- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
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July 31, 1996
Dear Trust Shareholder:
After posting strong returns during 1995, the fixed income markets have
given back much of their gains in 1996 in response to a strengthening U.S.
economy. Accelerating economic growth has raised concerns about an increased
inflationary environment, which could erode the value of fixed income
investments. The stronger economy also has led some market participants to
consider the possibility that the Federal Reserve may increase interest rates to
thwart inflation threats after three interest rate reductions over the past
twelve months.
Despite the pick-up in economic growth, we believe that current inflationary
fears will subside. Commodity prices have risen but manufacturers will have
difficulty passing along the increased costs of raw materials to consumers,
whose debt levels as a percentage of disposable income are at the highest point
since the recessionary highs of 1990. We believe that the overleveraged consumer
will have to retrench, restricting future economic expansion and creating a
positive environment for bonds in the latter half of this year.
The following semi-annual report provides detailed market commentary and a
review of portfolio management activity. We believe that BlackRock's duration
controlled management style and risk management capabilities will allow each of
our Trusts to achieve its long-term investment objective.
We look forward to maintaining your respect and confidence and to serving
your financial needs in the coming years.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 31, 1996
Dear Shareholder,
We are pleased to present the semi-annual report for The BlackRock Insured
Municipal Term Trust Inc. ("the Trust") for the six months ended June 30, 1996.
We would like to take this opportunity to review the Trust's stock price and net
asset value (NAV) performance, summarize market developments and discuss recent
portfolio management activity.
The Trust is a diversified closed-end bond fund whose investment objective
is to manage a portfolio of municipal debt securities that will return $10 per
share (an amount equal to the Trust's initial public offering price) to
investors on or about December 31, 2010, while providing high current income
exempt from regular federal income tax. The Trust seeks to achieve this
objective by investing in high credit quality ("AAA" or insured to "AAA")
tax-exempt general obligation and revenue bonds issued by city, county and state
municipalities throughout the United States.
The table below summarizes the performance of the Trust's stock price and
net asset value (the market value of its bonds per share) over the period:
---------------------------------------------------
6/30/96 12/31/95 Change High Low
- --------------------------------------------------------------------------------
Stock Price $10.125 $10.00 1.25% $10.375 $9.875
Net Asset Value (NAV) $10.62 $11.02 (3.63%) $11.30 $11.61
- --------------------------------------------------------------------------------
The Fixed Income Markets
The domestic fixed income markets witnessed two profoundly different
environments during the past six months, providing an exciting and challenging
environment in which to manage the Trust. The Treasury market rally of 1995
continued through the middle of February 1996, as market demand for fixed income
securities remained strong due to a combination of moderate economic growth, low
absolute levels of inflation and two reductions of the Fed funds target rate.
The rally halted during mid-February, however, as data indicating accelerating
economic growth rekindled inflationary concerns. The strengthening of the
economy continued throughout the second quarter, leading market participants to
become more resolute in their belief that the Federal Reserve will tighten
monetary policy during the second half of 1996. These fears translated into a
sharp rise in bond yields across the Treasury yield curve, resulting in the
fixed income markets rescinding much of their 1995 gains.
After lagging the performance of its Treasury counterparts during the fourth
quarter of 1995, municipal bonds have outperformed taxable fixed income
securities in 1996. The diminished possibility of significant tax reform, which
had threatened the tax-exempt status of municipal bond income, helped renew
investor interest in the municipal sector. Additionally, municipal bond
investors received approximately $60 billion in cash during the June/July period
resulting from bond calls, interest payments and redemptions. A significant
portion of this money has been reinvested in the municipal market, as high
municipal bond absolute yields convinced many investors to bypass the equity
markets. For the period, the yield of the 10-year AAA General Obligation
increased 47 basis points (0.47%) to close at 5.11% versus at 114 basis point
rise in the yield of the 10-year Treasury note. Despite the potential decline in
retail demand as the June/July cash flows are reinvested, BlackRock believes
that municipal bonds have the potential to continue to outperform Treasury
securities for the remainder of 1996.
2
<PAGE>
The Trust's Portfolio and Investment Strategy
The Trust's portfolio is invested in high credit-quality municipal issues
with ratings of "AAA" by Standard & Poor's Corporation (or of equivalent quality
as determined by other major rating agencies). In addition, the majority of the
individual securities within the portfolio are insured as to timely payment of
interest and principal by municipal bond insurance companies whose long-term
obligations are rated "AAA". As such, Standard & Poor's has given a AAAf rating
to the portfolio. BlackRock Financial Management actively manages the Trust's
portfolio to diversify exposure to various sectors, issuers, revenue sources and
security types which fit within the context of the Trust seeking to achieve its
investment objectives.
Additionally, the Trust employs leverage at about 35% of total assets to
enhance its income by borrowing at short term municipal rates and investing the
proceeds in longer maturity issues with higher yields. The degree to which the
Trust can benefit from its use of leverage may affect its ability to pay high
monthly income. After steepening during the first quarter of 1996, the municipal
yield curve has recently flattened, as longer maturity municipal bonds have
outperformed shorter municipals. This resulted in a narrowing of the yield
differential, or "spread", between long and short maturities.
The following chart compares the Trust's current and December 31, 1995 asset
composition:
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The BlackRock Insured Municipal Term Trust Inc.
- --------------------------------------------------------------------------------
Sector June 30, 1996 December 31, 1995
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City, County and State 29% 29%
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Hospital 17% 17%
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Water & Sewer 12% 12%
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Utility 11% 11%
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Tax Revenue 9% 9%
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Lease Revenue 8% 9%
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Education 4% 4%
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Miscellaneous Revenue 4% 4%
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Housing 4% 3%
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Transportation 2% 2%
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3
<PAGE>
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock Insured
Municipal Term Trust Inc. Please feel free to call our marketing center at (800)
227-7BFM (7236) if you have any specific questions which were not addressed in
this report.
