- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
January 31, 1996
Dear Shareholder,
Since the inception of The BlackRock Municipal Target Term Trust Inc. in
1991, 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 has been a great year for investments
in the bond market following the disappointments of 1994, as yields have
declined and the value of fixed income securities has 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 Municipal
Target Term Trust Inc. (NYSE symbol: ("BMN") 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 municipal debt 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, 2006, while providing current income exempt
from regular federal income tax. The Trust seeks to achieve this objective by
investing in high credit quality ("AAA" or insured to "AAA") tax-exempt general
obligation and revenue bonds issued by city, county and state municipalities
throughout the United States.
The table below summarizes the performance of the Trust's stock price and
net asset value (the market value of its bonds per share) over the fiscal year:
-----------------------------------------------------
12/31/95 12/31/94 Change High Low
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Stock Price $10.125 $8.875 +14.08% $10.625 $8.750
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $11.14 $9.98 +11.62% $11.22 $9.98
- --------------------------------------------------------------------------------
Premium/(Discount) to NAV (9.11%) (11.07%) + 1.96% (5.12%) (11.15%)
- --------------------------------------------------------------------------------
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. The Treasury market
rallied throughout the year, sparked by a deceleration in economic growth from
the torrid pace of 1994 as well as continued signs of subdued inflation. Over
the past twelve months, interest rates have declined substantially across the
Treasury and municipal yield curves. At the end of December, the yield of
Treasury 30-year bond fell below 6.00% for the first time since October 1993,
closing the year at 5.95%. This represents a fall of 193 basis points (1.93%)
from year-end 1994.
While the overall performance of the municipal debt market somewhat lagged
the rally in the Treasury market, municipal securities posted strong performance
in 1995. Yields on municipal securities have declined dramatically from their
fourth quarter 1994 levels, led by a 123 basis point drop (1.23%) in the yield
on AAA 30-year General Obligation securities from 6.51% on December 31, 1994 to
5.28% on December 31, 1995. Although seasonal demand from coupon payments and
redemptions did not fully match expectations at times during the year, a
relatively light amount of new issuance improved technical conditions in the
municipal market and encouraged the rise in price for these securities.
Market participants have been attuned to the continuing debate in Washington
on tax reform. Most notably, several Congressional leaders and Presidential
hopefuls have proposed a variety of tax simplification plans, of which the most
extreme proposal would be a flat tax that would remove the tax-free advantage of
municipal income by exempting all investment income from taxation. On January
17, 1996, The Commission on Economic Growth and Tax Reform, headed by former
Congressman Jack Kemp, released its much anticipated report. Their
recommendations emphasized a need for tax simplification towards a "single tax
bracket" without definitively recommending a particular rate of taxation, thus
setting the stage for increased discussion on this issue in the election year.
2
<PAGE>
Due to investor concerns over the potential threat of tax reform, it is
likely that the municipal market may continue to experience price volatility in
1996. While the municipal market rallied and yields declined over 1995,
municipal securities were trading at cheap levels relative to comparable
Treasuries at year-end. BlackRock believes that municipal securities have the
potential to be the best performing sector of the fixed income markets in 1996
should the tax reform proposals currently negatively affecting municipal bond
performance be eliminated.
The Trust's Portfolio and Investment Strategy
The Trust's portfolio is invested in high credit-quality municipal issues
with ratings of "AAA" by Standard & Poor's Corporation (or of equivalent quality
determined by other major rating agencies). In addition, the majority of the
individual securities within the portfolio are insured as to timely payment of
interest and principal by municipal bond insurance companies whose long-term
obligations are rated "AAA." As such, Standard & Poor's has given a AAAf rating
to the portfolio.
BlackRock Financial Management actively manages the Trust's portfolio to
diversify exposure to various sectors, issuers, revenue sources and security
types. BlackRock's investment strategy emphasizes a relative value approach,
rotating sectors to benefit from changing market conditions. As the municipal
bond market rallied throughout 1995, prices of most securities in the portfolio
increased above their purchase price. By selling one of these bonds, the Trust
would recognize a gain and be forced to make a taxable distribution to
shareholders. As one of the Trust's primary objectives is to provide tax-free
income, the portfolio curbed its trading activity to minimize any taxable
distributions.
The Trust employs leverage at about 35% of total assets to enhance its
income by borrowing at short term municipal rates and investing the proceeds in
longer maturity issues which have higher yields. The degree to which the Trust
can benefit from its use of leverage affects the ability of the Trust to pay
high monthly income. The two reductions made to the Fed funds target rate in
December and January lowered the overnight bank lending rate by 0.50% and is
expected to result in lower short term municipal rates. This could provide the
Trust an opportunity to earn more excess income in the coming year through its
use of leverage.
The BlackRock Municipal Target Term Trust Inc.
-------------------------------------------------------------------------
Sector December 31, 1995 December 31, 1994
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City, County and State 21% 22%
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Hospital 15% 15%
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Tax Revenue 14% 19%
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Transportation 14% 14%
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Water & Sewer 10% 9%
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Utility 9% 6%
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Lease Revenue 7% 7%
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Education 4% 3%
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Building 2% 2%
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Other 4% 3%
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3
<PAGE>
We look forward to managing the Trust in the coming year to benefit from the
opportunities available to investors in the municipal market. We thank you for
your investment and continued interest in The BlackRock Municipal Target Term
Trust Inc. Please feel free to call our marketing center at (800) 227-7BFM
(7236) if you have any specific questions which were not addressed in this
report.
