- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
July 31, 1998
Dear Shareholder:
Domestic bonds provided investors with modest total returns during the
past six months, as interest rates generally fell. Supporting the bond market
was favorable inflation news and the belief that the Federal Reserve is unlikely
to raise short-term interest rates in the immediate future.
U.S. economic growth has slowed of late after a robust first quarter of
1998. We expect the fallout from the Asian fiscal crisis to quash any
significant rebound in U.S. growth for the remainder of the year. While we
expect that interest rates will be fairly stable in the near-term, our
longer-term outlook for the bond market remains optimistic, based on the
fundamentally favorable backdrop of low inflation, a currently high level of
real yields, and declining Treasury borrowing.
As you may know, the five investment management firms that comprised the
PNC Asset Management Group have consolidated under BlackRock, resulting in
BlackRock Inc., a $119 billion money management firm. We look forward to using
our global investment management expertise to present exciting investment
opportunities to closed-end fund shareholders in the future.
This report contains comments from your Trust's managers regarding the
markets and portfolio in addition to the Trust's financial statements and a
detailed portfolio listing. We thank you for your continued investment in the
Trust.
Sincerely,
/s/ Laurence D. Fink /s/Ralph L. Schlosstein
- ------------------- -----------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 31, 1998
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, 1998.
We would like to take this opportunity to review the Trust's stock price and net
asset value (NAV) performance, summarize developments in the fixed income
markets and discuss recent portfolio management activity.
The Trust is a diversified, actively managed closed-end bond fund whose
shares are traded on the New York Stock Exchange under the symbol "BMT". The
Trust's investment objective is to manage a portfolio of municipal debt
securities that will return $10 per share (an amount equal to the Trust's
initial public offering price) to investors on or about December 31, 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 changes in the Trust's stock price and net
asset value over the period:
<TABLE>
<CAPTION>
------------------------------------------------------------------
6/30/98 12/31/97 CHANGE HIGH LOW
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK PRICE $11.0625 $11.0000 0.57% $11.3125 $10.5625
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $11.15 $11.20 (0.45%) $11.33 $11.06
- --------------------------------------------------------------------------------------------------
</TABLE>
THE FIXED INCOME MARKETS
After an extremely strong first quarter of 1998, U.S. economic growth
slowed during the past three months. Despite the strong economic growth of the
past year, inflation stayed surprisingly subdued. One explanation for the
absence of inflation in the U.S. economy stems from the aftermath of the Asian
financial crisis. U.S. exports to Asia have slowed, while the strength of the
dollar caused cheap Asian imports to flood the U.S. market and exert downward
price pressure on domestic goods.
Yields of U.S. Treasury securities have remained in a fairly narrow range
during the period. For example, the yield of the 10-Year Treasury posted a net
decline of 29 basis points (0.29%), beginning 1998 at 5.74% and closing on June
30, 1998 at 5.45%. The past six months represented a continuation of strong
Treasury performance, which has been due to moderating economic growth, low
inflation and a "flight to quality" from investors seeking a safe haven in U.S.
Treasury securities. Continued expectations that the Asian crisis will slow
economic growth and force the Fed to leave the Federal funds rate unchanged
provided additional support to the bond market. With Treasury supply waning due
to a surplus in the federal budget and an increased foreign demand for
Treasuries due to their U.S. government backing and relatively attractive
yields, we anticipate a positive environment for Treasuries for the balance of
1998.
2
<PAGE>
Municipal bonds underperformed the taxable domestic bond market during the
past six months, returning 2.69% (as measured by the LEHMAN BROTHERS MUNICIPAL
INDEX) versus the LEHMAN BROTHERS AGGREGATE INDEX'S 3.91% on a pre-tax basis.
The main forces behind municipal bond underperformance were increased municipal
bond supply (fueled by the lowest municipal interest rates since the 1960s) and
retail investor focus on the equity markets. We believe that municipals are
attractively valued versus Treasuries and our outlook for municipal securities
is favorable. The credit quality of most issuers remains strong, and we expect
that the attractive taxable equivalent yields offered by municipal securities
should bring investors back into the market.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and security types. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors,
credits and coupons. Additionally, the Trust emphasizes securities whose
maturity dates match the termination date of the Trust. We have continued to
minimize trading activity in the Trust during the period, as the market prices
of a significant portion of the portfolio's bonds are currently above the prices
at which they were bought. A bond sold at a gain would result in the Trust
realizing a capital gain, which may require a taxable distribution to
shareholders. Since one of the Trust's primary investment objectives is to pay
out tax-exempt income, we believe that waiting to restructure the portfolio in a
higher interest rate environment remains the most prudent strategy.