Sincerely yours,
Robert S. Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
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The BlackRock Insured Municipal Term Trust Inc.
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Symbol on New York Stock Exchange: BMT
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Initial Offering Date: February 20, 1992
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Closing Stock Price as of 6/30/96: $10.125
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Net Asset Value as of 6/30/96: $10.62
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Yield on Closing Stock Price as of 6/30/96 ($10.125)1: 6.17%
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Current Monthly Distribution per Common Share2: $0.05208
- --------------------------------------------------------------------------------
Current Annualized Distribution per Common Share2: $0.62496
- --------------------------------------------------------------------------------
- -----------------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2Dividend is not constant and is subject to change.
4
<PAGE>
The BlackRock Insured Municipal Term Trust Inc.
Portfolio of Investments
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Description Provisions** (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS-144.4%
Alabama-1.2%
AAA $ 3,000 Mobile Cnty., G.O., 6.70%, 2/01/00+, MBIA ............................ No Opt. Call $ 3,246,120
------------
Arizona-1.6%
AAA 4,180 University of Arizona Med. Ctr. Hosp. Rev., 6.25%, 7/01/10, MBIA ..... 7/02 at 102 4,339,718
------------
California-10.5%
California St., G.0., FGIC,
AAA 4,355 6.80%, 11/01/10 .................................................... No Opt. Call 4,956,948
AAA 145 6.80%, 11/01/10 .................................................... 11/04 at 102 158,495
AAA 3,400 California St. Pub. Wks., 6.60%, 12/01/09, AMBAC ..................... 12/02 at 102 3,679,820
AAA 6,100 Contra Costa Tran. Auth., 6.50%, 3/01/09, FGIC ....................... No Opt. Call 6,666,202
AAA 3,500 Eastern Mun. Wtr. Dist., 6.50%, 7/01/09, FGIC ........................ 7/01 at 101 3,695,300
AAA 3,065 Los Angeles Cnty. Leasing Corp., 4.05%++, 12/01/10, AMBAC ............ No Opt. Call 3,149,472
AAA 3,000 San Francisco Bay Area Rapid Trans., 6.75%, 7/01/09, AMBAC ........... 7/00 at 102 3,213,510
AAA 3,500 Sonoma Cnty. Correct. Fac., C.O.P., 3.55%++, 11/15/12, AMBAC ......... No Opt. Call 3,428,390
------------
28,948,137
------------
District of Columbia-1.4%
AAA 3,500 District of Columbia, G.O., Ser. A, 6.875%, 6/01/00+, MBIA ........... No Opt. Call 3,801,035
------------
Florida-9.4%
AAA 10,750 Broward Cnty. Sch. Bd., 6.50%, 7/01/10, AMBAC ........................ 7/02 at 102 11,500,888
AAA 12,195 Jacksonville Excise Tax Rev., 6.50%, 10/01/10, AMBAC ................. 10/02 at 102 13,169,502
AAA 1,000 Volusia Cnty. Edl. Fac., 6.50%, 10/15/10, CONNIE LEE ................. 10/02 at 102 1,068,550
------------
25,738,940
------------
Georgia-2.7%
AAA 5,000 Henry Cnty. Hosp. Auth. Rev., 6.375%, 7/01/09, FGIC .................. 7/02 at 102 5,172,300
AAA 2,000 Macon-Bibb Cnty. Hosp. Auth. Rev. Georgia Med. Ctr.,
6.75%, 8/01/00+, FGIC .............................................. No Opt. Call 2,168,800
------------
7,341,100
------------
Illinois-13.8%
AAA 5,810 Chicago, Res. Mtg. Rev., Zero Coupon, 10/01/09, MBIA ................. No Opt. Call 2,305,989
Cook Cnty., G.O., MBIA,
AAA 7,000 6.50%, 11/15/10 .................................................... 11/02 at 102 7,398,160
AAA 4,500 7.00%, 11/01/00\'86 ................................................ No Opt. Call 4,974,255
AAA 5,000 Cook Cnty., Community Schs., 6.50%, 1/01/02\'86, FGIC ................ No Opt. Call 5,381,250
AAA 5,000 Illinois Edl. Facs. Auth. Rev., 4.125%\'86\'86, 7/01/13, FGIC ........ 7/03 at 102 4,719,100
Illinois Hlth. Facs. Auth. Rev., FGIC,
AAA 3,000 Ser. A, 6.75%, 1/01/10 ............................................. 1/00 at 102 3,182,130
AAA 1,750 Ser. C, 6.75%, 1/01/10 ............................................. 1/00 at 102 1,856,242
AAA 7,980 Kendell Kane & Will Cnty. Sch. Dist., 6.25%, 9/01/11, FGIC ........... 9/01 at 100 8,149,575
------------
37,966,701
------------
Indiana-3.1%
AAA 1,340 Columbus Sch. Bd., 6.625%, 7/01/11, AMBAC ............................ 7/02 at 102 1,410,940
AAA 3,750 Indiana St. Edl. Facs. Auth., 6.60%, 1/01/11, MBIA ................... 1/02 at 102 3,934,837
AAA 3,000 Monroe Cnty. Hosp. Auth. Rev., Bloomington Hosp.,
6.65%, 5/01/10, MBIA ............................................... 5/02 at 101 3,146,550
------------
8,492,327
------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Description Provisions** (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------