Sincerely yours,
Robert S. Kapito Kevin Klingert
Vice Chairman and Managing Director and
Portfolio Manager Municipal Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BMN
- --------------------------------------------------------------------------------
Initial Offering Date: September 27, 1991
- --------------------------------------------------------------------------------
Closing Stock Price as of 12/31/95: $10.125
- --------------------------------------------------------------------------------
Net Asset Value as of 12/31/95: $11.14
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 12/31/95 ($10.125)1: 6.07%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Common Share:2 $0.05125
- --------------------------------------------------------------------------------
Current Annualized Distribution per Common Share:2 $0.6150
- --------------------------------------------------------------------------------
- -----------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2Distribution is not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Portfolio of Investments
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Option
Rating* Principal Call
(Unaud- Amount Provisions+ Value
ited) (000) Description (unaudited) (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS-143.0%
Alabama-1.0%
Hoover Brd. of Ed. Spl. Tax. Wts., G.O., AMBAC,
AAA $ 1,700 6.50%, 2/01/01+ .................................................................. No Opt. Call $ 1,892,100
AAA 1,815 6.60%, 2/01/01+ .................................................................. No Opt. Call 2,028,262
AAA 1,025 6.625%, 2/01/01+ ................................................................. No Opt. Call 1,146,596
------------
5,066,958
Alaska-4.4%
AAA 7,500 Anchorage Elec. Util. Rev., 7.125%, 6/01/06, MBIA .................................. 6/99 at 102 8,236,575
AAA 4,845 Fairbanks Mun. Util. Auth. Rev., Ser. A, 7.10%, 1/01/05, AMBAC ..................... 1/99 at 102 5,254,548
No. Slope Boro.,
AAA 5,000 Ser. A, Zero Coupon, 6/30/06, MBIA ............................................... No Opt. Call 2,917,550
AAA 9,000 Ser. B, Zero Coupon, 6/30/04, CGIC ............................................... No Opt. Call 5,915,700
------------
22,324,373
------------
Arizona-1.1%
AAA 5,010 Tucson Bus. Dev. Fin. Corp. Lease Rev., 6.25%, 7/01/06, FGIC ....................... 7/02 at 102 5,475,479
------------
California-4.5%
AAA 6,000 California St., G.O., 6.30%, 9/01/06, AMBAC ........................................ No Opt. Call 6,778,860
AAA 1,910 California St., Pub. Wrks. Rev., Ser. A, 6.20%, 12/01/06, AMBAC .................... 12/02 at 102 2,088,318
AAA 4,000 Glendale Hosp. Rev., Adventist Hlth. Ctr., Ser. A, 6.50%, 3/01/07, MBIA ............ 3/01 at 102 4,370,520
Los Angeles Wst. Wtr. Sys. Rev., MBIA,
AAA 5,570 5.625%, 6/01/07 .................................................................. 6/03 at 102 5,812,963
AAA 3,320 Ser. D, 6.60%, 12/01/06 .......................................................... 12/00 at 102 3,639,085
------------
22,689,746
------------
Colorado-2.0%
Denver City & Cnty. Wtr. Brd. Rev., C.O.P., FGIC,
AAA 3,410 6.50%, 5/15/11 ................................................................... 11/01 at 101 3,715,400
AAA 1,875 6.60%, 11/15/06 .................................................................. 11/01 at 101 2,062,462
AAA 3,865 6.625%, 11/15/07 ................................................................. 11/01 at 101 4,235,538
------------
10,013,400
------------
District of Columbia-1.7%
AAA 8,250 District of Columbia, G.O., Ser. B, 5.90%, 6/01/06, MBIA ........................... 6/04 at 102 8,722,725
------------
Florida-13.2%
Florida St. Div. Bd. Fin. Dept. Gen. Svcs. Rev. (Dept. Nat. Res. & Pres.),
AAA 7,000 6.45%, 7/01/07, MBIA ............................................................. 7/01 at 101 7,705,670
AAA 6,975 6.75%, 7/01/07, AMBAC ............................................................ 7/01 at 102 7,870,311
AAA 2,190 Florida St. Sunshine Skyway Rev., 6.60%, 7/01/07, MBIA ............................. 7/01 at 101 2,417,607
Greater Orlando Aviation Auth., Arpt. Facs. Rev., Ser. B, FGIC,
AAA 4,760 6.55%, 10/01/06 .................................................................. 10/02 at 102 5,359,427
AAA 5,070 6.55%, 10/01/07 .................................................................. 10/02 at 102 5,676,980
AAA 3,155 Gulf Breeze, Local Gov't., Ln. Pkg. Rev., 7.70%, 12/01/15, FGIC .................... 12/99 at 102 3,510,568
AAA 2,650 Jacksonville Hlth. Facs. Auth. Rev., Mem. Med. Ctr., Ser. A, 6.625%, 5/01/01, MBIA . No Opt. Call 2,989,253
AAA 7,500 Jacksonville Hosp. Rev., Univ. Med. Ctr. Inc. Proj., 6.50%, 2/01/07, CONNIE LEE .... 2/02 at 102 8,199,975
AAA 4,000 Kissimmee Util. Auth. Rev., Elec. Sply., 6.70%, 10/01/07, MBIA ..................... 10/97 at 102 4,252,880
AAA 2,000 No. Broward Hosp. Rev., 6.50%, 1/01/07, MBIA ....................................... 1/02 at 102 2,219,140
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
Option
Rating* Principal Call
(Unaud- Amount Provisions+ Value
ited) (000) Description (unaudited) (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida (cont'd)
AAA $10,645 Orange Cnty., Tourist Dev. Tax Rev., Ser. A, 6.375%, 10/01/06, AMBAC ............... 10/02 at 102 $ 11,832,450
AAA 2,570 Tampa Auth. Rev., 6.70%, 12/01/07, MBIA ............................................ 12/01 at 102 2,864,985
AAA 1,600 Tampa Util. Tax & Spec. Rev., 6.80%, 10/01/06, AMBAC ............................... 10/01 at 102 1,805,888
------------
66,705,134
------------
Georgia-0.4%
