--------------------------------------------------------------------------------
THE BLACKROCK 2001 TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
--------------------------------------------------------------------------------
July 14, 1995
Dear Shareholder:
The fixed income markets experienced both extremely bearish and bullish
sentiment during the period between January 1, 1995 and June 30, 1995.
Closed-end bond funds responded to the broader markets with similar volatility
and hit all-time low stock prices during the fourth quarter of 1994. These low
levels of stock valuation were further eroded by an unusually high degree of
tax-related selling; however, closed-end bond funds have staged a significant
rebound during the first six months of 1995. The U.S. economy appears to have
responded to the Fed's vigilance toward inflation with low absolute levels of
inflation and moderate rates of growth. This scenario is suggestive of a "soft
landing" for the economy, which has sparked a significant Treasury market rally
and resulted in overall strength in most fixed income markets.
BlackRock Financial Management, Inc., your Trust's investment adviser, is
pleased to report that its acquisition by PNC Bank, N.A. ("PNC") was officially
completed on February 28, 1995. PNC is a commercial bank whose principal office
is in Pittsburgh, Pennsylvania and is wholly-owned by PNC Bank Corp., a bank
holding company. The merger was structured to assure continuity of performance
and service through stability of our organization. BlackRock retains its name
and continues to operate out of its New York office. All members of BlackRock's
management team have signed long-term employment contracts and will continue to
be responsible for managing BlackRock's business so that shareholders will
notice no changes in the management of the Trust.
You will note several enhancements to the Trust's annual report designed to
improve the report's usefulness to you. The letter to shareholders which reviews
the markets and Trust's investment strategy over the annual period is provided
by the Trust's portfolio managers. In addition, we have included an investment
summary section which provides a synopsis of the Trust's investment objectives
and guidelines and reviews its investment strategy. We appreciate your
investment in The BlackRock 2001 Term Trust Inc. and look forward to continuing
to serve your financial needs.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 14, 1995
Dear Shareholder:
The dramatic rally in the capital markets changed the market landscape for
fixed income investors over the fiscal year ended June 30, 1995. As we present
this annual report for The BlackRock 2001 Term Trust Inc. (BLK or "the Trust"),
we are pleased to review the strong performance of the Trust, from both a Net
Asset Value (NAV) and stock price perspective as well as to discuss the
opportunities available to the Trust in the current market environment.
The Trust's shares are traded on the New York Stock Exchange under the
symbol BLK. BLK is a diversified, closed-end bond fund whose investment
objective is to manage a portfolio of investment grade fixed income securities
that will return $10 per share (the initial offering price) to investors on or
about June 30, 2001 while providing high monthly income. As of the last fiscal
period-end, the Trust's NAV has appreciated in price by 4.81%, having ranged
from $8.04 to $8.78. BlackRock believes that the Trust is well positioned to
meet its targeted termination value.
It is important to evaluate the performance of the Trust in the context of
the closed-end fund marketplace. Investors who endured the market slump of 1994
and opted to "Hold" or acquire more shares of the Trust during the tumultuous
last months of the year witnessed a substantial increase in both NAV and share
price during the first half of 1995 as the market environment for fixed income
securities improved. As the closed-end bond market continues to lag the overall
market rally, many bond funds continue to trade at discounts despite the
appreciation of both NAV and stock price since the lows of last year. As the NAV
of the Trust draws closer to its termination value, a narrowing of its stock
price discount to NAV is expected to reflect such NAV growth.
The Fixed Income Markets
As the economy showed signs of a slowdown early this year, market
participants endlessly debated the direction of monetary policy and hotly
contested the likelihood that a "soft landing" for the economy had been
achieved. As economic reports grew increasingly pessimistic, the specter of
inflation diminished. With investor confidence in the value of fixed income
securities renewed, market demand increasingly accelerated.
While attuned to the possibility of a rejuvenated economy during the third
and fourth quarters of 1995 and the possibility of accompanying inflationary
pressure, BlackRock believes that the fixed income markets offer many pockets of
value to investors in the coming months. We believe that the Federal Reserve
will remain biased toward ease, which was echoed by Mr. Greenspan when he
acknowledged a better inflation environment by commenting in June that the
forces driving inflation "are very clearly easing". As such, BlackRock expects
continued solid performance of fixed income securities and continued decline in
interest rates, albeit modestly, over the balance of the year.
While fixed income markets, in general, have performed exceptionally well
over the last six months, falling yields and sustained high levels of interest
rate volatility together have created a less favorable environment for investors
in many mortgage-backed securities relative to other fixed income sectors. Due
to the ability of mortgage holders to refinance their mortgage at any time, the
"optionality of mortgage-backed securities", and the experience of investors who
witnessed unprecedented levels of mortgage refinancing in 1992 and 1993, lower
levels of interest rates have ignited fears of a similar acceleration in
prepayments. In some cases mortgage-backed security prices built in fast
prepayment expectations far in excess of actual prepayment experience, which
remained slow for the first months of the year. This presented selected
purchasing opportunities in those sectors of the mortgage market that are less
vulnerable to prepayment risk and reduce the likelihood of reinvesting cash
proceeds at lower yields.
Selected areas of the mortgage market continue to hold good relative value
for investors, even in light of the less favorable environment as described
above. These sectors include issues that have more stable cash flows and are,
therefore, less exposed to high levels of interest rate volatility and
accelerated prepayments. For example, seasoned mortgage pass-throughs are
fixed-rate issues which are relatively older than other pools on the market.
Because they have weathered several refinancing cycles, prepayments on these
securities are expected to be more predictable and to accelerate less in a
declining rate environment. In addition, five- and seven-year "balloon"
mortgages are attractive. While a security backed by a balloon
2
<PAGE>
mortgage amortizes in the same way as a thirty-year generic mortgage loan, the
balloon mortgage pays down entirely on the balloon date, e.g., five or seven
years after issue. This shorter time horizon to maturity significantly increases
the predictability of its income stream.
As demand increased for fixed income securities which offered strong cash
flow stability, corporate securities outperformed their counterparts in the
mortgage sector over the last five months, although new issuance has increased
supply. In particular, corporates which do not give the issuer the right to
redeem such securities prior to their maturity dates (non-callable) benefited
from their reduced exposure to volatility and continued strong corporate profits
(as evidenced by the astounding strength of the stock market). While a slowdown
in earnings and the prospects of a slower economy may put pressure on the
corporate market, significant demand from investors who seek to avoid the
volatility of mortgage product is expected to continue. Therefore, relatively
defensive purchases in the finance and non-cyclical industrial (e.g. food and
chemical) sectors which offer high credit quality and reduced exposure to
slowing economic growth appear attractive at this time.
The Trust's Portfolio and Investment Strategy
Reflecting the current and projected earnings level of the Trust's
portfolio, the Board of Directors for Trust voted at the end of June to reduce
the Trust's monthly dividend to $0.0375 per share from $0.04792 per share
effective with the July 1995 dividend. Based on the current stock price of
$7.38, this represents a current yield of 6.10% on an annualized basis. The
dividend is being set in accordance with the Trust's investment objective to
manage a portfolio of investment grade fixed income securities that will return
$10 per share (the initial offering price) to investors on or about June 30,
2001 while providing high monthly income.
