The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
- --------------------------------------------------
Annual Report
March 31, 1996
<PAGE>
Dear Shareholder:
We are pleased to provide the annual report to shareholders of the BFM
Institutional Trust Inc. ("BIT") for the fiscal period ended March 31, 1996. BIT
is an open-end management investment company whose investment adviser, BlackRock
Financial Management, Inc. (the "Adviser"), has day-to-day investment
responsibility for the BIT Portfolios.
The annual period between March 31, 1995 and March 31, 1996 witnessed two
profoundly different market environments for fixed income securities. 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. Economic data released during January, including
weak retail sales and consumer confidence reports, reinforced the belief among
market participants that the economy was not accelerating fast enough to
increase inflationary pressures; for example, consumer confidence fell to its
lowest level in almost a year and retail sales for 1995 registered their
smallest annual gain in four years.
Investor sentiment toward fixed income securities, however, reversed during
mid-February, as data indicating accelerating economic growth, in conjunction
with a sharp rise in commodity prices, rekindled inflationary concerns. Positive
news for the economy which may indicate increased levels of inflation can cause
bond yields to rise and prices to fall. Economic strength was demonstrated in
numerous economic reports, including factory orders, consumer spending and
housing starts. The March 8 release of the February employment report, which
showed a gain of 705,000 new jobs, forced investors to reconsider and then
adjust their assumptions regarding the weakness of the U.S. economy. This
number, although subsequently revised downward, was more than double economists'
estimates and produced the largest one-day price decline in U.S. bond prices in
over seven years. For the first quarter of 1996, GDP grew 2.8%, which
represented a strong rebound from the 0.5% gain posted in the fourth quarter of
1995.
Interest rate movements over the twelve month period illustrated the change in
investor sentiment toward fixed income securities. Interest rates across the
Treasury yield curve fell dramatically from March 1995 to mid-February 1996, as
seen in the decline in yield levels of the ten-year Treasury, which fell 167
basis points (1.67%) from 7.19% on March 31, 1995 to a low of 5.52% on January
19, 1996. However, data released during February suggested renewed economic
vigor and placed pressure on bond prices. These fears translated into a sharp
rise in bond yields across the Treasury yield curve. The yield of the ten-year
Treasury ended the annual period at 6.32%, an increase of 80 basis points in
approximately two and one-half months. Nevertheless, the yield of the 10-year
fell 87 basis points over the twelve months.
Commercial Mortgage-Backed Securities Market
Investor participation in commercial mortgage-backed securities ("CMBS")
continued to grow during the past twelve months as the combination of wider
yield spreads relative to comparably rated corporate bonds and strong prepayment
protection presented attractive value. Lower interest rates have spurred new
issuance, highlighted by a record $6.3 billion of issuance during the first
quarter of 1996. Despite the continued high levels of new supply, yield spreads
tightened across investment grade securities as new participants continued to be
attracted to the market. Intermediate quality bonds, rated A or BBB, posted the
best performance among investment grade bonds, with yield spreads to comparable
maturity Treasuries narrowing, respectively, from 155 to 125 basis points and
200 to 170 basis points. We expect further spread tightening for investment
grade classes during 1996 to be driven by several factors: 1) investor
preference for assets with limited cash flow variability; 2) improving
collateral performance information; 3) increasing secondary market liquidity;
and 4) improving real estate equity returns.
1
<PAGE>
Portfolio Performance
<TABLE>
<CAPTION>
- ---------------------------------------- ------------------------------- -----------------------------
Total Returns- Period Ending BIT-III Salomon BIG
March 31, 1996 Portfolio Index
<S> <C> <C>
- ---------------------------------------- ------------------------------- -----------------------------
1 Month -0.60% -0.72%
- ---------------------------------------- ------------------------------- -----------------------------
3 Month -1.62% -1.74%
- ---------------------------------------- ------------------------------- -----------------------------
6 Month 2.82% 2.52%
- ---------------------------------------- ------------------------------- -----------------------------
12 Month 11.53% 10.87%
- ---------------------------------------- ------------------------------- -----------------------------
Since Inception 18.31% 17.66%
- ---------------------------------------- ------------------------------- -----------------------------
</TABLE>
The figure below graphs the current value of $1,000,000 invested in the
Portfolio from inception through March 31, 1996.
[GRAPHIC OMITTED]
We appreciate your investment in the BlackRock Financial Management
Institutional Trust and look forward to continuing to serve your financial
needs.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
BlackRock Financial Management, Inc BlackRock Financial Management, Inc.
2
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Principal
Amount
Rating* (000) DESCRIPTION Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS 97.53%
Commercial Mortgage - Backed Securities 97.53%
# Aetna Commercial Mortgage,
AA $500 6.89%, Series 1995-C5, Class C 12/26/2030 $480,236
American Southwest Financial Securities Corp.,
A 4,000 8.00%, Series 1994-C2, Class A4, 08/25/10 4,017,500
Asset Securitization Corp.