AAA 1,990 Burke Cnty. Dev. Auth. Poll. Ctrl. Rev., Oglethorpe Pwr. Corp.,
Ser. B, 6.45%, 1/01/05, MBIA ..................................................... 1/04 at 101 2,197,756
------------
Illinois-15.6%
AAA 4,930 Alton Hlth. Facs. Rev., Christian Hlth. Ctr., 7.00%, 2/15/01+, FGIC ................ No Opt. Call 5,602,058
AAA 5,000 Chicago, G.O., Ser. A, 7.25%, 1/01/06, MBIA ........................................ 7/96 at 102 5,178,550
Chicago Cent. Pub. Library, G.O., AMBAC,
AAA 1,800 Ser. A, 6.75%, 1/01/07 ........................................................... 4/02 at 102 2,006,442
AAA 1,600 Ser. C, 6.75%, 1/01/07 ........................................................... 4/02 at 102 1,783,504
AAA 5,555 Cook Cnty., Ser. A, 6.40%, 11/15/06, MBIA .......................................... 11/02 at 102 6,097,834
AAA 1,775 Cook Cnty. Cmnty. Sch. Dist., G.O., Ser. A, 6.375%, 1/01/07, FGIC .................. 1/02 at 100 1,894,670
Illinois Hlth. Facs. Auth. Rev.,
AAA 3,300 Elmhurst Mem. Hosp., 6.60%, 1/01/07, FGIC .......................................... 1/02 at 102 3,608,220
AAA 14,585 Sisters Svcs., Inc., Ser. C, 6.625%, 6/01/06, MBIA ................................. 6/02 at 102 16,115,113
Illinois Regl. Trans. Auth. Rev., Ser. A, FGIC,
AAA 2,780 6.55%,11/01/06 ................................................................... 11/01 at 102 3,055,665
AAA 6,125 6.625%,11/01/08 .................................................................. 11/01 at 102 6,667,246
AAA 8,725 Illinois St. G.O., 6.40%, 12/15/07, AMBAC .......................................... 12/01 at 102 9,437,396
Illinois St. Sales Tax Rev., Ser. O,
AAA 5,900 Zero Coupon, 6/15/07 ............................................................. No Opt. Call 3,281,816
AAA 5,635 Zero Coupon, 6/15/08 ............................................................. No Opt. Call 2,942,090
AAA 6.000 6.50%. 6/15/06 ................................................................... 6/01 at 102 6,591,660
AAA 2,000 6.60%, 6/15/08 ................................................................... 6/01 at 102 2,206,740
AAA 2,000 Will Cnty. Cmnty. Unit Sch. Dist. Rev., 7.05%, 12/01/08, AMBAC ..................... No Opt. Call 2,377,240
------------
78,846,244
------------
Indiana-2.6%
AAA 9,000 Indiana Univ. Rev., Student Fee, Zero Coupon, 8/01/06, AMBAC ....................... No Opt. Call 5,288,940
Aaa 2,270 Noblesville West Indpt. Sch. Bldg. Corp., G.O., 7.00%, 7/01/07, MBIA ............... 1/01 at 102 2,536,793
AAA 5,000 Warsaw High Sch. Bldg. Corp., G.O., 6.90%, 7/01/05, MBIA ........................... 7/00 at 102 5,485,750
------------
13,311,483
------------
Kentucky-3.1%
Danville Multi-City Lease Rev., Swr. & Drain Sys., MBIA,
AAA 2,015 6.60%, 3/01/02+ .................................................................. No Opt. Call 2,276,688
AAA 2,160 6.65%, 3/01/02+ .................................................................. No Opt. Call 2,446,286
AAA 3,750 Kentucky Dev. Fin. Auth. Rev., Sisters of Charity, 6.60%, 11/01/06, MBIA ........... 11/01 at 102 4,155,525
AAA 6,410 Kentucky St. Ppty. & Bldgs. Auth. Rev., Proj. 53, 6.625%, 10/01/07, MBIA ........... 10/01 at 102 7,049,398
------------
15,927,897
------------
Louisiana-6.8%
Jefferson Sales Tax Dist. Rev., FGIC,
AAA 21,000 Ser. A, 6.75%, 12/01/06 .......................................................... 12/02 at 100 23,252,040
AAA 4,000 Ser. B. 6.75%,12/01/06 ........................................................... 12/02 at 100 4,428,960
AAA 3,500 Louisiana St., G.O., Ser. A, 6.50%, 5/01/07, AMBAC ................................. 5/02 at 102 3,876,355
AAA 5,250 New Orleans, G.O., Ref., Zero Coupon, 9/01/06, AMBAC ............................... No Opt. Call 3,071,932
------------
34,629,287
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
Option
Rating* Principal Call
(Unaud- Amount Provisions+ Value
ited) (000) Description (unaudited) (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts-5.2%
AAA $ 3,670 Mansfield, G.O., 6.65%, 1/15/07, AMBAC ............................................. 1/02 at 102 $ 4,063,791
Massachusetts Bay Trans. Auth. Rev., Gen. Tran. Sys., Ser. A, MBIA,
AAA 12,910 6.625%, 3/01/01+ ................................................................. No Opt. Call 14,491,733
AAA 7,105 6.625%, 3/01/01+ ................................................................. No Opt. Call 7,975,505
------------
26,531,029
------------
Michigan-8.9%
Detroit Swr. Disp. Rev., FGIC,
AAA 1,655 6.60%, 7/01/01+ .................................................................. No Opt. Call 1,869,968
AAA 1,765 6.65%, 7/01/01+ .................................................................. No Opt. Call 1,998,545
AAA 1,880 6.70%, 7/01/01+ .................................................................. No Opt. Call 2,128,367
AAA 3,750 Grand Rapids Wtr. Sply. Rev., 6.625%, 1/01/08, FGIC ................................ 1/01 at 102 4,082,325
Michigan Mun. Bond Auth.,
AAA 5,000 G.O., Ser. D, Zero Coupon, 5/15/06, MBIA ......................................... No Opt. Call 2,978,650
AAA 1,840 Local Gov't. Loan Prog., 6.35%, 11/01/06, AMBAC .................................. 11/04 at 102 2,052,244
Michigan St. Bldg. Auth. Rev.,
AAA 11,590 Ser. I, 6.75%, 10/01/07, MBIA .................................................... 10/01 at 102 12,805,559
AAA 3,850 Ser. II, 6.75%, 10/01/07, AMBAC .................................................. 10/01 at 102 4,253,788
AAA 11,940 Michigan St. Hosp. Fin. Auth. Rev., Sparrow Oblig. Grp., 6.60%, 11/15/07, MBIA ..... 11/01 at 102 13,037,883
------------
45,207,329
