- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
July 31, 1996
Dear Trust Shareholder:
After posting strong returns during 1995, the fixed income markets have given
back much of their gains in 1996 in response to a strengthening U.S. economy.
Accelerating economic growth has raised concerns about an increased inflationary
environment, which could erode the value of fixed income investments. The
stronger economy also has led some market participants to consider the
possibility that the Federal Reserve may increase interest rates to thwart
inflation threats after three interest rate reductions over the past twelve
months.
Despite the pick-up in economic growth, we believe that current inflationary
fears will subside. Commodity prices have risen but manufacturers will have
difficulty passing along the increased costs of raw materials to consumers,
whose debt levels as a percentage of disposable income are at the highest point
since the recessionary highs of 1990. We believe that the overleveraged consumer
will have to retrench, restricting future economic expansion and creating a
positive environment for bonds in the latter half of this year.
The following semi-annual report provides detailed market commentary and a
review of portfolio management activity. We believe that BlackRock's duration
controlled management style and risk management capabilities will allow each of
our Trusts to achieve its long-term investment objective.
We look forward to maintaining your respect and confidence and to serving
your financial needs in the coming years.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
- --------------------- -------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 31, 1996
Dear Shareholder:
We are pleased to present the semi-annual report for The BlackRock Insured
Municipal 2008 Term Trust Inc. ("the Trust") for the six months ended June 30,
1996. We would like to take this opportunity to review the Trust's stock price
and net asset value (NAV) performance, summarize market developments and discuss
recent portfolio management activity.
The Trust is a diversified closed-end bond fund whose investment objective is
to manage a portfolio of municipal debt securities that will return $15 per
share (an amount equal to the Trust's initial public offering price) to
investors on or about December 31, 2008, while providing high current income
exempt from regular federal income tax. The Trust seeks to achieve this
objective by investing in high credit quality ("AAA" or insured to "AAA")
tax-exempt general obligation and revenue bonds issued by city, county and state
municipalities throughout the United States.
The table below summarizes the performance of the Trust's stock price and net
asset value (the market value of its bonds per share) over the period:
<TABLE>
<CAPTION>
6/30/96 12/31/95 CHANGE HIGH LOW
<S> <C> <C> <C> <C> <C>
STOCK PRICE $14.125 $13.500 4.63% $14.625 $13.625
NET ASSET VALUE (NAV) $15.40 $16.08 (4.23%) $16.40 $15.06
</TABLE>
THE FIXED INCOME MARKETS
The domestic fixed income markets witnessed two profoundly different
environments during the past six months, providing an exciting and challenging
environment in which to manage the Trust. The Treasury market rally of 1995
continued through the middle of February 1996, as market demand for fixed income
securities remained strong due to a combination of moderate economic growth, low
absolute levels of inflation and two reductions of the Fed funds target rate.
The rally halted during mid-February, however, as data indicating accelerating
economic growth rekindled inflationary concerns. The strengthening of the
economy continued throughout the second quarter, leading market participants to
become more resolute in their belief that the Federal Reserve will tighten
monetary policy during the second half of 1996. These fears translated into a
sharp rise in bond yields across the Treasury yield curve, resulting in the
fixed income markets rescinding much of their 1995 gains.
After lagging the performance of its Treasury counterparts during the fourth
quarter of 1995, municipal bonds have outperformed taxable fixed income
securities in 1996. The diminished possibility of significant tax reform, which
had threatened the tax-exempt status of municipal bond income, helped renew
investor interest in the municipal sector. Additionally, municipal bond
investors received approximately $60 billion in cash during the June/July period
resulting from bond calls, interest payments and redemptions. A significant
portion of this money has been reinvested in the municipal market, as high
municipal bond absolute yields convinced many investors to bypass the equity
markets. For the period, the yield of the 10-year AAA General Obligation
increased 47 basis points (0.47%) to close at 5.11% versus a 114 basis point
rise in the yield of the 10-year Treasury note. Despite the potential decline in
retail demand as the June/July cash flows are reinvested, BlackRock believes
that municipal bonds have the potential to continue to outperform Treasury
securities for the remainder of 1996.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is invested in high credit-quality municipal issues
with ratings of "AAA" by Standard & Poor's Corporation (or of equivalent quality
as determined by other major rating agencies). In addition, the majority of the
individual securities within the portfolio are insured as to timely payment of
interest and principal by municipal bond insurance companies whose long-term
obligations are rated "AAA". As such, Standard & Poor's has given a AAAf rating
2
<PAGE>
to the portfolio. BlackRock Financial Management actively manages the Trust's
portfolio to diversify exposure to various sectors, issuers, revenue sources and
security types which fit within the context of the Trust seeking to achieve its
investment objectives.
Additionally, the Trust employs leverage at about 35% of total assets to
enhance its income by borrowing at short term municipal rates and investing the
proceeds in longer maturity issues with higher yields. The degree to which the
Trust can benefit from its use of leverage may affect its ability to pay high
monthly income. After steepening during the first quarter of 1996, the municipal
yield curve has recently flattened, as longer maturity municipal bonds have
outperformed shorter municipals. This resulted in a narrowing of the yield
differential, or "spread", between long and short maturities.
The following chart compares the Trust's current and December 31, 1995 asset
composition:
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
<TABLE>
SECTOR JUNE 30, 1996 DECEMBER 31, 1995
<S> <C> <C>
County, City &
State 32% 33%
Utility 20% 20%
Hospital 15% 15%
Transportation 8% 8%
Water & Sewer 6% 6%
Lease Revenue 4% 5%
Housing 3% 3%
Pollution Control/
Resource Recovery 2% --
Building 1% 1%
Education 1% 1%
Tax Revenue 1% 1%
Other 7% 7%
</TABLE>
3
<PAGE>
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock Insured
Municipal 2008 Term Trust Inc. Please feel free to call our marketing center at
(800) 227-7BFM (7236) if you have any specific questions which were not
addressed in this report.
