R, 12/25/19 .. 907,696
1 Trust 1990-2, Class 2-R, 1/25/20 ....... 1,940,052
1 Trust 1990-6, Class 6-R, 1/25/20 ....... 45,000
100 Trust 1990-23, Class 23-R, 3/25/20 ..... 1,740,000
75 Trust 1990-53, Class 53-R, 5/25/20 ..... 1,325,000
70 Trust 1990-78, Class 78-R, 7/25/20 ..... 927,500
25 Trust 1990-87, Class 87-R, 7/25/20 ..... 1,225,000
AAA 1 M.D.C. Asset Investors, Trust VI,
Collateralized Mortgage
Obligations, 11/01/17 (REMIC)# ......... 184,178
AAA 57 PaineWebber, CMO Trust, Series N7
Collateralized Mortgage
Obligation, 1/01/19 (REMIC)# ........... 456,000
AAA 150 Prudential-Bache CMO Trust II,
Collateralized Mortgage
Obligations, 6/01/18 (REMIC)# .......... 850,690
(Right Column)
- --------------------------------------------------------------------------------
Principal
Amount Value
Rating* (000) Description (Note 1)
- --------------------------------------------------------------------------------
AAA $ 18 Ryland Acceptance Corp. Four,
Collateralized Mortgage Bonds,
Series 1986, Class R,
4/01/19 (REMIC)# ....................... $ 555,608
AAA 50 Shearson Lehman Collateralized
Mortgage Obligation Inc.,
Mortgage-Backed Sequential Pay
Bonds, Series V, Sequence V-9,
5/01/19 (REMIC)# ....................... 2,470,356
AAA 34 Structured Asset Securities Corp.,
Collateralized Mortgage
Obligations, Series 1989-1,
Class R, 7/01/19 (REMIC)# .............. 87,730
-------------
26,105,919
-------------
U.S. Government Securities-2.0%
U. S. Treasury Notes,
17,000 5.50%, 12/31/00 ........................ 17,257,720
2,245+ 5.625%, 11/30/00 ....................... 2,265,340
-------------
19,523,060
-------------
Taxable Zero Coupon Bonds-77.6%
2,185 Agency STRIPS, Series 1, relating to
Federal National Mortgage
Association 8.95% Debentures,
Series SM-2018-A, 8/12/00 .............. 1,691,750
10,407 Federal Home Loan Mortgage
Corporation, Debenture, 5/15/00 ........ 8,170,177
6,250 Federal Judiciary Office Building,
8/15/00 ................................ 4,825,279
Federal National Mortgage
Association,
11,250 2/01/00 ................................ 8,956,949
11,250 8/01/00 ................................ 8,713,461
5,370 8/12/00 ................................ 4,166,459
Financing Corporation (FICO Strips),
5,311 2/08/00 ................................ 4,240,727
21,050++ 3/07/00 ................................ 16,776,429
4,472 3/26/00 ................................ 3,544,776
13,000 4/05/00 ................................ 10,308,480
12,750 4/06/00 ................................ 10,084,740
11,445 5/02/00 ................................ 9,016,600
19,199 6/06/00 ................................ 15,083,886
850 6/27/00 ................................ 665,695
4,675 8/03/00 ................................ 3,641,404
9,541 8/08/00 ................................ 7,405,438
23,000+ 9/07/00 ................................ 17,822,700
4,472 9/26/00 ................................ 3,445,631
2,474 10/06/00 ............................... 1,902,382
3,945 11/02/00 ............................... 3,021,436
38,050+ 12/06/00 ............................... 29,076,288
33,600++ 12/27/00 ............................... 25,593,792
333 Government and Agency Term
Obligation Receipt, 11/15/00 ........... 250,529
See Notes to Financial Statements.