------------
Nevada-5.4%
AAA 6,210 Clark Cnty. Flood Ctrl., G.O., 6.40%, 11/01/06, AMBAC .............................. 11/01 at 101 6,740,955
Clark Cnty. Sch. Dist., G.O., Ser. A, MBIA,
AAA 11,000 6.70%, 3/01/06 ................................................................... 3/01 at 101 12,003,090
AAA 1,500 6.75%, 3/01/07 ................................................................... 3/01 at 101 1,636,575
Nye Cnty. Sch. Dist., G.O., BIG,
AAA 1,365 7.25%, 5/01/99+ .................................................................. No Opt. Call 1,516,597
AAA 1,470 7.25%, 5/01/99+ .................................................................. No Opt. Call 1,633,258
AAA 3,250 Reno Hosp. Auth. Rev., St. Mary Regl. Med. Ctr., 6.70%, 7/01/06, MBIA .............. 7/01 at 102 3,592,680
------------
27,123,155
------------
New Hampshire-0.5%
AAA 2,310 New Hampshire High. Ed. Auth. Rev., Elliot Hosp. of Manchester,
6.70%, 10/01/06, AMBAC ........................................................... 10/01 at 102 2,567,449
New Jersey-16.2%
AAA 10,500 Elizabeth, G.O., 6.60%, 8/01/06, MBIA .............................................. 8/01 at 102 11,631,585
Howell Twp., Ref. G.O., FGIC,
AAA 7,715 6.70%, 1/01/06 ................................................................... 1/02 at 102 8,675,209
AAA 2,925 6.75%, 1/01/07 ................................................................... 1/02 at 102 3,280,212
New Jersey St. Hlth. Care Facs. Fin. Auth. Rev., Hackensack Med. Ctr., FGIC,
AAA 12,755 6.65%, 7/01/06 ................................................................... 7/01 at 102 14,191,213
AAA 3,735 6.70%, 7/01/07 ................................................................... 7/01 at 102 4,135,616
AAA 1,765 New Jersey St. Hwy. Auth. Rev., Garden St. Pkwy., 6.15%, 1/01/07, AMBAC ............ 1/02 at 102 1,916,684
AAA 30,000 New Jersey St. Tpk. Auth. Rev., Ser. C, 6.40%, 1/01/07, AMBAC ...................... 1/01 at 102 32,625,300
No. Jersey Dist. Wtr. Sply. Cmnty. Rev., MBIA,
AAA 2,525 Wanaque No. Proj., Ser. B. 6.50%, 11/15/06 ......................................... 11/01 at 102 2,799,922
AAA 1,065 Wanaque So. Proj., 6.50%, 7/01/06 .................................................. 7/01 at 102 1,204,015
AAA 1,250 Warren Cnty. Poll. Ctrl. Fin. Auth. Rev., 6.55%, 12/01/06, MBIA .................... 12/02 at 102 1,407,925
------------
81,867,681
------------
New Mexico-0.8%
AAA 3,535 Gallup Poll. Ctrl. Rev., 6.50%, 8/15/07, MBIA ...................................... 8/02 at 102 3,885,248
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
Option
Rating* Principal Call
(Unaud- Amount Provisions+ Value
ited) (000) Description (unaudited) (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York-11.8%
Mun. Asst. Corp. Rev.,
AAA $ 5,000 Ser. 57, 7.00%, 7/01/06, AMBAC ................................................... 7/96 at 102 $ 5,162,350
AAA 3,500 Ser. 61, 6.875%, 7/01/07, FGIC ................................................... 7/97 at 102 3,688,265
AAA 6,500 Ser. 61, 6.875%, 7/01/07, AMBAC .................................................. 7/97 at 102 6,849,635
AAA 3,500 Ser. 62, 6.90%, 7/01/07, AMBAC ................................................... 7/97 at 102 3,689,525
New York City Mun. Wtr. Fin. Auth. Rev., Wtr. & Swr. Sys., Ser. A, FGIC,
AAA 11,100 6.15%, 6/15/07 ................................................................... 6/02 at 101.5 11,978,454
AAA 2,160 6.75%, 6/15/06 ................................................................... 6/01 at 101 2,391,811
AAA 2,660 7.00%, 6/15/07 ................................................................... 6/01 at 101 2,984,015
AAA 10,000 New York City, G.O., Ser. E, 6.125%, 8/01/06, MBIA ................................. No Opt. Call 11,080,800
AAA 4,500 New York St. Environ. Facs. Corp., Poll. Ctrl. Rev., Ser. D, 6.40%, 5/15/06 ........ 11/04 at 102 5,143,410
AAA 6,000 Triborough Brdg. & Tunl. Auth. Rev., Ser. B, 6.70%, 1/01/08, FGIC .................. 1/01 at 102 6,645,360
------------
59,613,625
North Carolina-1.3%
AAA 6,000 North Carolina Eastern Mun. Pwr. Agcy. Sys. Rev., Ser. B, 6.00%, 1/01/06, CAPMAC ... No Opt. Call 6,489,240
------------
North Dakota-0.4%
AAA 2,035 Grand Forks Hlth. Care Facs. Rev., United Hosp. Oblig. Grp., 6.50%, 12/01/06, MBIA . 12/01 at 102 2,231,500
------------
Pennsylvania-10.3%
AAA 6,200 Beaver Cnty. Hosp. Auth., 6.625%, 7/01/06, AMBAC ................................... 7/02 at 102 6,860,362
AAA 1,500 Coatesville Sch. Dist., G.O., 6.60%, 3/01/01+, AMBAC ............................... No Opt. Call 1,655,355
AAA 10,000 Harrisburg Auth. Lease Rev., 6.625%, 6/01/01+, CGIC ................................ No Opt. Call 11,075,600
AAA 7,450 Pennsylvania St., G.O., Ser. A, 6.50%, 11/01/07, FGIC .............................. 11/01 at 101.5 8,093,159
AAA 1,445 Pennsylvania St. Higher Ed. Rev., 6.75%, 7/01/07, MBIA ............................. 7/01 at 102 1,601,551
AAA 4,500 Pennsylvania St. Tpk. Auth. Rev., Ser. O, 5.80%, 12/01/07, FGIC .................... 12/02 at 102 4,753,710
Philadelphia Mun. Auth., Justice Lease Rev.,
AAA 1,550 Ser. A, 7.00%, 11/15/04, MBIA .................................................... 11/01 at 102 1,748,152
AAA 2,370 Ser. B, 7.10%, 11/15/01+, FGIC ................................................... No Opt. Call 2,740,787
Pittsburgh & Allegheny Cntys. Rev., AMBAC,
AAA 1,015 Ser. A, 6.50%, 7/15/06 ........................................................... 7/01 at 100 1,094,606
AAA 900 Ser. B, 6.50%, 7/15/06 7/01 at 100 970,587
AAA 2,500 Schuylkill Cnty. Redev. Auth. Common Lease Rev., Ser. A, 7.00%, 6/01/01+, FGIC ..... No Opt. Call 2,801,025
