- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
January 31, 2000
Dear Shareholder:
After easing monetary policy three times during the fourth quarter of 1998,
the Federal Reserve reversed its trend by raising the Fed funds target rate 75
basis points (to 5.50%) over the course of 1999 in response to robust GDP, low
unemployment and rising equity prices. U.S. Treasury yields rose significantly
during the past twelve months, with the yield of the 30-year Treasury rising
above 6.00% for the first time since May 1998.
Despite the rise in Treasury yields, continued strong economic growth may
spur the Federal Reserve to proactively fight perceived inflation through
continued monetary policy tightening in 2000. Until the inflation picture
becomes clearer, we expect interest rates to remain largely range-bound.
Accordingly, we will continue to seek the most attractive relative value
opportunities and utilize our proprietary risk management systems to help the
Trust to achieve its investment objectives.
This report contains a summary of market conditions during the annual
period and a review of portfolio strategy by your Trust's managers in addition
to the Trust's audited financial statements and a detailed portfolio list of the
Trust's holdings. Continued thanks for your confidence in BlackRock. We
appreciate the opportunity to help you achieve your long-term investment goals.
Sincerely,
/S/ LAURENCE D. FINK /S/ RALPH L. SCHLOSSTEIN
- -------------------- --------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
January 31, 2000
Dear Shareholder:
We are pleased to present the annual report for The BlackRock Municipal
Target Term Trust Inc. ("the Trust") for the year ended December 31, 1999. We
would like to take this opportunity to review the Trust's stock price and net
asset value (NAV) performance, summarize developments in the fixed income
markets and discuss recent portfolio management activity.
The Trust is a diversified closed-end bond fund whose shares are traded on
the New York Stock Exchange under the symbol "BMN". The Trust's 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 changes in the Trust's stock price and NAV
over the past year:
--------------------------------------------------------
12/31/99 12/31/98 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $9.8125 $11.375 (13.74%) $11.375 $9.25
- --------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $10.60 $11.21 (5.44%) $11.30 $10.60
- --------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
The U.S. economy sustained its growth during the past twelve months, as
U.S. exports and manufacturing continued to rebound. Additionally, consumer
strength remains an important contributor to economic growth as low unemployment
and rising incomes fuel domestic demand. After lowering interest rates three
times in the second half of 1998, and despite inflation concerns as measured by
CPI and PPI remaining relatively benign, the Federal Reserve (the "Fed") adopted
a tightening bias and raised its target for the Federal funds rate from 4.75% to
5.50% between June and November 1999. In a statement accompanying the latest
tightening on November 16, it was indicated that the Fed believes that growth
"continues in excess of the economy's growth potential"; nevertheless, the Fed
reversed its tightening stance by adopting a neutral bias.
U.S. Treasury yields rose dramatically during 1999, with the yield of the
30-year Treasury increasing by 139 basis points to close the year at 6.48%. Bond
prices, which move inversely to their yields, were punished by the constant
threat of inflation in response to the strong economic data and the market's
uncertainty over the Fed's policy throughout the year. Recently, a weaker
dollar, higher commodity prices and strong gains in the U.S. and European equity
markets have depressed overall demand for fixed income securities.
Municipals underperformed the taxable market during the year, posting a
pre-tax -2.07% total return as measured by the LEHMAN MUNICIPAL BOND INDEX
versus the LEHMAN AGGREGATE'S -0.83%. As interest rates rose to their highest
level in four years during the third quarter of 1999, retail demand for
municipal securities increased dramatically. This rise in municipal interest
rates is directly related to the increase of alternative taxable investment
spreads over Treasuries. Currently
2
<PAGE>
municipals are substantially cheaper than their long-term average valuations as
compared to Treasuries. Unlike the taxable market, which witnessed a surge of
supply by issuers trying to avoid potential year-end market dislocations due to
Y2K, the volume of new municipal issuance is down significantly from 1998's
pace, creating a positive technical environment. We believe that the current
market environment offers some of the most attractive investment opportunities
in municipals in the last few years.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and types of bonds. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors and
coupons. Additionally, the Trust emphasizes securities whose maturity dates
match the termination date of the Trust.
Over the year, trading activity in the Trust remained relatively low, as
many of the securities in the Trust's portfolio continued to trade at prices
above where they were purchased. As trading activity that results in the Trust
realizing a capital gain could require a taxable distribution, we continue to
believe that waiting to restructure the portfolio in a higher interest rate
environment is the most prudent portfolio management strategy. At present, we
are confident that the Trust is on schedule to achieve its primary investment
objective of returning $10 per share upon termination and will continue to seek
investment opportunities in the municipal market.
Additionally, the Trust employs leverage to enhance its income by borrowing
at short-term municipal rates and investing the proceeds in longer maturity
issues that have higher yields. The degree to which the Trust can benefit from
its use of leverage may affect its ability to pay high monthly income.
The following charts compare the Trust's current and December 31, 1998
asset composition:
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
- --------------------------------------------------------------------------------
SECTOR DECEMBER 31, 1999 DECEMBER 31, 1998
- --------------------------------------------------------------------------------
City, County and State 22% 22%
- --------------------------------------------------------------------------------
Hospital 15% 15%
- --------------------------------------------------------------------------------
Transportation 15% 14%
- --------------------------------------------------------------------------------
Tax Revenue 13% 14%
- --------------------------------------------------------------------------------
Water & Sewer 10% 11%
- --------------------------------------------------------------------------------
Lease Revenue 9% 9%
- --------------------------------------------------------------------------------
Utility/Power 6% 7%
- --------------------------------------------------------------------------------
Education 6% 5%
- --------------------------------------------------------------------------------
Other 4% 3%
- --------------------------------------------------------------------------------
3
<PAGE>
As a result of an internal reorganization, effective January 1, 2000,
BlackRock Advisors, Inc. has replaced BlackRock Financial Management, Inc., a
wholly-owned subsidiary of BlackRock Advisors, Inc. as the Advisor of the Trust.