Sincerely yours,
/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.
<TABLE><CAPTION>
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
<S> <C>
Symbol on New York Stock Exchange: BRM
Initial Offering Date: September 18, 1992
Closing Stock Price as of 6/30/96: $14.125
Net Asset Value as of 6/30/96: $15.40
Yield on Closing Stock Price as of 6/30/96 ($14.125)1: 5.63%
Current Monthly Distribution per Common Share2: $0.06625
Current Annualized Distribution per Common Share2: $0.7950
</TABLE>
- --------------
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 Distribution is not constant and is subject to change.
4
<PAGE>
<TABLE><CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
AMOUNT CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+++ (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--146.6%
ALABAMA--0.2%
<S> <C> <C> <C> <C>
AAA 1,905 Mobile Impvt. Wt., Zero Coupon, 8/15/08, MBIA............ No Opt. Call $ 954,976
-------------------
ARIZONA--0.5%
AAA 4,000 Chandler, G.O., Zero Coupon, 7/01/08, FGIC............... No Opt. Call 2,050,120
-------------------
CALIFORNIA--0.4%
AAA 1,890 California Hlth. Facs. Fin. Auth. Rev., Marin Gen. Hosp.,
Ser. A, 5.75%, 8/01/09, FSA............................. 08/03 at 102 1,899,469
-------------------
COLORADO--10.9%
AAA 30,205 Jefferson Cnty., Sch. Dist. No. R-001, G.O., 6.25%,
12/15/08, AMBAC.......................................... 12/02 at 101 31,792,575
AAA 13,285 Univ. of Colorado, Hosp. Auth. Rev., Ser. A, 6.25%,
11/15/08, AMBAC.......................................... 11/02 at 102 13,937,294
-------------------
45,729,869
-------------------
DISTRICT OF COLUMBIA--5.7%
Dist. of Columbia, G.O., MBIA,
AAA 3,070 Ser. E, 5.875%, 6/01/08................................. 06/03 at 102 3,080,100
AAA 17,950 Ser. B, 6.30%, 6/01/09.................................. 06/02 at 102 18,593,687
AAA 2,000 Dist. of Columbia, Hosp. Rev., Children's Hosp., Ser. A,
6.25%, 7/15/08, FGIC.................................... 07/02 at 102 2,053,540
-------------------
23,727,327
-------------------
GEORGIA--1.7%
Atlanta, C.O.P., Pretrial Det. Ctr., MBIA,
AAA 3,000 6.25%, 12/01/08......................................... 12/02 at 102 3,156,270
AAA 4,000 6.25%, 12/01/11......................................... 12/02 at 102 4,148,240
-------------------
7,304,510
-------------------
ILLINOIS--13.6%
AAA 14,205 Chicago O' Hare Intl. Arprt. Rev., Ser. A, 6.25%,
1/01/08, MBIA............................................ 01/05 at 102 14,946,927
Chicago, Sch. Fin. Auth., G.O., Ser. A, FGIC,
AAA 13,000 6.25%, 6/01/07.......................................... 06/02 at 102 13,729,690
AAA 9,150 6.25%, 6/01/09.......................................... 06/02 at 102 9,592,128
Illinois Hlth. Facs. Auth. Rev.,
AAA 11,000 Alexian Med. Ctr. Proj., Ser. A, 4.10%++, 1/01/08,
MBIA.................................................... 01/02 at 102 11,080,190
AAA 2,500 Carle Foundation, 6.75%, 1/01/10, FGIC.................. 01/00 at 102 2,651,775
AAA 10,170 Met. Pier & Expo. Auth., Ded. St. Tax Rev., Ser. A, Zero
Coupon, 6/15/08, FGIC................................... No Opt. Call 5,140,833
-------------------
57,141,543
-------------------
INDIANA--2.5%
Indiana Hlth. Fac. Fin. Auth. Hosp. Rev. & Impvt.,
Ancilla Sys. Inc., MBIA,
AAA 5,665 Ser. A, 6.25%, 7/01/08.................................. 07/02 at 102 5,892,563
AAA 4,350 Ser. B, 6.25%, 7/01/08.................................. 07/02 at 102 4,524,740
-------------------
10,417,303
-------------------
IOWA--1.9%
AAA 3,915 Iowa Fin. Auth., Sngl. Fam. Mtge. Rev., Ser. F, 6.35%,
7/01/09, AMBAC........................................... 01/03 at 102 3,979,715
AAA 4,400 Muscatine, Elec. Rev., 5.00%, 1/01/08, CGIC.............. 03/96 at 100 4,172,916
-------------------
8,152,631
-------------------
</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>
KENTUCKY--2.8%
AAA $ 9,000 Kentucky St. Tpke. Auth. Econ. Dev. Rd. Rev., 6.50%,
7/01/08, AMBAC........................................... No Opt. Call $ 9,913,050
AAA 3,890 Owensboro, Elec. Lt. & Pwr. Rev., Ser. B, Zero Coupon,
1/01/09, AMBAC........................................... No Opt. Call 1,906,217
-------------------
11,819,267
-------------------
LOUISIANA--1.2%
AAA 5,000 Louisiana Pub. Facs. Auth. Hosp. Rev., Lafayette Gen.