Westmoreland Cnty., G.O., AMBAC,
AAA 7,800 6.70%, 8/01/01+ .................................................................. No Opt. Call 8,698,404
------------
52,093,298
------------
Puerto Rico-1.1%
AAA 5,000 Puerto Rico Elec. Pwr. Auth., Ser. W, 6.50%, 7/01/06, MBIA ......................... No Opt. Call 5,681,700
------------
Rhode Island-2.5%
AAA 11,220 Conv. Ctr. Auth. Rev., Ser. A, 6.60%, 5/15/01+, MBIA ............................... 5/01 at 102 12,593,552
------------
South Carolina-2.1%
AAA 4,390 Piedmont Mun. Pwr. Agy. Elec. Rev., 6.85%, 1/01/07, FGIC ........................... 1/01 at 102 4,849,018
AAA 5,100 Rock Hill Util. Sys. Rev., 6.50%, 1/01/07, FGIC .................................... 1/01 at 102 5,550,126
------------
10,399,144
------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
Option
Rating* Principal Call
(Unaud- Amount Provisions+ Value
ited) (000) Description (unaudited) (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tennessee-0.5%
AAA $ 2,350 Met. Nashville, Arpt. Rev., Ser. C, 6.625%, 7/01/07, FGIC .......................... 7/01 at 102 $ 2,567,845
------------
Texas-15.0%
AAA 2,000 Austin Util. Sys. Rev., 6.875%, 5/15/07, AMBAC ..................................... 5/01 at 102 2,204,540
AAA 8,500 Cypress-Fairbanks Indpt. Sch. Dist., G.O., Zero Coupon,
8/01/06, AMBAC ................................................................... No Opt. Call 4,958,390
AAA 5,800 El Paso Cnty. Tax Ref., G.O., Ser. B, 6.40%, 2/15/07, MBIA ......................... 2/02 at 100 6,233,782
Ft. Bend Cnty., Tax. Perm. Imprvt., G.O., FGIC,
AAA 1,650 6.60%, 9/01/02+ .................................................................. No Opt. Call 1,852,356
AAA 1,725 6.60%, 9/01/02+ .................................................................. No Opt. Call 1,936,554
Harris Cnty. Rev., Toll Rd. Sr. Lien, Ser. A, FGIC,
AAA 10,395 6.50%, 8/15/02+ .................................................................. No Opt. Call 11,759,136
AAA 1,955 6.50%, 8/15/06 ................................................................... 8/02 at 102 2,162,699
AAA 3,160 6.50%, 8/15/02+ .................................................................. No Opt. Call 3,574,687
AAA 590 6.50%, 8/15/07 ................................................................... 8/02 at 102 649,142
AAA 15,000 Houston Wtr. & Swr. Sys. Rev., Ser. B, 6.75%, 12/01/08, FGIC ....................... 12/01 at 102 16,541,100
AAA 1,900 No. Central Texas Hlth. Fac. Dev. Corp. Rev., Children's Med. Ctr. of Dallas,
6.375%, 10/01/06, MBIA ........................................................... 10/01 at 102 2,062,013
AAA 1,550 No. Texas Wtr. Dist., 6.40%, 6/01/07, MBIA ......................................... 6/03 at 100 1,681,936
AAA 3,000 Round Rock Indpt. Sch. Dist., G.O., 6.75%, 8/15/01+, MBIA .......................... No Opt. Call 3,355,020
AAA 15,000 Texas Mun. Pwr. Agy. Rev., Ref., Zero Coupon, 9/01/06, AMBAC ....................... No Opt. Call 8,842,350
AAA 3,745 Texas St. Bldg. Fin. Auth. Rev., 7.00%, 2/01/01+, MBIA ............................. No Opt. Call 4,192,415
AAA 3,395 Tyler Cnty. Hlth. Facs. Dev. Corp. Rev., Mother Francis Hosp.,
6.50%, 7/01/06, FGIC ............................................................. 7/02 at 102 3,741,256
------------
75,747,376
------------
Washington-4.0%
AAA 1,250 Snohomish Cnty. Pub. Util. Dist., Elec. Rev., 6.55%, 1/01/07, FGIC ................ 1/02 at 102 1,439,363
Snohomish Cnty. Sch. Dist., G.O., MBIA,
AAA 3,835 6.70%, 12/01/06 ................................................................. 12/01 at 100 4,202,546
AAA 4,145 6.75%, 12/01/07 ................................................................. 12/01 at 100 4,530,485
Washington St. Pub. Pwr. Sply. Sys. Rev., Nuclear Proj. #2, Ser. A,
AAA 12,875 Zero Coupon, 7/01/06, MBIA ........................................................ No Opt. Call 7,566,766
AAA 2,265 6.50%, 7/01/05, FGIC ............................................................ 7/01 at 102 2,472,972
------------
20,212,132
------------
Wisconsin-0.6%
AAA 2,850 Wisconsin Hlth. & Ed. Fac. Auth., Columbia Hosp. Rev., 6.50%, 11/15/06, MBIA ...... 11/01 at 102 3,122,175
------------
Total Investments-143.0% (cost $654,854,322) ...................................... 723,843,960
Other assets in excess of liabilities-1.4% ........................................ 7,215,717
Liquidation value of preferred stock-(44.4%) ...................................... (225,000,000)
------------
Net Assets Applicable to Common Shareholders-100% ................................. $506,059,677
============
<FN>
+ This bond is prerefunded. See glossary for definition.
++ Option call provisions: date (month/year) and prices of the earliest option call or redemption. There may be other call
provisions at varying prices at later dates.
* Rating: Using the higher of Standard & Poor's, Moody's or Fitch's rating.
</FN>
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
--------------------------------------------------------------------------
KEY TO ABBREVIATIONS
AMBAC -American Municipal Bond Assurance Corporation
BIG -Bond Investors Guaranty Insurance Company
CAPMAC -Capital Markets Assurance Corporation
CGIC -Capital Guaranteed Insurance Company
C.O.P. -Certificate of Participation
CONNIE LEE -College Construction Loan Insurance Association
FGIC -Financial Guaranty Insurance Company
G.O. -General Obligation Bond
MBIA -Municipal Bond Insurance Association
--------------------------------------------------------------------------
See Notes to Financial Statements.