AA 1,000 7.21%, Series 1996-D2, Class A2, 02/14/29 984,531
Carolina First Bank
BBB 2,000 7.60%, Series 1996 C1, Class B, 09/17/00
Carousel Center Finance, Inc.,
A 1,456 7.53%, Class C, 10/15/07 1,441,225
CBA Mortgage Corp.,
AAA 300 7.15%, Series 1993-C-1, Class A2, 12/25/03 306,346
BB 2,000 7.15%, Series 1993-C-1, Class C, 12/25/03 1,620,000
Central Life Assurance Co.,
AA+ 3,444 8.90%, Series 1994-1, Class A2, 11/01/20 3,617,158
Citibank, N.A. Multifamily Mortgage ,
BBB 3,000 8.00%, Series 1994-1, Class M2, 01/25/19 2,937,188
Creekwood Capital Corp., Collateral Note,
AA 3,968 8.47%, Series 1995-1, Class A, 03/16/15 4,194,317
CS First Boston Mortgage Securities Corp.,
A 2,000 7.14%, Series 1994-M1, Class C, 02/15/02 1,999,375
DLJ Mortgage Acceptance Corp.,
AA 1,000 7.65%, Series 1993-M12, Class A2, 09/18/03 1,017,989
FDIC Trust,
AA 4,000 8.45%, Series 1994-C1, Class 2C, 09/25/25 4,126,875
Goldman Sachs Mortgage Securities Corp. II,
AAA 2,500 7.41%, Series 1996, Class A2, 02/15/27 2,498,828
J.P. Morgan, Commercial Mortgage Finance Corp.,
BBB 2,500 7.30%, Series 1996-C2, Class D, 11/25/27 2,378,125
Kearney II - E,
BB 2,000 9.40%, Series 1995-1, Class E, 10/15/05 2,002,500
KP Acceptance Corp. 1,
A 2,500 7.00%, Series 1994-C1, Class C, 02/01/06 2,469,970
KS Mortgage Corp.,
BBB 1,800 7.74%, Series 1995-1, Class D, 02/20/30 1,779,750
LB Commercial Conduit Mortgage Trust,
BBB 2,000 7.05%, Series 1995-C2, Class D, 09/25/25 1,895,145
Lennar United States Partners, Ltd.,
BB 1,500 9.75%, Series 1995-1, Class E, 05/15/05 1,509,375
B 1,000 11.70%, Series 1995-1, Class F, 05/15/05 1,010,000
LTC,
A 2,125 9.50%, Series 1994-1, Class C, 06/15/26 2,269,102
BBB 2,000 7.97%, Series 1996, Class D, 04/15/28 1,990,000
LXP Funding Corp.,
BBB 3,000 8.86%, Series 1995-1, Class C, 05/26/08 3,056,250
Merrill Lynch Mortgage Investments, Inc.,
Pass-Through Certificates,
A 1,000 7.48%, Series 1995-C1, Class C, 05/25/15 997,895
A 2,000 7.42%, Series 1996-C1, Class C, 03/25/26 1,982,812
Morgan Stanley Capital Investments, Inc.,
Pass-Through Certificates,
BBB 3,500 7.23%, Series 1995, Class A, 02/15/02 3,508,750
AAA 1,861 7.00%, Series 1995, Class D, 02/15/27 1,872,939
</TABLE>
See notes to financial statements
3
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Principal
Amount
Rating* (000) DESCRIPTION Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortgage Capital Funding, Inc.,
BBB $2,000 8.52%, Series 1994-MC1, Class A5, 06/25/19 $2,053,343
Nomura Asset Capital Corp.,
BBB 1,000 7.64%, Series 1993-M1, Class A1, 11/25/03 991,094
Oregon Commercial Mortgage,
A 3,000 7.60%, Series 1995-1, Class C, 06/01/23 2,962,500
Paine Webber Mortgage Acceptance Corp.,
A 2,000 7.30%, Series 1995 M1, Class C, 01/15/07 1,994,327
A 2,000 6.90%, Series 1995 M2, Class C, 12/01/03 1,975,349
BBB 1,000 7.20%, Series 1995 M2, Class D, 12/01/03 981,701
Phoenix Real Estate Securities, Inc.,
BBB+ 3,545 8.00%, Series 1993-1, Class C, 11/25/23 3,566,048
Prudential Securities Secured Financing,
Pass-Through Certificates,
A 895 7.64%, Series 1995-C1, Class C, 01/25/15 886,609
Queens Center Funding Corp.,
BBB 2,000 8.06%, Series 1, Class B, 01/01/04 2,005,000
Resolution Trust Corp.,
BBB 3,000 6.90%, Series 1995-C1, Class D, 02/25/27 2,797,500
AAA 2,000 6.90%, Series 1995-C1, Class A2C, 02/25/27 2,004,062
A 2,904 8.00%, Series 1994-C2, Class D, 04/25/25 2,909,917
A 611 8.00%, Series 1994-C1, Class D, 06/25/26 603,889
A 1,844 7.10%, Series 1993-C2, Class D, 03/25/23 1,816,240
BBB 2,954 7.00%, Series 1995-C2, Class D, 05/25/27 2,798,798
AA+ 840 8.63%, Series 1992-M3, Class A2, 07/25/30 852,198
B+ 2,500 10.63%, Series 1994-N2, Class A, 12/14/04 2,523,828
Salomon Brothers Mortgage Securities,
AA 3,000 7.75%, Series 1996-C1, Class B, 01/20/28 2,949,375
Structured Asset Securities Corp.