Over the life of a term trust, dividends are expected to decline as assets
are reinvested in shorter maturity securities. Two other factors have put
pressure on the dividends of the Trust: (i) the bond market rally, which
resulted in a reduction in bond yields and (ii) a flatter yield curve, which has
resulted in a sharp reduction in the amount of income which the Trust earns from
leverage.
The Trust is now utilizing its broadened investment authority to purchase
investment grade corporate bonds, capturing opportunities to invest in
securities with a higher degree of cash flow stability and call protection. As
such restructuring develops over the remaining life of the Trust, the Trust
expects to own securities that have more cash flow predictability in a wide
array of interest rate environments versus its existing portfolio of prepayment
sensitive securities.
The current investment strategy for the Trust emphasizes the following
themes:
* Continue to target securities consistent with the Trust's maturity
date
-Increase allocation to securities which mature on or before the
termination date
* De-emphasize mortgage securities with highest exposure to accelerating
prepayments and interest rate volatility
-Maintain minimal exposure to mortgage derivatives which, although
high yielding, have very unpredictable cash flows and have very
little liquidity in the current market
-Continue to invest in the mortgage securities where yield advantage
provides adequate compensation for cash flow risk
-Focus investments on seasoned pass-throughs which have weathered
several refinancing cycles
-Increase allocation to multifamily mortgage securities with
"balloon" dates to mitigate cash flow variability
* Increase allocation to corporate bonds upon opportunity
The following chart compares the Trust's portfolio composition as of June
30, 1995 and June 30, 1994. Consistent with the above themes, BlackRock modified
the Trust's allocation by adding to its adjustable rate mortgages and corporate
bond holdings as it decreased its taxable zero coupon holdings.
3
<PAGE>
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
--------------------------------------------------------------------------------
Composition June 30, 1995 June 30, 1994
--------------------------------------------------------------------------------
Mortgage Pass-Throughs 33% 36%
--------------------------------------------------------------------------------
Taxable Zero Coupon Bonds 23% 28%
--------------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 15% 13%
--------------------------------------------------------------------------------
U.S. Treasury Securities 10% 7%
--------------------------------------------------------------------------------
Adjustable Rate Mortgages 8% 2%
--------------------------------------------------------------------------------
Stripped Mortgage-Backed Securities 4% 1%
--------------------------------------------------------------------------------
Corporate Bonds 2% 0%
--------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 2% 3%
--------------------------------------------------------------------------------
Municipal Bonds 1% 3%
--------------------------------------------------------------------------------
CMO Residuals 1% 0%
--------------------------------------------------------------------------------
Non-Agency Multiple Class Mortgage Pass-Throughs 1% 1%
--------------------------------------------------------------------------------
Asset-Backed Securities 0% 2%
--------------------------------------------------------------------------------
Whole Loan Pass-Through Securities 0% 4%
--------------------------------------------------------------------------------
We look forward to managing the Trust in the coming months to benefit from
the many opportunities available to investors in the investment grade fixed
income markets as well as to position the Trust such that its exposure to
interest rate volatility is reduced.
We thank you for your investment in The BlackRock 2001 Term Trust Inc. and
appreciate your patience during this trying period. Please feel free to contact
us at (800) 227-7BFM (7236) if you have specific questions which were not
addressed in this annual report.
Sincerely,
Robert S. Kapito Keith T. Anderson
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
--------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BLK
--------------------------------------------------------------------------------
Initial Offering Date: July 23, 1992
--------------------------------------------------------------------------------
Closing Stock Price as of 6/30/95: $7.50
--------------------------------------------------------------------------------
Net Asset Value as of 6/30/95: $8.72
--------------------------------------------------------------------------------
Yield on Closing Stock Price as of 6/30/95 ($7.50)1: 6.00%
--------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.0375 3
--------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.45 3
--------------------------------------------------------------------------------
------------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2Distribution not constant and is subject to change.
3New dividend rate effective with July 1995 payment.
4
<PAGE>
(Left column)
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Portfolio of Investments
June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM INVESTMENTS-143.4%
Mortgage Pass-Throughs-54.6%
Federal Home Loan Mortgage
Corporation,
$ 46,494 7.00%, 12/01/07 - 06/01/09,
15 year.................................... $ 46,594,929
4,379 7.50%, 07/01/13 - 11/01/23................... 4,698,427
16,485 8.00%, 01/01/23 - 03/01/23................. 16,794,412
13,019 8.50%, 05/01/16 - 10/01/24................. 13,459,889
Federal National Mortgage
Association,
8,501 6.13%, 11/25/03, Series
1993-M2, Class M2-H........................ 8,238,433
127,000@@ 7.00%, 01/01/99, 7 Year...................... 127,952,500
34,350 7.00%, 12/01/07 - 07/01/24................... 33,759,965
12,500 7.50%, 01/01/99, 7 Year...................... 12,707,031
9,972\d 7.50%, 09/01/01,
7 Year Multifamily......................... 10,130,733
19,979 7.50%, 12/01/21 - 10/01/23................... 20,035,408
6,651 7.66%, 01/01/01,
7 Year Multifamily......................... 6,830,147
11,541\d 7.79%, 02/01/01,
7 Year Multifamily......................... 11,926,992
1,705 7.87%, 11/01/01,
7 Year Multifamily......................... 1,781,112
15,321 8.00%, 03/01/01,
7 Year Multifamily......................... 15,987,376
4,051 8.00%, 09/01/22 - 12/01/23................... 4,126,104
3,774 8.49%, 04/01/01,
7 Year Multifamily......................... 3,998,879
14,258 8.50%, 06/01/06 - 10/01/09................... 14,764,372
2,481 8.69%, 04/01/01,
7 Year Multifamily......................... 2,646,624
1,267 9.00%, 02/01/02, 7 Year...................... 1,304,244
13,278 9.00%, 04/25/25, Series
1995-W3, Class W3-A........................ 12,731,274
2,810 9.29%, 09/01/01,
7 Year Multifamily......................... 3,057,586
Government National Mortgage
Association,
8,676 6.50%, 05/20/25,
1 Year CMT (ARM)........................... 8,779,346
134,557\d 7.00%, 10/20/24 - 06/20/25,
1 Year CMT (ARM)........................... 137,332,874
23,456 7.00%, 12/15/07 - 06/15/24................... 23,082,452
11,646 8.00%, 01/15/23 - 06/15/24................... 11,922,287
</TABLE>
(Right column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Government National Mortgage
Association,
$ 74,525 9.00%, 04/15/16 - 10/20/19................... $ 78,686,989
26,841 9.50%, 03/15/16 - 10/15/21................... 28,547,277
--------------
676,294,468
--------------
Multiple Class Mortgage
Pass-Throughs-23.6%
Collateralized Mortgage Securities
Corporation,
58 Series 91-9, Class M,
11/20/21 (I)............................... 745,864
776 Series F, Class F-4, 11/01/15................ 832,900
2,386 Countrywide Funding
Corporation, Series 1994-I,
Class A-5, 07/25/09.......................... 2,318,632
Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation
Certificates,
96 Series 113, Class 113-N,
05/15/21 (I)............................... 2,488,875
135 Series 181, Class 181-F,
08/15/21 (I)............................... 3,172,500
76 Series 1018, Class 1018-I,
11/15/20 (I)............................... 2,360,025
23 Series 1125, Class 1125-F,
08/15/21 (I)............................... 520,718
4,000 Series 1161, Class 1161-H,
11/15/20................................... 4,131,240
15,334 Series 1184, Class 1184-G,