Louisiana-6.7%
Louisiana St., G.O., Ser. A, AMBAC,
AAA $ 4,000 6.50%, 5/01/09 ..................................................... 5/02 at 102 $ 4,247,120
AAA 10,385 6.50%, 5/01/10 ..................................................... 5/02 at 102 10,999,792
AAA 2,905 New Orleans Pub. Impt., G.O., 6.60%, 9/01/11\'86, FGIC ............... No Opt. Call 3,164,649
------------
18,411,561
------------
Massachusetts-16.5%
AAA 2,100 Boston, G.O., Ser. A, 6.50%, 7/01/12\'86, AMBAC ...................... 7/02 at 102 2,237,487
Massachusetts St. Hlth. & Edl. Facs. Auth.,
AAA 2,000 6.50%, 7/01/10, FGIC ............................................... 7/02 at 102 2,136,500
AAA 5,000 6.50%, 7/01/10, MBIA ............................................... 7/02 at 102 5,346,550
AAA 3,250 7.25%, 7/01/10, MBIA ............................................... 7/00 at 102 3,560,212
Massachusetts St. Hsg. Fin. Agcy., FNMA Collateral,
AAA 5,000 Ser. H, 6.75%, 11/15/12 ............................................ 11/03 at 102 5,223,550
AAA 5,500 Residential Dev. A, 6.875%, 11/15/11 ............................... 5/02 at 102 5,877,575
AAA 600 Residential Dev. C, 6.875%, 11/15/11 ............................... 5/02 at 102 641,190
AAA 1,220 Massachusetts St., G.O., 6.75%, 8/01/09, AMBAC ....................... 8/01 at 102 1,304,412
AAA 7,865 Massachusetts St., G.O., Ser. C, 6.70%, 11/01/09, FGIC ............... 11/04 at 101 8,623,501
AAA 2,350 Massachusetts St., G.O., Ser. D, 6.00%, 7/01/12, MBIA ................ 7/01 at 100 2,389,691
AAA 7,630 Massachusetts St. Wtr. Res., Ser. B, 6.25%, 11/01/10, MBIA ........... 11/02 at 102 8,093,141
------------
45,433,809
------------
Michigan-4.0%
AAA 2,375 Chippewa Valley Sch., Sch. Bldg. & Site, 6.375%, 5/01/01\'86, FGIC ... No Opt. Call 2,567,945
Michigan Mun. Bd. Auth. Rev.,
AAA 900 Ser. A, 6.50%, 11/01/12, MBIA ...................................... 11/02 at 102 955,800
AAA 2,040 6.45%, 11/01/07, AMBAC ............................................. 11/04 at 102 2,230,087
AAA 2,050 6.65%, 11/01/09, AMBAC ............................................. 11/04 at 102 2,230,585
AAA 3,000 Western Township Utils. Auth. Sewer Dis. Sys. Rev.,
6.50%,1/01/10, FSA ................................................. 1/02 at 100 3,124,410
------------
11,108,827
------------
Mississippi-0.7%
AAA 1,800 Harrison Cnty. Waste Wtr. Mgmt., 6.75%, 2/01/11, FGIC ................ 2/01 at 102 1,909,674
------------
Nevada-7.4%
AAA 4,000 Clark Cnty., G.O., 6.50%, 6/01/02\'86, AMBAC ......................... No Opt. Call 4,395,720
AAA 5,215 Clark Cnty. Arpt., 6.25%, 6/01/01\'86, FGIC .......................... No Opt. Call 5,542,085
Clark Cnty. Sch. Dist.,
AAA 4,185 6.75%, 6/15/09, FGIC ............................................... 12/04 at 101 4,712,143
AAA 5,175 7.00%, 6/01/01\'86, MBIA ........................................... No Opt. Call 5,708,542
------------
20,358,490
------------
New Jersey-0.8%
AAA 2,000 Hudson Cnty. Correct. Fac., C.O.P., 6.50%, 12/01/11, MBIA ............ 6/02 at 101.5 2,132,080
------------
New York-11.2%
AAA 4,500 New York City, G.O., Ser. B, 6.95%, 8/15/12, MBIA .................... 8/04 at 101 4,993,020
New York St. Env. Fac. Corp. Poll. Ctr. Rev.,
AAA 6,155 6.70%, 5/15/09 ..................................................... 11/04 at 102 6,742,125
AAA 4,965 6.80%, 5/15/10 ..................................................... 11/04 at 102 5,453,953
New York St. Medicare Facs., AMBAC,
AAA 9,715 6.60%, 8/15/09 ..................................................... 2/05 at 102 10,579,344
AAA 2,695 6.625%, 2/15/10 .................................................... 2/05 at 102 2,929,600
------------
30,698,042
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Description Provisions** (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------
Ohio-6.2%
AAA $12,000 Cleveland Wtrwks. Rev., First Mtg., Ser. F, 6.50%,1/01/11, AMBAC ..... 1/02 at 102 $ 12,870,000
AAA 3,900 Lucas Cnty. Hosp Impt. Rev., St. Vincent Med. Ctr., 6.50%,
8/15/02\'86, MBIA .................................................. No Opt. Call 4,290,117
------------
17,160,117
------------
Oklahoma-2.2%
AAA 5,725 Oklahoma City Wtr. Utils. Tr. Wtr. & Sewer Rev., MBIA,
Ser. B, 6.375%, 7/01/12 ............................................ 7/02 at 100 5,961,786
------------
Pennsylvania-5.3%
AAA 5,000 Dauphin Cnty. Gen. Auth., 6.25%, 7/01/08, MBIA ....................... 7/02 at 102 5,210,650
AAA 6,005 Pittsburgh, G.O., Ser. D, 6.00%, 9/01/01\'86, AMBAC .................. 9/02 at 102 6,164,853
AAA 3,000 Pittsburgh Wtr. & Swr., 6.75%, 9/01/10, FGIC ......................... No Opt. Call 3,311,340
------------
14,686,843
------------
Rhode Island-4.9%
AAA 2,390 Rhode Island Clean Wtr. Protn. Fin. Agcy. Wtr. Poll. Ctl. Rev.