Med. Ctr. Proj., 6.30%, 10/01/08, FSA................... 10/02 at 102 5,201,700
-------------------
MASSACHUSETTS--5.1%
AAA 4,465 Chelsea, Sch. Proj. Loan, 6.00%, 6/15/09, AMBAC.......... 06/04 at 102 4,626,454
AAA 6,000 Massachusetts Bay Trans. Auth. Rev., Ser. B, 6.00%,
3/01/10, MBIA............................................ 03/03 at 102 6,118,440
AAA 10,000 Massachusetts St. Hsg. Fin. Agcy., Hsg. Proj., Ser. A,
5.95%, 10/01/08, AMBAC.................................. 04/03 at 102 10,410,000
-------------------
21,154,894
-------------------
MICHIGAN--8.4%
Greater Detroit Res. Rec. Auth. Rev, AMBAC,
AAA 6,625 6.25%, 12/13/07......................................... No Opt.Call 6,089,308
AAA 5,735 6.25%, 12/13/08......................................... No Opt.Call 6,998,650
Lake Orion, Cmnty. Sch. Dist., AMBAC,
AAA 3,290 6.60%, 5/01/05+......................................... No Opt.Call 3,670,489
AAA 3,285 6.70%, 5/01/05+......................................... No Opt.Call 3,688,070
AAA 8,920 Michigan St. Bldg. Auth. Rev., Facs. Proj., Ser. IIA,
6.25%, 10/01/08,AMBAC.................................... 10/02 at 102 9,352,620
AAA 1,760 Western Michigan Univ. Rev., 6.20%, 11/15/08, FGIC....... 11/02 at 102 1,870,933
AAA 3,400 Wyandotte, Elec. Rev., 6.25%, 10/01/08, MBIA............. No Opt.Call 3,670,878
-------------------
35,340,948
-------------------
MISSOURI--1.7%
AAA 6,600 Kansas City, Sch. Dist. Bldg. Corp. Leasehold Rev., Cap.
Impvts. Proj., Ser. A, 6.50%, 2/01/08, FGIC............. 02/01 at 102 6,966,432
-------------------
NEVADA--4.1%
AAA 6,490 Clark Cnty., Fld. Ctrl., 6.30%, 11/01/05, AMBAC.......... 11/01 at 101 6,897,767
Washoe Cnty. Arpt. Auth., Ser. B, MBIA,
AAA 3,135 5.70%, 7/01/07.......................................... 07/03 at 102 3,199,612
AAA 2,645 5.75%, 7/01/08.......................................... 07/03 at 102 2,689,965
AAA 4,135 Washoe Cnty. Sch. Dist., G.O., Ser. A, 6.20%, 4/01/09,
AMBAC.................................................... 10/02 at 101 4,329,469
-------------------
17,116,813
-------------------
NEW JERSEY--13.4%
AAA 30,275 New Jersey Econ. Dev. Auth., Mkt. Trans. Fac. Rev., Ser.
A, 5.80%, 7/01/08, MBIA................................. 07/04 at 102 30,657,676
AAA 24,495 New Jersey St. G.O., Ser. D, 6.00%, 2/15/09, MBIA........ 02/03 at 102 25,348,406
-------------------
56,006,082
-------------------
NEW YORK--7.4%
New York City G.O., Ser. E, MBIA,
AAA 5,000 6.125%, 8/01/06......................................... No Opt.Call 5,314,150
AAA 15,500 6.20%, 8/01/07.......................................... No Opt.Call 16,510,755
New York St. Environ. Facs. Corp., Poll. Ctrl. Rev.,
Ser. D,
AAA 5,945 6.50%, 5/15/07.......................................... 11/04 at 102 6,517,444
AAA 2,245 6.50%, 11/15/07......................................... 11/04 at 102 2,461,171
-------------------
30,803,520
-------------------
NORTH CAROLINA--9.0%
AAA 1,000 Cumberland Cnty. C.O.P., Civic Ctr. Proj., Ser. A,
6.375%, 12/01/09, AMBAC.................................. 12/04 at 102 1,068,160
North Carolina Eastn. Mun. Pwr. Agcy. Rev., Ser. B,
AAA 13,500 6.125%, 1/01/09, FGIC................................... No Opt. Call 14,313,645
AAA 5,000 7.00%, 1/01/08, CAPMAC.................................. No Opt. Call 5,608,300
AAA 14,675 7.25%, 1/01/07, CAPMAC................................... No Opt. Call 16,759,290
-------------------
37,749,395
-------------------
</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>
NORTH DAKOTA--1.2%
AAA $ 4,450 Bismark Hosp. Rev., St. Alexius Med. Ctr., 6.90%,
5/01/06, AMBAC........................................... 05/03 at 100 $ 4,830,786
-------------------
OHIO--2.4%
AAA 2,410 Cleveland, G.O., 6.40%, 11/15/08, MBIA................... 11/04 at 102 2,601,137
AAA 6,095 Hamilton City, Elec. Sys. Rev., Ser. A, 6.125%, 10/15/08,
FGIC..................................................... 10/02 at 102 6,358,060
AAA 1,000 Ohio St. Bldg. Auth., Facs. Rev., Juvenille Correctional
Proj., 6.50%, 10/01/09, AMBAC........................... 10/04 at 102 1,073,730
-------------------
10,032,927
-------------------
PENNSYLVANIA--13.9%
AAA 4,000 Allegheny Cnty. Hosp. Dev. Auth. Rev., Magee Women's
Hosp., 6.25%, 10/01/08, FGIC............................ 10/02 at 102 4,188,600
Dauphin Cnty. Gen. Auth. Hosp. Rev., HAPSCO-Western
Pennsylvania Hosp. Proj.,MBIA,
AAA 5,000 6.25%, 7/01/08.......................................... 07/02 at 102 5,210,650
AAA 10,000 6.25%, Ser.A, 7/01/08,.................................. 07/02 at 102 10,421,300
AAA 6,600 Erie Cnty. Hosp. Auth. Rev., St. Vincent Hlth. Ctr.