04/15/20................................... 16,009,616
31 Series 1189, Class 1189-I,
01/15/22 (I)............................... 755,150
31 Series 1190, Class 1190-V,
01/15/22 (I)............................... 919,839
27,006 Series 1261, Class 1261-H,
08/15/19................................... 27,748,926
15,794 Series 1264, Class 1264-GA,
01/15/21................................... 16,549,111
50 Series 1274, Class 1274-Y,
05/15/22 (I)............................... 1,237,473
52 Series 1283, Class 1283-X,
06/15/22 (I)............................... 1,294,204
12,556 Series 1376, Class 1376-I,
10/15/03................................... 13,062,132
12,450 Series 1382, Class 1382-G,
09/15/19................................... 12,294,375
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
(Left column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Multiple Class Mortgage
Pass-Throughs (cont'd)
Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation
Certificates,
$ 575 Series 1382, Class 1382-LB,
10/15/22 (I)............................... $ 5,254,664
165 Series 1404, Class 1404-E,
01/15/06 (I)............................... 2,789,312
30 Series 1418, Class 1418-K,
06/15/22 (I)............................... 2,038,428
2,529 Series 1544, Class 1544-TM,
07/15/08 (ARM)............................. 2,352,154
42,760@ Series 1696, Class 1696-B,
11/15/23 (P)............................... 17,745,311
80 Series G002, Class G002-N,
03/25/22 (I)............................... 3,260,000
Federal National Mortgage
Association, REMIC
Pass-Through Certificates,
31 Trust 1990-76, Class 76-N,
07/25/20 (I)............................... 866,960
41 Trust 1990-106, Class 106-K,
09/25/20 (I)............................... 881,482
5,235 Trust 1990-144, Class 144-W,
12/25/20................................... 5,901,774
12,000 Trust 1991-9, Class 9-J,
02/25/06................................... 12,491,160
194 Trust 1991-11, Class 11-E,
02/25/21 (I)............................... 5,478,898
40 Trust 1991-17, Class 17-H,
03/25/21 (I)............................... 998,598
18 Trust 1991-29, Class 29-J,
04/25/21 (I)............................... 500,099
75 Trust 1991-40, Class 40-K,
05/25/21 (I)............................... 1,434,151
54 Trust 1991-80, Class 80-Q,
07/25/21 (I)............................... 1,323,904
54 Trust 1991-113, Class 113-H,
09/25/21 (I)............................... 2,252,143
69 Trust 1991-160, Class 160-PM,
12/25/21 (I)............................... 1,720,594
50 Trust 1991-164, Class 164-PM,
12/25/21 (I)............................... 1,966,250
924 Trust 1991-167, Class 167-B,
10/25/17 (P)............................... 441,731
15,000 Trust 1992-43, Class 43-E,
04/25/22................................... 15,135,900
</TABLE>
(Right column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Federal National Mortgage
Association, REMIC Pass-
Through Certificates,
$ 10,000 Trust 1992-122, Class 122-PJ,
06/25/19................................... $ 10,387,500
110 Trust 1992-131, Class 131-JC,
06/25/21 (I)............................... 3,767,500
20,567 Trust 1992-143, Class 143-H,
08/25/19................................... 20,637,211
400 Trust 1992-180, Class 180-MA,
10/25/22 (I)............................... 14,716,114
8,075@ Trust 1992-G41, Class G41-H,
01/25/19................................... 8,165,957
18,484 Trust 1992-G45, Class G45-B,
08/25/22 (I)............................... 4,205,202
1,800 Trust 1993-71, Class 71-PG,
07/25/07................................... 1,755,888
4,636 Trust 1993-128, Class 128-B,
07/25/23 (P)............................... 3,905,830
14,350\d\d Trust 1993-152, Class 152-D,
08/25/23 (P)............................... 10,645,835
8,207 Trust 1994-23, Class 23-SC,
08/25/04................................... 6,975,950
24,473 Trust 1994-61, Class 61-DB,
03/25/24................................... 15,357,106
--------------
291,795,186
--------------
Commercial Mortgage-
Backed Securities-3.0%
18,525@ CBA Mortgage Corporation,
7.15%, 12/25/03,
Series 1993-C1, Class A2..................... 18,951,024
1,250 Gentra Capital Commercial
Real Estate, 8.50%,
07/25/28, Series 1994-1,
Class 1-D.................................... 1,279,068
Resolution Trust Corporation,
3,000 6.90%, 02/25/27,
Series 1995-C1, Class D.................... 2,754,375
7,882 7.70%, 07/25/24,
Series 1992-C6, Class B.................... 7,934,007
5,932 8.00%, 04/25/25,
Series 1994-C2, Class D.................... 5,893,123
--------------
36,811,597
--------------
Corporate Bonds-3.1%
7,000 Household Finance
Corporation, 6.65%, A*,
05/26/98..................................... 7,042,140
4,000 Household Financial Limited,
7.45%, A*, 04/01/00.......................... 4,145,840
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
(Left column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds-(cont'd)
Smith Barney Holdings Inc.,
$ 3,000 6.63%, A-*, 06/01/00......................... $ 2,974,020
2,600 7.00%, A-*, 05/15/00......................... 2,628,860
6,500 7.98%, A-*, 03/01/00......................... 6,819,475
15,000 Transamerica Finance
Corporation, Subordinated
Note, 6.75%, A*, 06/01/00.................... 15,120,848
--------------
38,731,183
--------------
Stripped Mortgage-Backed
Securities-6.6%
97 CMO Mortgage Investors
Trust, Collateralized
Mortgage Obligations,
Trust 7, Series P,
09/22/21 (I/O)............................... 1,664,098
24 Collateralized Mortgage
Securities Corporation,
Series 1990-5, Class 5-L,
09/20/20 (I/O)............................... 373,684
Federal Home Loan Mortgage
Corporation,
9,150 Series 1498, Class 1498-L,
04/15/23 (I/O)............................. 3,499,875
3,271 Series 1721, Class 1721-OC,
05/15/24 (P/O)............................. 1,676,402
Federal National Mortgage
Association,
3,203 Series 1989-28, Class 28-B,
03/25/17 (P/O)............................. 2,598,207
37 Series 1991-G46, Class G46-K,
12/25/09 (I/O)............................. 1,002,643
3,283 Series 1992-G55, Class G55-D,
11/25/17 (P/O)............................. 2,009,812
4,703 Series 1994-53, Class 53-EA,
11/25/23 (P/O)............................. 2,455,803
4,576 Trust 1, Class 2,
02/01/17 (I/O)............................. 1,098,153
4,172 Trust 2, Class 2,
02/01/17 (I/O)............................. 1,142,176
5,744 Trust 3, Class 1,
02/01/17 (P/O)............................. 4,595,367
14,528 Trust 5, Class 1,
09/01/07 (P/O)............................. 10,768,808
11,886 Trust 9, Class 2,
02/01/17 (I/O)............................. 2,823,004
11,956 Trust 14, Class 2,
02/01/17 (I/O)............................. 2,839,526
2,288 Trust 58, Class 1,
12/01/18 (P/O)............................. 1,817,117
1,134 Trust 58, Class 2,
12/01/18 (I/O)............................. 291,189
</TABLE>
(Right column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Federal National Mortgage
Association,
$ 2,510 Trust 60, Class 1,
01/01/19 (P/O)............................. $ 2,025,785
19,199 Trust 160, Class 2,
06/01/22 (I/O)............................. 4,804,139
20,890 Trust 225, Class 1,
02/01/23 (P/O)............................. 16,293,815
76,589 Trust 226, Class 2,
06/01/23 (I/O)............................. 17,782,542
7,290 Residential Funding
Corporation, Trust 1992-S6,
Class S6-A11,
02/25/22 (I/O)............................... 79,732
--------------
81,641,877
--------------
Collateralized Mortgage
Obligation Residuals**-0.3%
1 Fleet Mortgage Securities Inc.,
Series 1989-3, Class R,
09/01/19#.................................... 1,089,818
1 Residential Resources
Incorporated, Mortgage
Collateral Bond,
Series 9, Class 1X F,
10/01/18#.................................... 2,000,000
499 Shearson Lehman Brothers,
Series F, Class R, 02/20/18#................. 795,000
100 Smith Barney Mortgage
Capital Trust, Series 10,
Class R, 10/01/19#........................... 410,671
--------------
4,295,489
--------------
U.S. Government Securities-16.5%
35,305\d\d U.S. Treasury Bonds,
7.63%, 02/15/25.............................. 39,872,408
U.S. Treasury Notes,
11,500\d 6.13%, 05/15/98.............................. 11,575,440
71,000\d\d 6.25%, 05/31/00.............................. 71,754,020
80,000\d 6.50%, 05/15/05.............................. 81,700,000
--------------
204,901,868
--------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
(Left column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Taxable Zero Coupon Bonds-34.2%
Financing Corporation
(FICO Strips),
$ 5,311 02/08/01..................................... $ 3,756,205