BBB 3,000 7.38%, Series 1995-C1, Class D , 09/25/24 2,838,611
A 1,980 7.03%, Series 1995-C4, Class C , 02/25/28 1,913,560
AA 1,900 7.00%, Series 1995-C4, Class C, 06/25/26 1,815,093
BBB 1,970 7.75%, Series 1996 cfl., Class E, 02/25/28 1,879,182
SKW Real Estate II,
B 500 11.00%, Class E, 05/15/05 502,133
B 2,222 12.80%, Class F, 05/15/28 2,231,219
TVO Southwest,
A 4,500 9.37%, Series 1994-MF1, Class A2, 11/18/04 4,824,844
WHP Commercial Mortgage,
A 2,000 7.76%, Series 1995-C1, Class C, 07/20/25 2,018,877
-----------
Total long-term investments (Cost $113,750,773) 114,669,478
SHORT-TERM INVESTMENTS 5.22%
6,050 Federal Home Loan Mortgage Association 5.15%
Discount Note due 4/1/96 (Cost $6,050,000) 6,050,000
-----------
</TABLE>
See notes to financial statements
4
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Contracts ## DESCRIPTION Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Call Options Purchased 0.07%
77 U.S. Treasury Bond Future 10 Year, expiring June 1996
(Cost $95,413) 83,016
------------
Total short-term investments (Cost $6,145,413) 6,133,016
------------
Total investments (Cost $119,896,186) 102.75% 120,802,494
Other liabilities in excess of assets -2.75% (3,233,345)
------------------------
NET ASSETS 100.00% $117,569,149
========================
<FN>
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
# A portion of the above denoted securities market value was segregated to cover
margin requirements for open futures contracts.
## One contract equals $100,000 face value.
</FN>
</TABLE>
See notes to financial statements
5
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Statement of Assets and Liabilities
March 31, 1996
- --------------------------------------------------------------------------------
Assets
Investments, at value (cost $119,896,186) $120,802,494
Receivable for margin variation on futures 6,109
Interest receivable 745,929
------------
121,554,532
------------
Liabilities
Cash overdraft 956,778
Payable for securities purchased 1,985,798
Dividend payable 762,013
Advisory fee payable 222,586
Other accrued expenses and liabilities 53,130
Payable for margin variation on futures 5,078
------------
3,985,383
------------
Net Assets $117,569,149
============
Net assets were comprised of :
Common stock, at par (Note 5) $12
Paid-in capital in excess of par 116,037,583
------------
116,037,595
Accumulated net realized gain 745,413
Net unrealized appreciation 786,141
------------
Net assets, March 31, 1996 $117,569,149
============
Net asset value per share $1,019.41
============
Total shares outstanding at end of period 115,331
- --------------------------------------------------------------------------------
See notes to financial statements
6
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Statement of Operations
For the Nine Months Ended March 31, 1996
- --------------------------------------------------------------------------------
Net Investment Income
Income
Interest (including net discount accretion of $53,128) $7,051,694
----------
Expenses
Investment advisory 216,699
Administration, custody, and transfer agent fees 78,011
Legal 11,270
Audit 7,513
Insurance 6,627
Directors 1,878
Registration fees 1,042
Miscellaneous 1,326
----------
Total expenses 324,366
----------
Expenses waived by the Adviser (Note 2) (3,652)
----------
Net expenses 320,714
----------
Net investment income 6,730,980
Realized and unrealized gain/(loss) on investments
Net realized gain/(loss) on:
Investments 1,982,535
Futures (481,631)
----------
Net realized gain 1,500,904
----------
Net change in unrealized appreciation on:
Investments (2,814,093)
Futures 103,678
----------
Net change in unrealized appreciation on (2,710,415)
----------
Net realized and unrealized loss on investments (1,209,511)
----------
Net Increase In Net Assets Resulting from Operations $5,521,469
==========
- --------------------------------------------------------------------------------
See notes to financial statements
7
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
07/01/95 10/04/94
through through
Increase (Decrease) in Net Assets 03/31/96 06/30/95
-------- --------
Operations:
<S> <C> <C>
Net investment income $6,730,980 $5,719,137
Net realized gain on investments 1,500,904 3,568,972
Net change in unrealized appreciation on investments (2,710,415) 3,496,556
------------ ------------
Net increase in net assets resulting from operations 5,521,469 12,784,665
------------ ------------
Dividends and distributions:
Net investment income (6,730,980) (5,719,137)
Net realized gain (4,324,463) --
------------ ------------
(11,055,443) (5,719,137)
Capital share transactions:
Proceeds from shares subscribed -- 100,000,000
Net asset value of shares issued in reinvestment
of dividends and distributions 10,293,458 5,719,137
------------ ------------
Total increase 4,759,484 112,784,665
------------ ------------
Net Assets
Beginning of period 112,809,665 25,000
------------ ------------
End of period $117,569,149 $112,809,665
------------ ------------
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
8
<PAGE>
The BFM Institutional Trust Inc.