Revolving Fd. Pooled Ln., Issue A, 6.70%, 10/01/10, MBIA ........... 10/02 at 102 2,577,233
AAA 10,000 Rhode Island St. Pub. Bldgs. Auth., St. Pub. Prjs. Rev., Ser. A,
6.75%, 2/01/00\'86, AMBAC .......................................... No Opt. Call 10,836,700
------------
13,413,933
------------
South Carolina-8.6%
Piedmont Mun. Pwr. Agcy. Elec. Rev.,
AAA 14,925 6.30%, 1/01/11, MBIA ............................................... 1/03 at 102 15,502,597
AAA 7,900 6.50%, 1/01/11, FGIC ............................................... 1/01 at 102 8,229,114
------------
23,731,711
------------
Texas-15.5%
AAA 8,530 Austin Util. Sys. Rev., 6.00%, 5/15/10, FGIC ......................... 5/00 at 100 8,619,906
AAA 1,580 Dallas Cnty. Road Imp., G.O., 5.625%, 8/15/10 ........................ 8/01 at 100 1,589,543
AAA 2,500 Dallas Ft. Worth Regl. Arp. Rev., Ser. A, 7.375%, 11/01/10, FGIC ..... 5/04 at 102 2,815,675
AAA 8,000 El Paso Impt. Auth., G.O., Ser A, 6.375%, 8/15/02\'86, FGIC .......... No Opt. Call 8,313,520
Harris Cnty. Rfdg., FGIC,
AAA 2,585 Toll Road, Ser. B, Zero Coupon, 8/15/08 ............................ No Opt. Call 1,323,701
AAA 6,310 Toll Road Sr. Lien, Ser. A, 6.50%, 8/15/02\'86 ..................... 8/02 at 102 5,068,281
AAA 2,940 Toll Road Sr. Lien, Ser. A, 6.50%, 8/15/11 ......................... No Opt. Call 6,931,472
AAA 10,440 Houston Wtr. & Swr. Sys., Ser. C, Zero Coupon, 12/01/10, AMBAC ....... No Opt. Call 4,573,242
AAA 1,840 North Texas Mun. Wtr. Dist., 6.50%, 6/01/09, MBIA .................... 6/03 at 100 1,929,258
AAA 1,500 Texas Mun. Pwr. Agcy. Ref., Ser. A, 6.75%, 9/01/12, AMBAC ............ 9/01 at 102 1,604,610
------------
42,769,208
------------
Utah-1.0%
AAA 1,450 Salt Lake City Mun. Bldg. Lease, 6.15%, 10/01/10, MBIA ............... 10/04 at 101 1,492,311
AAA 3,175 Salt Lake City Wtr. Conservancy, Zero Coupon, 10/01/10, AMBAC ........ No Opt. Call 1,392,492
------------
2,884,803
------------
Virginia-3.6%
Peninsula Port Auth. Hlth. Sys., MBIA,
AAA 6,000 Riverside Hlth. Sys. Prj. A, 6.625%, 7/01/10 ....................... 7/02 at 102 6,364,620
AAA 3,380 Riverside Hlth. Sys. Prj. B, 6.625%, 7/01/10 ....................... 7/02 at 102 3,592,095
------------
9,956,715
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Description Provisions** (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------
Washington-5.3%
AAA $ 4,650 Port of Seattle Rev., 6.60%, 8/01/10, MBIA ........................... 8/02 at 102 $ 4,986,985
AAA 3,500 Washington St. Pub. Pwr. Supply Sys. Rev., Nuclear Prj. No. 1, Ser. A,
7.00%, 7/01/11, FGIC ............................................... 7/00 at 102 3,747,520
AAA 12,905 Washington St. Pub. Pwr. Supply Sys. Rev., Zero Coupon, 7/01/10, MBIA. No Opt. Call 5,750,210
------------
14,484,715
------------
Wisconsin-0.8%
AAA 2,000 Wisconsin St. Hlth. & Edl. Facs. Auth., Wausau Hosp. Inc., Ser. A,
6.625%, 8/15/09, AMBAC ............................................. 2/01 at 102 2,118,280
------------
Total long-term investments (cost $368,673,043) 397,094,672
------------
SHORT-TERM INVESTMENTS***-0.3%
NEW MEXICO-0.2%
A-1+ 600 Farmington Poll. Ctrl. Rev., Arizona Pub. Ser. Co., FRDD, 3.55%,
7/01/96, Ser. B .................................................... N/A 600,000
NEW YORK-0.1%
A-1+ 500 New York City Mun. Wtr. Fin. Auth. Rev., FRDD, 3.55%, 7/01/96, FGIC .. N/A 150,000
------------
Total Short-Term Investments (cost $750,000) ......................... 750,000
------------
Total Investments-144.7% (cost $369,423,043) ......................... 397,844,672
Other assets in excess of liabilities-2.6% ........................... 7,086,759
Liquidation value of preferred stock-(47.3%) ......................... (130,000,000)
------------
Net Assets Applicable to Common Shareholders-100% .................... $274,931,431
============
<FN>
(D) This bond is Pre-refunded. See glossary for definition.
(D)(D) This bond contains embedded caps. See glossary for definition.
* Rating: using the higher of Standard & Poor's, Moody's or Fitch's rating.
** Option call provisions: date (month/year) and prices of the earliest optional call or redemption. There may be other
call provisions at varying prices at later dates.
*** For purposes of amortized cost valuation, the maturity dates of these instruments are considered to be the later of the
next date on which the security can be redeemed at par or the next date on which the interest rate is adjusted.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
AMBAC-American Municipal Bond Assurance Corporation
CGIC-Capital Guarantee Insurance Company
CONNIE LEE-College Construction Loan Insurance Association
C.O.P.-Certificate of Participation
FGIC-Financial Guaranty Insurance Company
FNMA Collateral-Federal National Mortgage Association
FRDD-Floating Rate Daily Demand
G.O.-General Obligation Bond
MBIA-Municipal Bond Insurance Association
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE>
(LEFT COLUMN)
- --------------------------------------------------------------------------------
The BlackRock Insured
Municipal Term Trust Inc.