The investment management and other personnel responsible for providing services
to the Trust did not change as a result of the reorganization. We look forward
to managing the Trust to benefit from the opportunities available in the fixed
income markets and to meet its investment objectives. We thank you for your
investment in the BlackRock Municipal Target Term Trust Inc. Please feel free to
contact our marketing center at (800) 227-7BFM (7236) if you have specific
questions which were not addressed in this report.
Sincerely,
/s/ Robert S. Kapito /s/ Kevin Klingert
- -------------------- ------------------
Robert S. Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Advisors, Inc. BlackRock Advisors, Inc.
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BMN
- --------------------------------------------------------------------------------
Initial Offering Date: September 27, 1991
- --------------------------------------------------------------------------------
Closing Stock Price as of 12/31/99: $9.8125
- --------------------------------------------------------------------------------
Net Asset Value as of 12/31/99: $10.60
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 12/31/99 ($9.8125)1: 6.2675%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Common Share2: $0.05125
- --------------------------------------------------------------------------------
Current Annualized Distribution per Common Share2: $0.615
- --------------------------------------------------------------------------------
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 Distribution is not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS--144.3%
ALABAMA--1.0%
Hoover Brd. of Ed. Spl. Tax. Wts., G.O., AMBAC,
AAA $1,700++ 6.50%, 2/01/01 ....................................................... N/A $1,769,003
AAA 1,815++ 6.60%, 2/01/01 ....................................................... N/A 1,890,558
AAA 1,025 6.625%, 2/01/01 ...................................................... N/A 1,067,927
-----------
4,727,488
-----------
ALASKA--1.5%
AAA 9,000++ No. Slope Boro., Ser. B, Zero Coupon, 6/30/04, FSA .................... No Opt. Call 7,209,720
-----------
ARIZONA--1.1%
Tucson Bus. Dev. Fin. Corp. Lease Rev., FGIC,
AAA 1,515++ 6.25%, 7/01/02 ....................................................... N/A 1,602,037
AAA 3,495 6.25%, 7/01/06 ....................................................... 7/02 @ 102 3,673,804
----------
5,275,841
-----------
CALIFORNIA--5.1%
AAA 6,000 California St., G.O., 6.30%, 9/01/06, AMBAC ........................... No Opt. Call 6,481,860
AAA 1,910++ California St. Pub. Wrks. Rev., Ser. A, 6.20%, 12/01/02, AMBAC ........ N/A 2,030,979
AAA 4,000 Glendale Hosp. Rev., Adventist Hlth. Ctr.,
Ser. A, 6.50%, 3/01/07, MBIA 3/01 @ 102 4,155,560
Los Angeles Wst. Wtr. Sys. Rev., MBIA,
AAA 5,570 5.625%, 6/01/07 ..................................................... 6/03 @ 102 5,779,265
AAA 3,320++ Ser. D, 6.60%, 12/01/00 ............................................. N/A 3,462,063
AAA 3,500 San Joaquin Hills Trans. Agcy., Toll Rd. Rev., Ser. A,
Zero Coupon, 1/15/07, MBIA .......................................... No Opt. Call 2,443,980
----------
24,353,707
----------
COLORADO--2.0%
Denver City & Cnty. Wtr. Brd. Rev., C.O.P., FGIC,
AAA 2,025++ 6.50%, 11/15/01 ..................................................... N/A 2,116,145
AAA 1,385 6.50%, 11/15/05 ..................................................... 11/01 @ 101 1,442,796
AAA 1,110++ 6.60%, 11/15/01 ..................................................... N/A 1,161,915
AAA 765 6.60%, 11/15/06 ..................................................... 11/01 @ 101 798,270
AAA 2,295++ 6.625%, 11/15/01 .................................................... N/A 2,403,347
AAA 1,570 6.625%, 11/15/07 .................................................... 11/01 @ 101 1,632,690
----------
9,555,163
-----------
CONNECTICUT--0.9%
AAA 4,000 Connecticut St. Arpt. Rev., 7.65%, 10/01/12, FGIC, .................... 10/04 @ 100 4,442,240
-----------
DISTRICT OF COLUMBIA--1.8%
Dist. of Columbia, G.O., Ser B, MBIA,
AAA 1,060++ 5.90%, 6/01/04 ...................................................... N/A 1,121,215
AAA 7,190 5.90%, 6/01/06 ...................................................... 6/04 @ 102 7,487,594
----------
8,608,809
-----------
FLORIDA--11.6%
Florida St. Div. Bd. Fin. Dept. Gen. Svcs. Rev.
