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THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
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July 31, 1996
Dear Trust Shareholder:
After posting strong returns during 1995, the fixed income markets have
given back much of their gains in 1996 in response to a strengthening U.S.
economy. Accelerating economic growth has raised concerns about an increased
inflationary environment, which could erode the value of fixed income
investments. The stronger economy also has led some market participants to
consider the possibility that the Federal Reserve may increase interest rates to
thwart inflation threats after three interest rate reductions over the past
twelve months.
Despite the pick-up in economic growth, we believe that current inflationary
fears will subside. Commodity prices have risen but manufacturers will have
difficulty passing along the increased costs of raw materials to consumers,
whose debt levels as a percentage of disposable income are at the highest point
since the recessionary highs of 1990. We believe that the overleveraged consumer
will have to retrench, restricting future economic expansion and creating a
positive environment for bonds in the latter half of this year.
The following semi-annual report provides detailed market commentary and a
review of portfolio management activity. We believe that BlackRock's duration
controlled management style and risk management capabilities will allow each of
our Trusts to achieve its long-term investment objective.
We look forward to maintaining your respect and confidence and to serving
your financial needs in the coming years.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 31, 1996
Dear Shareholder,
We are pleased to present the semi-annual report for The BlackRock Municipal
Target Term Trust Inc. ("the Trust") for the six months ended June 30, 1996. We
would like to take this opportunity to review the Trust's stock price and net
asset value (NAV) performance, summarize market developments and discuss recent
portfolio management activity.
The Trust is a 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 high 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 period.
---------------------------------------------------
6/30/96 12/31/95 Change High Low
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Stock Price $10.250 $10.125 1.23% $10.50 $10.00
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Net Asset Value (NAV) $10.76 $11.14 (3.41%) $11.30 $10.61
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The Fixed Income Markets
The domestic fixed income markets witnessed two profoundly different
environments during the past six months, providing an exciting and challenging
environment in which to manage the Trust. The Treasury market rally of 1995
continued through the middle of February 1996, as market demand for fixed income
securities remained strong due to a combination of moderate economic growth, low
absolute levels of inflation and two reductions of the Fed funds target rate.
The rally halted during mid-February, however, as data indicating accelerating
economic growth rekindled inflationary concerns. The strengthening of the
economy continued throughout the second quarter, leading market participants to
become more resolute in their belief that the Federal Reserve will tighten
monetary policy during the second half of 1996. These fears translated into a
sharp rise in bond yields across the Treasury yield curve, resulting in the
fixed income markets rescinding much of their 1995 gains.
After lagging the performance of its Treasury counterparts during the fourth
quarter of 1995, municipal bonds have outperformed taxable fixed income
securities in 1996. The diminished possibility of significant tax reform, which
had threatened the tax-exempt status of municipal bond income, helped renew
investor interest in the municipal sector. Additionally, municipal bond
investors received approximately $60 billion in cash during the June/July period
resulting from bond calls, interest payments and redemptions. A significant
portion of this money has been reinvested in the municipal market, as high
municipal bond absolute yields convinced many investors to bypass the equity
markets. For the period, the yield of the 10-year AAA General Obligation
increased 47 basis points (0.47%) to close at 5.11% versus at 114 basis point
rise in the yield of the 10-year Treasury note. Despite the potential decline in
retail demand as the June/July cash flows are reinvested, BlackRock believes
that municipal bonds have the potential to continue to outperform Treasury
securities for the remainder of 1996.
2
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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
as 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 which fit within the context of the Trust seeking to achieve its
investment objectives.
Additionally, 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 with higher yields. The degree to which the
Trust can benefit from its use of leverage may affect its ability to pay high
monthly income. After steepening during the first quarter of 1996, the municipal
yield curve has recently flattened, as longer maturity municipal bonds have
outperformed shorter municipals. This resulted in a narrowing of the yield
differential, or "spread", between long and short maturities.
The following chart compares the Trust's current and December 31, 1995 asset
composition:
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The BlackRock Municipal Target Term Trust Inc.
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Sector June 30, 1996 December 31, 1995
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City, County and State 21% 21%
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Hospital 15% 15%
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Transportation 15% 14%
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Tax Revenue 14% 14%
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Water & Sewer 10% 10%
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Utility 8% 9%
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Lease Revenue 6% 7%
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Education 4% 4%
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Other 3% 4%
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Building 2% 2%
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Pollution Control/Resource Recovery 2% %
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3
<PAGE>
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock
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 Portfolio Manager Managing Director and Municipal
BlackRock Financial Management, Inc. Portfolio Manager
BlackRock Financial Management, Inc.
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The BlackRock Municipal Target Term Trust Inc.
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Symbol on New York Stock Exchange: BMN
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Initial Offering Date: September 27, 1990
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Closing Stock Price as of 6/30/96: $10.25
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Net Asset Value as of 6/30/96: $10.76
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Yield on Closing Stock Price as of 6/30/96 ($10.25)1: 6.00%
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Current Monthly Distribution per Common Share2: $0.05125
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Current Annualized Distribution per Common Share2: $0.6250
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- ------------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2Distribution not constant and is subject to change.