The following chart compares the Trust's current and December 31, 1997
asset composition:
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
- --------------------------------------------------------------------------------
SECTOR JUNE 30, 1998 DECEMBER 31, 1997
- --------------------------------------------------------------------------------
City, County and State 28% 28%
- --------------------------------------------------------------------------------
Hospital 17% 17%
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Water & Sewer 15% 15%
- --------------------------------------------------------------------------------
Utility/Power 11% 11%
- --------------------------------------------------------------------------------
Tax Revenue 8% 8%
- --------------------------------------------------------------------------------
Lease Revenue 6% 6%
- --------------------------------------------------------------------------------
Education 5% 5%
- --------------------------------------------------------------------------------
Miscellaneous Revenue 4% 4%
- --------------------------------------------------------------------------------
Housing 3% 3%
- --------------------------------------------------------------------------------
Transportation 3% 3%
- --------------------------------------------------------------------------------
Additionally, the Trust employs leverage to enhance its income by paying
the Trust's preferred shareholders short-term municipal rates and investing the
proceeds in longer maturity issues which have higher yields. The Trust's ability
to pay high monthly income may be affected by the profitability of its leverage.
The Federal Reserve's neutral interest rate policy has allowed the Trust's
leverage costs to remain reasonable. At the present, we believe that leverage
will continue to positively contribute to the Trust's long-term income earning
ability.
3
<PAGE>
We look forward to managing the Trust to benefit from the opportunities
available in the fixed income markets and to meet its investment objectives. We
thank you for your investment in the BlackRock Insured Municipal Term Trust Inc.
Please feel free to contact our marketing center at (800) 227-7BFM (7236) if you
have specific questions which were not addressed in this report.
Sincerely,
/s/ Robert S. Kapito /s/Kevin Klingert
- -------------------- -----------------
Robert S. Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BMT
- --------------------------------------------------------------------------------
Initial Offering Date: February 20, 1992
- --------------------------------------------------------------------------------
Closing Stock Price as of 6/30/98: $11.0625
- --------------------------------------------------------------------------------
Net Asset Value as of 6/30/98: $11.15
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 6/30/98 ($11.0625)1: 5.65%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Common Share2: $ 0.05208
- --------------------------------------------------------------------------------
Current Annualized Distribution per Common Share2: $ 0.62496
- --------------------------------------------------------------------------------
- ----------
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 Dividend is not constant and is subject to change.
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
PORTFOLIO OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION
AMOUNT CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS--142.7%
ALABAMA--1.1%
AAA $ 3,000 Mobile Cnty., G.O., 6.70%, 2/01/00+, MBIA .......................... NA $ 3,182,070
-----------
ARIZONA--1.6%
AAA 4,180 University of Arizona Med. Ctr. Hosp. Rev., 6.25%, 7/01/10, MBIA ... 7/02 at 102 4,526,940
-----------
CALIFORNIA--10.3%
California St., G.0., FGIC,