6,950 03/07/01..................................... 4,900,167
4,472 03/26/01..................................... 3,141,177
1,660 04/05/01..................................... 1,163,195
7,334 05/02/01..................................... 5,112,605
2,513 05/11/01..................................... 1,750,028
22,134 06/06/01..................................... 15,347,937
2,000 08/03/01..................................... 1,368,940
5,311 08/08/01..................................... 3,632,086
8,980 09/07/01..................................... 6,113,674
4,472 09/26/01..................................... 3,033,000
5,068 10/05/01..................................... 3,429,516
13,000 10/06/01..................................... 8,790,990
3,667 11/02/01..................................... 2,468,551
1,259 11/11/01..................................... 846,652
5,600 12/27/01..................................... 3,735,928
Government Trust Certificates,
2,500 11/15/99..................................... 1,925,625
20,340 11/15/01..................................... 13,753,194
31,909 05/15/02..................................... 20,873,272
4,000 11/15/02..................................... 2,520,680
32,794 Resolution Funding
Corporation, 10/15/01........................ 22,289,426
28,900 U.S. Treasury Obligation,
11/15/01..................................... 19,001,172
15,000 U.S. Treasury Physical
Corpus, 08/15/01............................. 10,308,190
U.S. Treasury Receipt,
4,705 08/15/01..................................... 3,242,458
39,499 11/15/01..................................... 26,810,051
U.S. Treasury Strip,
107,945\d\d 08/15/01..................................... 74,824,236
237,082\d 02/15/02..................................... 158,825,973
--------------
422,964,928
--------------
<FN>
* Using the higher of Standard & Poor's or Moody's rating.
** Illiquid securities representing 0.24% of portfolio assets.
# Private placements restricted as to resale.
\d Partial principal amount pledged as collateral for reverse repurchase
agreements.
\d\d Entire principal amount pledged as collateral for reverse repurchase
agreements.
@ Partial principal amount pledged as collateral for futures transactions.
@@ Mortgage dollar roll, see Note 4.
</FN>
</TABLE>
(Right column)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
--------------------------------------------------------------------------------
<S> <C> <C>
Municipal Bonds-1.5%
$ 4,000 Florida Board of Education,
Series E, 5.75%, 06/01/19.................... $ 3,849,080
5,000 Intermountain Power Agency
Utah Power, 5.25%,
07/01/17..................................... 4,533,750
4,250 Los Angeles Waste Water
System Revenue, Series A,
5.70%, 06/01/20.............................. 4,038,605
6,915 Massachusetts Housing
Finance Agency, 1991-B,
6.85%, 10/01/20.............................. 6,508,744
--------------
18,930,179
--------------
Total investments before
investments sold short-143.4%
(cost $1,817,702,605)........................ 1,776,366,775
--------------
INVESTMENTS SOLD SHORT-(6.4)%
U.S. Treasury Bonds,
35,931 7.50%, 11/15/24.............................. (39,754,418)
U.S. Treasury Notes,
35,325 7.88%, 11/15/04.............................. (39,343,219)
--------------
Total investments sold short
(proceeds $72,257,120)....................... (79,097,637)
--------------
Total Investments, net of short
sales-137.0%................................. 1,697,269,138
Liabilities in excess of other
assets-(37.0%)............................... (458,879,889)
--------------
NET ASSETS-100%.............................. $1,238,389,249
==============
<FN>
--------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM - Adjustable Rate Mortgage.
CMO - Collateralized Mortgage Obligation.
CMT - Constant Maturity Treasury.
I - Denotes CMO with Interest Only Characteristics.
I/O - Interest Only.
P - Denotes CMO with Principal Only Characteristics.
P/O - Principal Only.
REMIC - Real Estate Mortgage Investment Conduit.
--------------------------------------------------------------------------------
</FN>
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
(Left column)
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Statement of Assets and Liabilities
June 30, 1995
--------------------------------------------------------------------------------
Assets
Investments, at value
(cost $1,817,702,605) (Note 1)............................... $1,776,366,775
Cash........................................................... 3,012,220
Deposits with brokers for investments
sold short (Note 1).......................................... 80,245,875
Receivable for investments sold................................ 91,385,170
Interest receivable............................................ 11,668,032
Due from broker-variation margin............................... 13,373
Deferred organization expenses and
other assets................................................. 129,210
--------------
1,962,820,655
--------------
Liabilities
Reverse repurchase agreements (Note 4)......................... 489,334,594
Dollar roll payable (Note 4) .................................. 127,952,500
Investments sold short, at value
(proceeds $72,257,120) (Note 1).............................. 79,097,637
Payable for investments purchased.............................. 23,905,956
Interest payable............................................... 2,099,203
Dividends payable.............................................. 983,356
Advisory fee payable (Note 2).................................. 410,370
Administration fee payable (Note 2)............................ 102,593
Other accrued expenses......................................... 545,197
--------------
724,431,406
--------------
Net Assets..................................................... $1,238,389,249
==============
Net assets were comprised of:
Common stock, at par (Note 5)................................ $ 1,420,106
Paid-in capital in excess of par............................. 1,338,223,236
--------------
1,339,643,342
Undistributed net investment income.......................... 4,018,170
Accumulated net realized loss................................ (57,021,103)
Net unrealized depreciation.................................. (48,251,160)
--------------
Net assets, June 30, 1995.................................... $1,238,389,249
==============
Net asset value per share:
($1,238,389,249 / 142,010,583 shares of
common stock issued and outstanding)......................... $8.72
=====
(Right column)
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Statement of Operations
For the Year Ended June 30, 1995
--------------------------------------------------------------------------------
Net Investment Income
Income
Interest (including discount amortization of
$17,857,272 and net of interest expense
of $38,448,247)............................................ $ 93,556,013
------------
Operating expenses
Investment advisory.......................................... 4,725,645
Administration............................................... 1,181,412
Custodian.................................................... 422,295
Reports to shareholders...................................... 321,178
Transfer agent............................................... 134,750
Directors.................................................... 73,500
Audit........................................................ 59,750
Legal........................................................ 47,000
Miscellaneous................................................ 531,444
------------
Total operating expenses................................. 7,496,974
------------
Net investment income........................................ 86,059,039
------------
Realized and Unrealized Gain (Loss) on
Investments (Note 3)
Net realized gain (loss) on:
Investments.................................................. (13,781,100)
Futures...................................................... (10,894,936)
------------
(33,684,786)
------------
Net change in unrealized appreciation
(depreciation) on:
Investments.................................................. 99,987,935
Short sales.................................................. (7,258,634)
Futures...................................................... (74,813)
------------
92,654,488
------------
Net gain on investments........................................ 58,969,702
------------
Net Increase in Net Assets
Resulting from Operations.................................... $145,028,741
============
See Notes to Financial Statements.