4
<PAGE>
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The BlackRock Municipal Target Term Trust Inc.
Portfolio of Investments
June 30, 1996
(Unaudited)
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Principal Option
Amount Call Value
Rating* (000) Descriptions Provisions++ (Note 1)
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LONG-TERM INVESTMENTS-145.5%
Alabama-1.0%
Hoover Brd. of Ed. Spl. Tax.
Wts., G.O., AMBAC,
AAA $ 1,700 6.50%, 2/01/01+ ......... No Opt. Call $ 1,844,789
AAA 1,815 6.60%, 2/01/01+ ......... No Opt. Call 1,976,953
AAA 1,025 6.625%, 2/01/01+ ........ No Opt. Call 1,117,506
------------
4,939,248
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Alaska-4.5%
AAA 7,500 Anchorage Elec. Util. Rev.,
7.125%, 6/01/06, MBIA ..... 6/99 at 102 8,096,550
AAA 4,845 Fairbanks Mun. Util. Auth.
Rev., Ser. A, 7.10%,
1/01/05, AMBAC ............ 1/99 at 102 5,147,667
No. Slope Boro.,
AAA 5,000 Ser. A, Zero Coupon,
6/30/06, MBIA ........... No Opt. Call 2,909,800
AAA 9,000 Ser. B, Zero Coupon,
6/30/04, CGIC ........... No Opt. Call 5,927,580
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22,081,597
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Arizona-1.1%
AAA 5,010 Tucson Bus. Dev. Fin. Corp.
Lease Rev., 6.25%, 7/01/06,
FGIC ...................... 7/02 at 102 5,317,313
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California-4.5%
AAA 6,000 California St., G.O., 6.30%,
9/01/06, AMBAC ............ No Opt. Call 6,527,580
AAA 1,910 California St., Pub. Wrks.
Rev., Ser. A, 6.20%,
12/01/06, AMBAC ........... 12/02 at 102 2,028,267
AAA 4,000 Glendale Hosp. Rev.,
Adventist Hlth. Ctr.,
Ser. A, 6.50%, 3/01/07,
MBIA ...................... 3/01 at 102 4,260,120
Los Angeles Wst. Wtr. Sys.
Rev., MBIA,
AAA 5,570 5.625%, 6/01/07 ........... 6/03 at 102 5,666,194
AAA 3,320 Ser. D, 6.60%, 12/01/06 ... 12/00 at 102 3,548,350
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22,030,511
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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 3,613,611
AAA 1,875 6.60%, 11/15/06 ........... 11/01 at 101 2,004,657
AAA 3,865 6.625%, 11/15/07 .......... 11/01 at 101 4,118,080
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9,736,348
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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 8,484,795
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Florida-13.3%
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 7,525,840
AAA 6,975 6.75%, 7/01/07, AMBAC ..... 7/01 at 102 7,567,805
AAA 2,190 Florida St. Sunshine
Skyway Rev., 6.60%,
7/01/07, MBIA ............. 7/01 at 101 2,358,827
Greater Orlando Aviation
Auth., Arpt. Facs. Rev.,
Ser. B, FGIC,
AAA 4,760 6.55%, 10/01/06 ........... 10/02 at 102 5,206,393
AAA 5,070 6.55%, 10/01/07 ........... 10/02 at 102 5,545,465
AAA 3,155 Gulf Breeze, Local Gov't.,
Ln. Pkg. Rev., 7.70%,
12/01/15, FGIC ............ 12/99 at 102 3,443,683
AAA 2,650 Jacksonville Hlth. Facs.
Auth. Rev., Mem. Med.
Ctr., Ser. A, 6.625%,
5/01/01, MBIA ............. No Opt. Call 2,910,177
AAA 7,500 Jacksonville Hosp. Rev.,
Univ. Med. Ctr. Inc. Proj.,
6.50%, 2/01/07,
CONNIE LEE ................ 2/02 at 102 8,015,025
AAA 4,000 Kissimmee Util. Auth. Rev.,
Elec. Sply., 6.70%,
10/01/07, MBIA ............ 10/97 at 102 4,180,160
AAA 2,000 No. Broward Hosp. Rev.,
6.50%, 1/01/07, MBIA ...... 1/02 at 102 2,157,020
See Notes to Financial Statements.
5
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Principal Option
Amount Call Value
Rating* (000) Descriptions Provisions++ (Note 1)
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Florida (cont'd)
AAA $10,645 Orange Cnty., Tourist Dev.
Tax Rev., Ser. A, 6.375%,
10/01/06, AMBAC ........... 10/02 at 102 $ 11,544,502
AAA 2,570 Tampa Auth. Rev., St.
Joseph Hlth. Ctr., 6.70%,
12/01/07, MBIA ............ 12/01 at 102 2,793,590
AAA 1,600 Tampa Util. Tax & Spec.