The Multi-Sector Mortgage Securities Portfolio III
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months October 6,1994(a)
Ended Through
March 31, 1996 June 30,1995
---------------------------------
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C>
Net asset value, beginning of period $1,068.11 $1,000.00
-------------------------------
Net investment income(b) 61.37 55.81
Net realized and unrealized gain on investments (9.06) 68.11
-------------------------------
Net increase from investment operation 52.31 123.92
-------------------------------
Dividends from net investment income (61.37) (55.81)
Distributions from net realized capital gains (39.64) -
-------------------------------
Total dividends and distributions (101.01) (55.81)
-------------------------------
Net asset value, end of period $1,019.41 $1,068.11
===============================
TOTAL INVESTMENT RETURN(c) 5.02% 12.78%
RATIOS TO AVERAGE NET ASSETS:
Expenses(b)(d) 0.37% 0.37%
Net investment income(b)(d) 7.77% 7.54%
SUPPLEMENTAL DATA:
Average net assets (in thousands) $115,362 $103,332
Portfolio turnover 119% 215%
Net assets, end of period (in thousands) $117,569 $112,810
- --------------------------------------------------------------------------------
<FN>
(a) Commencement of investment operations.
(b) The Adviser waived fees amounting to $3,652 and $56,269 for the periods ended
March 31, 1996 and June 30, 1995, respectively. Net investment income would have
been $61.37 and $55.28 on a per share basis for the periods ended March 31, 1996 and
June 30, 1995, respectively. The ratio of net operating expenses to average net assets
would have been 0.37% and 0.45% for the periods ended March 31, 1996 and June 30, 1995,
respectively. The net investment ratios would have been 7.76%, and 7.46% for the periods ended
March 31, 1996 and June 30, 1995, respectively.
(c) Total investment return is calculated assuming a purchase of common stock at net asset value
per share on the first day and a sale at net asset value per share on the last day of the period
reported. Dividends are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the payment date.
(d) Annualized
The information above represents audited operating performance based on an average
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 statement
</FN>
</TABLE>
See notes to financial statements
9
<PAGE>
The BFM Institutional Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1. Organization and Accounting Policies
The BFM Institutional Trust Inc. (the "Trust") is a no-load, open-end
management investment company organized as a Maryland corporation. The Articles
of Incorporation permit the Board of Directors to create an unlimited number of
series (or "Portfolios"), each of which issues a separate class of shares and
has its own investment objective and policies. The Trust was formed on November
27, 1991 and had no operations through June 18, 1992 other than those related to
organizational matters and the sale and issuance of 10,000 shares of The Short
Duration Portfolio to BlackRock Financial Management Inc. (the "Adviser") for
$100,000 on June 18, 1992. The Multi-Sector Mortgage Securities Portfolio III
(the "Portfolio") commenced investment operations on October 6, 1994. The Short
Duration Portfolio and The Core Fixed Income Portfolio commenced investment
operations on July 17, 1992 and December 9, 1992, respectively.
As of March 31, 1996 99.98% of the shares of capital stock of the Portfolio
are owned by Ameritech Pension/VEBA Trust.
The following is a summary of significant accounting policies followed by
the Trust.
Securities Valuation: The Trust values mortgage-backed, asset-backed and other
debt securities on the basis of current market quotations provided by dealers or
pricing services approved by the Trust's Board of Directors. In determining the
value of a particular security, pricing services may use certain information
with respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities, various relationships observed in the
market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange-traded
options are valued at their last sales price as of the close of options trading
on the applicable exchanges. In the absence of a last sale, options are valued
at the average of the quoted bid and asked prices as of the close of business. A
futures contract is valued at the last sale price as of the close of the
commodities exchange on which it trades unless the Trust's Board of Directors
determine that such price does not reflect its fair value, in which case it will
be valued at its fair value as determined by the Trust's Board of Directors. Any
securities or other assets for which such current market quotations are not
readily available are valued at fair value as determined in good faith under
procedures established by and under the general supervision and responsibility
of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost, if their term to maturity from date of purchase
was 60 days or less, or by amortizing their value on the 61st day prior to
maturity, if their original term to maturity from date of purchase exceeded 60
days.
In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
10
<PAGE>
Option Selling/Purchasing: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
Options, when used by the Trust, help in maintaining a targeted duration.
Duration is a measure of the price sensitivity of a security or a portfolio to
relative changes in interest rates. For instance, a duration of "one" means that
a portfolio's or a security's price would be expected to change by approximately
one percent with a one percent change in interest rates, while a duration of
five would imply that the price would move approximately five percent in
relation to a one percent change in interest rates.