Proj., Ser. A, 6.25%, 7/01/08, MBIA..................... 07/02 at 102 6,904,062
AAA 3,500 Indiana Cnty. Indl. Dev. Auth., New York St. Elec. & Gas
Corp., Ser. A, 6.00%, 6/01/06, MBIA..................... No Opt. Call 3,663,170
AAA 6,500 Pennsylvania Hsg. Fin. Agcy. Rev., Rental Hsg., Ser. C,
6.25%, 7/01/07, FNMA.................................... 07/02 at 102 6,643,650
AAA 7,450 Pennsylvania St., G.O., Ser. A, 6.50%, 11/01/07, FGIC.... 11/01 at 102 7,954,141
AAA 10,930 Pittsburgh, G.O., Ser. D, 6.00%, 9/01/08, AMBAC.......... 09/02 at 102 11,329,929
AAA 1,665 Scranton-Lackawanna Hlth. & Welfare Auth. Rev., 6.90%,
1/01/09, MBIA............................................ 01/00 at 102 1,786,079
-------------------
58,101,581
-------------------
TEXAS--22.8%
Austin, Pub. Impvt., G.O., AMBAC,
AAA 4,000 6.10%, 9/01/07.......................................... 09/02 at 100 4,153,840
AAA 4,000 6.10%, 9/01/08.......................................... 09/02 at 100 4,132,600
AAA 5,000 6.10%, 9/01/09.......................................... 09/02 at 100 5,139,400
Austin, Util. Sys. Rev.,
AAA 11,515 Ser. A, Zero Coupon, 11/15/08, MBIA..................... No Opt. Call 5,773,736
AAA 5,000 Ser. A, Zero Coupon, 11/15/09, AMBAC.................... No Opt. Call 2,340,400
AAA 5,000 Ser. A, Zero Coupon, 11/15/09, MBIA..................... No Opt. Call 2,340,400
AAA 7,000 6.25%, 11/15/08, AMBAC.................................. 11/02 at 102 7,343,700
AAA 5,225 Baytown, G.O., 6.40%, 2/01/08, AMBAC..................... 02/02 at 100 5,462,946
AAA 9,930 Circle C Mun. Util. Dist. No. 3 Rev., 6.50%, 11/15/09,
FGIC..................................................... 11/01 at 100 10,386,879
Coppell Indpt. Sch. Dist., MBIA,
AAA 1,430 6.10%, 8/15/09.......................................... 08/02 at 100 1,493,907
AAA 2,495 6.10%, 8/15/09.......................................... 08/02 at 100 2,558,922
AAA 4,390 Houston Indpt. Sch. Dist., Zero Coupon, 8/15/09, AMBAC... No Opt. Call 2,073,573
AAA 16,135 Houston, Wtr. & Swr. Sys. Rev., Jr. Lien, Ser. C, 6.25%,
12/01/09, MBIA........................................... 12/02 at 102 16,787,661
AAA 6,000 San Antonio Elec. & Gas Rev., Ser. B, Zero Coupon,
2/01/10, FGIC............................................ No Opt. Call 2,760,360
Texas Mun. Pwr. Agcy. Rev., AMBAC:
AAA 15,000 Zero Coupon, 9/01/08.................................... No Opt. Call 7,607,850
AAA 16,175 Zero Coupon, 9/01/09.................................... No Opt. Call 7,659,995
AAA 5,900 Texas St. Pub. Fin. Auth. Bldg. Rev., Ser. B, 6.25%,
2/01/09, AMBAC........................................... No Opt. Call 6,279,134
AAA 2,275 Ysleta, Indpt. Sch. Dist. Rev., Zero Coupon, 8/15/08,
PSFG..................................................... No Opt. Call 1,159,454
-------------------
95,454,757
-------------------
UTAH--0.4%
AAA 1,550 Salt Lake Cnty. Mun. Bldg. Auth. Lease Rev., Ser. A,
6.05%, 10/01/08, MBIA.................................... 10/04 at 101 1,595,446
-------------------
</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--12.7%
AAA $ 9,000 Seattle Hlth. Care Facs. Auth. Rev., Virginia Mason
Oblig. Group, 6.30%, 2/15/09, MBIA...................... 02/03 at 102 $ 9,376,560
AAA 4,000 Snohomish Cnty. Sch. Dist., 6.10%, 12/01/08, MBIA........ 12/03 at 102 4,161,240
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 5,550 No. 3, Zero Coupon, 7/01/07, MBIA....................... No Opt. Call 3,020,254
AAA 2,000 No. 3, Zero Coupon, 7/01/08, BIGI....................... No Opt. Call 1,017,880
AAA 10,000 No. 2, Ser. A, 5.70%, 7/01/08, MBIA..................... No Opt. Call 10,143,800
AAA 11,000 5.80%, 7/01/07, FSA..................................... No Opt. Call 11,310,640
AAA 13,635 No. 2, Ser. A, 6.25%, 7/01/09, MBIA..................... 07/02 at 102 14,173,855
-------------------
53,204,229
-------------------
WEST VIRGINIA--2.7%
AAA 11,600 West Virginia St. Parkways Econ. Dev. & Tourism Auth.,
3.60%,++ 5/15/09, FGIC.................................. 05/03 at 102 11,285,872
-------------------
Total Long-Term Investments (cost $583,112,355).......... 614,042,397
-------------------
SHORT-TERM INVESTMENTS**--0.3%
CONNECTICUT--0.1%
A-1+ 300 Connecticut St. Dev. Auth. Poll. Ctrl. Rev., Western
Mass. Elec. Co., Ser. A, FRDD, 3.50%, 7/01/96........... N/A 300,000
NEW YORK
A-1 200 New York City Trust Cultural Res. Rev., FRDD, 3.75%,
7/01/96.................................................. N/A 200,000
WYOMING--0.2%
850 Uinta County Pollution Ctrl. Rev., FRDD, 3.50%,
7/01/96.................................................. N/A 850,000
-------------------
Total Short-Term Investments (cost $1,350,000)........... 1,350,000
-------------------
TOTAL INVESTMENTS--146.9% (cost $584,462,355)............ 615,392,397
Other assets in excess of liabilities--2.3%.............. 9,473,140
Liquidation value of preferred stock--(49.2)%............ (206,000,000)
-------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100%....... $ 418,865,537
-------------------
-------------------
</TABLE>
- --------------
* Rating: using the higher of Standard and Poor's, Moody's or Fitch's.