Rev., 6.80%, 10/01/06,
AMBAC ..................... 10/01 at 102 1,758,976
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65,007,463
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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 2,123,728
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Illinois-15.8%
AAA 4,930 Alton Hlth. Facs. Rev.,
Christian Hlth. Ctr.,
7.00%, 2/15/01+, FGIC ..... No Opt. Call 5,453,221
AAA 5,000 Chicago, G.O., Ser. A,
7.25%, 1/01/06, MBIA ...... 7/96 at 102 5,100,000
Chicago Cent. Pub. Library,
G.O., AMBAC,
AAA 1,800 Ser. A, 6.75%, 1/01/07 .... 4/02 at 102 1,957,248
AAA 1,600 Ser. C, 6.75%, 1/01/07 .... 4/02 at 102 1,739,776
AAA 5,555 Cook Cnty., Ser. A, 6.40%,
11/15/06, MBIA ............ 11/02 at 102 5,918,353
AAA 1,775 Cook Cnty. Cmnty. Sch.
Dist., G.O., Ser. A,
6.375%, 1/01/07, FGIC ..... 1/02 at 100 1,899,765
Illinois Hlth. Facs. Auth.
Rev.,
AAA 3,300 Elmhurst Mem. Hosp., 6.60%,
1/01/07, FGIC ............. 1/02 at 102 3,527,964
AAA 14,585 Sisters Svcs., Inc.,
Ser. C, 6.625%, 6/01/06,
MBIA ...................... 6/02 at 102 15,734,298
Illinois Regl. Trans. Auth.
Rev., Ser. A, FGIC,
AAA 2,780 6.55%, 11/01/06 ........... 11/01 at 102 2,968,428
AAA 6,125 6.625%, 11/01/08 .......... 11/01 at 102 6,522,941
AAA 8,725 Illinois St. G.O., 6.40%,
12/15/07, AMBAC ........... 12/01 at 102 9,215,694
Illinois St. Sales Tax Rev.,
Ser. O,
AAA 5,900 Zero Coupon, 6/15/07 ...... No Opt. Call 3,208,302
AAA 5,635 Zero Coupon, 6/15/08 ...... No Opt. Call 2,865,059
AAA 6,000 6.50%. 6/15/06 ............ 6/01 at 102 6,428,040
AAA 2,000 6.60%, 6/15/08 ............ 6/01 at 102 2,151,320
AAA 2,000 Will Cnty. Cmnty. Sch.
Dist. Rev., 7.05%,
12/01/08, AMBAC ........... No Opt.Call 2,288,560
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76,978,969
-----------
Indiana-2.7%
AAA 9,000 Indiana Univ. Rev., Student
Fee, Zero Coupon, 8/01/06,
AMBAC ..................... No Opt. Call 5,167,350
AAA 2,270 Noblesville West Indpt.
Sch. Bldg. Corp., G.O.,
7.00%, 7/01/07, MBIA ...... 1/01 at 102 2,478,522
AAA 5,000 Warsaw High Sch. Bldg.
Corp., G.O., 6.90%,
7/01/05, MBIA ............. 7/00 at 102 5,360,100
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13,005,972
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Kentucky-3.2%
Danville Multi-City Lease
Rev., Swr. & Drain Sys.,
MBIA,
AAA 2,015 6.60%, 3/01/02+ ........... No Opt. Call 2,213,034
AAA 2,160 6.65%, 3/01/02+ ........... No Opt. Call 2,377,555
AAA 3,750 Kentucky Dev. Fin. Auth.
Rev., Sisters of Charity,
6.60%, 11/01/06, MBIA ..... 11/01 at 102 4,036,313
AAA 6,410 Kentucky St. Ppty. & Bldgs.
Auth. Rev., Proj. 53,
6.625%, 10/01/07, MBIA .... 10/01 at 102 6,883,186
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15,510,088
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Louisiana-6.9%
Jefferson Sales Tax Dist.
Rev., FGIC,
AAA 21,000 Ser. A, 6.75%, 12/01/06 ... 12/02 at 100 22,597,470
AAA 4,000 Ser. B, 6.75%, 12/01/06 ... 12/02 at 100 4,304,280
AAA 3,500 Louisiana St., G.O., Ser. A,
6.50%, 5/01/07, AMBAC ..... 5/02 at 102 3,752,560
AAA 5,250 New Orleans, G.O., Ref.,
Zero Coupon, 9/01/06,
AMBAC ..................... No Opt. Call 3,024,420
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33,678,730
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See Notes to Financial Statements.
6
<PAGE>
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Principal Option
Amount Call Value
Rating* (000) Descriptions Provisions++ (Note 1)
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Massachusetts-5.3%
AAA $ 3,670 Mansfield, G.O., 6.65%,
1/15/07, AMBAC ............ 1/02 at 102 $ 3,972,702
Massachusetts Bay Trans. Auth.