AAA 4,355 6.80%, 11/01/04+ ................................................ NA 5,057,592
AAA 145 6.80%, 11/01/10 ................................................. 11/04 at 102 166,896
AAA 3,400 California St. Pub. Wks., 6.60%, 12/01/02+, AMBAC .................. NA 3,807,626
AAA 6,100 Contra Costa Trans. Auth., 6.50%, 3/01/09, FGIC .................... No Opt. Call 6,577,386
AAA 3,500 Eastern Mun. Wtr. Dist., 6.50%, 7/01/09, FGIC ...................... 7/01 at 101 3,749,480
AAA 3,065 Los Angeles Cnty. Leasing Corp., 6.05%, 12/01/10, AMBAC ............ No Opt. Call 3,489,962
AAA 3,000 San Francisco Bay Area Rapid Trans., 6.75%, 7/01/00+, AMBAC ........ NA 3,220,410
AAA 3,500 Sonoma Cnty. Correct. Fac., C.O.P., 6.10%, 11/15/12, AMBAC ......... 11/02 at 102 3,813,215
-----------
29,882,567
-----------
DISTRICT OF COLUMBIA--1.3%
AAA 3,500 District of Columbia, G.O., Ser. A, 6.875%, 6/01/00+, MBIA ......... NA 3,747,310
-----------
FLORIDA--9.2%
AAA 10,750 Broward Cnty. Sch. Bd., 6.50%, 7/01/02+, AMBAC ..................... NA 11,885,200
AAA 12,195 Jacksonville Excise Tax Rev., 6.50%, 10/01/10, AMBAC ............... 10/02 at 102 13,473,280
AAA 1,000 Volusia Cnty. Edl. Fac., 6.50%, 10/15/10, CONNIE LEE ............... 10/02 at 102 1,100,560
-----------
26,459,040
-----------
GEORGIA--2.6%
AAA 5,000 Henry Cnty. Hosp. Auth. Rev., 6.375%, 7/01/09, FGIC ................ 7/02 at 102 5,441,450
AAA 2,000 Macon-Bibb Cnty. Hosp. Auth. Rev., Georgia Med. Ctr.,
6.75%, 8/01/99+, FGIC ........................................... NA 2,101,760
-----------
7,543,210
-----------
ILLINOIS--13.3%
AAA 3,215 Chicago, Res. Mtg. Rev., Zero Coupon, 10/01/09, MBIA No Opt. Call 1,479,189
Cook Cnty., G.O., MBIA,
AAA 7,000 6.50%, 11/15/02+ ................................................ NA 7,775,180
AAA 4,500 7.00%, 11/01/00+ ................................................ NA 4,877,955
AAA 5,000 Cook Cnty., Community Schs., 6.50%, 1/01/02+, FGIC ................. NA 5,382,700
AAA 5,000 ILLINOIS EDL. FAC. AUTH. REV., 4.125%++, 7/01/13, FGIC ............. 7/03 AT 102 5,352,500
Illinois Hlth. Fac. Auth. Rev., FGIC,
AAA 3,000 Ser. A, 6.75%, 1/01/10 .......................................... 1/00 at 102 3,162,330
AAA 1,750 Ser. C, 6.75%, 1/01/10 .......................................... 1/00 at 102 1,844,693
AAA 7,980 Kendell Kane & Will Cnty. Sch. Dist., 6.25%, 9/01/11, FGIC ......... 9/01 at 100 8,388,017
----------
38,262,564
----------
INDIANA--3.1%
AAA 1,340 Columbus Sch. Bd., 6.625%, Ser. A, 7/01/11, AMBAC .................. 7/02 at 102 1,468,372
AAA 3,750 Indiana St. Edl. Fac. Auth. Rev., Ser. A, 6.60%, 1/01/11, MBIA ..... 1/02 at 102 4,063,125
AAA 3,000 Monroe Cnty. Hosp. Auth. Rev., Bloomington Hosp.,
6.65%, 5/01/02+, MBIA ........................................... NA 3,291,150
----------
8,822,647
----------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION
AMOUNT CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOUISIANA--6.6%
AAA $14,385 Louisiana St., G.O., Ser. A, AMBAC, 6.50%, 5/01/02+ ............... NA $ 15,801,779
AAA 2,905 New Orleans Pub. Impt., G.O., 6.60%, 9/01/02+, FGIC ............... NA 3,177,199
------------
18,978,978
------------
MASSACHUSETTS--16.1%
AAA 2,100 Boston, G.O., Ser. A, 6.50%, 7/01/12, AMBAC ....................... 7/02 at 102 2,287,656
Massachusetts St. Hlth. &Edl. Fac. Auth. Rev.,
AAA 2,000 Ser. C, 6.50%, 7/01/10, FGIC ................................... 7/02 at 102 2,177,960
AAA 5,000 Ser. D, 6.50%, 7/01/10, MBIA ................................... 7/02 at 102 5,444,900
AAA 3,250 Ser. C, 7.25%, 7/01/10, MBIA ................................... 7/00 at 102 3,490,338
Massachusetts St. Hsg. Fin. Agcy., FNMA,
AAA 5,000 Ser. H, 6.75%, 11/15/12 ........................................ 11/03 AT 102 5,418,950
AAA 5,500 Residential Dev., Ser. A, 6.875%, 11/15/11 ..................... 5/02 at 102 5,948,250