(Dept. Nat. Res. & Pres.),
AAA 7,000++ 6.45%, 7/01/01, MBIA ................................................ N/A 7,268,170
AAA 6,975++ 6.75%, 7/01/01, AMBAC ............................................... N/A 7,337,351
AAA 2,190 Florida St. Sunshine Skyway Rev., 6.60%, 7/01/07, MBIA 7/01 @ 101 2,266,716
Greater Orlando Aviation Auth., Arpt. Fac. Rev., Ser B, FGIC,
AAA 4,760 6.55%, 10/01/06 ..................................................... 10/02 @ 102 5,039,412
AAA 5,070 6.55%, 10/01/07 ..................................................... 10/02 @ 102 5,364,922
AAA 2,650++ Jacksonville Hlth. Fac. Auth. Rev., Mem. Med. Ctr.,
Ser. A, 6.625%, 5/01/01, MBIA ....................................... N/A 2,775,795
AAA 7,500 Jacksonville Hosp. Rev., Univ. Med. Ctr. Inc. Proj.,
6.50%, 2/01/07, CONNIE LEE .......................................... 2/02 @ 102 7,863,000
AAA 2,000++ No. Broward Hosp. Rev., 6.50%, 1/01/02, MBIA .......................... N/A 2,109,140
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA--(CONTINUED)
AAA $10,645 Orange Cnty., Tourist Dev. Tax Rev., Ser. A,
6.375%, 10/01/06, AMBAC .............................................. 10/02 @ 102 $11,222,704
AAA 2,570++ Tampa Auth. Rev., St. Joseph Hlth. Ctr., 6.70%,
12/01/01, MBIA ....................................................... N/A 2,723,121
AAA 1,600 Tampa Util. Tax & Spec. Rev., 6.80%, 10/01/06, AMBAC ................. 10/01 @ 102 1,682,368
-----------
55,652,699
-----------
GEORGIA--0.4%
AAA 1,990 Burke Cnty. Dev. Auth. P.C.R., Oglethorpe Pwr. Corp.,
Ser. B, 6.45%, 1/01/05, MBIA ....................................... 1/04 @ 101 2,099,788
-----------
HAWAII--1.2%
AAA 5,675 Hawaii St., G.O., Ser. CP, 5.50%, 10/01/06, FGIC ...................... No Opt. Call 5,828,055
-----------
ILLINOIS--15.0%
AAA 4,930++ Alton Hlth. Fac. Rev., Christian Hlth. Ctr.,
7.00%, 2/15/01, FGIC ................................................. N/A 5,158,407
Chicago Cent. Pub. Library, G.O., AMBAC,
AAA 1,800++ Ser. A, 6.75%, 4/01/02 ............................................... N/A 1,911,798
AAA 1,600++ Ser. C, 6.75%, 4/01/02 ............................................... N/A 1,699,376
AAA 5,555++ Cook Cnty., Ser. A, 6.40%, 11/15/02, MBIA ............................ N/A 5,909,631
AAA 1,775++ Cook Cnty. Cmnty. Sch. Dist., G.O, Ser. A, 6.375%,
1/01/02, FGIC ........................................................ N/A 1,832,510
Illinois Hlth. Fac. Auth. Rev.,
AAA 3,300 Elmhurst Mem. Hosp., 6.60%, 1/01/07, FGIC ............................. 1/02 @ 102 3,450,282
AAA 14,585 Sisters Svcs., Inc., Ser. C, 6.625%, 6/01/06, MBIA .................... 6/02 @ 102 15,360,484
Illinois Regl. Trans. Auth. Rev., Ser. A, FGIC,
AAA 2,780++ 6.55%, 11/01/01 ...................................................... N/A 2,929,675
AAA 6,125++ 6.625%, 11/01/01 ..................................................... N/A 6,462,733
AAA 8,725++ Illinois St., Ded. Tax Rev., 6.40%, 12/15/01, AMBAC ................... N/A 9,190,130
Illinois St. Sales Tax Rev., Ser. O.,
AAA 5,900 Zero Coupon, 6/15/07 ................................................. No Opt. Call 3,966,452
AAA 5,635 Zero Coupon, 6/15/08 ................................................. No Opt. Call 3,556,756
AAA 2,065++ 6.50%, 6/15/01 ....................................................... N/A 2,160,795
AAA 3,935 6.50%, 6/15/06, MBIA ................................................. 6/02 @ 101 4,108,494
AAA 2,000++ 6.60%, 6/15/01 ....................................................... N/A 2,095,540
AAA 2,000 Will Cnty. Cmnty. Sch. Dist. Rev., 7.05%, 12/01/08, AMBAC ............. No Opt. Call 2,244,800
-----------
72,037,863
-----------
INDIANA--2.9%
AAA 9,000 Indiana Univ. Rev., Student Fee, Zero Coupon, 8/01/06, AMBAC .......... No Opt. Call 6,386,760
AAA 2,270 Noblesville West Indpt. Sch. Bldg. Corp., G.O., 7.00%,
7/01/07, MBIA ........................................................ 1/01 @ 102 2,356,487
AAA 5,000 Warsaw High Sch. Bldg. Corp., G.O., 6.90%, 7/01/05, MBIA .............. 7/00 @ 102 5,147,050
-----------
13,890,297
-----------
KENTUCKY--3.1%
Danville Multi-City Lease Rev., Swr. & Drain Sys., MBIA,
AAA 2,015++ 6.60%, 3/01/02 ....................................................... N/A 2,132,334
AAA 2,160++ 6.65%, 3/01/02 ....................................................... N/A 2,287,958
AAA 3,750++ Kentucky Dev. Fin. Auth. Rev., Sisters of Charity,
6.60%, 11/01/01, MBIA ................................................ N/A 3,922,800
AAA 6,410 Kentucky St. Ppty. & Bldgs. Auth. Rev., Proj. 53,
6.625%, 10/01/07, MBIA ............................................... 10/01 @ 102 6,714,859
-----------
15,057,951
-----------
LOUISIANA--7.0%
Jefferson Sales Tax Dist. Rev., FGIC,
AAA 21,000++ Ser. A, 6.75%, 12/01/02 .............................................. N/A 22,072,545
AAA 4,000++ Ser. B, 6.75%, 12/01/02 .............................................. N/A 4,217,840
AAA 3,500++ Louisiana St., G.O., Ser. A, 6.50%, 5/01/02, AMBAC .................... N/A 3,702,020
AAA 5,250 New Orleans, G.O., Zero Coupon, 9/01/06, AMBAC ........................ No Opt. Call 3,709,545
-----------
33,701,950
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MASSACHUSETTS--5.2%
AAA $ 3,670++ Mansfield, G.O., 6.65%, 1/15/02, AMBAC ................................ N/A $ 3,883,154
Massachusetts Bay Trans. Auth. Rev. Gen., Tran. Sys.,
AAA 20,015++ Ser. A, 6.625%, 3/01/01, MBIA ....................................... N/A 20,897,461
-----------
24,780,615
-----------
MICHIGAN--9.1%
Detroit Swr. Disp. Rev., FGIC,
AAA 1,655++ 6.60%, 7/01/01 ....................................................... N/A 1,736,211