10
<PAGE>
(left column)
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Statement of Assets and Liabilities
December 31, 1995
- --------------------------------------------------------------------------------
Assets
Investments, at value (cost
$654,854,322) (Note 1) ........................................ $723,843,960
Interest receivable ............................................. 11,895,456
Deferred organization expenses and
other assets .................................................. 28,985
------------
735,768,401
------------
Liabilities
Due to custodian ................................................ 2,358,413
Distribution payable-common stock ............................... 1,321,268
Dividends payable-common stock .................................. 290,059
Advisory fee payable (Note 2) ................................... 203,872
Dividends payable-preferred stock ............................... 124,187
Administration fee payable (Note 2) ............................. 40,770
Other accrued expenses .......................................... 370,155
------------
4,708,724
------------
Net Investment Assets ........................................... $731,059,677
============
Net investment assets were comprised of:
Common stock:
Par value (Note 4) .......................................... $ 454,106
Paid-in capital in excess of par ............................ 421,119,385
Preferred stock (Note 4) ...................................... 225,000,000
------------
646,573,491
Undistributed net investment income ........................... 15,493,515
Accumulated net realized gain ................................. 3,033
Net unrealized appreciation ................................... 68,989,638
------------
Net investment assets, December 31, 1995 ...................... $731,059,677
============
Net assets applicable to common
shareholders ................................................ $506,059,677
============
Net asset value per common share:
($506,059,677 / 45,410,639 shares of
common stock issued and outstanding) .......................... $11.14
======
(right column)
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Statement of Operations
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
Net Investment Income
Income
Interest and discount earned .................................. $ 43,701,813
------------
Expenses
Investment advisory ........................................... 2,463,657
Auction agent ................................................. 560,000
Administration ................................................ 492,731
Reports to shareholders ....................................... 180,000
Custodian ..................................................... 168,000
Directors ..................................................... 72,000
Transfer agent ................................................ 50,000
Legal ......................................................... 35,000
Audit ......................................................... 32,000
Miscellaneous ................................................. 336,091
------------
Total expenses ............................................ 4,389,479
------------
Net investment income ........................................... 39,312,334
------------
Realized and Unrealized Gain
on Investments (Note 3)
Net realized gain on investments .............................. 1,759,203
Net change in unrealized appreciation
on investments .............................................. 49,939,651
------------
Net gain on investments ....................................... 51,698,854
------------
Net Increase in Net Investment Assets
Resulting from Operations ..................................... $ 91,011,188
============
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Statements of Changes
in Net Investment Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1995 1994
------------ --------------
Increase (Decrease) in Net Investment Assets
Operations:
<S> <C> <C>
Net investment income ........................................................ $ 39,312,334 $ 37,618,778
Net realized gain on investments ............................................. 1,759,203 366,539
Net change in unrealized appreciation on investments ......................... 49,939,651 (63,417,101)
------------ --------------
Net increase (decrease) in net investment assets resulting from operations ... 91,011,188 (25,431,784)
------------ --------------
Dividends and distributions:
To common shareholders from net investment income ............................ (27,927,543) (27,927,543)
To preferred shareholders from net investment income ......................... (8,475,663) (6,572,378)
------------ --------------
(36,403,206) (34,499,921)
------------ --------------
To common shareholders from capital gains .................................... (1,500,458) --
To preferred shareholders from capital gains ................................. (454,791) --
------------ --------------
(1,955,249) --
------------ --------------
Total increase (decrease) .................................................. 52,652,733 (59,931,705)
------------ --------------
Net Investment Assets
Beginning of year .............................................................. 678,406,944 738,338,649
------------ --------------
End of year .................................................................... $731,059,677 $678,406,944
============ ============
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30,
1991*
Through
------------------------------------- December 31,
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ...................... $ 9.98 $11.30 $10.04 $ 9.56 $ 9.40
------ ------ ------ ------ ------
Net investment income ..................................... .87 .83 .82 .82 .13
Net realized and unrealized gain (loss) on investments .... 1.14 (1.39) 1.17 .42 .22
------ ------ ------ ------ ------
Net increase (decrease) from investment operations ........ 2.01 (.56) 1.99 1.24 .35
------ ------ ------ ------ ------
Dividends from net investment income to:
Preferred shareholders .................................... (.19) (.14) (.12) (.15 ) (.02)
Common shareholders ....................................... (.62) (.62) (.61) (.61) (.05)
------ ------ ------ ------ ------
Total dividends ........................................... (.81) (.76) (.73) (.76) (.07)
------ ------ ------ ------ ------
Distributions from capital gains to:
Preferred shareholders .................................... (.01) - - - -
Common shareholders ....................................... (.03) - - - -
------ ------ ------ ------ ------
Total distributions ....................................... (.04) - - - -
Capital charge with respect to issuance of shares ......... - - - - (.12)
------ ------ ------ ------ ------
Net asset value, end of period** .......................... $11.14 $ 9.98 $11.30 $10.04 $ 9.56#
====== ====== ====== ====== ======
Market value, end of period** ............................. $10.12 $ 8.875 $10.375 $10.00 $ 9.625
====== ======= ======= ====== =======
TOTAL INVESTMENT RETURN+ .................................. 21.67% (8.89%) 10.01% 10.51% 2.93%
RATIOS TO AVERAGE NET ASSETS
OF COMMON SHAREHOLDERS+++:
Operating expenses ........................................ .90% .94% .87% .91% .81%++
Net investment income ..................................... 8.06% 7.91% 7.61% 8.43% 5.80%++
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) .. $487,923 $475,529 $492,138 $441,368 $418,353
Portfolio turnover 9% 21% 1% 35% 1%
Net assets of common shareholders, end of period (in
thousands) ................................................ $506,060 $453,407 $513,339 $455,954 $434,166
Asset coverage per share of preferred stock, end of period. $ 81,243##$150,783 $164,075 $151,323 $146,481
Preferred stock outstanding (in thousands) ................ $225,000 $225,000 $225,000 $225,000 $225,000
<FN>
- ----------------
* Commencement of investment operations.
** Net asset value and market value are published in The Wall Street Journal
each Monday.
# Net asset value immediately after the closing of the initial public offering
was $9.28.
## A stock split occured on July 24, 1995 (Note 4).
+ 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. This calculation does not reflect
brokerage commissions. Total investment returns for periods of less than one
full year are not annualized.
++ Annualized.
+++ Ratios 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. Ratios do not reflect the effect of dividend payments to
preferred shareholders.
</FN>
</TABLE>
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 common stock.
See Notes to Financial Statements.
13
<PAGE>
Left Col.
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1. Accounting
Policies
The BlackRock Municipal Target Term Trust Inc., (the "Trust") a Maryland
corporation is a diversified closed-end management investment company. The
Trust's investment objective is to manage a diversified portfolio of investment
grade securities that will return $10 per share to investors on or about
December 31, 2006 while providing current income exempt from regular federal
income tax. The ability of issuers of debt securities held by the Trust to meet
their obligations may be affected by economic developments in a specific state,
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 a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. 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 is 60
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.
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 commis-
Right Col.
sions, 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 and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
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.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential 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 payments
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.