** For purposes of amortized cost valuation, the maturity date of these
instruments is considered to be the later of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
+ This bond is prerefunded. See glossary for definition.
++ This bond contains embedded caps. See glossary for definition.
+++ Option call provisions: date (month/year) and prices of the earliest
option call or redemption. There may be other call provisions at varying
prices at later dates.
KEY TO
ABBREVIATIONS
AMBAC--American Municipal Bond Assurance Corporation
BIGI--Bond Investors Guaranty Insurance Company
CAPMAC--Capital Markets Assurance Company
CGIC--Capital Guaranteed Insurance Company
C.O.P.--Certificate of Participation
FGIC--Financial Guaranty Insurance Company
FRDD--Floating Rate Daily Demand**
FSA--Financial Security Assurance
G.O.--General Obligation Bond
MBIA--Municipal Bond Insurance Association
PSFG--Permanent School Fund Guaranty
See Notes to Financial Statements.
8
<PAGE>
- ----------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
- ----------------------------------------------
ASSETS
Investments, at value (cost
$584,462,355) (Note 1)........... $615,392,397
Cash.............................. 49,449
Interest receivable............... 10,155,357
Receivable for investments sold... 100,000
Deferred organization expense and
other assets..................... 58,131
------------
625,755,334
------------
LIABILITIES
Dividends payable--common stock... 314,343
Advisory fee payable (Note 2)..... 178,447
Dividends payable--preferred
stock............................. 146,808
Administration fee payable (Note
2)................................ 50,985
Other accrued expenses............ 199,214
------------
889,797
------------
NET INVESTMENT ASSETS............. $624,865,537
------------
------------
Net investment assets were
comprised of:
Common Stock:
Par value (Note 4)............. $ 272,071
Paid-in capital in excess of
par............................... 378,448,786
Preferred stock (Note 4)......... 206,000,000
------------
584,720,857
Undistributed net investment
income............................ 8,375,059
Accumulated net realized gain..... 839,579
Net unrealized appreciation....... 30,930,042
------------
Net investment assets, June 30,
1996.............................. $624,865,537
------------
------------
Net assets applicable to common
shareholders...................... $418,865,537
------------
------------
Net asset value per common share:
($418,865,537/27,207,093 shares
of common stock issued and
outstanding)...................... $15.40
- ----------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
- ----------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned..... $ 17,951,900
------------
Expenses
Investment advisory.............. 1,106,550
Administration................... 316,157
Auction agent.................... 257,000
Custodian........................ 62,000
Reports to shareholders.......... 54,000
Directors........................ 34,000
Audit............................ 20,000
Transfer agent................... 16,000
Legal............................ 6,000
Miscellaneous.................... 154,649
------------
Total expenses................... 2,026,356
------------
Net investment income............. 15,925,544
------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 3)
Net realized gain on
investments....................... 1,160,492
Net change in unrealized
appreciation on investments...... (21,287,109)
------------
Net loss on investments........... (20,126,617)
------------
NET DECREASE IN NET INVESTMENT
ASSETS RESULTING FROM
OPERATIONS........................ $ (4,201,073)
------------
------------
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX YEAR ENDED
MONTHS ENDED DECEMBER 31,
JUNE 30, 1996 1995
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
Operations:
Net investment income.................................................. $ 15,925,544 $ 32,267,438
Net realized gain on investments....................................... 1,160,492 3,007,107
Net change in unrealized appreciation (depreciation) on investments.... (21,287,109) 57,220,422
------------- ------------
Net increase (decrease) in net investment assets resulting from
operations.............................................................. (4,201,073) 92,494,967
------------- ------------
Dividends and Distributions:
To common shareholders from net investment income...................... (10,814,729) (22,649,755)
To common shareholders from net realized gain on investments........... -- (1,618,766)
To common shareholders in excess of net realized gain on investments... -- (238,227)
To preferred shareholders from net investment income................... (3,588,240) (7,552,794)
To preferred shareholders from net realized gain on investments........ -- (561,857)
To preferred shareholders in excess of net realized gain on
investments............................................................. -- (82,686)
------------- ------------
(14,402,969) (32,704,085)
------------- ------------
Total increase (decrease)............................................ (18,604,042) 59,790,882
NET INVESTMENT ASSETS
Beginning of period..................................................... 643,469,579 583,678,697
------------- ------------
End of period........................................................... $ 624,865,537 $643,469,579
------------- ------------
------------- ------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 28,
SIX MONTHS 1992*
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, ------------------------------------ DECEMBER 31,
1996 1995 1994 1993 1992
---------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
PER COMMON SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 16.08 $ 13.88 $ 16.23 $ 14.31 $ 14.10
---------- -------- -------- -------- -------------
Net investment income....................... 0.59 1.19 1.15 1.14 0.17
Net realized and unrealized gain (loss) on
investments.................................. (0.74) 2.21 (2.39) 1.91 0.31
---------- -------- -------- -------- -------------
Net increase (decrease) from investment
operations................................... (0.15) 3.40 (1.24) 3.05 0.48
---------- -------- -------- -------- -------------
Dividends from net investment income to:
Preferred shareholders...................... (0.13) (0.28) (0.23) (0.20) (0.02)
Common shareholders......................... (0.40) (0.83) (0.88) (0.88) (0.07)
Distributions from net realized gain on
investments to:
Preferred shareholders...................... -- (0.02) -- (0.01) --
Common shareholders......................... -- (0.06) -- (0.04) --
Distributions in excess of net realized gain
on investments to:
Preferred shareholders...................... -- -- *** -- -- --
Common shareholders......................... -- (0.01) -- -- --
---------- -------- -------- -------- -------------