AAA 1,765++ 6.65%, 7/01/01 ....................................................... N/A 1,852,861
AAA 1,880++ 6.70%, 7/01/01 ....................................................... N/A 1,974,940
AAA 3,750 Grand Rapids Wtr. Sply. Rev., 6.625%, 1/01/08, FGIC ................... 1/01 @ 102 3,872,850
AAA 5,000 Michigan Mun. Bond Auth., G.O., Ser. D, Zero Coupon,
5/15/06, MBIA ........................................................ No Opt. Call 3,598,550
Michigan Mun. Bond Auth. Rev., Ser. G, AMBAC,
AAA 1,165++ 6.35%, 11/01/04 ...................................................... N/A 1,260,880
AAA 675 6.35%, 11/01/06 ...................................................... 11/04 @ 102 722,756
Michigan St. Bldg. Auth. Rev.,
AAA 11,590 Ser. I, 6.75%, 10/01/07, MBIA ........................................ 10/01 @ 102 12,147,247
AAA 3,850 Ser. II, 6.75%, 10/01/01, AMBAC ...................................... N/A 4,066,255
AAA 11,940 Michigan St. Hosp. Fin. Auth. Rev., Sparrow Oblig. Grp.,
6.60%, 11/15/07, MBIA ................................................ 11/01 @ 102 12,461,897
-----------
43,694,447
-----------
NEVADA--4.7%
AAA 6,210++ Clark Cnty. Flood Ctrl., G.O., 6.40%, 11/01/01, AMBAC ................. N/A 6,474,298
Clark Cnty. Sch. Dist., G.O., Ser. A, MBIA,
AAA 11,000 6.70%, 3/01/06 ....................................................... 3/01 @ 101 11,311,630
AAA 1,500 6.75%, 3/01/07 ....................................................... 3/01 @ 101 1,542,990
AAA 3,250++ Reno Hosp. Auth. Rev., St. Mary Regl. Med. Ctr., 6.70%,
7/01/01, MBIA ........................................................ N/A 3,414,125
-----------
22,743,043
-----------
NEW HAMPSHIRE--0.5%
AAA 2,310 New Hampshire High. Ed. Auth. Rev., Elliot Hosp. of Manchester,
6.70%, 10/01/06, AMBAC ............................................... 10/02 @ 102 2,413,627
-----------
NEW JERSEY--16.1%
Elizabeth, G.O., MBIA,
AAA 10,235++ 6.60%, 8/01/01 ....................................................... N/A 10,752,994
AAA 265 6.60%, 8/01/06 ....................................................... 8/01 @ 102 276,636
Howell Twp., G.O., FGIC,
AAA 7,715 6.70%, 1/01/06 ....................................................... 1/02 @ 102 8,107,693
AAA 2,925 6.75%, 1/01/07 ....................................................... 1/02 @ 102 3,073,766
New Jersey St. Hlth. Care Fac. Fin. Auth. Rev.,
Hackensack Med. Ctr., FGIC,
AAA 12,755++ 6.65%, 7/01/01 ....................................................... N/A 13,389,944
AAA 3,735++ 6.70%, 7/01/01 ....................................................... N/A 3,923,617
AAA 1,765 New Jersey St. Hwy. Auth. Rev., Garden St. Pkwy.,
6.15%, 1/01/07, AMBAC 1/02 @ 102 1,834,276
AAA 30,000 New Jersey St. Tpk. Auth. Rev., Ser. C, 6.40%, 1/01/07, AMBAC ......... 1/01 @ 101.5 30,896,100
No. Jersey Dist. Wtr. Sply. Cmnty. Rev., MBIA,
AAA 2,525 Wanaque No. Proj., Ser. B, 6.50%, 11/15/06 ........................... 11/01 @ 102 2,639,686
AAA 1,065 Wanaque So. Proj., 6.50%, 7/01/06 .................................... No Opt. Call 1,126,482
AAA 1,250 Warren Cnty. Fin. Auth., P.C.R., 6.55%, 12/01/06, MBIA ................ 12/02 @ 102 1,253,425
-----------
77,274,619
-----------
NEW MEXICO--0.8%
AAA 3,535 Gallup, P.C.R., 6.50%, 8/15/07, MBIA .................................. 8/02 @ 102 3,716,310
-----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK--14.7%
AAA $ 2,800 Nassau Cnty. Gen. Imprvt., Ser. Y, 5.00%, 3/01/06, FGIC ............... No Opt. Call $ 2,791,908
New York City, G.O.,
AAA 13,000 Ser. A, 7.00%, 8/01/07, FSA .......................................... 8/06 @ 101.5 14,487,850
AAA 10,000 Ser. E, 6.125%, 8/01/06, MBIA ........................................ No Opt. Call 10,593,400
New York City Mun. Wtr. Fin. Auth., Wtr & Swr. Sys. Rev.,
Ser. A, FGIC,
AAA 11,100 6.15%, 6/15/07 ....................................................... 6/02 @ 101.5 11,576,523
AAA 1,090++ 6.75%, 6/15/01 ....................................................... N/A 1,134,581
AAA 1,070 6.75%, 6/15/06 ....................................................... 6/01 @ 101 1,110,403
AAA 1,340++ 7.00%, 6/15/01 ....................................................... N/A 1,399,442
AAA 1,320 7.00%, 6/15/07 ....................................................... 6/01 @ 101 1,372,338
AAA 4,500 New York St. Environ. Fac. Corp., P.C.R., Ser. D, 6.40%, 5/15/06 ...... 11/04 @ 102 4,876,425
AAA 9,830 New York St. Hsg. Fin. Agcy. Rev., Hsg. Proj. Mtge.,
Ser. A, 5.50%, 11/01/06, FSA ......................................... 5/06 @ 102 10,011,757
AAA 5,250 New York St. Urb. Dev. Corp. Rev., 5.625%, 1/01/07, AMBAC ............. 1/03 @ 102 5,375,055
AAA 6,000 Triborough Brdg. & Tunl. Auth. Rev., Ser. B, 6.70%, 1/01/08, FGIC ..... 1/01 @ 102 6,219,720
-----------
70,949,402
-----------
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 6,293,340
-----------
NORTH DAKOTA--0.4%
AAA 2,035 Grand Forks Hlth. Care Fac. Rev., United Hosp. Oblig. Grp.,
6.50%, 12/01/06, MBIA ................................................ 12/01 @ 102 2,119,941
-----------
PENNSYLVANIA--10.4%
AAA 6,200++ Beaver Cnty. Hosp. Auth., 6.625%, 7/01/02, AMBAC ...................... N/A 6,599,776
AAA 1,500++ Coatesville Sch. Dist., G.O., 6.60%, 3/01/01, AMBAC ................... N/A 1,537,515
AAA 10,000++ Harrisburg Auth. Lease Rev., 6.625%, 6/01/01, FSA ..................... N/A 10,390,800
AAA 7,450++ Pennsylvania St., G.O., Ser. A, 6.50%, 11/01/01, FGIC ................. N/A 7,814,380
AAA 1,445++ Pennsylvania St. Higher Edl. Rev., 6.75%, 7/01/01, MBIA ............... N/A 1,518,998