Statement of Assets and Liabilities
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments, at value (cost $369,423,043)(Note 1) ............... $397,844,672
Cash ............................................................ 28,225
Interest receivable ............................................. 7,548,510
Prepaid assets .................................................. 24,743
Deferred organization expenses .................................. 9,333
------------
405,455,483
------------
Liabilities
Dividends payable-preferred stock ............................... 116,661
Dividends payable-common stock .................................. 121,546
Advisory fee payable (Note 2) ................................... 115,258
Administration fee payable (Note 2) ............................. 32,931
Other accrued expenses .......................................... 137,656
------------
524,052
------------
Net Investment Assets ........................................... $404,931,431
============
Net investment assets were comprised of:
Common stock:
Par value (Note 4) .......................................... $ 258,856
Paid-in capital in excess of par ............................ 239,833,688
Preferred stock (Note 4) ...................................... 130,000,000
------------
370,092,544
Undistributed net investment income ........................... 6,750,853
Accumulated net realized loss on investments .................. (333,595)
Net unrealized appreciation on investments .................... 28,421,629
------------
Net investment assets, June 30, 1996 .......................... $404,931,431
============
Net assets applicable to common shareholders .................. $274,931,431
============
Net asset value per common share:
($274,931,431 / 25,885,639 shares of
common stock issued and outstanding) .......................... $10.62
======
See Notes to Financial Statements.
(RIGHT COLUMN)
- --------------------------------------------------------------------------------
The BlackRock Insured
Municipal Term Trust Inc.
Statement of Operations
Six Months Ended June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
Net Investment Income
Income
Interest and discount earned .................................. $ 12,136,112
------------
Expenses
Investment advisory ........................................... 711,175
Administration ................................................ 203,193
Auction agent ................................................. 174,000
Custodian ..................................................... 87,000
Reports to shareholders ....................................... 62,000
Directors ..................................................... 25,000
Audit ......................................................... 19,000
Transfer agent ................................................ 17,000
Legal ......................................................... 5,000
Miscellaneous ................................................. 48,235
------------
Total expenses ................................................ 1,351,603
------------
Net investment income ........................................... 10,784,509
------------
Realized and Unrealized Gain (Loss)
on Investments (Note 3)
Net realized gain on investments ................................ 190,331
Net change in unrealized appreciation on investments ............ (10,865,464)
------------
Net loss on investments ......................................... (10,675,133)
------------
Net Increase in Net Investment
Assets Resulting from Operations .............................. $ 109,376
============
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Insured Municipal Term Trust Inc.
Statements of Changes in Net Investment Assets
(Unaudited)
- --------------------------------------------------------------------------------
Six Months Year
Ended Ended
June 30, December 31,
1996 1995
-------- -----------
Increase (Decrease) in Net Investment Assets
Operations:
Net investment income .......................... $ 10,784,509 $ 21,760,900
Net realized gain on investments ............... 190,331 193,262
Net change in unrealized appreciation
(depreciation) on investments ................ (10,865,464) 32,691,361
------------ ------------
Net increase in net investment assets
resulting from operations .................... 109,376 54,645,523
------------ ------------
Dividends:
To preferred shareholders from net
investment income ............................ (2,315,389) (5,097,663)
To common shareholders from net
investment income ............................ (8,088,666) (16,177,339)
------------ ------------
(10,404,055) (21,275,002)
------------ ------------
Total increase (decrease) (10,294,679) 33,370,521
Net Investment Assets
Beginning of period ............................ 415,226,110 381,855,589
------------ ------------
End of period .................................. $404,931,431 $415,226,110
============ ============
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Insured Municipal Term Trust Inc.
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Six Months February 28,
Ended Year Ended December 31, 1992* to
June 30, --------------------------------- December 31,
1996 1995 1994 1993 1992
---------- ---- ---- ---- ----
PER COMMON SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period ......................... $ 11.02 $ 9.73 $ 11.18 $ 9.93 $ 9.40
-------- -------- -------- -------- --------
Net investment income ...................................... .42 .84 .82 .83 .61
Net realized and unrealized gain (loss) on investments ..... (.42) 1.27 (1.48) 1.18 .56
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations ........... - 2.11 (.66) 2.01 1.17
-------- -------- -------- -------- --------
Dividends from net investment income to:
Preferred shareholders ..................................... (.09) (.20) (.14) (.12) (.09)
Common shareholders ........................................ (.31) (.62) (.62) (.63) (.42)
Distributions from net realized gain on investments to:
Preferred shareholders ..................................... - - (.01) (.00)*** -
Common shareholders ........................................ - - (.02) (.01) -
-------- -------- -------- -------- --------
Total dividends and distributions ............................ (.40) (.82) (.79) (.76) (.51)
-------- -------- -------- -------- --------
Capital charge with respect to issuance of shares ............ - - - - (.13)
-------- -------- -------- -------- --------
Net asset value, end of period** ............................. $ 10.62 $ 11.02 $ 9.73 $ 11.18 $ 9.93#
======== ======== ======== ======== ========
Market value, end of period** ................................ $ 10.12 $ 10.00 $ 8.50 $ 10.50 $ 9.875
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN (D) .................................. 4.38% 25.31% (13.38%) 12.99% 9.51%
RATIOS TO AVERAGE NET ASSETS
OF COMMON SHAREHOLDERS:(DDD)
Expenses ..................................................... .97%(DD) .96% 1.04% .96% .98%(DD)
Net investment income ........................................ 7.78%(DD) 7.97% 7.99% 7.75% 7.52%(DD)
SUPPLEMENTAL DATA:
Average net assets of common shareholders (000) .............. $278,619 $272,868 $265,851 $275,162 $247,807
Portfolio turnover ........................................... 1% 1% 31% 1% 37%
Net assets of common shareholders, end of period (000) ....... $274,931 $285,226 $251,856 $289,449 $256,956
Asset coverage per share of preferred stock, end of period## . $ 77,871 $ 79,851 $146,868 $161,327 $148,829
Preferred stock outstanding (000) ............................ $130,000 $130,000 $130,000 $130,000 $130,000
<FN>
- -----------------
* Commencement of investment operations.