7
<PAGE>
(Left Column)
- --------------------------------------------------------------------------------
Principal
Amount Value
Rating* (000) Description (Note 1)
- --------------------------------------------------------------------------------
Taxable Zero Coupon Bonds-(con't)
Government Trust Certificates,
$13,659 Series J-I, 5/15/00 ....................$ 10,779,273
13,362 Series J-I, 11/15/00 ................... 10,257,874
46,028 Series T-1, 11/15/00 ................... 35,203,691
20,673 Series T-4, 11/15/00 ................... 15,870,455
16,644 Series 1-D, 5/15/00 .................... 13,134,946
33,100 Series 1-D, 11/15/00 ................... 25,410,539
42,627 Series 2-F, 5/15/00 .................... 33,639,949
44,627 Series 2-F, 11/15/00 ................... 34,259,702
356 Physical Treasury Coupons,
8/15/00 ................................ 276,856
17,938 Resolution Funding Corporation,
10/15/00 ............................... 13,862,845
Tennessee Valley Authority,
15,488 5/01/00 ................................ 12,264,560
11,128 11/01/00 ............................... 8,568,560
1,862 U.S. Treasury CUBES, 11/15/00 ............ 1,426,720
U.S. Treasury Strips,
1,097 2/15/00 ................................ 881,681
161 5/15/00 ................................ 127,841
296,926+ 8/15/00 ................................ 232,086,250
124,685+ 11/15/00 ............................... 96,151,684
--------------
742,608,434
--------------
Municipal Bonds-1.3%
AAA 2,190 Long Beach California Pension
Obligation, Taxable Refunding,
6.33%, 9/01/00 ......................... 2,231,084
AAA 7,855 Massachusetts State Housing
Finance Authority, Series 1991-A,
Class 91-5, 6.85%, 4/01/21 ............. 8,021,919
AAA 2,000 Western Minnesota Municipal
Power Agency Supply, Series A,
6.19%, 1/01/00 ......................... 2,016,800
--------------
12,269,803
--------------
Total Long-Term Investments
(cost $1,364,171,141) ............... $1,412,246,439
--------------
SHORT-TERM INVESTMENT-0.2%
Discount Note (a)
2,160 Federal Home Loan Bank, 5.75%,
1/02/96
(cost $2,159,655) ................... 2,159,655
--------------
Total Investments-147.8%
(cost $1,366,330,796) ............... 1,414,406,094
Liabilities in excess of other
assets--(47.8%) ..................... (457,484,507)
--------------
NET ASSETS-100% ....................... $ 956,921,587
==============
(Right Column)
- ------------
*Using the higher of Standard & Poor's or Moody's rating.
**Illiquid securities representing 1.8% of portfolio assets.
#Private placements restricted as to resale.
+$400,247,041 principal amount pledged as collateral for reverse
repurchase agreements.
++Entire principal amount pledged as collateral for reverse repurchase
agreements.
@$6,189,028 principal amount pledged as collateral for futures contracts.
(a)Security was purchased on a discount basis, the interest rate shown has
been adjusted to reflect a money market equivalent.
- -------------------------------------------------------------------------------
Key to Abbreviations
ARM -Adjustable Rate Mortgage.
CMO -Collateralized Mortgage Obligation.
CMT -Constant Maturity Treasury.
I -Denotes a CMO with interest only characteristics.
I/O -Interest Only.
P -Denotes a CMO with principal only characteristics.
P/O -Principal Only.
REMIC -Real Estate Mortgage Investment Conduit.
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE>
(Left column)
- -------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Statement of Assets and Liabilities
December 31, 1995
- -------------------------------------------------------------------------------
Assets
Investments, at value
(cost $1,366,330,796) (Note 1) ............................. $1,414,406,094
Cash ......................................................... 29,182
Interest receivable .......................................... 5,853,695
Receivable for investments sold .............................. 1,265,620
Due from broker-variation margin ............................. 98,197
--------------
1,421,652,788
--------------
Liabilities
Reverse repurchase agreements (Note 4) ....................... 428,825,000
Payable for investments purchased ............................ 27,677,419
Dividends payable ............................................ 4,574,362
Interest payable ............................................. 2,656,435
Advisory fee payable (Note 2) ................................ 364,824
Accrued excise tax ........................................... 140,000
Administration fee payable (Note 2) .......................... 91,718
Other accrued expenses ....................................... 401,443
--------------
464,731,201
--------------
Net Assets ................................................... $ 956,921,587
==============
Net assets were comprised of:
Common stock, at par (Note 5) .............................. $ 954,606
Paid-in capital in excess of par ........................... 893,438,946
--------------
894,393,552
--------------
Undistributed net investment income ........................ 16,165,141
Accumulated net realized losses ............................ (2,152,998)
Net unrealized appreciation ................................ 48,515,892
--------------
Net assets, December 31, 1995 .............................. $ 956,921,587
==============
Net asset value per share:
($956,921,587 / 95,460,639 shares of
common stock issued and outstanding) ....................... $10.02
======
See Notes to Financial Statements.