Rev., Gen. Tran. Sys.,
Ser. A, MBIA,
AAA 20,015 6.625%, 3/01/01+ .......... No Opt. Call 21,931,636
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25,904,338
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Michigan-9.1%
Detroit Swr. Disp. Rev., FGIC,
AAA 1,655 6.60%, 7/01/01+ ........... No Opt. Call 1,819,772
AAA 1,765 6.65%, 7/01/01+ ........... No Opt. Call 1,944,606
AAA 1,880 6.70%, 7/01/01+ ........... No Opt. Call 2,071,027
AAA 3,750 Grand Rapids Wtr. Sply. Rev.,
6.625%, 1/01/08, FGIC ..... 1/01 at 102 3,982,387
Michigan Mun. Bond Auth.,
AAA 5,000 G.O., Ser. D, Zero Coupon,
5/15/06, MBIA ............. No Opt. Call 2,926,700
AAA 1,840 Local Gov't. Loan Prog.,
6.35%, 11/01/06, AMBAC .... 11/04 at 102 2,005,692
Michigan St. Bldg. Auth. Rev.,
AAA 11,590 Ser. I, 6.75%, 10/01/07,
MBIA ...................... 10/01 at 102 12,527,747
AAA 3,850 Ser. II, 6.75%, 10/01/07,
AMBAC ..................... 10/01 at 102 4,161,503
AAA 11,940 Michigan St. Hosp. Fin.
Auth. Rev., Sparrow Oblig.
Grp., 6.60%, 11/15/07,
MBIA ...................... 11/01 at 102 12,769,114
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44,208,548
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Nevada-5.5%
AAA 6,210 Clark Cnty. Flood Ctrl., G.O.,
6.40%, 11/01/06, AMBAC .... 11/01 at 101 6,598,932
Clark Cnty. Sch. Dist., G.O.,
Ser. A, MBIA,
AAA 11,000 6.70%, 3/01/06 ............ 3/01 at 101 11,823,130
AAA 1,500 6.75%, 3/01/07 ............ 3/01 at 101 1,612,080
Nye Cnty. Sch. Dist., G.O.,
BIG,
AAA 2,835 7.25%, 5/01/99+ ........... No Opt. Call 3,093,552
AAA 3,250 Reno Hosp. Auth. Rev.,
St. Mary Regl. Med. Ctr.,
6.70%, 7/01/06, MBIA ...... 7/01 at 102 3,518,710
-----------
26,646,404
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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 2,503,878
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New Jersey-16.3%
AAA 10,500 Elizabeth, G.O., 6.60%,
8/01/06, MBIA ............. 8/01 at 102 11,362,050
Howell Twp., Ref, G.O., FGIC,
AAA 7,715 6.70%, 1/01/06 ............ 1/02 at 102 8,460,115
AAA 2,925 6.75%, 1/01/07 1/02 at 102 3,199,628
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 13,818,767
AAA 3,735 6.70%, 7/01/07 ............ 7/01 at 102 4,028,832
AAA 1,765 New Jersey St. Hwy. Auth. Rev.,
Garden St. Pkwy., 6.15%,
1/01/07, AMBAC ............ 1/02 at 102 1,864,670
AAA 30,000 New Jersey St. Tpk. Auth.
Rev., Ser. C, 6.40%,
1/01/07, AMBAC ............ 1/01 at 102 31,832,400
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 2,724,879
AAA 1,065 Wanaque So. Proj., 6.50%,
7/01/06 ................... 7/01 at 102 1,150,669
AAA 1,250 Warren Cnty. Poll. Ctrl.
Fin. Auth. Rev., 6.55%,
12/01/06, MBIA ............ 12/02 at 102 1,365,837
-----------
79,807,847
-----------
New Mexico-0.8%
AAA 3,535 Gallup Poll. Ctrl. Rev.,
6.50%, 8/15/07, MBIA ...... 8/02 at 102 3,796,944
-----------
See Notes to Financial Statements.
7
<PAGE>
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Principal Option
Amount Call Value
Rating* (000) Descriptions Provisions++ (Note 1)
- --------------------------------------------------------------------------------
New York-11.9%
Mun. Asst. Corp. Rev.,
AAA $ 5,000 Ser. 57, 7.00%, 7/01/06,
AMBAC ..................... 7/96 at 102 $ 5,100,000
AAA 3,500 Ser. 61, 6.875%, 7/01/07,
FGIC ...................... 7/97 at 102 3,662,295
AAA 6,500 Ser. 61, 6.875%, 7/01/07,
AMBAC ..................... 7/97 at 102 6,801,405
AAA 3,500 Ser. 62, 6.90%, 7/01/07,
AMBAC ..................... 7/97 at 102 3,663,170
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 11,664,102
AAA 2,160 6.75%, 6/15/06 ............ 6/01 at 101 2,331,439
AAA 2,660 7.00%, 6/15/07 ............ 6/01 at 101 2,903,603
AAA 10,000 New York City, G.O., Ser. E,
6.125%, 8/01/06, MBIA ..... No Opt. Call 10,628,300
AAA 4,500 New York St. Environ. Facs.