** NAV and market value are published in The Wall Street Journal on Monday.
*** Actual amount paid to preferred shareholders was $0.0013 per common share.
# Net asset value immediately after the closing of the initial public offering was $9.38.
## A stock split occurred on July 24, 1995 (Note 4).
(D) Total investment return is calculated assuming a purchase of common stock at the current market value on the first day and
a sale at the current market price on the last day of each period reported. Dividends and distributions, if any, are
assumed for purposes of this calculation, to be reinvested at prices obtained under the Trust's dividend reinvestment
plan. Total investment returns do not reflect brokerage commissions. Total investment returns for periods of less than one
full year are not annualized.
(DD) Annualized.
(DDD) Ratios calculated on the basis of income and expenses applicable to both the common and preferred shares relative to the
average net assets of common shareholders. Ratios do not reflect the effect of dividend payments to preferred shareholders.
The information above represents the unaudited operating performance data for a share of common stock outstanding, total
investment return, ratios to average net assets and other supplemental data for the periods indicated. This information has
been determined based upon financial information provided in the financial statements and market value data for the Trust's
shares.
</FN>
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Insured Municipal Term Trust Inc.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(RIGHT COLUMN)
Note 1. Accounting Policies
The BlackRock Insured Municipal Term Trust Inc. (the "Trust"), a Maryland
Corporation is a diversified, closed-end management investment company. The
Trust's investment objective is to manage a portfolio of investment grade
securities that will return $10 per share to investors on or about December 31,
2010 while providing current income exempt from regular Federal income tax. The
ability of issuers of debt securities held by the Trust to meet their
obligations may be affected by economic developments in a specific state,
industry or region. No assurance can be given that the Trust's investment
objective will be achieved.
The following is a summary of significant accounting policies followed by the
Trust:
Securities Valuation: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost if their term to maturity from date of purchase is 60
days or less, or by amortizing their value on the 61st day prior to maturity if
their original term to maturity from date of purchase exceeded 60 days.
Option Selling/Purchasing: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is
(LEFT COLUMN)
exercised, the premium paid or received is added to the proceeds from the sale
or cost of the purchase in determining whether the Trust has realized a gain or
a loss on investment transactions. The Trust, as writer of an option, may have
no control over whether the underlying securities may be sold (call) or
purchased (put) and as a result bears the market risk of an unfavorable change
in the price of the security underlying the written option.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential declines in similar securities owned. When the Trust makes a short
sale, it may borrow the security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for its obligation to deliver
the security upon conclusion of the sale. The Trust may have to pay a fee to
borrow the particular securities and may be obligated to pay over any payments
received on such borrowed securities. A gain, limited to the price at which the
Trust sold the security short, or a loss, unlimited as to dollar amount, will be
recognized upon the termination of a short sale if the market price is greater
or less than the proceeds originally received.
12
<PAGE>
(LEFT COLUMN)
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses are calculated on the
identified cost basis. Interest income is recorded on the accrual basis and the
Trust amortizes premium and accretes original issue discount on securities
purchased using the interest method.
Federal Income Taxes: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient net income to shareholders. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, no federal tax provision is required.
Dividends and Distributions: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income. Net
capital gains, if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
Deferred Organization Expenses: A total of $70,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a period of sixty months from the date the Trust
commenced investment operations.
Note 2. Agreements
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management Inc. (the "Adviser"), a wholly-owned corporate subsidiary of PNC
Asset Management Group, Inc., the holding company for PNC's asset management
businesses and an Administration Agreement with Mitchell Hutchins Asset
Management Inc. (the "Administrator"), a wholly-owned subsidiary of PaineWebber
Incorporated.
The investment advisory fee paid to the Adviser is computed weekly and payable
monthly at an annual rate of 0.35% of the Trust's average weekly net investment
assets. The administration fee paid to the Administrator is also computed weekly
and payable monthly at an annual rate of 0.10% of the Trust's average weekly net
investment assets.
Pursuant to the agreements, the Adviser provides continuous supervision of the
investment portfolio and pays the compensation of officers of the Trust who are
affiliated persons of the Adviser.The Administrator pays occupancy and certain
clerical and accounting costs of the Trust. The Trust bears all other costs and
expenses.
(RIGHT COLUMN)
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended June 30, 1996 aggregated $6,448,814 and $2,608,375,
respectively.
The federal income tax basis of the Trust's investments at June 30, 1996 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized appreciation for federal income tax purposes was $28,421,629;
(gross unrealized appreciation-$28,769,794; gross unrealized
depreciation-$348,165).
For federal income tax purposes, the Trust had a capital loss carryforward
at December 31, 1995 of $523,926 which expires in 2003. Accordingly, no capital
gain distribution is expected to be paid to shareholders until net gains have
been realized in excess of such amount.
Note 4. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
25,885,639 common shares outstanding at June 30, 1996, the Adviser owned 10,639
shares. As of June 30, 1996 there were 5,200 preferred shares outstanding as
follows: 2,600 shares of Series M-7 and M-28, respectively.
The Trust may classify or reclassify any unissued shares of common stock into
one or more series of preferred stock. On April 27, 1992 the Trust reclassified
2,600 shares of common stock and issued two series of Auction Market Preferred
Stock ("Preferred Stock") as follows: Series M7-1,300 shares and Series
M28-1,300 shares. The Preferred Stock has a liquidation value of $25,000 per
share plus any accumulated but unpaid dividends.
Dividends on Series M7 are cumulative at a rate which is reset every 7 days
based on the results of an auction. Dividends on Series M28 are also cumulative
at a rate which is reset every 28 days based on the results of an auction.
Dividend rates ranged from 3.29% to 3.89% for the six months ended June 30,
1996.