Option selling and purchasing is used by the Trust to effectively "hedge"
more volatile positions so that changes in interest rates do not change the
duration of the portfolio unexpectedly. In general, the Trust uses options to
hedge a long or short position or an overall portfolio that is longer or shorter
than the benchmark security. A call option gives the purchaser of the option the
right (but not obligation) to buy, and obligates the seller to sell (when the
option is exercised), the underlying position at the exercise price at any time
or at a specified time during the option period. A put option gives the holder
the right to sell and obligates the writer to buy, the underlying position at
the exercise price at any time or at a specified time during the option period.
Put options can be purchased to effectively hedge a position or a portfolio
against price declines if a portfolio is long. In the same sense, call options
can be purchased to hedge a portfolio that is shorter than its benchmark against
price changes. The Trust can also sell (or write) covered call options and put
options to hedge portfolio positions.
The main risk that is associated with purchasing options is that the option
expires without being exercised. In this case, the option expires worthless and
the premium paid for the option is considered the loss. The risk associated with
writing call options is that the Trust may forego the opportunity for a profit
if the market value of the underlying position increases and the option is
exercised. The risk in writing put options is that the Trust may incur a loss if
the market value of the underlying position decreases and the option is
exercised. In addition, as with futures contract, the Trust risks not being able
to enter into a closing transaction for the written option as the result of an
illiquid market.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy or sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period that the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or the cost of) the closing
transaction and the Trust's basis in the contract.
11
<PAGE>
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Futures contracts can be sold to effectively shorten an
otherwise longer duration portfolio. Duration is a measure of the price
sensitivity of a security or a portfolio to relative changes in interest rates.
For instance, a duration of "one" means that a portfolio's or a security's price
would be expected to change by approximately one percent with a one percent
change in interest rates, while a duration of "five" would imply that the price
would move approximately five percent in relation to a one percent change in
interest rates. In the same sense, futures contracts can be purchased to
lengthen a portfolio that is shorter than its duration target. Thus, by buying
or selling futures contracts, the Trust can effectively "hedge" more volatile
positions so that changes in interest do not change the duration of the
portfolio unexpectedly.
The Trust may invest in financial futures contracts primarily for the
purpose of hedging its existing portfolio securities or securities the Trust
intends to purchase against fluctuations in value caused by changes in
prevailing market interest rates, or for risk management, duration management or
other portfolio management purposes. Should interest rates move unexpectedly,
the Trust may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. The use of futures transactions involves the
risk of imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets. The Trust is also at risk of
not being able to enter into a closing transaction for the futures contract
because of an illiquid secondary market. In addition, since futures are used to
shorten or lengthen a portfolio's duration, there is a risk that the portfolio
may have temporarily performed better without the hedge or that the Trust may
lose the opportunity to realize appreciation in the market price of the
underlying positions.
Security Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains or losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes premium or amortizes discount on securities
purchased using the interest method.
Taxes: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of it taxable income to shareholders. Therefore, no
federal income or excise tax provision is required.
Dividends and Distributions: The Trust declares dividends daily and pays
dividends and distributions monthly first from net investment income, then from
net realized short-term capital gains and other sources, if necessary. Net
long-term capital gains, if any, in excess of loss carryforwards are distributed
at least annually. Dividends and distributions are recorded on the ex-dividend
date. Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for mortgage-backed securities.
Note 2. Agreements
The Trust has an Investment Advisory Agreement with the Adviser which
provides that the Portfolio will pay to the Adviser for its services a monthly
fee in an amount equal to .25% of average daily net assets on an annualized
basis. The Adviser has agreed to waive a portion of its advisory fee from the
Portfolio to the extent that the expenses of the Portfolio exceed .37% of
average daily net assets. For the nine months ended March 31, 1996, the Adviser
waived $3,652 of its fee. The Trust has also entered into an Administration,
Transfer Agent and Custodian Agreement with PFPC Inc. (a wholly owned corporate
subsidiary of PNC Bank, NA)
12
<PAGE>
and PNC Bank NA. PFPC and PNC Bank NA will receive an annual fee of .09% of the
Portfolio's average daily net asset value.
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. The Trust bears all other costs and
expenses. The Adviser has agreed that, in any fiscal year, it will reimburse the
Trust for expenses (including the fees of the Adviser but excluding taxes,
interest, brokerage fees, commissions, litigation and indemnification expenses
and other extraordinary expenses) that exceed the most restrictive expense
limitation imposed by state securities commissions. The most restrictive expense
limitation is 2 1/2% of the average value of the Trust's net assets during the
year up to $30 million, 2% of the next $70 million of average net assets and 1
1/2% thereafter. Such expense reimbursement, if any, will be estimated and
accrued daily. No expense reimbursement was required due to such limitation for
the nine months ended March 31, 1996.
The Trust has entered into a Distribution Agreement with Provident
Distributors, Inc. (the "Distributor"). Pursuant to the terms of the
Distribution Agreement, the Distributor serves as the principal underwriter and
distributor of the Trust's shares, and in that capacity makes a continuous
offering of the Trust's shares and bears the costs and expenses of printing and
distributing any copies of any prospectuses and annual and interim reports for
the Trust (after such items have been prepared and set in type) which are used
in connection with the offering of shares to securities dealers or investors,
and the cost and expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use by securities
dealers in connection with the offering of the shares for sale to the public.