Total dividends and distributions............ (0.53) (1.20) (1.11) (1.13) (0.09)
---------- -------- -------- -------- -------------
Capital charge with respect to issuance of
shares....................................... -- -- -- -- (0.18)
---------- -------- -------- -------- -------------
Net asset value, end of period**............. $ 15.40 $ 16.08 $ 13.88 $ 16.23 $ 14.31#
---------- -------- -------- -------- -------------
---------- -------- -------- -------- -------------
Market value, end of period**................ $ 14.125 $ 13.50 $ 12.25 $ 15.125 $ 13.75
---------- -------- -------- -------- -------------
---------- -------- -------- -------- -------------
TOTAL INVESTMENT RETURN+..................... 6.21% 17.64% (13.71)% 16.05% (1.99)%
---------- -------- -------- -------- -------------
---------- -------- -------- -------- -------------
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS:+++
Expenses..................................... 0.95%++ 0.95% 1.02% 0.88% 0.73%++
Net investment income........................ 7.58%++ 7.74% 7.80% 7.43% 4.91%++
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in
thousands)................................... $426,581 $417,017 $400,555 $420,532 $ 372,256
Portfolio turnover........................... 2% 27% 64% 15% 2%
Net assets of common shareholders, end of
period (in thousands)....................... $418,866 $437,470 $377,679 $441,543 $ 389,333
Preferred stock outstanding (in thousands)... $206,000 $206,000 $206,000 $206,000 $ 206,000
Asset coverage per share of preferred stock,
end of
period##.................................... $ 75,833 $ 78,091 $141,670 $157,171 $ 144,500
</TABLE>
- ------------
* Commencement of investment operations.
** Net asset value and market value are published in The Wall Street Journal
each Monday.
*** Actual amount paid to preferred shareholders was $0.002929 per common share.
# Net asset value immediately after the closing of the first public offering
was $14.07.
## 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 the period. 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 for periods of
less than a full year are not annualized.
++ Annualized.
+++ Ratios calculated on the basis of income and expenses applicable to both the
common and preferred shares relative to the average net assets of common
shareholders. Ratios do not reflect the effect of dividend payments to
preferred shareholders.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for Trust's shares.
See Notes to Financial Statements.
11
<PAGE>
- ----------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- ----------------------------------------------
Note 1. Accounting The BlackRock Insured
Policies Municipal 2008 Term
Trust Inc. (the
"Trust") was organized
in
Maryland on August 7, 1992 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 $15 per share to investors on or
about December 31, 2008 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 the
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: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, if their term to maturity from date of purchase is 60
days or less, or by amortizing their value on the 61st day prior to maturity, if
their original term to maturity from date of purchase exceeded 60 days.
OPTION SELLING/PURCHASING: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
FINANCIAL FUTURES CONTRACTS: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets.
SHORT SALES: The Trust may make short sales of securities as a method of hedging
potential price declines in similar securities owned. When the Trust makes a
short sale, it may borrow the securities sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any payments received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as to
dollar amount, will be recognized upon the termination of a short sale if the
market price is greater or less than the proceeds originally received.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust amortizes premium and accretes original issue
discount on securities purchased using the interest method.
FEDERAL INCOME TAXES: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient net income to shareholders. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, no federal income tax provision is required.
12
<PAGE>
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income. Net
capital gains, if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
DEFERRED ORGANIZATION EXPENSES: A total of $60,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a period of sixty months from the date the Trust
commenced investment operations.
Note 2. Agreements The Trust has an
Investment Advisory
Agreement with
BlackRock Financial
Management, Inc. (the "Adviser") a wholly-owned corporate sub-
sidiary of PNC Asset Management Group, Inc., the holding com-
pany for PNC's asset management business and an Administration Agreement with
Princeton Administrators, L.P. (the "Administrator"), an indirect wholly owned
subsidiary of Merrill Lynch & Co., Inc.
The investment advisory fee paid to the Adviser is computed weekly and
payable monthly at an annual rate of 0.35% of the Trust's average weekly net
investment assets. The administration fee paid to the Administrator is also
computed weekly and payable monthly at an annual rate of 0.10% of the Trust's
average weekly net investment assets.
Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Adviser. The Administrator pays occupancy and
certain clerical and accounting costs of the Trust. The Trust bears all other
costs and expenses.
Note 3. Portfolio Purchases and sales of
Securities investment securities,
other than short- term
investments, for the
six months ended June 30, 1996, aggregated $13,202,173 and $14,068,260
respectively.
The federal income tax basis of the Trust's investments at June 30, 1996 was
substantially the same as the basis for finan-
cial reporting and accordingly, net unrealized appreciation was
$30,930,042--(gross unrealized appreciation--$31,345,432, gross unrealized
depreciation--$415,390).
Note 4. Capital There are 200 million
shares of $.01 par
value common stock
authorized. Of the
27,207,093
common shares outstanding at June 30, 1996, the Adviser owned 7,093 shares. As
of June 30, 1996 there were 8,240 preferred shares outstanding as follows:
Series T28-2,060, Series R28-2,060, Series T7-2,060 and Series R7-2,060.
The Trust may classify or reclassify any unissued shares of common stock into
one or more series of preferred stock. On November 23, 1992, the Trust
reclassified 4,120 shares of common stock and issued 4 series of Auction Market
Preferred Stock ("Preferred Stock") as follows: Series T28--1,030 shares, Series
R28--1,030 shares, Series R7--1,030 shares and series T7--1,030 shares. The
Preferred Stock has a liquidation value of $25,000 per share plus any
accumulated but unpaid dividends.