AAA 4,500 Pennsylvania St. Tpk. Auth. Rev., Ser. O, 5.80%, 12/01/07, FGIC ....... 12/02 @ 102 4,629,330
Philadelphia Mun. Auth., Justice Lease Rev.,
AAA 1,550 Ser. A, 7.00%, 11/15/04, MBIA ........................................ 11/01 @ 102 1,641,419
AAA 2,370++ Ser. B, 7.10%, 11/15/01, FGIC ........................................ N/A 2,523,600
Pittsburgh & Allegheny Cntys. Rev., AMBAC,
AAA 1,015 Ser. A, 6.50%, 7/15/06 ............................................... 7/01 @ 100 1,042,669
AAA 900 Ser. B, 6.50%, 7/15/06 ............................................... 7/01 @ 100 924,534
AAA 3,000 Schuylkill Cnty. Redev. Auth. Common Lease Rev.,
Ser. A, 7.00%, 6/01/07, FGIC ......................................... 6/01 @ 102 3,151,770
AAA 7,800++ Westmoreland Cnty., G.O., 6.70%, 8/01/01, AMBAC ....................... N/A 8,060,910
-----------
49,835,701
-----------
PUERTO RICO--0.6%
AAA 3,000 Puerto Rico Mun. Fin. Agcy., Ser. A, 5.25%, 8/01/06, FSA .............. No Opt. Call 3,052,830
-----------
RHODE ISLAND--2.4%
AAA 11,220++ Conv. Ctr. Auth. Rev., Ser. A, 6.60%, 5/15/01, MBIA ................... N/A 11,742,740
-----------
SOUTH CAROLINA--2.0%
AAA 4,390 Piedmont Mun. Pwr. Agy. Elec. Rev., 6.85%, 1/01/07, FGIC .............. 1/01 @ 102 4,549,269
AAA 5,100 Rock Hill Util. Sys. Rev., 6.50%, 1/01/07, FGIC ....................... 1/01 @ 102 5,267,994
-----------
9,817,263
-----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (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 @ 102 $ 2,446,749
-----------
TEXAS--15.6%
AAA 2,000++ Austin Util. Sys. Rev., 6.875%, 5/15/01, AMBAC ........................ N/A 2,101,720
AAA 8,500 Cypress-Fairbanks Indpt. Sch. Dist., G.O.,
Zero Coupon, 8/01/06, AMBAC .......................................... No Opt. Call 6,031,940
AAA 5,800 El Paso Cnty. Tax Rev., Ser. B, 6.40%, 2/15/07, MBIA .................. 2/02 @ 100 5,960,370
Ft. Bend Cnty., Perm. Imprvt., FGIC,
AAA 1,650++ G.O., 6.60%, 9/01/02 ................................................. N/A 1,730,635
AAA 1,725++ Rev., 6.60%, 9/01/02 ................................................. N/A 1,809,301
Harris Cnty. Toll Rd., Sr. Lien, Ser. A, FGIC,
AAA 13,555++ 6.50%, 8/15/02 ....................................................... N/A 14,414,929
AAA 1,955 6.50%, 8/15/06 ....................................................... 8/02 @ 102 2,061,665
AAA 590 6.50%, 8/15/07 ....................................................... 8/02 @ 102 621,748
Houston Wtr. & Swr. Sys. Rev., Ser. B, FGIC,
AAA 1,775++ 6.75%, 12/01/01 ...................................................... N/A 1,880,683
AAA 13,225 6.75%, 12/01/08 ...................................................... 12/01 @ 102 13,885,589
AAA 1,900 No. Central Texas Hlth. Fac. Dev. Corp. Rev., Childrens
Med. Ctr. of Dallas,
6.375%, 10/01/06, MBIA ............................................... 10/01 @ 102 1,973,473
AAA 1,550++ No. Texas Wtr. Dist., 6.40%, 6/01/03, MBIA ............................ N/A 1,630,957
AAA 3,000++ Round Rock Indpt. Sch. Dist., G.O., 6.75%, 8/15/01, MBIA .............. N/A 3,105,000
AAA 15,000 Texas Mun. Pwr. Agy. Rev., Zero Coupon, 9/01/06, AMBAC ................ No Opt. Call 10,667,698
AAA 3,745++ Texas St. Bldg. Fin. Auth. Rev., 7.00%, 2/01/01, MBIA ................. N/A 3,844,917
AAA 3,395 Tyler Cnty. Hlth. Fac. Dev. Corp. Rev., Mother Francis Hosp.,
6.50%, 7/01/06, FGIC ................................................. 7/02 @ 102 3,566,278
-----------
75,286,903
-----------
WASHINGTON--4.8%
Seattle, G.O., Ser. E, MBIA,
AAA 1,700 Zero Coupon, 12/15/07 ................................................ No Opt. Call 1,117,206
AAA 1,345 Zero Coupon, 12/15/08 ................................................ No Opt. Call 833,416
AAA 1,250 Snohomish Cnty. Pub. Util. Dist., Elec. Rev., 6.55%, 1/01/07, FGIC .... No Opt. Call 1,351,575
Snohomish Cnty. Sch. Dist., G.O., MBIA,
AAA 3,835 6.70%, 12/01/06 ...................................................... 12/01 @ 100 3,953,272
AAA 4,145 6.75%, 12/01/07 ...................................................... 12/01 @ 100 4,271,215
Washington St. Pub. Pwr. Sply. Sys. Rev., Nuclear Proj. No.2, Ser. A,
AAA 12,875 Zero Coupon, 7/01/06, MBIA ........................................... No Opt. Call 9,135,712
AAA 2,265++ 6.50%, 7/01/01, FGIC ................................................. N/A 2,371,251
-----------
23,033,647
-----------
WISCONSIN--0.6%
AAA 2,850 Wisconsin Hlth. & Ed. Fac. Auth., Columbia Hosp. Rev.,
6.50%, 11/15/06, MBIA ................................................ 11/01 @ 102 2,984,634
-----------
Total Long-Term Investments (cost $661,830,674) 694,627,382
-----------
SHORT-TERM INVESTMENTS**--0.7%
NEW YORK--0.6%
A1+ 3,100 New York St. Energy Res. & Dev. Auth. P.C.R., Niagara Mohawk Pwr.,
Ser. A, 4.25%, 1/03/00, FRDD ......................................... N/A 3,100,000
-----------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEXAS--0.1%
A1+ $300 Harris Cnty. Hlth. Fac. Dev. Corp. Rev., St. Lukes
Episcopal Hosp.,
Ser. A, 4.50%, 1/03/00, FRDD ......................................... N/A $ 300,000
-----------
Total Short-Term Investments (cost $3,400,000) ........................ 3,400,000
-----------
TOTAL INVESTMENTS--145.0% (COST $665,230,674) ......................... 698,027,382
-----------
Other assets in excess of liabilities--1.7% ........................... 8,436,110
Liquidation value of preferred stock--(46.7%) ......................... (225,000,000)
-----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100% .................... $481,463,492
===========
</TABLE>
* Using the higher of Standard &Poor's or Moody's rating.