There is no fee payable by the Trust pursuant to the Distribution Agreement, and
there is no sales or redemption charge. The Distribution Agreement provides for
indemnification by the Trust of the Distributor, its partners, employees, agents
and affiliates for liabilities incurred by them in connection with their
services to the Trust, subject to certain limitations and conditions. The
continuance of the Distribution Agreement must be approved in the same manner as
the Investment Advisory Agreement, and the Distribution Agreement will terminate
automatically if assigned by either party thereto and is terminable with respect
to any Portfolio at any time without penalty by the Rule 12b-1 Directors (as
defined below) or by vote of a majority of the outstanding shares of the
Portfolio (as such term is defined in the Investment Company Act) on not more
than 60 days' nor less than 30 days' written notice to the Distributor and by
the Distributor on like notice to the Trust.
The Trust has adopted a Distribution and Stockholder Servicing Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act pursuant to
which the Adviser is permitted to use a portion of the advisory fee it receives
from the Trust to promote the distribution of the Trust's shares and to enhance
the provision of stockholder services. The Plan was approved by a majority of
(i) the directors of the Trust and (ii) the directors of the Trust who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
(Rule 12b-1 Directors). The Plan permits the Adviser to pay fees to the
Distributor. The Trust is not required or permitted under the Plan to make
payments over and above the amount of the advisory fee to promote the sale of
its shares; the Plan merely permits the reallocation of a portion of the
advisory fee the Adviser receives to pay for distribution-related activities.
From amounts received by it under the Plan, the Distributor is authorized to
make payments to securities dealers with which the Distributor has entered into
solicitation fee agreements. The Distributor may also use a portion of the fee
it receives under the Plan to cover the Distributor's cost of marketing services
and advertising on behalf of the Portfolios and to compensate institutions who
perform support services that would otherwise be performed by the Trust or its
13
<PAGE>
agent. These support services may include providing such office space,
equipment, telephone facilities and various personnel as may be necessary or
beneficial to establish and maintain stockholders' accounts and records, process
purchase and redemption transactions, answer routine client inquiries and
provide such other services to the Trust as may reasonably be requested.
The Plan will continue from year to year, provided that each such
continuance is approved at least annually by a vote of the Board of Directors,
including a majority vote of the Rule 12b-1 Directors, cast in person at a
meeting called for the purpose of voting on such continuance. The Plan may be
terminated with respect to any Portfolio at any time, without penalty, by the
vote of a majority of the Rule 12b-1 Directors or by the vote of the holders of
a majority of the outstanding shares of the Portfolio. The Plan may not be
amended materially without the approval of the Board of Directors, including a
majority of the Rule 12b-1 Directors, cast in person at a meeting called for
that purpose. Any modification to the Plan which would materially increase the
amount of money to be spent by a Portfolio must also be submitted to the
stockholders of the Portfolio for approval.
Certain directors of the Trust who are not interested parties are paid a fee
for their services in the amount of $2,500 on an annual basis.
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term
investments and dollar rolls, for the nine months ended March 31, 1996 were
$137,398,827 and $136,222,351 respectively. The federal income tax basis of the
investments of the Portfolio at March 31, 1996 was $119,896,186 and accordingly,
as of March 31, 1996, net unrealized appreciation for Federal income tax
purposes aggregated $906,308 of which $2,004,261 related to appreciated
securities and $1,097,953 related to depreciated securities.
During the nine months ended March 31, 1996, the Trust entered into
financial futures contracts. Details of open contracts at March 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Number of Expiration Value at Value at Unrealized Appreciation
Contracts Type Date Trade Date March 31, 1996 (Depreciation)
--------- ---- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Short Positions:
54 5 yr. T-Note June $5,809,125 $5,775,469 33,656
1996
262 10 yr. T-Note June 28,456,625 28,533,438 (76,813)
1996
Long Positions:
50 2 yr. T-Note June 10,448,281 10,360,938 (87,343)
1996
175 30 yr. T-Bond June 19,493,750 19,507,031 13,281
1996 ---------
(120,167)
=========
</TABLE>
Note 4. Reverse Repurchase Agreements and Dollar Rolls
Reverse Repurchase Agreements: The Trust may enter into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and under
the direction of the Trust's Board of Directors. Interest on the value of
reverse repurchase agreements issued and outstanding will be based upon
competitive market rates at the time of issuance. At the time the Trust enters
into a reverse repurchase agreement, it will establish and maintain a segregated
account with the lender containing the value of which at least equals the
principal amount of the
14
<PAGE>
reverse repurchase transaction, including accrued interest.
Dollar Rolls: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date. There were no dollar roll transactions during the nine
months ended March 31, 1996.