(Right Column)
- -------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Statement of Operations
Year Ended December 31, 1995
- -------------------------------------------------------------------------------
Net Investment Income
Income
Interest (includes net discount accretion of
$36,007,519 and net of interest expense of
$34,723,295) ............................................. $ 76,489,429
--------------
Operating expenses
Investment advisory ........................................ 4,039,429
Administration ............................................. 1,022,994
Custodian .................................................. 549,000
Reports to shareholders .................................... 540,000
Transfer agent ............................................. 312,000
Directors .................................................. 72,000
Audit ...................................................... 70,000
Legal ...................................................... 25,000
Miscellaneous .............................................. 220,769
--------------
Total operating expenses ................................. 6,851,192
--------------
Net investment income before excise tax ...................... 69,638,237
Excise tax ................................................. 140,000
--------------
Net investment income ........................................ 69,498,237
==============
Realized and Unrealized Gain (Loss)
on Investments (Note 3)
Net realized gain (loss) on:
Investments ................................................ 29,518,405
Futures .................................................... (805,544)
Short sales ................................................ (31,703,333)
--------------
............................................................. (2,990,472)
--------------
Net change in unrealized appreciation
(depreciation) on:
Investments .............................................. 93,303,570
Futures .................................................. 595,791
Short sales .............................................. 3,596,537
--------------
............................................................. 97,495,898
--------------
Net gain on investments .................................... 94,505,426
--------------
Net Increase In Net Assets
Resulting from Operations ................................... $164,003,663
==============
See Notes to Financial Statements.
9
<PAGE>
(LEFT COLUMN)
- -------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Statement of Cash Flows
Year Ended December 31, 1995
- -------------------------------------------------------------------------------
Increase (Decrease) in Cash
Cash flows provided by operating activities:
Interest received ........................................... $ 74,196,893
Operating expenses paid ..................................... (6,753,081)
Interest expense paid ....................................... (35,769,726)
Purchases of short-term portfolio
investments, net .......................................... (1,304,655)
Purchase of long-term portfolio investments . ...............(1,408,712,729)
Proceeds from disposition of long-term
portfolio investments ..................................... 1,434,661,625
Variation margin on futures ................................. (55,917)
Other ....................................................... 78,048
--------------
Net cash flows provided by operating activities ............. 56,340,458
--------------
Cash flows used for financing activities:
Increase in reverse repurchase agreements ................... 6,247,000
Cash dividends paid ......................................... (62,993,887)
--------------
Net cash flows used for financing activities ................ (56,746,887)
--------------
Net decrease in cash .......................................... (406,429)
Cash at beginning of year ..................................... 435,611
--------------
Cash at end of year ........................................... $ 29,182
==============
Reconciliation of Net Increase in Net
Assets Resulting from Operations to
Net Cash Flows Provided By
Operating Activities
Net increase in net assets resulting from
operations .................................................. $164,003,663
--------------
Increase in investments ....................................... (49,234,558)
Net realized loss ............................................. 2,990,472
Increase in unrealized appreciation ........................... (97,495,898)
Decrease in deposits with brokers as
collateral for investments sold short ....................... 130,906,250
Decrease in receivable for investments sold ................... 34,656,281
Increase in interest receivable ............................... (1,008,312)
Decrease in receivable for variation margin ................... 153,836
Decrease in other assets ...................................... 78,048
Increase in payable for investments purchased . ............... 1,778,102
Decrease in dollar roll payable ............................... (543,506)
Decrease in interest payable .................................. (1,046,431)
Decrease in payable for securities sold short ................. (129,135,600)
Increase in accrued expenses and other
liabilities ................................................. 238,111
--------------
Total adjustments ............................................. (107,663,205)
--------------
Net cash flows provided by operating activities ............... $ 56,340,458
==============
(RIGHT COLUMN)
- -------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Statements of Changes
in Net Assets
- -------------------------------------------------------------------------------
Year Ended December 31,
--------------------------
1995 1994
---- ----
Increase (Decrease) in
Net Assets
Operations:
Net investment income ........................ $ 69,498,237 $ 60,188,948
Net realized gain (loss) on
investments, futures
and short sales ............................ (2,990,472) 5,054,621
Net change in unrealized
appreciation (depreciation)
on investments,
futures, and short sales ................... 97,495,898 (129,628,993)
Net increase (decrease) in
net assets resulting from
operations ................................. 164,003,663 (64,385,424)
Dividends and distributions:
Dividends from net
investment income .......................... (66,625,406) (68,416,640)
Distributions from net
realized capital gains ..................... (282,086) -
------------ -------------
Total increase (decrease) .................... 97,096,171 (132,802,064)
Net Assets
Beginning of year .............................. 859,825,416 992,627,480
------------ -------------
End of year .................................... $956,921,587 $859,825,416
============ =============