9
<PAGE>
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Statement of Cash Flows
For the Year Ended June 30, 1995
--------------------------------------------------------------------------------
Increase (Decrease) in Cash
Cash flows used for operating activities:
Interest received, net of interest purchased................. $ 113,203,110
Operating expenses and excise taxes paid..................... (7,849,675)
Interest expense paid........................................ (46,527,011)
Purchase of long-term portfolio investments.................. (2,728,749,982)
Sale of long-term portfolio investments...................... 2,667,984,613
Other........................................................ 4,246
-------------
Net cash flows used for operating
activities................................................. (1,934,699)
-------------
Cash flows provided by financing activities:
Increase in reverse repurchase agreements.................... 93,775,594
Dividends paid............................................... (88,983,804)
-------------
Net cash flows provided by financing
activities................................................. 4,791,790
-------------
Net increase in cash........................................... 2,857,091
Cash at beginning of year...................................... 155,129
-------------
Cash at end of year............................................ $ 3,012,220
=============
Reconciliation of Net Decrease in Net
Assets Resulting from Operations to Net
Cash Flows Used for Operating Activities
Net increase in net assets resulting from
operations................................................... $ 145,028,741
-------------
Increase in investments........................................ (68,828,748)
Net realized loss.............................................. 33,684,786
Decrease in unrealized depreciation............................ (92,654,488)
Increase in interest receivable................................ (943,878)
Increase in receivable for investments sold.................... (76,818,764)
Increase in broker-variation margin............................ (13,373)
Decrease in deposits with brokers.............................. 363,134,125
Decrease in deferred and prepaid assets........................ 4,246
Increase in dollar roll payable ............................... 127,952,500
Decrease in payable for investments purchased.................. (73,746,418)
Decrease in payable for securities
sold short................................................... (350,301,963)
Decrease in interest payable................................... (8,078,764)
Decrease in accrued expenses and other
liabilities.................................................. (352,701)
-------------
Total adjustments............................................ (146,963,440)
-------------
Net cash flows used for operating activities................... $ (1,934,699)
=============
(Right column)
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Statements of Changes
in Net Assets
--------------------------------------------------------------------------------
Year Ended June 30,
--------------------------------
1995 1994
-------------- --------------
Increase (Decrease) in
Net Assets
Operations:
Net investment income..................... $ 86,059,039 $ 90,227,903
-------------- --------------
Net realized gain (loss)
on investments, short
sales and futures....................... (33,684,786) 12,710,431
Net change in unrealized
appreciation
(depreciation) on
investments, short
sales and futures....................... 92,654,488 (186,530,776)
-------------- --------------
Net increase (decrease)
in net assets resulting
from operations......................... 145,028,741 (83,592,442)
Dividends from net
investment income......................... (88,759,294) (100,571,819)
-------------- --------------
Net increase
(decrease).............................. 56,269,447 (184,164,261)
Net Assets
Beginning of year........................... 1,182,119,802 1,366,284,063
-------------- --------------
End of year................................. $1,238,389,249 $1,182,119,802
============== ==============
See Notes to Financial Statements.
10
<PAGE>
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
August 28,
1992*
Year Ended June 30, to
----------------------- June 30,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................................ $ 8.32 $ 9.62 $ 9.45
---------- ---------- ----------
Net investment income (net of $0.27, $0.12 and $0.04, respectively, of
interest expense)........................................................... 0.61 0.64 0.66
Net realized and unrealized gain (loss) on investments........................ 0.42 (1.23) 0.07
---------- ---------- ----------
Net increase (decrease) from investment operations.............................. 1.03 (0.59) 0.73
---------- ---------- ----------
Dividends from net investment income............................................ (0.63) (0.71) (0.54)
---------- ---------- ----------
Capital charge with respect to issuance of shares............................... - - (0.02)
---------- ---------- ----------
Net asset value, end of period**................................................ $ 8.72 $ 8.32 $ 9.62
---------- ---------- ----------
Market value, end of period**................................................... $ 7.50 $ 8.00 $ 9.375#
========== ========== ==========
TOTAL INVESTMENT RETURN\d....................................................... 1.61% (7.73)% 4.99%
========== ========== ==========
RATIOS TO AVERAGE NET ASSETS:
Operating expenses\d\d\d........................................................ 0.63% 0.67% 0.60%\d\d
Net investment income........................................................... 7.28% 6.97% 8.41%\d\d
SUPPLEMENTAL DATA:
Average net assets (in thousands)............................................... $1,181,411 $1,295,131 $1,327,571
Portfolio turnover.............................................................. 107% 91% 210%
Net assets, end of period (in thousands)........................................ $1,238,389 $1,182,120 $1,366,284
Reverse repurchase agreements outstanding, end of period (in thousands)......... $ 489,335 $ 395,559 $ 498,618
Asset coverage@ ................................................................ $ 3,531 $ 3,988 $ 3,740
<FN>
* Commencement of investment operations.
** Net asset value and market value published in The Wall Street Journal
each Monday.
# Net asset value immediately after the closing of the first public
offering was $9.44.
\d 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 the periods 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 return does not reflect brokerage commissions.
Total investment return is not annualized.
\d\d Annualized.
\d\d\d The ratios of expenses, including excise taxes, to average net assets
were 0.63%, 0.68% and 0.64% for the periods indicated above,
respectively.
@ Per $1,000 of reverse repurchase agreements outstanding.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for 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>
(Left column)
--------------------------------------------------------------------------------
The BlackRock 2001 Term Trust Inc.
Notes to Financial Statements
--------------------------------------------------------------------------------
Note 1. Organization
and Accounting
Policies
The BlackRock 2001 Term Trust Inc. (the "Trust"), a Maryland corporation, is a
diversified, closed-end management investment company. The Trust had no
transactions until August 17, 1992, when it sold 10,583 shares of common stock
for $100,010 to BlackRock Financial Management, Inc. (the "Adviser"). Investment
operations commenced on August 28, 1992.