Corp., Poll. Ctrl. Rev.,
Ser. D, 6.40%, 5/15/06 .... 11/04 at 102 4,930,200
AAA 6,000 Triborough Brdg. & Tunl.
Auth. Rev., Ser. B, 6.70%,
1/01/08, FGIC ............. 1/01 at 102 6,482,100
-----------
58,166,614
-----------
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 6,284,400
-----------
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 2,177,572
-----------
Pennsylvania-10.4%
AAA 6,200 Beaver Cnty. Hosp. Auth.,
6.625%, 7/01/06, AMBAC .... 7/02 at 102 6,673,494
AAA 1,500 Coatesville Sch. Dist., G.O.,
6.60%, 3/01/01+, AMBAC .... No Opt. Call 1,612,260
AAA 10,000 Harrisburg Auth. Lease Rev.,
6.625%, 6/01/01+, CGIC .... No Opt. Call 10,810,600
AAA 7,450 Pennsylvania St., G.O.,
Ser. A, 6.50%, 11/01/07,
FGIC ......................11/01 at 101.5 7,954,141
AAA 1,445 Pennsylvania St. Higher Ed.
Rev., 6.75%, 7/01/07,
MBIA ...................... 7/01 at 102 1,595,005
AAA 4,500 Pennsylvania St. Tpk. Auth.
Rev., Ser. O, 5.80%,
12/01/07, FGIC ............ 12/02 at 102 4,593,150
Philadelphia Mun. Auth.,
Justice Lease Rev.,
AAA 1,550 Ser. A, 7.00%, 11/15/04,
MBIA ...................... 11/01 at 102 1,707,573
AAA 2,370 Ser. B, 7.10%, 11/15/01+,
FGIC ...................... No Opt. Call 2,661,771
Pittsburgh & Allegheny Cntys.
Rev., AMBAC,
AAA 1,015 Ser. A, 6.50%, 7/15/06 .... 7/01 at 100 1,067,354
AAA 900 Ser. B, 6.50%, 7/15/06 .... 7/01 at 100 946,422
AAA 2,500 Schuylkill Cnty. Redev. Auth.
Common Lease Rev., Ser. A,
7.00%, 6/01/01+, FGIC ..... No Opt. Call 2,734,100
AAA 7,800 Westmoreland Cnty., G.O.,
6.70%, 8/01/01+ AMBAC, .... No Opt. Call 8,460,426
-----------
50,816,296
-----------
Rhode Island-2.5%
AAA 11,220 Conv. Ctr. Auth. Rev., Ser. A,
6.60%, 5/15/01+, MBIA ..... 5/01 at 102 12,264,582
-----------
South Carolina-2.1%
AAA 4,390 Piedmont Mun. Pwr. Agy. Elec.
Rev., 6.85%, 1/01/07,
FGIC ...................... 1/01 at 102 4,728,337
AAA 5,100 Rock Hill Util. Sys. Rev.,
6.50%, 1/01/07, FGIC ...... 1/01 at 102 5,414,007
-----------
10,142,344
-----------
Tennessee-0.5%
AAA 2,350 Met. Nashville, Arpt. Rev.,
Ser. C, 6.625%, 7/01/07,
FGIC ...................... 7/01 at 102 2,501,223
-----------
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Descriptions Provisions++ (Note 1)
- --------------------------------------------------------------------------------
Texas-17.2%
AAA $ 2,000 Austin Util. Sys. Rev.,
6.875%, 5/15/07, AMBAC .... 5/01 at 102 $ 2,161,900
AAA 8,500 Cypress-Fairbanks Indpt.
Sch. Dist., G.O., Zero
Coupon, 8/01/06, AMBAC .... No Opt. Call 4,894,725
AAA 10,000 Dallas Fort Worth Regl.
Arpt. Rev., Ser. A, 6.00%,
11/01/09, MBIA ............ 11/04 at 100 10,262,500
AAA 5,800 El Paso Cnty. Tax Ref.,
G.O., Ser. B, 6.40%,
2/15/07, MBIA ............. 2/02 at 100 6,091,508
Ft. Bend Cnty., Tax. Perm.
Imprvt., G.O., FGIC,
AAA 3,375 6.60%, 9/01/02+ ........... No Opt. Call 3,676,657
Harris Cnty. Rev., Toll Rd.
Sr. Lien, Ser. A, FGIC,
AAA 10,395 6.50%, 8/15/02+ ........... No Opt. Call 11,418,804
AAA 3,160 6.50%, 8/15/02+ ........... No Opt. Call 3,471,228
AAA 1,955 6.50%, 8/15/06 ............ 8/02 at 102 2,109,152
AAA 590 6.50%, 8/15/07 ............ 8/02 at 102 633,306
AAA 15,000 Houston Wtr. & Swr. Sys.