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Two Months Year
Year Ended December 31, Ended Ended
------------------------------------------- December 31, October 31,
1995 1994 1993 1992 1991* 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ...................... $ 9.01 $10.40 $10.28 $10.53 $ 10.14 $ 9.24
------ ------ ------ ------ ------- ------
Net investment income (net of interest expense of
$.36, $.21, $.10, $.18, $.04 and $.07, respectively) .. .72 .63 .81 .74 .17 1.14
Net realized and unrealized gain (loss) on investments .. .99 (1.30) .04 (.12) .46 .71
------ ------ ------ ------ ------- ------
Net increase (decrease) from investment operations ........ 1.71 (.67) .85 .62 .63 1.85
------ ------ ------ ------ ------- ------
Dividends from net investment income ...................... (.70) (.72) (.73) (.87) (.24) (.95)
------ ------ ------ ------ ------- ------
Net asset value, end of period** .......................... $10.02 $ 9.01 $10.40 $10.28 $ 10.53 $10.14
====== ====== ====== ====== ======= ======
Market value, end of period** ............................. $ 8.75 $8.125 $10.00 $10.00 $10.875 $10.75
====== ====== ====== ====== ======= ======
TOTAL INVESTMENT RETURN+ .................................. 16.34% (11.98%) 7.36% (.20%) 3.42% 17.57%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses# ....................................... 0.75% 0.75% 0.73% 0.88% 0.89%++ 0.90%
Net investment income ..................................... 7.57% 6.62% 7.62% 7.18% 10.36%++ 11.82%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ......................... $918,344 $909,105 $1,011,691 $981,133 $ 975,843 $921,727
Portfolio turnover 118% 84% 41% 30% 2% 279%
Net assets, end of period (in thousands) .................. $956,922 $859,825 $ 992,627 $981,267 $1,005,552 $967,739
Reverse repurchase agreements outstanding,
end of period (in thousands) ............................ $428,825 $422,578 $ 270,800 $270,636 $ 472,805 $424,765
Asset coverage+++ $ ....................................... 3,231 $ 3,035 $ 4,666 $ 4,625 $ 3,127 $ 3,278
<FN>
- ----------
* Subsequent to October 31, 1991 (the Trust's prior fiscal year-end) the Trust changed its fiscal year-end to December 31.
** NAV and market value published in The Wall Street Journal each Monday.
# The ratios of operating expenses including excise tax, if applicable, to average net assets were 0.76%, 0.75%, 0.73%, 0.89%,
1.04% and 0.92% for the periods indicated above, respectively.
+ 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 each period reported. Dividends 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 returns for periods of less than one full year are not annualized.
++ Annualized.
+++ Per $1,000 of reverse repurchase agreement outstanding. The information above represents the audited operating performance data
for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data, for
each of 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.
</FN>
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Left Column)
Note 1. Accounting
Policies
The BlackRock Target Term Trust Inc. (the "Trust"), a Maryland corporation, is a
diversified, closed-end management investment company. The investment objective
of the Trust is to manage a portfolio of investment grade fixed income
securities that will return $10 per share (the initial offering price per share)
to investors on or shortly before December 31, 2000 while providing high monthly
income. 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 mortgage-backed, asset-backed and other
debt securities 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. Exchange-traded
options are valued at their last sales price as of the close of options trading
on the applicable exchanges. In the absence of a last sale, options are valued
at the average of the quoted bid and asked prices as of the close of business. A
futures contract is valued at the last sale price as of the close of the
commodities exchange on which it trades unless the Trust's Board of Directors
determines that such price does not reflect its fair value, in which case it
will be valued at its fair value as determined by the Trust's Board of
Directors. 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 more than 60 days are valued at
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost, if their term to maturity from date of purchase
was 60
12
(Right Column)
days or less, or by amortizing their value on the 61st day prior to maturity, if
their original term to maturity from date of purchase exceeded 60 days.
In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
Option Selling/Purchasing: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy or sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period that the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract
<PAGE>
(Left Column)
is closed, the Trust records a realized gain or loss equal to the difference
between the proceeds from (or cost of) the closing transaction and the Trust's
basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Duration is a measure of the price sensitivity of a security
or a portfolio to relative changes in interest rates. For instance, a duration
of "one" means that a portfolio or a security's price would be expected to
change by approximately one percent with a one percent change in interest rates,
while a duration of "five" would imply that the price would move approximately
five percent in relation to a one percent change in interest rates. Futures
contracts can be sold to effectively shorten an otherwise longer duration
portfolio. In the same sense, futures contracts can be purchased to lengthen a
portfolio that is shorter than its duration target. Thus, by buying or selling
futures contracts, the Trust can effectively hedge more volatile positions so
that changes in interest rates do not change the duration of the portfolio
unexpectedly.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets. The Trust is also at risk of not being able to
enter into a closing transaction for the futures contract because of an illiquid
secondary market. In addition, since futures are used to shorten or lengthen a
portfolio's duration, there is a risk that the portfolio may have temporarily
performed better without the hedge or that the Trust may lose the opportunity to
realize appreciation in the market price of the underlying positions.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential price declines in similar securities owned. When the Trust makes a
short sale, it may borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any premiums received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as to
dollar amount, will be recognized upon the termination of a short sale if the
market price is greater or less than the proceeds originally received.