AAA 600 Residential Dev., Ser. C, 6.875%, 11/15/11 ..................... 5/02 at 102 651,102
Massachusetts St., G.O.,
AAA 2,350 Ser. D, 6.00%, 7/01/01+, MBIA NA 2,470,188
AAA 7,865 Ser. C, 6.70%, 11/01/04+, FGIC NA 9,006,290
AAA 780 Ser. C, 6.75%, 8/01/01+, AMBAC NA 855,161
AAA 440 Ser. C, 6.75%, 8/01/09, AMBAC .................................. 8/01 at 102 477,461
AAA 7,630 Massachusetts St. Wtr. Res., Ser. B, 6.25%, 11/01/10, MBIA ........ 11/02 at 102 8,296,099
------------
46,524,355
------------
MICHIGAN--3.9%
AAA 2,375 Chippewa Valley, Sch. Bldg. & Site Rev., 6.375%, 5/01/01+, FGIC ... NA 2,555,666
Michigan Mun. Bd. Auth. Rev.,
AAA 900 Ser. A, 6.50%, 11/01/12, MBIA .................................. 11/02 at 102 988,074
AAA 2,040 6.45%, 11/01/07, AMBAC ......................................... 11/04 at 102 2,287,166
AAA 2,050 6.65%, 11/01/09, AMBAC ......................................... 11/04 at 102 2,328,021
AAA 3,000 Western Township Util. Auth. Swr. Dist. Sys. Rev.,
6.50%, 1/01/10, FSA ............................................ 1/02 at 100 3,192,540
------------
11,351,467
------------
MISSISSIPPI--0.7%
AAA 1,800 Harrison Cnty. Waste Wtr. Mgmt., 6.75%, 2/01/11, FGIC ............. 2/01 at 102 1,938,384
------------
NEVADA--7.1%
AAA 4,000 Clark Cnty., G.O., 6.50%, 6/01/02+, AMBAC ......................... NA 4,415,640
AAA 5,215 Clark Cnty. Arpt., 6.25%, 6/01/01+, FGIC .......................... NA 5,525,970
Clark Cnty. Sch. Dist.,
AAA 4,185 6.75%, 12/15/04+, FGIC ......................................... NA 4,813,713
AAA 5,175 7.00%, 6/01/01+, MBIA .......................................... NA 5,634,902
------------
20,390,225
------------
NEW JERSEY--0.7%
AAA 2,000 Hudson Cnty. Correct. Fac., C.O.P., 6.50%, 12/01/11, MBIA ......... 6/02 at 101.5 2,178,820
------------
NEW YORK--11.1%
AAA 4,500 New York City, G.O., Ser. B, 6.95%, 8/15/04+, MBIA ................ NA 5,195,295
New York St. Env. Fac. Corp. P.C.R.,
AAA 6,155 6.70%, 5/15/09 ................................................. 11/04 at 102 7,029,010
AAA 4,965 6.80%, 5/15/10 ................................................. 11/04 at 102 5,688,401
New York St. Medicare Fac., AMBAC,
AAA 9,715 6.60%, 2/15/05+ ................................................ NA 11,164,964
AAA 2,695 6.625%, 2/15/05+ ............................................... NA 3,101,056
------------
32,178,726
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION
AMOUNT CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OHIO--6.0%
Cleveland Wtrwks. Rev., First Mtg., Ser. F, AMBAC,
AAA $ 6,495 6.50%, 1/01/11 ................................................. 1/02 AT 102 $ 7,045,127
AAA 5,505 6.50%, 1/01/02+ ................................................ NA 6,031,278
AAA 3,900 Lucas Cnty. Hosp. Impt. Rev., St. Vincent Med. Ctr.,
6.50%, 8/15/02+, MBIA .......................................... NA 4,255,602
------------
17,332,007
------------
OKLAHOMA--2.1%
AAA 5,725 Oklahoma City Wtr. Util. Tr. Wtr. & Sewer Rev., Ser. B,
6.375%, 7/01/12, MBIA .......................................... 7/02 at 100 6,134,223
------------
PENNSYLVANIA--6.0%
AAA 5,000 Dauphin Cnty. Gen. Auth. Rev., 6.25%, 7/01/08, MBIA ............... 7/02 at 102 5,390,200
AAA 2,100 Philadelphia Wtr. &Waste Rev., Ser. A, 5.625%, 6/15/08, AMBAC ..... No Opt. Call 2,284,989
AAA 6,005 Pittsburgh, G.O., Ser. D, 6.00%, 9/01/10, AMBAC ................... 9/02 at 102 6,437,000
AAA 3,000 Pittsburgh Wtr. & Swr., 6.75%, 9/01/01+, FGIC ..................... NA 3,290,130
------------
17,402,319
------------
RHODE ISLAND--4.6%
AAA 2,390 Rhode Island Clean Wtr. Protn. Fin. Agcy., Wtr. P.C.R.,
Revolving Fd. Pooled Ln., Issue A, 6.70%, 10/01/10, MBIA ....... 10/02 at 102 2,644,726
AAA 10,000 Rhode Island St. Pub. Bldgs. Auth., St. Pub. Proj. Rev., Ser. A,