Rev., Ser. B, 6.75%,
12/01/08, FGIC ........... 12/01 at 102 16,151,700
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 2,013,107
AAA 1,550 No. Texas Wtr. Dist., 6.40%,
6/01/07, MBIA ............ 6/03 at 100 1,637,296
AAA 3,000 Round Rock Indpt. Sch.
Dist., G.O., 6.75%,
8/15/01+, MBIA ........... No Opt. Call 3,262,410
AAA 15,000 Texas Mun. Pwr. Agy. Rev.,
Ref., Zero Coupon,
9/01/06, AMBAC ........... No Opt. Call 8,675,550
AAA 3,745 Texas St. Bldg. Fin. Auth.
Rev., 7.00%, 2/01/01+,
MBIA ..................... No Opt. Call 4,079,803
AAA 3,395 Tyler Cnty. Hlth. Facs.
Dev. Corp. Rev., Mother
Francis Hosp.,
6.50%, 7/01/06, FGIC ..... 7/02 at 102 3,645,449
-----------
84,185,095
-----------
Washington-4.1%
AAA 1,250 Snohomish Cnty. Pub. Util.
Dist., Elec. Rev., 6.55%,
1/01/07, FGIC ............ 1/02 at 102 1,378,263
Snohomish Cnty. Sch. Dist.,
G.O., MBIA,
AAA 3,835 6.70%, 12/01/06 .......... 12/01 at 100 4,100,919
AAA 4,145 6.75%, 12/01/07 .......... 12/01 at 100 4,421,927
Washington St. Pub. Pwr.
Sply. Sys. Rev., Nuclear
Proj. #2, Ser. A,
AAA 12,875 Zero Coupon, 7/01/06,
MBIA ..................... No Opt. Call 7,477,028
AAA 2,265 6.50%, 7/01/05, FGIC ..... 7/01 at 102 2,417,004
-----------
19,795,141
-----------
Wisconsin-0.6%
AAA 2,850 Wisconsin Hlth. & Ed. Fac.
Auth., Columbia Hosp. Rev.,
6.50%, 11/15/06, MBIA ..... 11/01 at 102 3,043,031
-----------
Total Long-Term Investments
(cost $660,760,347) 711,139,019
-----------
SHORT-TERM INVESTMENTS**-0.4%
New York-0.2%
AAA 1,000 New York City Mun. Wtr. Fin.
Auth. Rev., FRDD, 3.55%,
7/01/96 .................. N/A 1,000,000
-----------
Washington-0.1%
A1+ 650 Washington St. Hlth. Care
Facs. Auth. Rev., FRDD,
3.55%, 7/01/96 ........... N/A 650,000
-----------
Wyoming-0.1%
P1 350 Uinta Cnty. Poll. Ctrl.
Rev., Chevron Inc. Proj.,
FRDD, 3.50%, 7/01/96 ..... N/A 350,000
-----------
Total Short-Term Investments
(cost $2,000,000) ........ 2,000,000
-----------
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Descriptions Provisions++ (Note 1)
- --------------------------------------------------------------------------------
Total Investments-145.9%
(cost $662,760,347) ...... $713,139,01
Other assets in excess of
liabilities-0.1% ......... 613,863
Liquidation value of
preferred stock-(46.0)% ... (225,000,000)
-----------
Net Assets Applicable to
Common Shareholders-100% . $488,752,882
===========
+ 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.
** For purposes of amortized cost valuation, the maturity date of these
instruments are considered to be the next date on which the security can be
redeemed at par or the next date on which the rate of interest is adjusted.