The Trust may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The preferred stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at $25,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition
13
<PAGE>
(LEFT COLUMN)
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 shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares, and (b) take any action requiring a vote of security holders including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
(RIGHT COLUMN)
On May 16, 1995 shareholders approved a proposal to split each share of the
Trust's Auction Rate Municipal 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.
Note 5. Dividends
Subsequent to June 30, 1996, the Board of Directors of the Trust declared
dividends from undistributed earnings of $0.05208 per common share payable July
31, 1996 to shareholders of record on July 15, 1996.
For the period July 1, 1996 through July 31, 1996, dividends declared on
preferred shares totalled $381,816 in aggregate for the two outstanding
preferred share series.
Note 6. Quarterly Data
<TABLE>
<CAPTION>
(LEFT COLUMN)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and Net increase (decrease)
Net investment unrealized in net investment assets
Income gains (loss) resulting from operations Dividends and Distributions
Per on investments, Per
Quarterly Total common Per common Common shares Preferred shares*
period Income Amount share Amount common share Amount share Amount Per share Amount Per Share
- ------- ------ ---------------- -------------------- ------------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 1,
1994 to
March 31,
1994 ... $5,999,230 $5,304,787 $.20 $(26,178,438) $(1.01) $(20,873,651) $(.81) $4,044,333 $0.15 $ 729,385 $.03
April 1,
1994 to
June 30,
1994 ... 6,016,513 5,339,405 .21 (1,486,903) (.06) 3,852,502 .15 4,044,359 .16 901,335 .03
July 1,
1994 to
September
30,
1994 ... 6,043,084 5,330,459 .21 (2,450,435) (.10) 2,880,024 .11 4,044,362 .15 972,927 .04
October 1,
1994 to
December
31,
1994 ... 5,942,087 5,260,204 .20 (8,078,192) (.31) (2,817,988) (.11) 4,664,034 .18 1,233,897 .05
January 1,
1995 to
March 31,
1995 ... 5,951,229 5,304,114 .21 17,918,947 .69 23,223,061 .90 4,044,313 .15 1,292,588 .05
April 1,
1995 to
June 30,
1995 ... 6,097,923 5,466,704 .21 2,868,078 .11 8,334,782 .32 4,044,346 .16 1,314,322 .05
July 1,
1995 to
September
30,
1995 ... 6,259,025 5,584,367 .21 3,702,483 .15 9,286,850 .36 4,044,342 .16 1,227,277 .05
October 1,
1995 to
December
31,
1995 ... 6,066,683 5,405,715 .21 8,395,115 .32 13,800,830 .53 4,044,338 .15 1,263,476 .05
January 1,
1996 to
March 31,
1996 ... 6,073,137 5,391,081 .21 (7,406,995) (.29) (2,015,914) (.08) 4,044,335 .16 1,156,524 .04
April 1,
1996 to
June 30,
1996 ... 6,062,975 5,393,428 .21 (3,268,138) (.13) 2,125,290 .08 4,044,331 .15 1,158,865 .05
</TABLE>
(RIGHT COLUMN)
Period
Share price of end
Common Stock net asset
High Low value
--------------- ---------
January 1,
1994 to
March 31,
1994 ... $10-3/4 $9-1/2 $10.19
April 1,
1994 to
June 30,
1994 ... 10-1/8 9-1/4 10.15
July 1,
1994 to
September
30,
1994 ... 10 9 10.07
October 1,
1994 to
December
31,
1994 ... 9-1/2 8-1/2 9.73
January 1,
1995 to
March 31,
1995 ... 9-3/4 8-1/2 10.42
April 1,
1995 to
June 30,
1995 ... 10 9-1/2 10.54
July 1,
1995 to
September
30,
1995 ... 10-1/8 9-1/2 10.69
October 1,
1995 to
December
31,
1995 ... 10-3/8 9-3/4 11.02
January 1,
1996 to
March 31,
1996 ... 10-3/8 10 10.74
April 1,
1996 to
June 30,
1996 ... 10-1/4 9-7/8 10.62
*For the six months ended June 30, 1996, the average annualized rate paid to
preferred shareholders was 3.57%.
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), shareholders
may elect to have all distributions of dividends and capital gains automatically
reinvested by State Street Bank and Trust Company (the "Plan Agent") in Trust
shares 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 Custodian, as dividend
disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the Plan.
After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange for the participants' accounts. The Trust will not issue shares
under the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income taxes that
may be payable on such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days' written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Trust at (800) 699-1BFM or BlackRock Financial Management, Inc.
at (800) 227-7BFM. The addresses are on the front of this report.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders. There have been no
changes in the Trust's charter or by-laws. There have been no changes in the
principal risk factors associated with investment in the Trust. There have been
no changes in the persons who are primarily responsible for the day-to-day
management of the Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 8, 1996 to vote on the
following matters:
(1) To elect three Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
Richard E. Cavanagh* I 3 years 1999
James Grosfeld I 3 years 1999
James Clayburn LaForce I 3 years 1999
*Represents the preferred Shareholders.
Directors whose term of office continues beyond this meeting are Andrew
F. Brimmer, Kent Dixon, Frank J. Fabozzi, Laurence D. Fink and Ralph L.
Schlosstein.
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December31, 1996.
(3) To modify the investment restriction prohibiting investing for the
purpose of exercising control over the management of a company.
Shareholders elected the three Directors, ratified the selection of Deloitte &
Touche LLP and approved the modification of the investment restriction
prohibiting investing for the purpose of exercising control over the management
of a company. The results of the voting was as follows:
Votes for Votes Against Abstentions
---------- --------------- -----------
Richard E. Cavanagh 3,549 - 1
James Grosfeld 14,030,230 - 368,541
James Clayburn LaForce 14,024,322 - 374,449
Ratification of Deloitte
& Touche LLP 13,865,652 113,049 420,070
Investment restriction 10,809,439 476,272 816,175
15
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
The Trust's Investment Objective
The Trust's investment objective is to provide current income exempt from
Federal income tax and to return at least $10 per share (the initial public
offering price per share) to investors on or about December 31, 2010.