14
<PAGE>
Left Col.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses are calculated on the
identified cost basis. Interest income is recorded on the accrual basis and the
Trust amortizes premium and accretes original issue discount on securities
purchased using the interest method.
Federal Income Taxes: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient 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 to common
shareholders monthly from net investment income. 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.
Deferred Organization Expenses: A total of $70,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a period of sixty months from the date the Trust
commenced investment operations.
Reclassification of Capital Accounts: Effective January 1, 1994, the Trust
began accounting and reporting for permanent differences between financial and
tax reporting in accordance with the American Institute of Certified Public
Accountants' 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 of adopting the statement for
the year ended December 31, 1995 was to decrease accumulated net realized gain
and increase undistributed net investment income by $4,426. Net investment
income, net realized gains and net asets were not affected by this change.
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 Company of America.
The investment advisory fee paid to the Adviser is computed weekly and payable
monthly at an annual rate of 0.35% of the Trust's average weekly net investment
assets. The administration fee paid to PMF is also computed weekly and payable
monthly at an annual rate of 0.07% of the Trust's average weekly net investment
assets.
Right Col.
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
acquisition, the Adviser has become a wholly-owned corporate subsidiary of PNC
Asset Management Group, Inc., the holding company for PNC's asset management
businesses.
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended December 31, 1995 aggregated $67,328,321 and $64,799,727,
respectively.
The federal income tax basis of the Trust's investments at December 31, 1995
was substantially the same as the basis for financial reporting purposes and,
accordingly, net and gross unrealized appreciation was $68,989,638. Note 4.
Capital There are 200 million shares of $.01 par value common stock authorized.
Of the 45,410,639 common shares outstanding at December 31, 1995, the Adviser
owned 10,639 shares. As of December 31, 1995, there were 9,000 preferred shares
outstanding as follows: Series
W7-3,000, Series F7-3,000 and Series W28-3,000.
The Trust may classify or reclassify any unissued shares of common stock into
one or more series of preferred stock. On November 21, 1991 the Trust
reclassified 4,500 shares of common stock and issued 3 series of Auction Market
Preferred Stock ("Preferred Stock") as follows: Series W7-1,500 shares, Series
F7-1,500 shares and Series W28-1,500 shares. The Preferred Stock had a
liquidation value of $50,000 per share plus any accumulated but unpaid
dividends. On May 16, 1995 shareholders approved a proposal to split each share
of preferred stock into two shares and simultaneously reduce each share's
liquidation preference from $50,000 to $25,000 plus any accumulated but unpaid
dividends. The stock split occurred on July 24, 1995.
Dividends on Series W7 and Series F7 are cumulative at a rate which is reset
every 7 days based on the results of an auction. Dividends on Series W28 are
also cumulative at a rate which is reset every 28 days based on the results of
an auction. Dividend rates ranged from 2.90% to 5.85% during the year ended
December 31, 1995.
15
<PAGE>
Left Col.
The Trust may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution, or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is 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 Stock is 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
Articles of Incorporation are not satisfied.
The holders of Preferred Stock 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 Stock are also
entitled to elect two of the Trust's directors. In addition, the
Right Col.
Investment Company Act of 1940 requires that along with approval by shareholders
that might otherwise be required, the approval of the holders of a majority of
any outstanding preferred shares, voting separately as a class would be required
to (a) adopt any plan of reorganization that would adversely affect the
Preferred shares 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 December 31, 1995, the Board of Directors of the Trust declared
dividends from undistributed earnings of $0.05125 per common share payable
January 31, 1995 to shareholders of record on January 16, 1995.
For the period January 1, 1996 to January 31, 1996 dividends and distributions
declared on preferred shares totalled $726,510 in aggregate for the three
outstanding preferred share series.
Note 6. Quarterly Data
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase
Net realized and (decrease)
unrealized in net investment
Net investment gain (loss) assets resulting Dividends Period
income on investments from operations Common Shares Preferred Shares* end
Quarterly Total common common common common common Common Stock asset
period Income Amount share Amount share Amount share Amount share Amount share High Low value
- ------ ------ --------------- ------------------ ----------------- --------------- --------------- ---- --- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 1,
1994 to
March
31,
1994 $10,507,914 $ 9,400,533 $.21 $(43,506,373) $(.96) $(34,105,840) $(.75) $6,981,886 $.15375 $1,259,117 $.03 $107/8 $95/8 $10.37
April 1,
1994 to
June
30,
1994 10,495,844 9,429,834 .21 866,471) (.02) 8,563,363 .19 6,981,885 .15375 1,571,564 .03 101/8 93/8 10.37
July 1,
1994 to
September
30, 10,551216 9,425,932 .21 (5,116,231) (.11) 4,309,701 .10 6,961,886 .15375 1,695,136 .03 10 91/4 10.28
October 1,
1994 to
December
31,
1994 10,520,366 9,362,479 .20 (13,561,487) (.30) (4,199,008) (.10) 6,981,886 .15375 2,046,561 .05 93/4 81/4 9.98
January 1,
1995 to
March
31,
1995 10,652,689 9,619,611 .21 29,779,929 .66 39,399,540 .87 6,981,886 .15375 2,233,857 .05 97/8 83/4 10.65
April 1,
1995 to
June
30,
1995 10,600,843 9,529,910 .21 5,897,36 .13 15,427,272 .34 6,981,885 .15375 2,260,138 .05 10 95/8 10.79
July 1,
1995 to
September
30,
1995 11,745,300 10,646,786 .24 6,545,040 .14 17,191,826 .38 7,161,132 .15770 2,120,077 .05 103/16 93/4 10.96
October 1,
1995 to
December
31,
1995 10,702,981 9,516,027 .21 9,476,523 .21 18,992,550 .42 8,303,098 .18284 2,315,382 .05 105/8 10 1.14
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
- ------------
*For the year ended December 31, 1995 the average annualized rate paid to
preferred shareholders was 3.97%.
</FN>
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and
Board of Directors of
The BlackRock Municipal Target Term Trust Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The BlackRock Municipal Target Term Trust Inc.
as of December 31, 1995 and the related statement of operations for the year
then ended, the statement of changes in net investment 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 September 30, 1991
(commencement of investment operations) to December 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
Municipal Target Term Trust Inc. as of December 31, 1995, the results of its
operations, the changes in its net investment 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
17
<PAGE>
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THE BLACKROCK MUNICIPAL 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 dividends of
$0.615 per common share that were federally tax-exempt interest dividends.