13
(Right Column)
Security Lending: The Trust may lend its portfolio securities to qualified
institutions. The loans are secured by collateral at least equal, at all times,
to the market value of the securities loaned. The Trust may bear the risk of
delay in recovery of, or even loss of rights in, the securities loaned should
the borrower of the securities fail financially. The Trust receives compensation
for lending its securities in the form of interest on the loan. The Trust also
continues to receive interest on the securities loaned, and any gain or loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Trust. The Trust did not engage in
securities lending during the year ended December 31, 1995.
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.
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. As part of its tax planning
strategy, the Trust may retain a portion of its taxable income and pay an excise
tax on the undistributed amounts.
Dividends and Distributions: The Trust declares and pays dividends and
distributions monthly first from net investment income, then from 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.
Reclassification of Capital Accounts: The Trust accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountant's Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect caused by
applying this statement was to decrease paid-in capital and increase
undistributed net investment income by $140,000 due to certain expenses not
being deductible for tax purposes. Net investment income, net realized gains and
net assets were not affected by this change.
<PAGE>
(Left Column)
Note 2. Agreements
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, Inc. (the "Adviser"), and an Administration Agreement with
Prudential Mutual Fund Management, Inc. ("PMF"), an indirect, wholly-owned
subsidiary of The Prudential Insurance Co. of America.
The investment advisory fee paid to the Adviser is computed weekly and
payable monthly at an annual rate of 0.45% of the Trust's average weekly net
assets through December 31, 1996 and 0.30% from January 1, 1997 to the
termination or liquidation of the Trust. The administration fee paid to PMF is
also computed weekly and payable monthly at an annual rate of 0.125% of the
first $500 million and 0.10% of any excess through December 31, 1996, and 0.10%
of the first $500 million of the Trust's average weekly net assets and 0.08% of
any excess from January 1, 1997 to the termination or liquidation of the Trust.
Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Adviser. PMF pays occupancy and certain clerical
and accounting costs of the Trust. The Trust bears all other costs and expenses.
On February 28, 1995, the Adviser was acquired by PNC Bank, N.A. Following
the acquisition, the Adviser has become a wholly-owned corporate subsidiary of
PNC Asset Management Group, Inc., the holding company for PNC's asset management
business.
Note 3. Portfolio
Securities
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the year ended December 31, 1995 aggregated
$1,410,490,831, and $1,359,608,057, respectively.
The Trust may invest up to 40% of its total assets in securities which are
not readily marketable, including those which are restricted as to disposition
under securities law ("restricted securities"). At December 31, 1995, the Trust
held 1.8% of its portfolio assets in illiquid securities including 0.3% of its
portfolio assets in securities restricted as to resale.
The federal income tax basis of the Trust's investments at December 31, 1995
was substantially the same as the basis for financial reporting and accordingly,
net unrealized appreciation for federal income tax purposes was $48,075,298
(gross unrealized appreciation-$85,340,439; gross unrealized depreciation-
$37,265,141).
For federal income tax purposes, the Trust had a capital loss carryforward
at December 31, 1995 of approximately
14
(Right Column)
$7,421,500 which will expire in 2003. Accordingly, no capital gains distribution
is expected to be paid to shareholders until net gains have been realized in
excess of such amount.
During the year ended December 31, 1995, the Trust entered into financial
futures contracts. Details of open futures at December 31, 1995 are as follows:
Value at Value at
Number of Expiration Trade December 31, Unrealized
Contracts Type Date Date 1995 Appreciation
- --------- ---- ---- ---- ---- ------------
Long
positions:
30 yr. March
290 T-Bond 1996 $34,785,344 $35,225,938 $440,594
Note 4. Borrowings
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 will be based upon
competitive market rates at the time of issuance. At the time the Trust enters
into a reverse repurchase agreement, it will establish and maintain a segregated
account with the lender, the value of which at least equals the principal amount
of the reverse repurchase transactions including accrued interest.
The average daily balance of reverse repurchase agreements outstanding
during the year ended December 31, 1995 was approximately $441,329,233 at a
weighted average interest rate of approximately 6.03%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the year ended
December 31, 1995 was $517,100,000 as of November 30, 1995, which was 33.5% of
total assets. The amount of reverse repurchase agreements outstanding at
December 31, 1995 was $428,825,000, which was 30.2% of total assets.
Dollar Rolls: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date.
The average monthly balance of dollar rolls outstanding during the year
ended December 31, 1995 was approximately $6,146,000. The maximum amount of
dollar rolls outstanding at any month-end during the year ended December 31,
1995 was $12,645,300 as of December 31, 1995, which was .89% of total assets.