6.75%, 2/01/00+, AMBAC ......................................... NA 10,614,500
------------
13,259,226
SOUTH CAROLINA--8.6%
Piedmont Mun. Pwr. Agcy. Elec. Rev.,
AAA 14,925 6.30%, 1/01/11, MBIA ........................................... 1/03 at 102 16,326,905
AAA 7,900 6.50%, 1/01/11, FGIC ........................................... 1/01 at 102 8,447,707
------------
24,774,612
------------
TEXAS--15.6%
Austin Util. Sys. Rev. Comb., Ser A., FGIC,
AAA 7,475 6.00%, 5/15/00+ ................................................ NA 7,750,603
AAA 1,055 6.00%, 5/15/10 ................................................. 5/00 at 100 1,087,399
AAA 1,580 Dallas Cnty. Road Imp., G.O., 5.625%, 8/15/10 ..................... 8/01 at 100 1,631,856
AAA 2,500 Dallas Ft. Worth Regl. Arpt. Rev., Ser. A, 7.375%, 11/01/10, FGIC . 5/04 at 102 2,912,250
AAA 8,000 El Paso Impt. Auth. Rev., G.O., Ser. A, 6.375%, 8/15/10, FGIC ..... No Opt. Call 8,552,640
Harris Cnty., Toll Road, FGIC,
AAA 2,585 Ser. B, Zero Coupon, 8/15/08 ................................... No Opt. Call 1,622,656
AAA 6,310 Sr. Lien, Ser. A, 6.50%, 8/15/02+ .............................. NA 6,978,608
AAA 4,775 Sr. Lien, Ser. A, 6.50%, 8/15/11 ............................... 8/02 at 102 5,236,886
AAA 10,440 Houston Wtr. & Swr. Sys., Ser. C, Zero Coupon, 12/01/10, AMBAC .... No Opt. Call 5,748,890
AAA 1,840 North Texas Mun. Wtr. Dist., 6.50%, 6/01/09, MBIA ................. 6/03 at 100 2,014,818
AAA 1,500 Texas Mun. Pwr. Agcy., Ser. A, 6.75%, 9/01/12, AMBAC .............. 9/01 at 102 1,624,125
------------
45,160,731
------------
UTAH--1.2%
AAA 1,450 Salt Lake City Mun. Bldg. Lease, 6.15%, 10/01/10, MBIA ............ 10/04 at 101 1,586,228
AAA 3,175 Salt Lake City Wtr. Conservancy, Zero Coupon, 10/01/10, AMBAC ..... No Opt. Call 1,768,761
------------
3,354,989
------------
VIRGINIA--3.6%
Peninsula Port. Auth., Riverside Hlth. Sys., MBIA,
AAA 6,000 Proj. A, 6.625%, 7/01/10 ....................................... 7/02 at 102 6,591,000
AAA 3,380 Proj. B, 6.625%, 7/01/10 ....................................... 7/02 at 102 3,712,930
------------
10,303,930
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION
AMOUNT CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS** (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WASHINGTON--5.6%
AAA $ 4,650 Port of Seattle Rev., 6.60%, 8/01/02+, MBIA ....................... NA $ 5,156,571
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 12,905 Zero Coupon, 7/01/10, MBIA ..................................... No Opt. Call 7,232,994
AAA 3,500 Nuclear Proj. No. 2, Ser. A, 7.00%, 7/01/00+, FGIC ............. NA 3,766,735
------------
16,156,300
------------
WISCONSIN--0.7%
AAA 2,000 Wisconsin St. Hlth. & Edl. Facs. Auth. Rev.,
Wausau Hosp. Inc., Ser. A, 6.625%, 2/15/01+, AMBAC ............. NA 2,162,180
------------
TOTAL INVESTMENTS--142.7% (cost $371,787,757) ..................... 412,007,820
Other assets in excess of liabilities--2.3% ....................... 6,673,828
Liquidation value of preferred stock--(45.0)% ..................... (130,000,000)
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100% ................ $288,681,648
============
</TABLE>
- ---------------
* Rating: Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** Option call provisions: date (month/year) and price of the earliest call or
redemption. There may be other call provisions at varying prices at later
dates.
+ This bond is pre-refunded. See glossary for definition.
++ This bond contains embedded caps. See glossary for definition.
- --------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
AMBAC -- American Municipal Bond Assurance Corporation
CONNIE LEE -- College Construction Loan Insurance Association
C.O.P. -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance, Inc.