** For purposes of amortized cost valuation, the maturity date of these
instruments is considered to be the earlier of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
+ Option call provisions: date (month/year) and price
of the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates.
++ This bond is prefunded. See Glossary for definition.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
<S> <C> <C> <C>
AMBAC --American Municipal Bond Assurance Corporation FRDD --Floating Rate Daily Demand**
CAPMAC --Capital Markets Assurance Company FSA --Financial Security Assurance
C.O.P. --Certificate of Participation G.O. --General Obligation
CONNIE LEE --College Construction Loan Insurance Association MBIA --Municipal Bond Insurance Association
FGIC --Financial Guaranty Insurance Company P.C.R. --Pollution Control Revenue
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $665,230,674) (Note 1) ......... $698,027,382
Cash ....................................................... 88,236
Interest receivable ........................................ 11,432,136
------------
709,547,754
------------
LIABILITIES
Dividends payable--common stock ............................ 2,327,295
Investment advisory fee payable (Note 2) ................... 191,692
Dividends payable--preferred stock ......................... 162,646
Administration fee payable (Note 2) ........................ 39,720
Other accrued expenses ..................................... 362,909
------------
3,084,262
------------
NET INVESTMENT ASSETS ...................................... $706,463,492
------------
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 ..................... 27,112,807
Accumulated net realized loss ........................... (19,514)
Net unrealized appreciation ............................. 32,796,708
------------
Net investment assets, December 31, 1999 ................ $706,463,492
============
Net assets applicable to common
shareholders .......................................... $481,463,492
============
Net asset value per common share:
($481,463,492 O 45,410,639 shares of
common stock issued and outstanding) .................... $10.60
======
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned ............................ $ 42,742,717
------------
Expenses
Investment advisory ..................................... 2,527,527
Auction agent ........................................... 563,500
Administration .......................................... 506,887
Custodian ............................................... 165,000
Directors ............................................... 84,000
Reports to shareholders ................................. 50,000
Legal ................................................... 40,000
Registration ............................................ 35,000
Transfer agent .......................................... 35,000
Independent accountants ................................. 32,000
Miscellaneous ........................................... 291,919
------------
Total expenses .......................................... 4,330,833
------------
Net investment income ...................................... 38,411,884
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments ........................... 2,678
Net change in unrealized appreciation
on investments ............................................. (30,439,561)
-----------
Net loss on investments .................................... (30,436,883)
-----------
NET INCREASE IN NET INVESTMENT
ASSETS RESULTING FROM OPERATIONS $ 7,975,001
===========
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,
----------------------------------
1999 1998
--------------- ------------
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
OPERATIONS:
<S> <C> <C>
Net investment income .............................................. $38,411,884 $38,755,547
Net realized gain (loss) on investments ............................ 2,678 (22,192)
Net change in unrealized appreciation on investments ............ (30,439,561) (3,961,990)
----------- -----------
Net increase in net investment assets resulting from operations . 7,975,001 34,771,365
----------- -----------
DIVIDENDS:
To common shareholders from net investment income ............... (27,927,182) (27,927,201)
To preferred shareholders from net investment income ............ (7,435,130) (7,606,013)
----------- -----------
Total dividends ............................................... (35,362,312) (35,533,214)
----------- -----------
Total decrease .............................................. (27,387,311) (761,849)
----------- -----------
NET INVESTMENT ASSETS
Beginning of year .................................................. 733,850,803 734,612,652
----------- -----------
End of year (including undistributed net investment income of
$27,112,807 and $24,063,235, respectively) ......................... $706,463,492 $733,850,803
=========== ===========
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
PER COMMON SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........................ $ 11.21 $ 11.22 $ 10.96 $ 11.14 $ 9.98
------ ------ ------ ------ -----
Net investment income ..................................... .85 .85 .85 .84 .87
Net realized and unrealized gain (loss) on investments .... (.68) (.08) .20 (.24) 1.14
------ ------ ------ ------ -----
Net increase from investment operations ................... .17 .77 1.05 .60 2.01
------ ------ ------ ------ -----
Dividends from net investment income to:
Common shareholders ..................................... (.62) (.61) (.61) (.61) (.62)
Preferred shareholders .................................... (.16) (.17) (.18) (.17) (.19)
Distributions from capital gains to:
Common shareholders ....................................... -- -- * * (.03)
Preferred shareholders .................................. -- -- * * (.01)
------ ------ ------ ------ -----
Total dividends and distributions ......................... (.78) (.78) (.79) (.78) (.85)
------ ------ ------ ------ -----
Net asset value, end of year** ............................ $ 10.60 $ 11.21 $ 11.22 $ 10.96 $ 11.14
====== ====== ====== ====== =====
Market value, end of year** ............................... $ 9.81 $ 11.38 $ 11.00 $ 10.25 $ 10.13
====== ====== ====== ====== =====
TOTAL INVESTMENT RETURN ................................... (8.43)% 9.35% 13.69% 7.43% 21.67%
====== ====== ====== ====== =====
RATIOS TO AVERAGE NET ASSETS OF
COMMONSHAREHOLDERS:
Expenses .................................................. .87% .80% .88% .91% .90%
Net investment income before preferred stock dividends .... 7.72% 7.63% 7.70% 7.75% 8.06%
Preferred stock dividends ................................. 1.49% 1.50% 1.61% 1.59% 1.83%
Net investment income available to common stockholders .... 6.23% 6.13% 6.09% 6.16% 6.23%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) .. $497,324 $508,037 $500,227 $494,667 $487,923
Portfolio turnover rate ................................... 4% 0% 8% 5% 9%
Net assets of common shareholders, end of year (in thousands) $481,463 $508,851 $509,613 $497,686 $506,060
Asset coverage per share of preferred stock, end of year .. $ 78,514 $ 81,550 $ 81,640 $ 80,298 $ 81,243
Preferred stock outstanding (in thousands) ................ $225,000 $225,000 $225,000 $225,000 $225,000
</TABLE>
- ---------------
* Actual amount paid for the year ended December 31, 1997 to preferred
shareholders was $.0008 and to common shareholders was $.0031 and for the
year ended December 31, 1996 to preferred shareholders was $.0007 and to
common shareholders was $.0024.