Dividends on Series T7 and R7 are cumulative at a rate which is reset every 7
days based on the results of an auction. Dividends on Series T28 are cumulative
at a rate which is reset every 28 days based on the results of an auction.
Series R28 paid dividends monthly at a rate established at the initial offering
through May 17, 1994. Thereafter, rates on Series R28 reset every 28 days based
on results of an auction. Dividend rates ranged from 2.20% to 4.45% for the six
months ended June 30, 1996.
The Trust may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at $25,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared if certain requirements relating to the
composition 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
Stock, and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
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. The split occurred on July 24, 1995.
13
<PAGE>
Note 5. Dividends Subsequent to June 30,
1996, the Board of
Directors of the Trust
declared a dividend from
undistributed earnings of $.06625 per common share payable July 31, 1996 to
shareholders of record on July 15, 1996.
For the period July 1, 1996 to July 31, 1996 dividends declared on Preferred
Stock totalled $574,694 in aggregate for the four outstanding Preferred Stock
series.
<TABLE><CAPTION>
Note 6. Quarterly Data
NET REALIZED AND
UNREALIZED GAINS
NET INVESTMENT INCOME (LOSSES) ON
INVESTMENTS
PER PER
TOTAL COMMON COMMON
QUARTERLY PERIOD INCOME AMOUNT SHARE AMOUNT SHARE
<S> <C> <C> <C> <C> <C>
January 1, 1994 to
March 31, 1994........... $ 8,832,081 $ 7,884,427 $ .29 $ 45,751,726 $ 1.68
April 1, 1994 to
June 30, 1994............ 8,809,249 7,772,462 .29 1,212,935 .05
July 1, 1994 to September
30, 1994.................. 8,829,898 7,734,106 .28 4,375,948 .16
October 1, 1994 to
December 31, 1994......... 8,857,899 7,833,957 .29 13,467,359 .50
January 1, 1995 to March
31, 1995.................. 9,022,548 8,038,887 .30 32,598,380 1.19
April 1, 1995 to
June 30, 1995............ 8,760,099 7,775,425 .28 4,307,377 .17
July 1, 1995 to September
30, 1995.................. 9,413,593 8,412,112 .31 9,668,972 .36
October 1, 1995 to
December 31, 1995......... 9,041,087 8,041,014 .30 13,652,800 .49
January 1, 1996 to
March 31, 1996........... 8,982,744 7,970,142 .30 (13,172,559) (.48)
April 1, 1996 to
June 30, 1996............ 8,969,156 7,955,402 .29 (6,954,058) (.26)
<CAPTION>
NET INCREASE (DECREASE) IN NET
INVESTMENT ASSETS RESULTING FROM DIVIDENDS AND DISTRIBUTIONS
COMMON SHARES PREFERRED SHARES*
PER PER
OPERATIONS COMMON COMMON
QUARTERLY PERIOD AMOUNT SHARE AMOUNT SHARE AMOUNT
<S> <C> <C> <C> <C> <C>
January 1, 1994 to
March 31, 1994........... $ 37,867,299 $ 1.39 $ 6,019,560 $ .22 $ 1,335,347
April 1, 1994 to
June 30, 1994............ 6,559,527 .24 6,019,553 .22 1,491,464
July 1, 1994 to September
30, 1994.................. 3,358,158 .12 6,019,554 .22 1,532,047
October 1, 1994 to
December 31, 1994......... 5,633,402 .21 6,019,556 .22 1,844,550
January 1, 1995 to March
31, 1995.................. 40,637,267 1.49 6,019,538 .22 2,009,567
April 1, 1995 to
June 30, 1995............ 12,082,802 .45 5,815,476 .21 2,033,766
July 1, 1995 to September
30, 1995.................. 18,081,084 .66 5,407,386 .20 1,924,542
October 1, 1995 to
December 31, 1995......... 21,693,814 .80 7,264,348 .27 2,229,462
January 1, 1996 to
March 31, 1996........... (5,202,417) (.18 ) 5,407,375 .20 1,774,481
April 1, 1996 to
June 30, 1996............ 1,001,344 .03 5,407,354 .20 1,813,759
<CAPTION>
PER SHARE PRICE OF PERIOD
COMMON COMMON STOCK END NET
QUARTERLY PERIOD SHARE HIGH LOW ASSET VALUE
<S> <C> <C> <C> <C>
January 1, 1994 to
March 31, 1994........... $ .05 $ 15.375 $ 13.875 $ 14.57
April 1, 1994 to
June 30, 1994............ .05 14.875 13.625 14.53
July 1, 1994 to September
30, 1994.................. .06 14.625 13.375 14.38
October 1, 1994 to
December 31, 1994......... .07 13.625 11.500 13.88
January 1, 1995 to March
31, 1995.................. .07 14.125 12.250 15.08
April 1, 1995 to
June 30, 1995............ .08 14.500 13.375 15.24
July 1, 1995 to September
30, 1995.................. .07 13.125 14.125 15.63
October 1, 1995 to
December 31, 1995......... .08 13.375 14.250 16.08
January 1, 1996 to
March 31, 1996........... .06 14.625 13.625 15.62
April 1, 1996 to
June 30, 1996............ .07 14.25 13.625 15.40
</TABLE>
- --------------
* For the six months ended June 30, 1996 the average annualized rate paid to
preferred shareholders was 3.46%.