<PAGE>
(Left Column)
Note 5. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
95,460,639 shares outstanding at December 31, 1995, the Adviser owned 10,639
shares.
(Right Column)
Note 6. Dividends
Subsequent to December 31, 1995, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.047917 per share payable February 29,
1996 to shareholders of record on February 15, 1996.
Note 7. Quarterly Data
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and Net increase (decrease)
unrealized in net assets Dividends
Net investment gains (losses) resulting from and Period end
Quarterly Total income on investments operations Distributions Share price net asset
period income Amount Per share Amount Per share Amount Per share Amount Per share High Low value
--------- ------ ---------------- ---------------- ----------------- ----------------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 1, 1994
to March 31,1994 $15,191,464 $13,423,417 $.14 $(63,941,217) $(.67) $(50,517,800) $(.53) $18,302,668 $.19 $10-1/8 $8-7/8 $9.68
April 1, 1994
to June 30, 1994 11,806,618 10,142,089 .11 (24,083,293) (.25) (13,941,204) (.14) 16,704,657 .18 9-3/8 8-5/8 9.36
July 1, 1994
to Sept.30, 1994 15,534,348 13,888,570 .14 (6,871,861) (.07) 7,016,709 .07 16,704,657 .18 9-1/8 8-3/8 9.25
October 1, 1994
to Dec. 31, 1994 24,453,953 22,734,872 .24 (29,678,001) (.31) (6,943,129) (.07) 16,704,658 .17 8-5/8 7-7/8 9.01
January 1, 1995
to March 31,1995 24,821,335 21,969,605 .23 33,502,291 .35 55,471,896 .58 15,512,613 .16 8-7/8 8-1/8 9.43
April 1, 1995
to June 30, 1995 16,128,039 15,710,472 .16 34,604,887 .37 50,315,359 .53 15,512,614 .16 9-1/4 8-3/8 9.79
July 1, 1995
to Sept.30, 1995 17,948,613 16,249,910 .17 (4,458,729) (.05) 11,791,181 .12 15,795,395 .17 9 8-3/8 9.75
October 1, 1995
to Dec. 31, 1995 17,591,442 15,568,250 .16 30,856,977 .32 46,425,227 .48 20,086,870 .21 9-1/4 8-5/8 10.02
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The BlackRock Target Term Trust Inc.:
We have audited the accompanying statement of assets and liabilities of The
BlackRock Target Term Trust Inc. including the portfolio of investments, as of
December 31, 1995, and the related statements of operations and cash flows for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
four years in the period then ended and for the period November 1, 1991 to
December 31, 1991 and for the year ended October 31, 1991. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1995, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock Target
Term Trust Inc. as of December 31, 1995, the results of its operations, its cash
flows, the changes in its net assets and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
February 9, 1996
16
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THE BLACKROCK TARGET TERM TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------
We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during its fiscal year ended December 31, 1995.
During the fiscal year ended December 31, 1995, the Trust paid aggregate
distributions of $0.7009 per share of which $0.6979 is a distribution from net
investment income and $0.003 is a distribution from long term capital gains. For
federal income tax purposes, the aggregate of any dividends and short-term
capital gains distributions you received are reportable in your 1995 federal
income tax returns as ordinary income and the long-term capital gain
distributions are taxable as such. Further, we wish to advise you that your
income dividends do not qualify for the dividends received deduction.
For the purpose of preparing your 1995 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form 1099
DIV which was mailed to you in January 1996.
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DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by State Street Bank & Trust Company (the "Plan Agent")
in Trust shares pursuant to the Plan. Shareholders who do not 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, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange for the participants' accounts. The Trust will not issue shares
under the Plan.
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.
Experience under the Plan may indicate that changes are desirable.
Accordingly, 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.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trusts 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.
17
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THE BLACKROCK TARGET TERM TRUST INC.
INVESTMENT SUMMARY
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The Trust's Investment Objective
The Trust's investment objective is to manage a portfolio of investment grade
fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or shortly before December 31, 2000
while providing high monthly income.
Who Manages the Trust?
BlackRock Financial Management, Inc. ("BlackRock" or the "Adviser") is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages
approximately $34 billion of assets across the government, mortgage, corporate
and municipal sectors. These assets are managed on behalf of institutional and
individual investors in 21 closed-end funds traded either on the New York Stock
Exchange or American Stock Exchange, several open-end funds and separate
accounts for more than 80 clients in the U.S. and overseas. BlackRock is a
subsidiary of PNC Asset Management Group, Inc. which is a division of PNC Bank,
the nation's eleventh largest banking organization.
What Can the Trust Invest In?