** Net asset value and market value are published in BARRON'S on Saturday and
THE WALL STREET JOURNAL on Monday.
+ 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 year reported. Dividends and
distributions, are assumed, for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment
plan. Total investment return does not reflect brokerage commissions.
++ Ratios calculated on the basis of income and expenses applicable to both
the common and preferred stock relative to the average net assets of
common stockholders.
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 years 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
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION & ACCOUNTING POLICIES
The BlackRock Municipal Target Term Trust Inc. (the "Trust"), was organized in
Maryland on July 16, 1991 as a diversified, closed-end management investment
company. The Trust's investment objective is to manage a diversified portfolio
of high quality 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 dealers or pricing services approved by the Trust's Board of
Directors. In determining the value of a particular security, pricing services
may use certain information with respect to transactions in such securities,
quotations from 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 having a remaining maturity of 60 days or less are
valued at amortized cost which approximates market value.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust 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 and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Net long-term
capital gains, if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, Inc. (the "Advisor") a wholly-owned corporate subsidiary of
BlackRock Advisors,Inc., which is a wholly-owned subsidiary of BlackRock, Inc.,
which in turn is an indirect majority-owned subsidiary of PNC Bank Corp. The
Trust has an Administration Agreement with Prudential Investments Fund
Management LLC ("PIFM"), a wholly-owned subsidiary of The Prudential Insurance
Company of America.
The investment advisory fee paid to the Advisor 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 PIFM 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 Advisor provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Advisor. PIFM pays occupancy and certain clerical
and accounting costs of the Trust. The Trust bears all other costs and expenses.
14
<PAGE>
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments
for the year ended December 31, 1999 aggregated $30,099,605 and $27,340,704,
respectively.
The federal income tax basis of the Trust's investments at December 31,
1999 was the same as the basis for financial reporting purposes and,
accordingly, net unrealized appreciation on investments for federal income tax
purposes was $32,796,708 (gross unrealized appreciation--$33,286,638, gross
unrealized depreciation--$489,930).
For federal income tax purposes, the Trust had a capital loss carry forward
at December 31, 1999 of approximately $19,500 which will expire in 2006.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amounts.
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, 1999, the Advisor owned
10,639 shares. As of December 31, 1999, 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 2.37% to 6.435% during the year ended
December 31, 1999.
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 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 stock, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the Preferred
stock 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, 1999, the Board of Directors of the Trust declared
dividends from undistributed earnings of $0.05125 per common share payable
February 1, 2000 to shareholders of record on January 14, 2000.
For the period January 1, 2000 to January 31, 2000 dividends and
distributions declared on preferred shares totalled $784,629 in aggregate for
the three outstanding preferred share series.
NOTE 6. SUBSEQUENT EVENT
Subsequent to year-end, the Trust will be issuing 2,964 shares of Auction Rate
Municipal Preferred Stock, series W7, at an aggregate offering price of
$74,100,000. The liquidation preference of each share is $25,000 plus
accumulated but unpaid dividends. The estimated net proceeds of the offering are
$73,059,000 after payment of offering expenses and the underwriting discount.
Except for the initial dividend rate and the length of the initial dividend
period for the new preferred shares, the rights and preferences of the new
preferred shares are the same as the trust's outstanding series W7 preferred
shares.
15
<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, 1999, and the related statement of operations for the year
then ended, and the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended. 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, 1999 by correspondence with the custodian. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
BlackRock Municipal Target Term Trust Inc. as of December 31, 1999, the results
of its operations, the changes in its net assets and the financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
/S/ DELOITTE & TOUCHE LLP
- -------------------------
Deloitte & Touche LLP
New York, New York
February 11, 2000
16
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days
of the Trust's tax year end as to the federally exempt interest dividends
received by you during such fiscal year. Accordingly, we are advising you that
all dividends paid by the Trust during the fiscal year were federal tax-exempt
interest dividends.
For purposes of preparing your annual federal income tax return, you should
report the amounts as reflected on the appropriate Form 1099-DIV or substitute
1099 DIV.
- --------------------------------------------------------------------------------
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
reinvested by State Street Bank and Trust Company (the "Plan Agent") in Trust
shares pursuant to the Plan. Shareholders who do not participate in the Plan
will receive all distributions in cash paid by check in United States dollars
mailed directly to the shareholders of record (or if the shares are held in
street or other nominee name, then to the nominee) by the transfer agent, as
dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange for the participants' accounts. The Trust will not issue any new
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.