G.O. -- General Obligation Bond
MBIA -- Municipal Bond Insurance Association
P.C.R. -- Pollution Control Revenue
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $371,787,757)
(Note 1) .............................. $412,007,820
Interest receivable ..................... 7,569,265
Prepaid assets .......................... 32,467
------------
419,609,552
------------
LIABILITIES
Due to custodian ........................ 553,707
Investment Advisory fee payable (Note 2) 120,846
Dividends payable--preferred stock ...... 101,669
Administration fee payable (Note 2) ..... 34,528
Other accrued expenses .................. 117,154
------------
927,904
------------
NET INVESTMENT ASSETS ................... $418,681,648
============
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 ... 8,720,935
Accumulated net realized loss ......... (351,894)
Net unrealized appreciation ........... 40,220,063
------------
Net investment assets, June 30, 1998 .. $418,681,648
============
Net assets applicable to
common shareholders ................. $288,681,648
============
Net asset value per common share:
($288,681,648 / 25,885,639 shares of
common stock issued and outstanding) .. $11.15
======
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned ............ $12,271,967
-----------
Expenses
Investment advisory ..................... 730,210
Administration .......................... 208,631
Auction agent ........................... 161,000
Custodian ............................... 53,000
Reports to shareholders ................. 42,000
Directors ............................... 27,000
Audit ................................... 21,000
Transfer agent .......................... 16,000
Legal ................................... 7,000
Miscellaneous ........................... 82,566
-----------
Total expenses .......................... 1,348,407
-----------
Net investment income ..................... 10,923,560
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain on investments .......... 16,839
Net change in unrealized appreciation on
investments ............................. (1,856,728)
-----------
Net loss on investments ................... (1,839,889)
-----------
NET INCREASE IN NET INVESTMENT
ASSETS RESULTING FROM OPERATIONS ........ $ 9,083,671
===========
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
Operations:
Net investment income ........................................................... $ 10,923,560 $ 21,724,960
Net realized gain (loss) on investments ......................................... 16,839 (45,924)
Net change in unrealized appreciation on investments ............................ (1,856,728) 7,582,696
------------ ------------
Net increase in net investment assets resulting from operations ................. 9,083,671 29,261,732
------------ ------------
Dividends:
To common shareholders from net investment income ............................... (8,088,608) (16,177,257)
To preferred shareholders from net investment income ............................ (2,275,106) (4,592,916)
------------ ------------
(10,363,714) (20,770,173)
------------ ------------
Total increase (decrease) ..................................................... (1,280,043) 8,491,559
------------ ------------
NET INVESTMENT ASSETS
Beginning of period ............................................................... 419,961,691 411,470,132
------------ ------------
End of period ..................................................................... $418,681,648 $419,961,691
============ ============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------
1998 1997 1996 1995 1994 1993
----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $ 11.20 $ 10.87 $ 11.02 $ 9.73 $ 11.18 $ 9.93
------- ------- ------- ------ ------- ------
Net investment income ......................... 0.42 0.84 0.83 0.84 0.82 0.83
Net realized and unrealized gain (loss) on
investments ................................. (0.07) 0.29 (0.18) 1.27 (1.48) 1.18
------- ------- ------- ------ ------- ------
Net increase (decrease) from
investment operations ......................... 0.35 1.13 0.65 2.11 (0.66) 2.01
------- ------- ------- ------ ------- ------
Dividends from net investment income to:
Preferred shareholders ........................ (0.09) (0.18) (0.18) (0.20) (0.14) (0.12)
Common shareholders ........................... (0.31) (0.62) (0.62) (0.62) (0.62) (0.63)
Distributions from net realized
gain on investments to:
Preferred shareholders ........................ -- -- -- -- (0.01) **
Common shareholders ........................... -- -- -- -- (0.02) (0.01)
------- ------- ------- ------ ------- ------
Total dividends and distributions .............. (0.40) (0.80) (0.80) (0.82) (0.79) (0.76)
------- ------- ------- ------ ------- ------
Net asset value, end of period* ................. $ 11.15 $ 11.20 $ 10.87 $ 11.02 $ 9.73 $ 11.18
======= ======= ======= ======= ====== =======
Market value, end of period* .................... $ 11.06 $ 11.00 $ 10.13 $ 10.00 $ 8.50 $ 10.50
======= ======= ======= ======= ====== =======
TOTAL INVESTMENT RETURN+ ........................ 3.47% 15.22% 7.59% 25.31% (13.38%) 12.99%
======= ======= ======= ======= ====== =======
RATIOSTOAVERAGENETASSETS OF
COMMON SHAREHOLDERS:++
Expenses ........................................ 0.94%+++ 0.94% 0.97% 0.96% 1.04% 0.96%
Net investment income before preferred
stock dividends ............................... 7.61%+++ 7.66% 7.66% 7.97% 7.99% 7.75%
Preferred stock dividends ....................... 1.59%+++ 1.62% 1.61% 1.87% 1.44% 1.15%
Net investment income available to
common shareholders ........................... 6.02%+++ 6.04% 6.05% 6.10% 6.55% 6.60%
SUPPLEMENTAL DATA:
Average net assets of common shareholders
(in thousands) ................................ $289,568 $283,531 $281,521 $272,868 $265,851 $275,162
Portfolio turnover 0% 1% 1% 1% 31% 1%
Net assets of common shareholders,
end of period (in thousands) .................. $288,682 $289,962 $281,470 $285,226 $251,856 $289,449
Preferred stock outstanding (in thousands) ...... $130,000 $130,000 $130,000 $130,000 $130,000 $130,000
Asset coverage per share of preferred stock,
end of period# ................................ $ 80,516 $ 80,762 $ 79,129 $ 79,851 $146,868 $161,327
</TABLE>
- ------------------
* Net asset value and market value are published in THE WALL STREET JOURNAL
each Monday. ** Actual amount paid to preferred shareholders was $0.0013
per common share.
# A stock split occurred on July 24, 1995 (Note 4).
+ Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends 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.
++ Ratios calculated on the basis of income and expenses applicable to both
the common and preferred shares, and preferred stock dividends, relative to
the average net assets of common shareholders.