Who Manages the Trust?
BlackRock Financial Management, Inc. ("BlackRock" or the "Adviser") is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages
approximately $41 billion of assets across the government, mortgage, corporate
and municipal sectors. These assets are managed on behalf of institutional and
individual investors in 21 closed-end funds which trade on either the New York
Stock or American Stock Exchanges, several open-end funds and separate accounts
for more than 80 clients in the U.S. and overseas. BlackRock is a subsidiary of
PNC Asset Management Group, Inc. which is a division of PNC Bank N.A., one of
the nation's largest banking organizations.
What Can the Trust Invest In?
The Trust intends to invest at least 80% of its total assets in municipal
obligations insured as to the timely payment of both principal and interest. The
Trust may invest up to 20% of its total assets in uninsured municipal
obligations which are rated Aaa by Moody's or AAA by S&P, or are determined by
the Adviser to be of comparable credit quality (guaranteed, escrowed, or backed
in trust).
What is the Adviser's Investment Strategy?
The Adviser will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($10 per share)
at maturity. The Trust will implement a conservative strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment at the end of 2010. At the Trust's termination,
BlackRock expects that the value of the securities which have matured, combined
with the value of the securities that are sold will be sufficient to return the
initial offering price to investors. On a continuous basis, the Trust will seek
its objective by actively managing its portfolio of municipal obligations and
retaining a small amount of income each year.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide current income exempt from Federal income tax to
investors. The portfolio managers will attempt to achieve this objective by
investing in securities that provide competitive income. In addition, leverage
will be used (in an amount up to 35% of total assets) to enhance the income of
the portfolio. In order to maintain competitive yields as the Trust approaches
maturity and depending on market conditions, the Adviser will attempt to
purchase securities with call protection or maturities as close to the Trust's
maturity date as possible. Securities with call protection should provide the
portfolio with some degree of protection against reinvestment risk during times
of lower prevailing interest rates. Since the Trust's primary goal is to return
the initial offering price at maturity, any cash that the Trust receives prior
to its maturity date will be reinvested in securities with maturities which
coincide with the remaining term of the Trust. Since shorter-term securities
typically yield less than longer-term securities, this strategy will likely
result in a decline in the Trust's income over time. 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.
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 adviser. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, State Street
Bank and Trust Company. Investors who wish to hold shares in a brokerage account
should check with their financial adviser to determine whether their brokerage
firm offers dividend reinvestment services.
16
<PAGE>
Leverage Considerations in a Term Trust
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the issuance of preferred
stock. Leverage permits the Trust to borrow money at short-term rates and
reinvest that money in longer-term assets which typically offer higher interest
rates. The difference between the cost of the borrowed funds and the income
earned on the proceeds that are invested in longer term assets is the benefit to
the Trust from leverage. In general, the portfolio is typically leveraged at
approximately 35% of total assets.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rising rate environment. BlackRock's portfolio managers continuously monitor and
regularly review the Trust's use of leverage and the Trust may reduce, or
unwind, the amount of leverage employed should BlackRock consider that reduction
to be in the best interests of the shareholders.
Special Considerations and Risk Factors Relevant to Term Trusts
The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
Return of Initial Investment. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.
Dividend Considerations. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
Leverage. The Trust utilizes leverage through the issuance of preferred stock
which involves special risks. The Trust's net asset value and market value may
be more volatile due to its use of leverage.
Market Price of Shares. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange (NYSE symbol: BMT) 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. Investing in these securities involves 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. The Trust currently holds no AMT securities.
17
<PAGE>
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THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
Closed-End Fund: Investment vehicle which initially offers a fixed number
of shares and trades on a stock exchange. The fund
invests in a portfolio of securities in accordance with
its stated investment objectives and policies.
Discount: When a fund's net asset value is greater than its stock
price, the fund is said to be trading at a discount.
Dividend: Income generated by securities in a portfolio and
distributed to shareholders after deduction of expenses.
This Trust declares and pays dividends on a monthly
basis.
Dividend Reinvestment: Shareholders may have all distributions of dividends and
capital gains automatically reinvested into additional
shares of the Trust.
Embedded Caps: Also known as additional interest municipal bonds.
These securities are intended to protect the income
that the Trust earns through leverage from significant
increase in short-term rates. The coupon on these bonds
will increase if short-term rates rise significantly.
Market Price: Price per share of a security trading in the secondary
market. For a closed-end fund, this is the price at
which one share of the fund trades on the stock
exchange. If you were to buy or sell shares, you would
pay or receive the market price.
Net Asset Value (NAV): Net asset value is the total market value of all
securities and other assets held by the Trust, plus
income accrued on its investment, minus any liabilities
including accrued expenses, dividend 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 on 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 the U.S.
Government securities which are held in escrow and are
used to pay principal and interest on the tax-exempt
issue and to retire the bond in full at the date
indicated, typically at a premium to par.
18
<PAGE>
(Left column)
BlackRock
Directors
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Ralph L. Schlosstein
Officers
Ralph L. Schlosstein, President
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Kevin Klingert, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Karen H. Sabath, Secretary
Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
Administrator
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY 10019
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 669-1BFM
Auction Agent
Bankers Trust Company
Four Albany Street
New York, NY 10006
Independent Auditors
Deloitte & Touche LLP
Two World Finanical Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of
June 30, 1996 were not audited and accordingly,
no opinion is expressed on them.
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of any securities.
The BlackRock Insured Municipal Term Trust Inc.
c/o Mitchell Hutchins Asset Management Inc.
15th Floor
1285 Avenue of the Americas
New York, NY 10019
(800) 227-7BFM
092474 10 5
092474 20 4
092474 30 3
(Left column)
The BlackRock
Insured Municipal
Term Trust Inc.
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Semi-Annual Report
June 30, 1996