Additionally the following summarized the special taxable distributions
declared by the Trust during the fiscal year:
<TABLE>
<CAPTION>
Taxable Short-term Long-term
Record Payable Ordinary Income Capital Gains Capital Gains
Date Date Per Share Per Share Per Share
---- ---- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Common Stock ........... 12/29/95 1/31/96 $0.000652 $ 0.016061 $ 0.012383
Common Stock ........... 9/15/95 9/29/95 0.000036 - 0.003946
Preferred Stock:
Series W-7 ........... 12/5/95 12/6/95 1.030000 25.450000 19.620000
Series W-7 ........... 7/18/95 7/19/95 0.080000 - 9.180000
Series F-7 ........... 12/7/95 12/8/95 1.040000 25.710000 19.820000
Series F-7 ........... 7/20/95 7/21/95 0.090000 - 9.370000
Series W-28 .......... 12/26/95 12/27/95 1.010000 24.950000 19.240000
Series W-28 .......... 8/8/95 8/9/95 0.090000 - 9.560000
</TABLE>
For the purposes of preparing your annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form
1099-DIV or substitute 1099-DIV.
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
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.
18
<PAGE>
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THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
The Trust's Investment Objective
The Trust's investment objective is to provide current income exempt from
regular Federal income tax and to return $10 per share (the initial public
offering price per share) to investors on or about December 31, 2006.
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 on the New York or American
Stock Exchanges, several open-end funds and over 80 separate accounts for
various clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset
Management Group, Inc. which is a division of PNC Bank, N.A., the nation's
eleventh largest banking organization.
What Can the Trust Invest In?
The Trust intends to invest substantially all of its assets in a diversified
portfolio of tax-exempt Municipal Obligations which are rated Aaa by Moody's or
AAA by S &P or are covered by insurance or a guaranty of the timely payment of
both principal and interest from an entity having a Aaa or AAA rating or are
determined by the Trust's adviser to be of comparable credit quality.
What is the Adviser's Investment Strategy?
The primary investment strategy for the Trust is to seek to closely match the
maturity of the assets of the portfolio with the future return of the initial
investment on or about December 31, 2006. Accordingly, the majority of the
funds' assets are invested in securities which have maturities that are similar
to the maturity date of the fund. Most municipal securities, however, have
optional redemption provisions (or "calls") which allow the issuer to redeem the
bonds on specified dates prior to their maturity. While call features are more
predictable than prepayments on mortgage-backed securities, they require
additional active ,management considerations for the Trust. If a portion of the
Trust is invested in callable bonds, the yield to call date is analyzed instead
of the yield to the maturity of the bond, and should the security be called,
BlackRock will generally seek to reinvest the proceeds in additional assets with
maturities which are not significantly longer than the remaining term of the
Trust. In addition, in order to seek to earn back the underwriting discount and
upfront expenses and have the ability to return the full initial investment at
the end of the term, the Trust generally seeks to retain a small portion of the
income earned on its portfolio each year.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide current income exempt from Federal income tax to
investors. The portfolio managers will attempt to achieve this objective by
investing in securities that provide competitive tax-exempt income. In addition,
leverage will be used (in an amount up to 35% of the portfolio 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 will be reinvested in securities with
maturities which coincide with the remaining term of the Trust. 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. If market conditions, such as high
interest rate volatility, force a choice between current income and risking the
return of the initial offering price, it is likely that the return of the
initial offering price will be emphasized.
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
19
<PAGE>
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 issuance of preferred
stock 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 35% 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
rapidly 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 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 New York Stock Exchange (NYSE symbol: BMN) 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.
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
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.
Municipal Obligations. Municipal obligations include debt obligations issued by
states, cities, and local authorities, and possessions and certain territories
of the United States to obtain funds for various public purposes, including the
construction of public facilities, the refinancing of outstanding obligations
and the obtaining of funds for general operating expenses and for loans to other
public institutions and facilities. 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.
Alternative Minimum Tax (AMT). The Trust may invest in securities subject to
alternative minimum tax.
20
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
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. 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 income tax 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.
21
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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.
Discount: When a fund's net asset value is greater than its stock price the fund is said to be trading at a
discount.
Dividend: Income generated by securities in a portfolio and distributed to shareholders after the deduction of
expenses. This Trust declares and pays dividends on a monthly basis.
Dividend Reinvestment: Shareholders may have all distributions of dividends and capital gains automatically reinvested into
additional shares of the Trust.
Embedded Caps: Also known as additional interest municipal bonds. These securities are intended to protect the income
that the Trust earns through leverage from significant increases in short-term rates. The coupon on these
bonds will increase if short-term rates rise significantly.
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 and The New York Times on Saturday or
The Wall Street Journal each Monday.
Premium: When a fund's stock price is greater than its net asset value, the fund is said to be trading at a
premium.
Pre-refunded 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.
Total Investment Return: A measurement of a fund's performance, taking into account the combination of dividends paid and the
increase in the market value of a Trust's common shares. It may be expressed on an average annual basis
or cumulative basis (total change over a given period). In addition, total investment return may be
expressed with or without the effect of reinvestment of dividends and capital gains. This report
calculates total investment return with reinvested dividends and capital gains.
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
BlackRock Financial Management Inc.
Summary of Closed-End Funds
- --------------------------------------------------------------------------------
Taxable Trusts
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Termination
Perpetual Trusts Stock Symbol Date
------------ -----------
<S> <C> <C>
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
</TABLE>
Tax-Exempt Trusts
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Termination
Perpetual Trusts Stock Symbol Date
------------ -----------
<S> <C> <C>
The BlackRock Investment Quality Municipal Trust Inc. ............ BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc .. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust ......... RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. . RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. ... RNY N/A
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 call BlackRock at (800) 227-7BFM
or consult with your financial advisor
23
<PAGE>
Left Col.
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
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Kevin Klingert, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, 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
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171 (800) 669-1BFM
Auction Agent
Bankers Trust Company 4
Albany Street
New York, NY 10006
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 Municipal Target Term Trust Inc.
c/o Prudential Mutual Fund Management, Inc.
32nd Floor
One Seaport Plaza
New York, NY 10292
(800) 227-7BFM
09247M 10 5
09247M 20 4
09247M 30 3
09247M 40 2
Right Col.
The BlackRock
Municipal Target
Term Trust Inc.
- ---------------------------------------
Annual Report
December 31, 1995