The Trust may invest in all fixed income securities rated investment grade or
higher ("AAA", "AA", "A" or "BBB"). Examples of securities in which the Trust
may invest include U.S. government and agency securities, zero coupon
securities, mortgage-backed securities, corporate debt securities, asset-backed
securities, U.S. dollar-denominated foreign debt securities and municipal
securities. Under current market conditions, BlackRock expects that the primary
investments of the Trust will be U.S. government securities, securities backed
by government agencies (such as mortgage-backed securities) and corporate debt
securities.
What is the Adviser's Investment Strategy?
The Adviser will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($10 per share)
at maturity. The Trust will implement a conservative strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment at the end of 2000. At the Trust's termination,
BlackRock expects that the value of the securities which have matured, combined
with the value of the securities that are sold will be sufficient to return the
initial offering price to investors. On a continuous basis, the Trust will seek
it's objective by actively managing its assets in relation to market conditions,
interest rate changes and, importantly, the remaining term to maturity of the
Trust.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide high monthly income to investors. The portfolio managers
will attempt to achieve this objective by investing in securities that provide
competitive income. In addition, leverage will be used (in an amount up to
33-1/3% of total assets) to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Adviser will attempt to purchase securities with call
protection or maturities as close to the Trust's maturity date as possible.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates. Since the Trust's primary goal is to return the initial offering price at
maturity, any cash that the Trust receives prior to its maturity date (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) will be reinvested in securities with maturities which coincide with
the remaining term of the Trust. Since shorter-term securities typically yield
less than longer-term securities, this strategy will likely result in a decline
in the Trust's income over time. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the yield curve (i.e. if the Trust has three years left until its maturity,
the Adviser will attempt to maintain a yield at a spread over a 3-year
Treasury). It is important to note that the Trust will be managed so as to
preserve the integrity of the return of the initial offering price.
18
<PAGE>
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, Boston
Financial Data Services. 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 a Term Trust
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. 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.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rising rate 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 BlackRock consider that reduction
to be in the best interests of the shareholders.
Special Considerations and Risk Factors Relevant to Term Trusts
The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
Return of Initial Investment. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.
Dividend Considerations. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
Leverage. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, 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 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.
Mortgage-Backed and Asset-Backed Securities. The cash flow and yield
characteristics of these securities differ from traditional debt securities. The
major differences typically include more frequent payments and the possibility
of prepayments which will change the yield to maturity of the security.
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 movements on these securities are generally more
sensitive to interest rate movements than 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 objective.
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 10% of its assets in non-U.S.
dollar-denominated securities which involve special risks such as currency,
political and economic risks, although under current market conditions does not
do so.
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.
19
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THE BLACKROCK TARGET TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Adjustable Rate Mortgage-
Backed Securities (ARMs): Mortgage instruments with interest rates that adjust at periodic intervals at a fixed amount
over the market levels of interest rates as reflected in specified indexes. ARMS are backed by
mortgage loans secured by real property.
Asset-Backed Securities: Securities backed by various types of receivables such as automobile and credit card receivables.
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.
Collateralized Mortgage
Obligations (CMOs): Mortgage-backed securities which separate mortgage pools into short-, medium-, and long-term
securities with different priorities for receipt of principal and interest. Each class is paid a
fixed or floating rate of interest at regular intervals. Also known as multiple-class mortgage
pass-throughs.
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: This is 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 dividends and distributions of capital gains automatically
reinvested into additional shares of the Trust.
FHA: Federal Housing Administration, a government agency that facilitates a secondary mortgage market by
providing an agency that guarantees timely payment of interest and principal on mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a publicly owned, federally chartered corporation that
facilitates a secondary mortgage market by purchasing mortgages from lenders such as savings
institutions and reselling them to investors by means of mortgage-backed securities. Obligations of
FHLMC are not guaranteed by the U.S. government, however; they are backed by FHLMC's authority to
borrow from the U.S. government. Also known as Freddie Mac.
FNMA: Federal National Mortgage Association, a publicly owned, federally chartered corporation that
facilitates a secondary mortgage market by purchasing mortgages from lenders such as savings
institutions and reselling them to investors by means of mortgage-backed securities. Obligations of
FNMA are not guaranteed by the U.S. government, however; they are backed by FNMA's authority to
borrow from the U.S. government. Also known as Fannie Mae.
GNMA: Government National Mortgage Association, a U.S. government agency that facilitates a secondary
mortgage market by providing an agency that guarantees timely payments of interest and principal on
mortgages. GNMA's obligations are supported by the full faith and credit of the U.S. Treasury. Also
known as Ginnie Mae.
Government Securities: Securities issued or guaranteed by the U.S. government, or one of its agencies or instrumentalities,
such as GNMA (Government National Mortgage Association), FNMA (Federal National Mortgage
Association) and FHLMC (Federal Home Loan Mortgage Corporation).