+++ Annualized.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each of the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's common shares.
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION & The BlackRock Insured Municipal Term Trust Inc.
ACCOUNTING (the "Trust"), was organ- ized in Maryland on
POLICIES December 23, 1991 as a diversified, closed-end
management investment company. The Trust's
investment objective is to manage a diversified portfolio of high quality
securities that will return $10 per share to investors on or about December 31,
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.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes original issue discount or amortizes
premium on securities purchased using the interest method.
FEDERAL INCOME TAXES: For federal income tax purposes, the Trust is treated as a
separate taxpaying entity. It is the intent of the Trust to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net income to shareholders. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, no federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Net long-term
capital gains if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS The Trust has an Investment Advisory Agreement
with BlackRock Financial Management, Inc. (the
"Adviser"), a wholly-owned corporate subsidiary of
BlackRock Advisors, Inc., an indirect majority-owned subsidiary of PNC Bank,
N.A., and an Administration Agreement with Mitchell Hutchins Asset Management
Inc. (the "Administrator"), a wholly-owned subsidiary of PaineWebber
Incorporated.
The investment 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.
NOTE 3. PORTFOLIO Purchases and sales of investment securities,
SECURITIES other than short-term investments, for the six
months ended June 30, 1998 aggregated $1,611,045
and $3,475,205, respectively.
12
<PAGE>
The federal income tax basis of the Trust's investments at June 30, 1998 was
substantially the same as the basis for financial reporting, and accordingly,
gross and net unrealized appreciation for federal income tax purposes was
$40,220,063.
For federal income tax purposes, the Trust had a capital loss carryforward at
December 31, 1997 of $368,733 of which $322,809 will expire in 2003 and $45,924
will expire in 2004. 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, 1998, the Adviser
owned 10,583 shares. As of June 30, 1998, 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. 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.
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 2.40% to 4.10% for the six months ended June 30,
1998.
The Trust may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at $25,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Trust as set forth in the
Articles of Incorporation are not satisfied.
The holders of Preferred Stock have voting rights equal to the holders of
common stock (one vote per share) and will vote together with holders of shares
of common stock as a single class. However, holders of Preferred Stock are also
entitled to elect two of the Trust's directors. In addition, the Investment
Company Act of 1940 requires that along with approval by stockholders that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares, and (b) take any action requiring a vote of security holders including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
NOTE 5. DIVIDENDS Subsequent to June 30, 1998, the Board of
Directors of the Trust declared dividends from
undistributed earnings of $0.05208 per common share payable July 31, 1998 to
shareholders of record on July 15, 1998.
For the period July 1, 1998 through July 31, 1998, dividends declared on
preferred shares totalled $327,704 in aggregate for the two outstanding
preferred share series.
13
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders will automatically have all distributions of dividends and capital
gains reinvested by State Street Bank and Trust Company (the "Plan Agent") in
Trust shares pursuant to the Plan unless an election is made to receive such
amounts in cash. The Plan Agent will affect purchases of shares under the Plan
in the open market. Shareholders who elect not to participate in the Plan will
receive all distributions in cash paid by check in United States dollars mailed
directly to the shareholders of record (or if the shares are held in street or
other nominee name, then to the nominee) by the transfer agent, as dividend
disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market, on the American
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with 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 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 by the Plan
Agent upon at least 90 days' written notice to all shareholders of the Trust.
The Plan may be terminated by the Plan Agent or the Trust upon at least 30 days
written notice to all shareholders of the Trust. All correspondence concerning
the Plan should be directed to the Plan Agent at (800) 699-1BFM. The addresses
are on the front of this report.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives
or policies that have not been approved by the shareholders or to its charter or
by-laws or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 6, 1998 to vote on
the following matters:
(1) To elect three Directors as follows:
<TABLE>
<CAPTION>
DIRECTOR CLASS TERM EXPIRING
-------- ----- ----- -------
<S> <C> <C> <C>
Andrew F. Brimmer ........................................... III 3 years 2001
Kent Dixon .................................................. III 3 years 2001
Laurence D. Fink ............................................ III 3 years 2001
</TABLE>
Directors whose term of office continues beyond this meeting are
Richard E. Cavanagh, Frank J. Fabozzi, James Grosfeld, James Clayburn
La Force, Jr., Walter Mondale and Ralph L. Schlosstein.
(2) To ratify the selection of Deloitte & Touche LLP as independent
public accountants of the Trust for the fiscal year ending December
31, 1998. Shareholders elected the three Directors and ratified the
selection of Deloitte & Touche LLP. The results of the voting was as
follows:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS
-------- ----------- ----------
<S> <C> <C> <C>
Andrew F. Brimmer ........................................ 22,805,935 0 276,201
Kent Dixon ............................................... 22,830,933 0 251,203
Laurence D. Fink ......................................... 22,843,305 0 238,831
Ratification of Deloitte & Touche LLP .................... 22,566,017 115,619 400,500
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock Insured Municipal Term Trust's investment objective is to provide
current income exempt from regular Federal income tax and to return $10 per
share (the initial public offering price per share) to investors on or about
December 31, 2010.