Note 5. Capital
The Trust is authorized to issue 2 billion shares of $.0001 par value
capital stock in or more classes or series. The Portfolio is authorized to issue
1 million shares. Of the 115,331 shares of the Portfolio outstanding at March
31, 1996, the Advisor owned 25 shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Nine Months October 6, 1994 *
Ended Through
March 31, 1996 June 30, 1995
-------------- ----------------
<S> <C> <C>
Shares subscribed ....................................... --- 100,000
Shares issued in connection with the reinvestment
of dividends and distributions .......................... 9,740 5,591
----- -----
9,740 105,591
Shares redeemed ......................................... --- 0
----- -----
Net Increase ............................................ 9,740 105,591
===== =======
*Commencement of investment operations
</TABLE>
Note 6. Dividends
Subsequent to March 31,1996 the Board of Directors of the Trust declared a
dividend from undistributed earnings of $6.51565 per share, payable April 30,
1996 to shareholders of record on April 30, 1996.
Note 7. Subsequent Event
On September 28, 1995, and September 29, 1995, respectively, the Board of
Directors of the Trust and the Board of Directors of the PNC Fund ("PNC"),
including all of the non- interested members of each Board, approved an asset
purchase agreement between PNC and the BFM Institutional Trust Inc. the
Multi-Sector Mortgage Securities Portfolio III ("BIT-III"). The agreement, which
was approved by BIT shareholders on December 20, 1995, provides for the
acquisition by PNC of all the assets and liabilities of BIT-III in exchange for
shares of the PNC Multi-Sector Mortgage Securities Portfolio III and the
distribution of the PNC shares to the shareholders of BIT-III in liquidation of
the Portfolio. On January 12, 1996, PNC was renamed Compass Capital Fund. The
Acquisition occurred on April 25, 1996, at which time Compass Capital Fund
Multi-Sector Mortgage Securities Portfolio III acquired the Assets of BIT-III.
15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors of
The Multi-Sector Mortgage Securities Portfolio III of the BFM Institutional
Trust Inc.:
We have audited the accompanying statement of assets and liabilities of The
Multi-Sector Mortgage Securities Portfolio III of The BFM Institutional Trust
Inc., including the portfolio of investments, as of March 31, 1996, and the
related statements of operations for the nine months ended March 31, 1996, and
of changes in net assets for the periods October 4, 1994 (commencement of
operations) through June 30, 1995 and for the nine months ended March 31, 1996,
and the financial highlights for the periods October 6, 1994 (commencement of
investment operations) through June 30, 1995 and for the nine months ended March
31, 1996. 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 as of March
31, 1996, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The Multi-Sector
Mortgage Securities Portfolio III of The BFM Institutional Trust Inc. as of
March 31, 1996, 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.
Deloitte & Touche LLP
New York, New York
May 22, 1996
16
<PAGE>
The BFM Institutional Trust Inc.
Glossary
<TABLE>
<S> <C>
Adjustable Rate Mortgage instruments with interest rates that adjust at periodic intervals at a fixed
Mortgage-Backed amount relative to the market levels of interest rates as reflected in specified
Securities (ARMs): indexes. ARMS are backed by mortgage loans secured by real property.
Asset-Backed Securities: Securities backed by various types of receivables such as automobile and credit
card receivables.
Collateralized Mortgage Mortgage-backed securities which separate mortgage pools into short-medium-,
Obligations (CMOs): and long-term securities with different priorities for receipt of principal and
interest. Each class is paid a fixed or floating rate of interest at regular intervals.
Also known as multiple-class mortgage pass-throughs.
Dividend: This is income generated by securities in a portfolio and distributed to shareholders
after the deduction of expenses. This Trust declares dividends daily and pays
dividends on a monthly basis.
Dividend Reinvestment: Shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested into additional shares of the Trust.
FHA: Federal Housing Administration, a government agency that facilitates a secondary
mortgage market by providing an agency that guarantees timely payment of
interest and principal on mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a publicly owned, federally chartered
corporation that facilitates a secondary mortgage market by purchasing mortgages
from lenders such as savings institutions and reselling them to investors by means
of mortgage-backed securities. Obligations of FHLMC are not guaranteed by the
U.S. government, however; they are backed by FHLMC's authority to borrow
from the U.S. government. Also known as Freddie Mac.
FNMA: Federal National Mortgage Association, a publicly owned, federally chartered
corporation that facilitates a secondary mortgage market by purchasing mortgages
from lenders such as savings institutions and reselling them to investors by means
of mortgage-backed securities. Obligations of FNMA are not guaranteed by the
U.S. government, however; they are backed by FNMA's authority to borrow from
the U.S. government. Also known as Fannie Mae.
GNMA: Government National Mortgage Association, a government agency that facilitates
a secondary mortgage market by providing an agency that guarantees timely
payment of interest and principal on mortgages. GNMA's obligations are
supported by the full faith and credit of the U.S. Treasury. Also known as Ginnie
Mae.
</TABLE>
17
<PAGE>
The BFM Institutional Trust Inc.
Glossary
<TABLE>
<S> <C>
Government Securities: Securities issued or guaranteed by the U.S. government, or one of its agencies
or instrumentalities, such as GNMA (Government National Mortgage Association),
FNMA (Federal National Mortgage Association) and FHLMC (Federal Home
Loan Mortgage Corporation).
Interest-Only Securities Mortgage securities that receive only the interest cash flows from an underlying
(I/O): pool of mortgage loans or underlying pass-through securities. Also known as a
Strip.