The Trust reserves the right to amend or terminate the Plan as applied to
any dividend or distribution paid subsequent to written notice of the change
sent to all shareholders of the Trust at least 90 days before the record date
for the dividend or distribution. The Plan also may be amended or terminated by
the Plan Agent upon at least 90 days' written notice to all shareholders of the
Trust. All correspondence concerning the Plan should be directed to the Plan
Agent at (800) 699-1BFM. The addresses are on the front of this report.
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ADDITIONAL INFORMATION
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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.
We have transitioned into the Year 2000, and it is business as usual at
BlackRock.
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THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
INVESTMENT SUMMARY
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THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock Municipal Target Term Trust Inc.'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 Advisors, Inc. ("the Advisor") is an SEC-registered investment
advisor. As of December 31, 1999, The Advisors and its affiliates (together,
"BlackRock") currently managed over $165 billion on behalf of taxable and
tax-exempt clients worldwide. Strategies include fixed income, equity and cash
and may incorporate both domestic and international securities. Domestic fixed
income strategies utilize the government, mortgage, corporate and municipal bond
sectors.BlackRock manages twenty-two closed-end funds that are traded on either
the New York or American stock exchanges, and a $27 billion family of open-end
funds. BlackRock manages over 580 accounts, domiciled in the United States and
overseas.
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 advisor to be of comparable credit quality.
WHAT IS THE ADVISOR'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
Trust's assets are invested in securities which have maturities that are similar
to the maturity date of the Trust. 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, the
Advisor 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 Advisor
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 to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Advisor 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.
18
<PAGE>
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the first business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the Trust 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.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the Trust in a declining rate
environment, but can cause net assets to decline faster than the market in a
rapidly rising rate environment. The Advisor's portfolio managers continuously
monitor and regularly review the Trust's use of leverage and the Trust may
reduce, or unwind, the amount of leverage employed should the Advisor consider
that reduction to be in the best interests of the shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO 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
<PAGE>
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THE BLACKROCK MUNICIPAL TARGET TERM TRUST INC.
GLOSSARY
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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 to
common shareholders on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may have all dividends and distributions
of capital gains automatically reinvested into
additional shares of the Trust.
MARKET PRICE: Price per share of a security trading in the secondary
market. For a closed-end fund, this is the price at
which one share of the fund trades on the stock
exchange. If you were to buy or sell shares, you would
pay or receive the market price.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities and other assets held by the Trust, plus
income accrued on its investments, minus any
liabilities including accrued expenses, divided by the
total number of outstanding shares. It is the
underlying value of a single share on a given day. Net
asset value for the Trust is calculated weekly and
published in BARRON'S on Saturday and THE WALL STREET
JOURNAL 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.
20
<PAGE>
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BLACKROCK ADVISORS, INC.
SUMMARY OF CLOSED-END FUNDS
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<TABLE>
<CAPTION>
TAXABLE TRUSTS
- ---------------------------------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ ------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
The BlackRock High Yield Trust BHY N/A
TERM TRUSTS
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BTM 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
TAX-EXEMPT TRUSTS
- ---------------------------------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS 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
The BlackRock Pennsylvania Strategic Municipal Trust BPS N/A
The BlackRock Strategic Municipal Trust BSD N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE CALL BLACKROCK AT (800) 227-7BFM
(7236) OR CONSULT WITH YOUR FINANCIAL ADVISOR.
21
<PAGE>
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BLACKROCK ADVISORS, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------
BlackRock Advisors, Inc. (the "Advisor") is an SEC-registered investment
advisor. As of December 31, 1999, BlackRock and its affiliates (together
"BlackRock") managed $165 billion on behalf of taxable and tax-exempt clients
worldwide. Strategies include fixed income, equity and cash and may incorporate
both domestic and international securities. BlackRock manages twenty-two
closed-end funds that are traded on either the New York or American stock
exchanges, and a $27 billion family of open-end funds. BlackRock manages over
580 accounts, domiciled in the United States and overseas.
BlackRock's fixed income product was introduced in 1988 by a team of highly
seasoned fixed income professionals. These professionals had extensive
experience creating, analyzing and trading a variety of fixed income
instruments, including the most complex structured securities. In fact, several
individuals at BlackRock were responsible for developing many of the major
innovations in the mortgage-backed and asset-backed securities markets,
including the creation of the first CMO, the floating rate CMO, the
senior/subordinated pass-through and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
emphasis it places on the development of proprietary analytical capabilities.
Over one quarter of the firm's professionals is dedicated to the design,
maintenance and use of these systems, which are not otherwise available to
investors. BlackRock's proprietary analytical tools are used for evaluating, and
designing fixed income investment strategies for client portfolios. Securities
purchased include mortgages, corporate bonds, municipal bonds and a variety of
hedging instruments.
BlackRock has developed investment products that respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. In fact, BlackRock introduced the first closed-end mortgage fund, the
first taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
Currently, BlackRock's closed-end funds have dividend reinvestment plans, which
are designed to provide ongoing demand for the stock in the secondary market.
BlackRock manages a wide range of investment vehicles, each having specific
investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
that you may have about your BlackRock funds and we thank you for the continued
trust that you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
22
<PAGE>
BLACKROCK
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
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 ADVISOR
BlackRock Advisors, Inc.
400 Bellevue Parkway
Wilmington,DE 19809
(800) 227-7BFM
ADMINISTRATOR
Prudential Investments Fund Management LLC
Gateway Center 3
100 Mulberry Street
Newark, NJ07102-4077
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
AUCTION AGENT
Deutsche Bank
4 Albany Street
New York, NY 10006
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
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 Investments Fund Management LLC
Gateway Center 3
100 Mulberry Street
Newark, NJ07102-4077
092476-10-5
092476-20-4
092476-30-3
092476-40-2
Printed on recycled paper
THE BLACKROCK
MUNICIPAL TARGET
TERM TRUST INC.
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1999
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