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
Interest-Only Securities (I/O): Mortgage securities that receive only the interest cash flows from an underlying pool of mortgage
loans or underlying pass-through securities. Also known as a strip.
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.
Mortgage Dollar Rolls: A mortgage dollar roll is a transaction in which the Trust sells mortgage-backed securities for
delivery in the current month and simultaneously contracts to repurchase substantially similar
(although not the same) securities on a specified future date. During the "roll" period, the Trust
does not receive principal and interest payments on the securities, but is compensated for giving up
these payments by the difference in the current sales price (for which the security is sold) and
lower price that the Trust pays for the similar security at the end date as well as the interest
earned on the cash proceeds of the initial sale.
Mortgage Pass-Throughs: Mortgage-backed securities issued by Fannie Mae, Freddie Mac or Ginnie Mae.
Multiple-Class Pass-Throughs: Collateralized Mortgage Obligations.
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 New
York Times or The Wall Street Journal each Monday.
Principal-Only Securities(P/O): Mortgage securities that receive only the principal cash flows from an underlying pool of mortgage
loans or underlying pass-through securities. Also known as a strip.
Project Loans: Mortgages for multi-family, low- to middle-income housing.
Premium: When a fund's stock price is greater than its net asset value, the fund is said to be trading at a
premium.
REMIC: A real estate mortgage investment conduit is a multiple-class security backed by mortgage-backed
securities or whole mortgage loans and formed as a trust, corporation, partnership, or segregated
pool of assets that elects to be treated as a REMIC for federal tax purposes. Generally, Fannie Mae
REMICs are formed as trusts and are backed by mortgage-backed securities.
Residuals: Securities issued in connection with collateralized mortgage obligations that generally represent
the excess cash flow from the mortgage assets underlying the CMO after payment of principal and
interest on the other CMO securities and related administrative expenses.
Reverse Repurchase
Agreements: In a reverse repurchase agreement, the Trust sells securities and agrees to repurchase them at a
mutually agreed date and price. During this time, the Trust continues to receive the principal and
interest payments from that security. At the end of the term, the Trust receives the same securities
that were sold for the same initial dollar amount plus interest on the cash proceeds of the initial
sale.
Stripped Mortgage-Backed
Securities: Arrangements in which a pool of assets is separated into two classes that receive different
proportions of the interest and principal distributions from underlying mortgage-backed securities.
IO's and PO's are examples of strips.
</TABLE>
21
<PAGE>
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BlackRock Financial Management, Inc.
Summary of Closed-End Funds
- --------------------------------------------------------------------------------
Taxable Trusts
- --------------------------------------------------------------------------------
Perpetual Trusts Stock Maturity
Symbol Date
------ --------
The BlackRock Income Trust Inc. ................................BKT N/A
The BlackRock North American Government Income Trust Inc. ......BNA N/A
Term Trusts
The BlackRock 1998 Term Trust Inc. .............................BBT 12/98
The BlackRock 1999 Term Trust Inc. .............................BNN 12/99
The BlackRock Target Term Trust Inc. ...........................BTT 12/00
The BlackRock 2001 Term Trust Inc. .............................BLK 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
- --------------------------------------------------------------------------------
Perpetual Trusts Stock Maturity
Symbol Date
------ --------
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 Inc. ..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
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 Inc. ...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
If you would like further information please call BlackRock at
(800) 227-7BFM (7236) or consult with your financial advisor.
22
<PAGE>
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BlackRock Financial Management, Inc.
An Overview
- --------------------------------------------------------------------------------
BlackRock Financial Management (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages approximately $34 billion of
assets across the government, mortgage, corporate and municipal sectors. These
assets are managed on behalf of institutional and individual investors in 21
closed-end funds which trade on either the New York Stock or American Stock
Exchanges, several open-end funds and over 80 institutional clients in the
United States and overseas. BlackRock's institutional investor base includes
Chrysler Corporation Master Retirement Trust, General Retirement System of the
City of Detroit, State Treasurer of Florida, Ford Motor Company Pension Plan,
General Electric Pension Trust and Unisys Corporation Master Trust.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individuals and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities market, including the
creation of the 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
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. 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 AAAf rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund 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
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
23
<PAGE>
(Left Column)
- ---------
BlackRock
- ---------
Directors
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
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
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Kevin J. Mahoney, Assistant Treasurer
Karen H. Sabath, Secretary
Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
Administrator
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of any securities.
The BlackRock Target Term Trust Inc.
c/o Prudential Mutual Fund
Management, Inc.
32nd floor
One Seaport Plaza
New York, NY 10292
(800) 227-7BFM
092476-10-0
(Right Column)
The BlackRock
Target
Term Trust Inc.
- -------------------------------------
Annual Report
December 31, 1995