Mortgage Dollar Rolls: A mortgage dollar roll is a transaction in which the Trust sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (although not the same) securities on a specified
future date. During the "roll" period, the Trust does not receive principal and
interest payments on the securities, but is compensated for giving up these
payments by the difference in the current sales price (for which the security is
sold) and lower price that the Trust pays for the similar security at end date as
well as the interest earned on the cash proceeds of the initial sale.
Mortgage Pass-Throughs: Mortgage-backed securities issued by Fannie Mae, Freddie Mac or Ginnie Mae.
Multiple-Class
Pass-Throughs: See Collateralized Mortgage Obligations.
Net Asset Value (NAV): Net asset value is the total market value of all securities and other assets held by
the Trust, plus income accrued on its investments, minus any liabilities including
accrued expenses, divided by the total number of outstanding shares. It is the
underlying value of a single share on a given day. Net asset value for the Trust
is calculated daily and published in The New York Times and The Wall Street
Journal.
Open-End Fund: Investment vehicle which continually offers its shares to the public at net asset
value and redeems its shares anytime at the prevailing net asset value. The fund
invests in a portfolio of securities in accordance with its stated investment
objectives and policies.
Principal-Only Mortgage securities that receive only the principal cash flows from an underlying
Securities (P/O): pool of mortgage loans of underlying pass-through securities, also known as a
strip.
Project Loans: Mortgages for multi-family, low to middle income housing.
REMIC: Real Estate Mortgage Investment Conduit, a multiple-class security backed by
mortgage-backed securities or whole mortgage loans and formed as a trust,
corporation, partnership, or segregated pool of assets that elects to be treated as
a REMIC for federal tax purposes. Generally, Fannie Mae REMICs are formed
as trusts and are backed by mortgage-backed securities.
</TABLE>
18
<PAGE>
The BFM Institutional Trust Inc.
Glossary
<TABLE>
<S> <C>
Reverse Repurchase In a reverse repurchase agreement, the Trust sells securities and agrees to
Agreements: repurchase them at a mutually agreed date and price. During this time, the Trust
continues to receive the principal and interest payments from that security. At the
end of the term, the Trust receives the same securities that were sold for the same
initial dollar amount plus interest on the cash proceeds of the initial sale.
Residuals: Securities issued in connection with collateralized mortgage obligations that
generally represent the excess cash flow from the mortgage assets underlying the
CMO after payment of principal and interest on the other CMO securities and
related administrative expenses.
Strip Mortgage- Arrangements in which a pool of assets is separated into two classes that receive
Backed Securities different proportions of the interest and principal distribution from underlying
mortgage-backed securities. IO's and PO's are examples of strips.
</TABLE>
19
<PAGE>
BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
<TABLE>
<CAPTION>
Taxable Trusts
- ------------------------------------------------------------------------------------------------------
Maturity
Stock Symbol Date
Perpetual Trusts
<S> <C> <C>
The BlackRock Income Trust Inc. ............................... BKT N/A
The BlackRock North American Government Income Trust Inc. ..... BNA N/A
Term Trusts
The BlackRock 1998 Term Trust Inc. ............................ BBT 12/98
The BlackRock 1999 Term Trust Inc. ............................ BNN 12/99
The BlackRock Target Term Trust Inc. .......................... BTT 12/00
The BlackRock 2001 Term Trust Inc. ............................ BLK 06/01
The BlackRock Strategic Term Trust Inc. ....................... BGT 12/02
The BlackRock Investment Quality Term Trust Inc. .............. BQT 12/04
The BlackRock Advantage Term Trust Inc. ....................... BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. ..... BCT 12/09
Tax-Exempt Trusts
- ------------------------------------------------------------------------------------------------------
Maturity
Stock Symbol Date
Perpetual Trusts
The BlackRock Investment Quality Municipal Trust Inc. ......... BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust. ..... RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc... RNY N/A
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 would like further information
please call BlackRock
at (800) 227-7BFM (7236) or
consult with your financial advisor.
20
<PAGE>
BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
BlackRock Financial Management, Inc. (BlackRock), is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax-exempt. BlackRock currently manages approximately $34 billion of
assets across the government, mortgage, corporate and municipal sectors. These
assets are managed on behalf of institutional and individual investors in
twenty-one closed-end funds traded on either the New York Stock Exchange or the
American Stock Exchange, and several open-end funds and over 80 institutional
clients in the United States and overseas. BlackRock's institutional investor
base includes Chrysler Corporation Master Retirement Trust, General Retirement
System of the City of Detroit, State Treasurer of Florida, Ford Motor Company
Pension Plan, General Electric Pension Trust and Unisys Corporation Master
Trust.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individual and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities markets, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. BlackRock introduced the first closed-end mortgage fund, the first
taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund having specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for your continued trust
you place in our abilities.
21
<PAGE>
Directors
Kent Dixon
Frank J. Fabozzi
James Grosfeld, Chairman
Officers
Richard E. Cavanagh, President,
Treasurer and Secretary
Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of Trust shares.
The BFM Institutional Trust Inc.
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
(800)227-7BFM