14
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders. There have been no
changes in the Trust's charter or by-laws. There have been no changes in the
principal risk factors associated with investment in the Trust. There have been
no changes in the persons who are primarily responsible for the day-to-day
management of the Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 8, 1996 to vote on the
following matters:
(1) To elect three Directors to serve as follows:
<TABLE><CAPTION>
DIRECTOR CLASS TERM EXPIRING
- ------------------------------------------------------------------ ----- -------- --------
<S> <C> <C> <C>
Andrew F. Brimmer................................................. III 3 years 1999
Kent Dixon........................................................ III 3 years 1999
Laurence D. Fink.................................................. III 3 years 1999
Directors whose term of office continues beyond this meeting are Richard E. Cavanagh, Frank J.
Fabozzi, James Grosfeld, James Clayburn LaForce, Jr. and Ralph L. Schlosstein.
</TABLE>
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 1996.
(3) To modify the investment restriction prohibited investing for the purpose
of exercising control over the management of a company.
Shareholders elected the three Directors, ratified the selection of Deloitte
& Touche LLP and approved the modification of the investment restriction
prohibiting investing for the purpose of exercising control over the management
of a company. The results of the voting was as follows:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS
---------- ------------- -----------
<S> <C> <C> <C>
Andrew F. Brimmer.......................................... 15,338,792 -- 588,903
Kent Dixon................................................. 15,361,998 -- 565,698
Laurence D. Fink........................................... 15,366,764 -- 560,931
Ratification of Deloitte & Touche LLP...................... 15,290,420 215,712 421,562
Investment restriction..................................... 12,117,744 747,478 858,473
</TABLE>
- --------------------------------------------------------------------------------
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. Shareholders who do not participate in the Plan will receive all
distributions in cash paid by check in United States dollars mailed directly to
the shareholders of record (or if the shares are held in street or other nominee
name, then to the nominee) by the custodian, as dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange for the participants' accounts. The Trust will not issue shares
under the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal income tax 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.
15
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLOSED-END FUND: Investment vehicle which initially offers a fixed number of shares and trades on a
stock exchange. The fund invests in a portfolio of securities in accordance with its
stated investment objectives and policies.
DISCOUNT: When a fund's net asset value is greater than its stock price the fund is said to be
trading at a discount.
DIVIDEND: Income generated by securities in a portfolio and distributed to shareholders after
the deduction of expenses. This Trust declares and pays dividends to common
shareholders on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may have all dividends and distributions of capital gains automatically
reinvested into additional shares of a fund.
EMBEDDED CAP BONDS: Also known as additional interest municipal bonds. These securities are intended to
protect the income that a fund earns through leverage from significant increases 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 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 and The New York Times on Saturday or
The Wall Street Journal each Monday.
PREMIUM: When a fund's stock price is greater than its net asset value, the fund is said to
be trading at a premium.
PREREFUNDED BONDS: These securities are collateralized by U.S. Government securities which are held in
escrow and are used to pay principal and interest on the tax exempt issue and retire
the bond in full at the date indicated, typically at a premium to par.
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE CALL BLACKROCK AT (800) 227-7BFM
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
16
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The Trust's investment objective is to provide current income exempt from
regular federal income tax and to return $15 per share (the initial public
offering price per share) to investors on or about December 31, 2008.
WHO MANAGES THE TRUST?
BlackRock Financial Management, Inc. (BlackRock or the Adviser) is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages
approximately 41 billion of assets across the government, mortgage, corporate
and municipal sectors. These assets are managed on behalf of institutional and
individual investors in 21 closed-end funds traded on the New York or American
Stock Exchanges, several open-end funds and separate accounts for more than 80
clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset
Management Group, Inc. which is a division of PNC Bank, N.A., one of the
nation's largest banking organizations.
WHAT CAN THE TRUST INVEST IN?
The Trust intends to invest at least 80% of its total assets in a diversified
portfolio of 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 Trust's 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 ($15 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 2008. 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, 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 portfolio of
municipal obligations which will have an average final maturity on or about
December 31, 2008 and by annually retaining a small portion of its income.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide current income exempt from regular 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 the portfolio 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. It is important
to note that the Trust will be managed so as to preserve the integrity of the
return of the initial offering price. If market conditions, such as high
interest rate volatility, force a choice between current income and risking the
return of the initial offering price, it is likely that the return of the
initial offering price will be emphasized.
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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, State Street
Bank and Trust Co. Investors who wish to hold shares in a brokerage account
should check with their financial advisor to determine whether their brokerage
firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN A TERM TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the issuance of preferred
stock. Leverage permits the Trust to borrow money at short-term rates and
reinvest that money in longer-term assets which typically offer higher interest
rates. The difference between the cost of the borrowed funds and the income
earned on the proceeds that are invested in longer term assets is the benefit to
the Trust from leverage. 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
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 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: BRM) and as such
are subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects only to do so to a
limited extent. An investment in these securities involves special risks.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change
in the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
MUNICIPAL OBLIGATIONS. Municipal obligations include debt obligations issued
by states, cities, and local authorities, and possessions and certain
territories of the United States to obtain funds for various public purposes,
including the construction of public facilities, the refinancing of outstanding
obligations and the obtaining of funds for general operating expenses and for
loans to other public institutions and facilities. The value of municipal debt
securities generally varies inversely with changes in prevailing market interest
rates. Depending on the amount of call protection that the securities in the
Trust have, the Trust may be subject to certain reinvestment risks in
environments of declining interest rates.
ALTERNATIVE MINIMUM TAX (AMT). The Trust may invest in securities subject to
AMT. The Trust currently holds no securities that are subject to AMT.
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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.
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
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 688-0928
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
4 Albany Street
New York, NY 10006
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of
June 30, 1996 were not audited and accordingly, no
opinion is expressed on them.
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of any securities.
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
c/o Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 227-7BFM
09247K 10 9
09247K 30 7
09247K 20 8
09247K 40 6
09247K 50 5
THE [BLACKROCK LOGO]
INSURED MUNICIPAL
2008 TERM TRUST INC.
- ----------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1996