WHO MANAGES THE TRUST?
BlackRock Financial Management, Inc. ("BlackRock" or the "Adviser") is an
SEC-registered investment adviser. BlackRock and its affiliates currently manage
over $119 billion on behalf of taxable and tax-exempt clients worldwide.
Strategies include fixed income, equity and cash and may incorporate both
domestic and international securities. Domestic fixed-income strategies utilize
the government, mortgage, corporate and municipal bond sectors. BlackRock
manages twenty-one closed-end funds that are traded on either the New York or
American stock exchanges, and a $23 billion family of open-end and equity bond
funds. Current institutional clients number 334, domiciled in the United States
and overseas.
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.
15
<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.
INVESTMENT GRADE MUNICIPAL OBLIGATIONS. 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.
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.
ALTERNATIVE MINIMUM TAX (AMT). The Trust may invest in securities subject to
alternative minimum tax. The Trust currently holds no AMT securities.
16
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSUREDMUNICIPAL TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
CLOSED-END FUND: Investment vehicle which initially offers a
fixed number of shares and trades on a stock
exchange. The fund invests in a portfolio of
securities in accordance with its stated
investment objectives and policies.
DISCOUNT: When a fund's net asset value is greater than
its stock price, the fund is said to be
trading at a discount.
DIVIDEND: Income generated by securities in a portfolio
and distributed to shareholders after the
deduction of expenses. This Trust declares
and pays dividends on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all dividends
and distributions of 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.
17
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
TAXABLE TRUSTS
- ---------------------------------------------------------------------------------------------------------------------------
MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
---------- ------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
TERM TRUSTS
The BlackRock 1998 Term Trust Inc. BBT 12/98
The BlackRock 1999 Term Trust Inc. BNN 12/99
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BLK 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
TAX-EXEMPT TRUSTS
- ---------------------------------------------------------------------------------------------------------------------------
MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
---------- ------
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE DO NOT HESITATE TO CALL
BLACKROCK AT (800) 227-7BFM (7236) OR CONSULT WITH YOUR FINANCIAL ADVISOR.
18
<PAGE>
- --------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------
BlackRock Financial Management, Inc. ("BlackRock") is an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $119
billion on behalf of taxable and tax-exempt clients worldwide. Strategies
include fixed income, equity and cash and may incorporate both domestic and
international securities. BlackRock manages twenty-one closed-end funds that are
traded on either the New York or American stock exchanges, and a $23 billion
family of open-end equity and bond funds. Current institutional clients number
334, domiciled in the United States and overseas.
BlackRock's fixed income product was introduced in 1988 by a team of
highly seasoned fixed income professionals. These professionals had extensive
experience creating, analyzing and trading a variety of fixed income
instruments, including the most complex structured securities. In fact, several
individuals at BlackRock were responsible for developing many of the major
innovations in the mortgage-backed and asset-backed securities markets,
including the creation of the first CMO, the floating rate CMO, the
senior/subordinated pass-through and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
emphasis it places on the development of proprietary analytical capabilities.
Over one quarter of the firm's professionals is dedicated to the design,
maintenance and use of these systems, which are not otherwise available to
investors. BlackRock's proprietary analytical tools are used for evaluating, and
designing fixed income investment strategies for client portfolios. Securities
purchased include mortgages, corporate bonds, municipal bonds and a variety of
hedging instruments.
BlackRock has developed investment products that respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. In fact, BlackRock introduced the first closed-end mortgage fund, the
first taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
Currently, BlackRock's closed-end funds have dividend reinvestment plans, which
are designed to provide ongoing demand for the stock in the secondary market.
BlackRock manages a wide range of investment vehicles, each having specific
investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
that you may have about your BlackRock funds and we thank you for the continued
trust that you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
<PAGE>
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BLACKROCK
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DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Kevin Klingert, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
Karen H. Sabath, SECRETARY
INVESTMENT 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) 699-1BFM
AUCTION AGENT
Bankers Trust Company
Four Albany Street
New York, NY 10006
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of June 30, 1998 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 Trust shares.
THE BLACKROCK INSURED MUNICIPAL TERM TRUST INC.
c/o Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY10019
(800) 227-7BFM
[Logo] Printed on recycled paper 092474 10 5
092474 20 4
092474 30 3
THE BLACKROCK
INSURED MUNICIPAL
TERM TRUST INC.
=======================
SEMI-ANNUAL REPORT
JUNE 30, 1998
[GRAPHIC}