- ---------------------------------------------------------------
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
FRDD -Floating Rate Daily Demand
G.O. -General Obligation Bond
MBIA -Municipal Bond Insurance Association
- ----------------------------------------------------------------
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Statement of Assets and Liabilities
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
(Left Column)
Assets
Investments, at value (cost
$662,760,347) (Note 1) ........................................ $713,139,019
Cash ............................................................ 30,548
Interest receivable ............................................. 11,876,953
Deferred organization expenses and
other assets .................................................. 5,198
------------
725,051,718
------------
Liabilities
Payable for investments purchased ............................... 10,262,700
Dividends payable-common stock .................................. 277,909
Dividends payable-preferred stock ............................... 208,850
Advisory fee payable (Note 2) ................................... 204,541
Administration fee payable (Note 2) ............................. 40,908
Other accrued expenses .......................................... 303,928
------------
11,298,836
------------
Net Investment Assets ........................................... $713,752,882
============
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 ........................... 16,723,984
Accumulated net realized gain ................................. 76,735
Net unrealized appreciation ................................... 50,378,672
------------
Net investment assets, June 30, 1996 .......................... $713,752,882
============
Net assets applicable to common
shareholders ................................................ $488,752,882
============
Net asset value per common share:
($488,752,882 / 45,410,639 shares of
common stock issued and outstanding) .......................... $10.76
======
(Right Column)
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Statement of Operations
Six Months Ended June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
Net Investment Income
Income
Interest and discount earned .................................. $21,429,031
-----------
Expenses
Investment advisory ........................................... 1,272,599
Auction agent ................................................. 281,000
Administration ................................................ 254,520
Custodian ..................................................... 102,000
Reports to shareholders ....................................... 62,000
Directors ..................................................... 36,000
Transfer agent ................................................ 27,000
Audit ......................................................... 12,000
Legal ......................................................... 10,000
Miscellaneous ................................................. 183,055
-----------
Total expenses ............................................ 2,240,174
-----------
Net investment income ........................................... 19,188,857
-----------
Realized and Unrealized Gain (Loss)
on Investments (Note 3)
Net realized gain on investments .............................. 73,702
Net change in unrealized appreciation
(depreciation) on investments ............................... (18,610,966)
-----------
Net loss on investments ....................................... (18,537,264)
-----------
Net Increase in Net Investment Assets
Resulting from Operations ....................................... $ 651,593
===========
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Statements of Changes
in Net Investment Assets
(Unaudited)
- --------------------------------------------------------------------------------
Six Months
Ended Year Ended
June 30, December 31,
1996 1995
---------- ------------
Increase (Decrease) in Net Investment Assets
Operations:
Net investment income ........................ $ 19,188,857 $ 39,312,334
Net realized gain on investments ............. 73,702 1,759,203
Net change in unrealized appreciation
(depreciation) on investments .............. (18,610,966) 49,939,651
------------ ------------
Net increase in net investment assets
resulting from operations .................. 651,593 91,011,188
------------ ------------
Dividends and distributions:
To common shareholders from net
investment income .......................... (13,963,771) (27,927,543)
To preferred shareholders from
net investment income ...................... (3,994,617) (8,475,663)
------------ ------------
(17,958,388) (36,403,206)
------------ ------------
To common shareholders from capital gains .... - (1,500,458)
To preferred shareholders from capital gains . - (454,791)
------------ ------------
- (1,955,249)
------------ ------------
Total increase (decrease) .................. (17,306,795) 52,652,733
------------ ------------
Net Investment Assets
Beginning of period .......................... 731,059,677 678,406,944
------------ ------------
End of period ................................ $713,752,882 $731,059,677
============ ============
See Notes to Financial Statements.
12
<PAGE>
- -------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30,
Six Months 1991
Ended Year Ended December 31, through
June 30, -------------------------------------- December 31,
1996 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .............. $11.14 $ 9.98 $11.30 $10.04 $ 9.56 $ 9.40
------ ------ ------ ------ ------ ------
Net investment income ........................... .42 .87 .83 .82 .82 .13
Net realized and unrealized gain (loss) on
investments ..................................... (.40) 1.14 (1.39) 1.17 .42 .22
------ ------ ------ ------ ------ ------
Net increase (decrease) from investment operations .02 2.01 (.56) 1.99 1.24 .35
------ ------ ------ ------ ------ ------
Dividends from net investment income to:
Preferred shareholders .......................... (.09) (.19) (.14) (.12) (.15) (.02)
Common shareholders ............................. (.31) (.62) (.62) (.61) (.61) (.05)
------ ------ ------ ------ ------ ------
Total dividends ................................. (.40) (.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** .................. $10.76 $11.14 $ 9.98 $11.30 $10.04 $ 9.56#
====== ====== ====== ====== ====== ======
Market value, end of period** ..................... $10.25 $10.125 $ 8.875 $10.375 $10.00 $ 9.625
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN+ .......................... 4.29% 21.67% (8.89%) 10.01% 10.51% 2.93%
RATIOS TO AVERAGE NET ASSETS
OF COMMON SHAREHOLDERS+++:
Operating expenses ................................ .91%++ .90% .94% .87% .91% .81++
Net investment income ............................. 7.79%++ 8.06% 7.91% 7.61% 8.43% 5.80%++
SUPPLEMENTAL DATA:
Average net assets of common shareholders
(in thousands) .................................. $495,605 $487,923 $475,529 $492,138 $441,368 $418,353
Portfolio turnover 1% 9% 21% 1% 35% 1%
Net assets of common shareholders, end of period
(in thousands) .................................. $488,753 $506,060 $453,407 $513,339 $455,954 $434,166
Asset coverage per share of preferred stock,
end of period## ................................. 79,329 $ 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 $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 unaudited 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>
- -------------------------------------------------------------------------------
The BlackRock Municipal Target Term Trust Inc.
Notes to Financial Statements
(Unaudited)
- -------------------------------------------------------------------------------
(Left Column)
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 Column)
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 Column)
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.
Note 2. Agreements
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, Inc. (the "Adviser") a wholly-owned corporate subsidiary of PNC
Asset Management Group, Inc., the holding company for PNC's asset management
business 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.
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.
Note 3. Portfolio
Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended June 30, 1996 aggregated $10,162,700 and $5,583,800,
respectively.