The investment objective of the Trust is to manage a portfolio of investment
grade fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or about June 30, 2001 while providing
high monthly income. This distribution may require stockholder approval. The
ability of issuers of debt securities held by the Trust to meet their
obligations may be affected by economic developments in a specific 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: The Trust values mortgage-backed, asset-backed, and other
debt securities on the basis of current market quotations provided by dealers or
pricing services approved by the Trust's Board of Directors. In determining the
value of a particular security, pricing services may use certain information
with respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities, various relationships observed in the
market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange-traded
options are valued at their last sales price as of the close of options trading
on applicable exchanges. In the absence of a last sale, options are valued at
the average of the quoted bid and asked prices as of the close of business. A
futures contract is valued at the last sale price as of the close of the
commodities exchange on which it trades unless the Trust's Board of Directors
determine that such price does not reflect its fair value, in which case it will
be valued at its fair value as determined by the Trust's Board of Directors. Any
securities or other assets for which such current market quotations are not
readily available are valued at fair market value as determined in good faith
under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
(Right column)
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, if their term to maturity from date of purchase was 60
days or less, or by amortizing their value on the 61st day prior to maturity, if
their original term to maturity from date of purchase exceeded 60 days.
In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
Option Selling/Purchasing: When the Trust sells (or purchases) an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written (or purchased). Premiums received or paid from writing (or
purchasing) options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy or sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period that 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
12
<PAGE>
(Left column)
the difference between the proceeds from (or cost of) the closing transaction
and the Trust's basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Duration is a measure of the price sensitivity of a security
or a portfolio to relative changes in interest rates. For instance, a duration
of "one" means that a portfolio or a security's price would be expected to
change by approximately one percent with a one percent change in interest rates,
while a duration of "five" would imply that the price would move approximately
five percent in relation to a one percent change in interest rates. Futures
contracts can be sold to effectively shorten an otherwise longer duration
portfolio. In the same sense, futures contracts can be purchased to lengthen a
portfolio that is shorter than its duration target. Thus, by buying or selling
futures contracts, the Trust can effectively "hedge" more volatile positions so
that changes in interest rates do not change the duration of the portfolio
unexpectedly.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets. The Trust is also at risk of not being able to
enter into a closing transaction for the futures contract because of an illiquid
secondary market. In addition, since futures are used to shorten or lengthen a
portfolio's duration, there is a risk that the portfolio may have temporarily
performed better without the hedge or that the Trust may lose the opportunity to
realize appreciation in the market price of the underlying positions.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential price declines in similar securities owned. To complete a short sale,
the Trust may arrange through a broker to borrow the securities to be delivered
to the buyer. The proceeds received by the Trust from the short sale are
retained by the broker until the Trust replaces the borrowed securities. In
borrowing the securities to be delivered to the buyer, the Trust becomes
obligated to replace the securities borrowed at their market price at the time
of the replacement, whatever that price may be. 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.
(Right column)
Securities Lending: The Trust may lend its portfolio securities to qualified
institutions. The loans are secured by collateral at least equal, at all times,
to the market value of the securities loaned. The Trust may bear the risk of
delay in recovery of, or even loss of rights in, the securities loaned should
the borrower of the securities fail financially. The Trust receives compensation
for lending its securities in the form of interest on the loan. The Trust also
continues to receive interest on the securities loaned, and any gain or loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Trust. The Trust did not engage in
securities lending during the year ended June 30, 1995.
Securities Transactions and Investment Income: Security transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust amortizes premium and accretes discount on
securities purchased using the interest method.
Taxes: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no federal income tax provision is required. As part of a tax planning strategy,
the Trust intends to retain a portion of its taxable income and pay an excise
tax on the undistributed amount.
Dividends and Distributions: The Trust declares and pays dividends and
distributions monthly, first from net investment income, then from realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards, are distributed annually.
Dividends and distributions are recorded on the ex-dividend date.
Deferred Organization Expenses: A total of $75,000 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 operations.
Note 2. Agreements
The Trust has an Investment Advisory Agreement with the Adviser 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 0.40% of the Trust's average weekly net assets. The
administration fee paid to the Administrator is also com-
13
<PAGE>
(Left column)
puted weekly and payable monthly at an annual rate of 0.10% of the Trust's
average weekly net 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.
On February 28, 1995, the Adviser was acquired by PNC Bank, NA. Following the
acquisition, the Adviser has become a wholly-owned corporate subsidiary of PNC
Asset Management Group, Inc., the holding company for PNC's asset management
businesses.
Note 3. Portfolio
Securities
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the year ended June 30, 1995 aggregated $1,924,350,085 and
$1,854,632,610, respectively.
The Trust may invest up to 40% of its total assets in securities which are not
readily marketable, including those which are restricted as to disposition under
securities law ("restricted securities"). At June 30, 1995, the Trust held 0.24%
of its portfolio assets in illiquid and restricted securities.
The federal income tax basis of the Trust's investments at June 30, 1995 was
the same as the basis for financial reporting and, accordingly, net unrealized
depreciation for federal income tax purposes was $48,251,160 (gross unrealized
appreciation-$25,158,314; gross unrealized depreciation-$73,409,474).
For federal income tax purposes, the Trust had a capital loss carryforward at
June 30, 1995 of approximately $24,284,000 of which $948,000 will expire in
2002, $19,902,000 will expire in 2001 and $3,434,000 will expire in 2000.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amount.
During the year ended June 30, 1995, the Trust entered into financial futures
contracts. Details of open contracts at June 30, 1995 are as follows:
Value at Value at
Number of Expiration Trade June 30, Unrealized
Contracts Type Date Date 1995 (Depreciation)
--------- ---- ---------- -------- ------- -------------
Long positions:
46 Muni Bond 09/21/95 $5,287,401 $5,213,813 $(73,588)
1 10 yr. T-Note 09/29/95 111,319 110,094 (1,225)
--------
$(74,813)
========
(Right column)
Note 4. Borrowings
Reverse Repurchase Agreements: The Trust may enter into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and under
the direction of the Trust's Board of Directors. Interest on the value of the
reverse repurchase agreements issued and outstanding will be based upon
competitive market rates at the time of issuance. At the time the Trust enters
into a reverse repurchase agreement, it will establish and maintain a segregated
account with the lender containing liquid high grade securities having a value
not less than the repurchase price, including accrued interest, of the reverse
repurchase agreement.
The average daily balance of reverse repurchase agreements outstanding during
the year ended June 30, 1995, was approximately $472,959,000 at a weighted
average interest rate of approximately 5.53%. The maximum amount of reverse
repurchase agreements outstanding at any month end during the year ended June
30, 1995, was $573,466,843 as of November 30, 1994, which was 25.52% of total
assets. The amount of reverse repurchase agreements outstanding at June 30, 1995
was $489,334,594, which was 24.93% of total assets.
Dollar Rolls: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date.
The average monthly balance of dollar rolls outstanding during the year ended
June 30, 1995, was approximately $19,806,000. For the year ended June 30, 1995,
the maximum amount of dollar rolls outstanding at any month end during the
year ended June 30, 1995 was $127,952,500 as of June 30, 1995, which was
6.52% of total assets.