(Right Column)
The federal income tax basis of the Trust's investments at June 30, 1996 was
substantially the same as the basis for financial reporting purposes and,
accordingly, net and gross unrealized appreciation was $50,378,672.
Note 4. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
45,410,639 common shares outstanding at June 30, 1996, the Adviser owned 10,639
shares. As of June 30, 1996, 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 3.14% to 3.75% during the six months
ended June 30, 1996.
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 plusany 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
15
<PAGE>
(Left Column)
entitled to elect two of the Trust's directors. In addition, the 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.
(Right Column)
Note 5. Dividends
Subsequent to June 30, 1996, the Board of Directors of the Trust declared
dividends from undistributed earnings of $0.05125 per common share payable July
31, 1996 to shareholders of record on July 15, 1996.
For the period July 1, 1996 to July 31, 1996 dividends and distributions
declared on preferred shares totalled $646,457 in aggregate for the three
outstanding preferred share series.
Note 6. Quarterly Data
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase
Net realized and (decrease)
unrealized in net investment
Net Investment gain (loss) assets resulting Dividends
Income on Investments from operations Common Shares Preferred Shares*
Per Per Per Per Per Share price of end net
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 $10-7/8 $9-5/8 $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 10-1/8 9-3/8 10.37
July 1,
1994 to
September
30, 1994. 10,551,216 9,425,932 .21 (5,116,231) (.11) 4,309,701 .10 6,981,886 .15375 1,695,136 .03 10 9-3/8 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 9-3/4 8-1/4 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 9-7/8 8-3/4 10.65
April 1,
1995 to
June 30,
1995.... 10,600,843 9,529,910 .21 5,897,362 .13 15,427,272 .34 6,981,885 .15375 2,260,138 .05 10 9-5/8 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 10-3/16 9-3/4 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 10-5/8 10 11.14
January 1,
1996 to
March 31,
1996.... 10,733,378 9,619,451 .21 (12,417,987) (.27) (2,798,536) (.06) 6,981,886 .15375 1,988,126 .04 10-1/2 10 10.88
April 1,
1996 to
June 30,
1996... 10,695,653 9,569,406 .21 (6,119,277) (.13) 3,450,129 .08 6,981,885 .15375 2,006,491 .05 10-3/8 10 10.76
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
- ------------
*For the six months ended June 30, 1996 the average annualized rate paid to preferred shareholders was 3.57%.
</FN>
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
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.
The Annual Meeting of Trust Shareholders was held May 8, 1996 to vote on the
following matters:
(1) To elect three Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
Richard E. Cavanagh* I 3 years 1999
James Grosfeld I 3 years 1999
James Clayburn LaForce I 3 years 1999
*Represents the preferred Shareholders.
Directors whose term of office continues beyond this meeting are Andrew
F. Brimmer, Kent Dixon, Frank J. Fabozzi, Laurence D. Fink and Ralph L.
Schlosstein.
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 1996.
(3) To modify the investment restriction prohibiting investing for the
purpose of exercising control over the management of a company.
Shareholders elected the three Directors, ratified the selection of Deloitte &
Touche LLP and approved the modification of the investment restriction
prohibiting investing for the purpose of exercising control over the management
of a company. The results of the voting was as follows:
Votes for Votes Against Abstentions
---------- ------------- -----------
Richard E. Cavanagh ....... 5,071 - 4
James Grosfeld ............ 22,513,908 - 725,723
James Clayburn LaForce .... 22,503,179 - 736,452
Ratification of
Deloitte & Touche LLP ... 22,329,061 200,317 710,253
Investment restriction .... 17,401,684 876,418 1,400,228
17
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THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
INVESTMENT SUMMARY
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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 $41 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., one of the nations
largest banking organizations.
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
18
<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, State Street Bank and
Trust Company. Investors who wish to hold shares in a brokerage account should
check with their financial advisor to determine whether their brokerage firm
offers dividend reinvestment services.
Leverage Considerations in 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.
19
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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 and 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.
20
<PAGE>
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THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
Closed-End Fund: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange. The
fund invests in a portfolio of securities in
accordance with its stated investment objectives and
policies.
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.
21
<PAGE>
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BlackRock Financial Management Inc.
Summary of Closed-End Funds
- --------------------------------------------------------------------------------
Taxable Trusts
- --------------------------------------------------------------------------------
Termination
Perpetual Trusts Stock 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
- --------------------------------------------------------------------------------
Termination
Perpetual Trusts Stock 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 ..................................... 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
If you would like further information please call BlackRock at (800) 227-7BFM
or consult with your financial advisor
22
<PAGE>
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 and Transfer Agent
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
The accompanying financial statements as of
June 30, 1996 were not audited and, accordingly,
no opinion is expressed on them.
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of any securities.
The BlackRock 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
The BlackRock
Municipal Target
Term Trust Inc.
- -------------------------------------
Semi-Annual Report
June 30, 1996