Note 5. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
142,010,583 common shares outstanding at June 30, 1995, the Adviser owned 10,583
shares.
Offering costs ($2,053,045) incurred in connection with the underwriting of
the Trust have been charged to paid-in capital in excess of par.
Note 6. Dividends
On June 29, 1995, the Board of Directors of the Trust declared a dividend from
undistributed earnings of $0.0375 per share payable July 31, 1995 to
shareholders of record on July 14, 1995.
14
<PAGE>
Note 7. Quarterly Data
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Net increase
Net realized and (decrease)
unrealized in net assets Dividends
Net investment gain (loss) resulting from and Period end
Quarterly Total income on investments operations Distributions Share price net asset
period income Amount Per share Amount Per share Amount Per share Amount Per share High Low value
------- ------ ---------------- -------------------- ----------------- ---------------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 1,
1993 to
March 31,
1993...... $32,023,760 $30,059,454 $0.21 $12,037,139 $0.09 $42,096,593 $0.30 $25,732,313 $0.18 $9-3/4 $9-1/8 $9.52
April 1,
1993 to
June 30,
1993...... 32,157,575 29,884,747 0.21 10,907,071 0.08 40,791,818 0.29 25,732,313 0.18 9-5/8 9-1/4 9.62
July 1,
1993 to
September
30, 1993.. 34,342,360 32,148,750 0.23 (17,558,331) (0.12) 14,590,419 0.11 25,732,301 0.18 9-5/8 9-1/4 9.54
October 1,
1993 to
December
31, 1993.. 20,386,901 18,194,749 0.13 (34,715,022) (0.25) (16,520,273) (0.12) 34,309,726 0.24 9-3/4 9 9.18
January 1,
1994 to
March 31,
1994...... 25,522,607 23,302,832 0.16 (90,128,903) (0.64) (66,826,071) (0.48) 16,565,515 0.12 9-3/8 8-1/8 8.60
April 1,
1994 to
June 30,
1994...... 18,719,408 16,581,572 0.12 (31,418,089) (0.22) 4,836,517) (0.10) 23,964,277 0.17 8-5/8 7-3/4 8.32
July 1,
1994 to
September
30, 1994.. 24,768,303 24,587,197 0.17 (14,674,730) (0.10) 9,912,467 0.07 23,964,278 0.17 8-1/4 7-3/8 8.23
October 1,
1994 to
December
31, 1994.. 23,422,397 19,730,413 0.14 (21,121,487) (0.14) (1,391,074) 0.00 23,964,272 0.17 7-7/8 7 8.05
January 1,
1995 to
March 31,
1995...... 21,633,042 19,861,828 0.14 50,559,812 0.35 70,421,640 0.49 20,415,369 0.14 7-5/8 7-1/4 8.40
April 1,
1995 to
June 30,
1995...... 23,732,271 21,879,601 0.16 44,206,107 0.31 66,085,708 0.47 20,415,375 0.15 8-1/4 7-1/2 8.72
</TABLE>
15
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK 2001 TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The BlackRock 2001 Term Trust Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The BlackRock 2001 Term Trust Inc. as of June
30, 1995 and the related statements of operations and of cash flows for the year
then ended, the statements of changes in net assets for the years ended June 30,
1995 and 1994, and financial highlights for the years ended June 30, 1995 and
1994 and the period August 28, 1992 (commencement of investment operations) to
June 30, 1993. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at June
30, 1995 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock 2001
Term Trust Inc. at June 30, 1995 and the results of its operations, its cash
flows, the changes in its net assets and its financial highlights for the
periods stated in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
August 7, 1995
16
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK 2001 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 or elsewhere, for the participants' accounts. The Trust will not
issue shares under the Plan below net asset value.
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 fee 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 Plan Agent at (800) 699-1BFM. The addresses are on the front of
this report.
17
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK 2001 TERM TRUST INC.
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders, or to its charter or
by-laws, or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
At a Special Meeting of Trust Shareholders held on February 15, 1995, the
Shareholders approved the advisory agreement with BlackRock Financial
Management, Inc. The result of the voting is as follows:
Votes For Votes Against Votes Withheld
--------- ------------- --------------
124,919,250 1,654,870 3,530,321
The Annual Meeting of Trust Shareholders was held May 16, 1995 to vote on the
following matters:
(1) To broaden the Trust's investment objective to permit investment in
investment grade securities while continuing to maintain the investment
objectives of returning the initial offering price per share on or about
the termination date of the Trust and providing high monthly income.
(2) To elect three Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
Frank K. Fabozzi................. II 3 years 1998
Ralph L. Schlosstein............. II 3 years 1998
Richard E. Cavanagh.............. I 2 years 1997
Directors whose term of office continues beyond this meeting are
Kent Dixon, Andrew F. Brimmer, James Grosfeld, James Clayburn La Force,
Jr. and Laurence D. Fink.
(3) To ratify the selection of Deloitte & Touche LLP as independent public
accountants for the Trust for the fiscal year ending June 30, 1996.
Shareholders approved the broadening of the investment objectives, elected
the three Directors and ratified the selection of Deloitte & Touche LLP. The
results of the voting was as follows:
Votes Votes Votes
For Against Withheld
---------- --------- ---------
Broadening of Investment Objectives... 58,464,941 2,618,945 2,051,354
Frank K. Fabozzi...................... 70,546,544 - 4,106,387
Ralph L. Schlosstein.................. 70,550,171 - 4,102,760
Richard E. Cavanagh................... 70,532,306 - 4,120,625
Ratification of Deloitte & Touche LLP. 70,519,269 2,458,872 1,674,790
18
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK 2001 TERM TRUST INC.
INVESTMENT SUMMARY
--------------------------------------------------------------------------------
The Trust's Investment Objective
The Trust's investment objective is to manage a portfolio of investment grade
fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or about June 30, 2001 while providing
high monthly income.
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 over $32
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, 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, the nation's
twelfth largest banking organization.
What Can the Trust Invest In?
The Trust may invest in all fixed income securities rated investment grade or
higher ("AAA", "AA", "A" or "BBB"). Examples of securities in which the Trust
may invest include U.S. government and government agency securities, zero coupon
securities, mortgage-backed securities, corporate debt securities, asset-backed
securities, U.S. dollar-denominated foreign debt securities and municipal
securities. Under current market conditions, BlackRock expects that the primary
investments of the Trust will be U.S. government securities, securities backed
by government agencies (such as mortgage-backed securities) and corporate debt
securities.
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 in June of 2001. 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 and the value of securities that are
purchased, if any, 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 assets in relation to market conditions, interest rate changes and,
importantly, the remaining term to maturity of the Trust.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide high monthly income 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
33-1/3% 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 (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) 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. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the yield curve (i.e. if the Trust has three years left until its maturity,
the Adviser will attempt to maintain a yield at a spread over a 3-year
Treasury). 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.
19
<PAGE>
How Are the Trust's Shares Purchased and Sold? Does the Trust Pay Dividends
Regularly?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the 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, Boston
Financial Data Services. Investors who wish to hold shares in a brokerage
account should check with their financial advisor to determine whether their
brokerage firm offers dividend reinvestment services.
Leverage Considerations in a Term Trust
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. 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 33-1/3% of total assets.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rapidly rising rate environment. BlackRock's portfolio managers continuously
monitor and regularly review the Trust's use of leverage and the Trust may
reduce, or unwind, the amount of leverage employed should BlackRock consider
that reduction to be in the best interests of the shareholders.
Special Considerations and Risk Factors Relevant to Term Trusts
The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
Return of Initial Investment. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.
Dividend Considerations. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
Leverage. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, 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 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.
Mortgage-Backed and Asset-Backed Securities. The cash flow and yield
characteristics of these securities differ from traditional debt securities. The
major differences typically include more frequent payments and the possibility
of prepayments which will change the yield to maturity of the security.
Corporate Debt Securities. The value of corporate debt securities generally
varies inversely with changes in prevailing market interest rates. The Trust may
be subject to certain reinvestment risks in environments of declining interest
rates.
Zero Coupon Securities. Such securities receive no cash flows prior to maturity,
t
herefore, interim price movements on these securities are generally more
sensitive to interest rate movements than securities that make periodic coupon
payments. These securities appreciate in value over time an s can play an
important role in helping the Trust achieve its primary objective.
Illiquid Securities. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
Non-U.S Securities. The Trust may invest up to 10% of its total assets in
non-U.S. dollar-denominated securities which involve special risks such as
currency, political and economic risks, although under current market conditions
does not do so.
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.
20
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK 2001 TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
GLOSSARY
--------------------------------------------------------------------------------
Adjustable Rate Mortgage-
Backed Securities (ARMs): Mortgage instruments with interest rates that
adjust at periodic intervals at a fixed amount
over the market levels of interest rates as
reflected in specified indexes. ARMS are backed by
mortgage loans secured by real property.
Asset-Backed Securities: Securities backed by various types of receivables
such as automobile and credit card receivables.
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.
Collateralized
Mortgage Obligations (CMOs): Mortgage-backed securities which separate mortgage
pools into short-, medium-, and long-term
securities with different priorities for receipt
of principal and interest. Each class is paid a
fixed or floating rate of interest at regular
intervals. Also known as multiple-class mortgage
pass-throughs.
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: This is 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 distributions
of dividends and capital gains automatically
reinvested into additional shares of the Trust.
FHA: Federal Housing Administration, a government
agency that facilitates a secondary mortgage
market by providing an agency that guarantees
timely payment of interest and principal on
mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by
purchasing mortgages from lenders such as savings
institutions and reselling them to investors by
means of mortgage-backed securities. Obligations
of FHLMC are not guaranteed by the U.S.
government, however; they are backed by FHLMC's
authority to borrow from the U.S. government. Also
known as Freddie Mac.
FNMA: Federal National Mortgage Association, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by
purchasing mortgages from lenders such as savings
institutions and reselling them to investors by
means of mortgage-backed securities. Obligations
of FNMA are not guaranteed by the U.S. government,
however; they are backed by FNMA's authority to
borrow from the U.S. government. Also known as
Fannie Mae.
GNMA: Government National Mortgage Association, a
government agency that facilitates a secondary
mortgage market by providing an agency that
guarantees timely payment of interest and
principal on mortgages. GNMA's obligations are
supported by the full faith and credit of the U.S.
Treasury. Also known as Ginnie Mae.
21
<PAGE>
Government Securities: Securities issued or guaranteed by the U.S.
government, or one of its agencies or
instrumentalities, such as GNMA (Government
National Mortgage Association), FNMA (Federal
National Mortgage Association) and FHLMC
(Federal Home Loan Mortgage Corporation).
Interest-Only Securities (I/O): Mortgage securities that receive only the
interest cash flows from an underlying pool of
mortgage loans or underlying pass-through
securities. Also known as Strip.
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.
Mortgage Dollar Rolls: A mortgage dollar roll is a transaction in
which the Trust sells mortgage-backed
securities for delivery in the current month
and simultaneously contracts to repurchase
substantially similar (although not the same)
securities on a specified future date. During
the "roll" period, the Trust does not receive
principal and interest payments on the
securities, but is compensated for giving up
these payments by the difference in the
current sales price (for which the security is
sold) and lower price that the Trust pays for
the similar security at the end date as well
as the interest earned on the cash proceeds of
the initial sale.
Mortgage Pass-Throughs: Mortgage-backed securities issued by Fannie
Mae, Freddie Mac or Ginnie Mae.
Multiple-Class Pass-Throughs: Collateralized Mortgage Obligations.
Net Asset Value (NAV): Net asset value is the total market value of
all securities and other assets held by the
Trust, plus income accrued on its investments,
minus any liabilities including accrued
expenses, divided by the total number of
outstanding shares. It is the underlying value
of a single share on a given day. Net asset
value for the Trust is calculated weekly and
published in Barron's on Saturday and The New
York Times or The Wall Street Journal each
Monday.
Principal-Only Securities (P/O): Mortgage securities that receive only the
principal cash flows from an underlying pool
of mortgage loans or underlying pass-through
securities. Also known as Strip.
Project Loans: Mortgages for multi-family, low- to
middle-income housing.
Premium: When a fund's stock price is greater than its
net asset value, the fund is said to be
trading at a premium.
REMIC: A real estate mortgage investment conduit is a
multiple-class security backed by
mortgage-backed securities or whole mortgage
loans and formed as a trust, corporation,
partnership, or segregated pool of assets that
elects to be treated as a REMIC for federal
tax purposes. Generally, Fannie Mae REMICs are
formed as trusts and are backed by
mortgage-backed securities.
Residuals: Securities issued in connection with
collateralized mortgage obligations that
generally represent the excess cash flow from
the mortgage assets underlying the CMO after
payment of principal and interest on the other
CMO securities and related administrative
expenses.
Reverse Repurchase In a reverse repurchase agreement, the Trust
Agreements: sells securities and agrees to repurchase them
at a mutually agreed date and price. During
this time, the Trust continues to receive the
principal and interest payments from that
security. At the end of the term, the Trust
receives the same securities that were sold
for the same initial dollar amount plus
interest on the cash proceeds of the initial
sale.
Strips: Arrangements in which a pool of assets is
separated into two classes that receive
different proportions of the interest and
principal distributions from underlying
mortgage-backed securities. IO's and PO's are
examples of strips.
22
<PAGE>
--------------------------------------------------------------------------------
BlackRock Financial Management, Inc.
Summary of Closed-End Funds
--------------------------------------------------------------------------------
<TABLE>
Taxable Trusts
-------------------------------------------------------------------------------------------------
<CAPTION>
Perpetual Trusts Stock Symbol Maturity
------------ --------
<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
</TABLE>
<TABLE>
Tax-Exempt Trusts
-------------------------------------------------------------------------------------------------
<CAPTION>
Perpetual Trusts Stock Symbol Maturity
------------ --------
<S> <C> <C>
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 call BlackRock at (800) 227-7BFM
or consult with your financial adviser
23
<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
Scott Amero, Vice President
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Kevin J. Mahoney, 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
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of Trust shares.
The BlackRock 2001 Term Trust Inc.
c/o Mitchell Hutchins Asset Management Inc.
14th Floor
1285 Avenue of the Americas
New York, NY 10019
(800) 227-7BFM
092477-10-8
(Right column)
The BlackRock
2001 Term Trust Inc.
-------------------------------
Annual Report
June 30, 1995
