- - --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- - --------------------------------------------------------------------------------
June 1, 1995
Dear Shareholder:
The fixed income markets experienced both extremely bearish and bullish
sentiment during the semi-annual period between November 1, 1994 and April 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
resounding rebound during the first five 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 semi-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 semi-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 Broad Investment Grade 2009 Term
Trust Inc. and look forward to continuing to serve your financial needs.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
June 1, 1995
Dear Shareholder:
Characterized by large swings in interest rates across the yield curve, the
semi-annual period between November 1, 1994 and April 30, 1995 provided a
challenging investment environment for fixed income products including The
BlackRock Broad Investment Grade 2009 Term Trust (BCT or the "Trust"). In
contrast to the year-long increase in interest rates in 1994, the fixed income
markets have rallied sharply in 1995. The bond market rally, which has caused
interest rates to decline as prices have increased, has been caused largely by
modest inflationary data and the perception that the Federal Reserve's proactive
attempts to contain inflation and provide a "soft landing" for the economy
(modest economic growth with little or no inflation) may have been successful.
During the final months of 1994, investor demand for closed-end bond funds
dropped to all-time low levels as seen by the large percentage of funds trading
at discounts to their net asset values. Closed-end bond funds fell victim to a
lack of demand stemming from fears of rising inflation and historically high
levels of year-end tax selling. As a result, the prices of most closed-end bond
funds dropped to historically low levels. Investors who endured the market slump
and opted to "Hold" or acquire more shares of the Trust during these tumultuous
markets witnessed a substantial increase in both net asset value (NAV) and share
price during the first few months of 1995 as the market environment for fixed
income securities and closed-end funds improved considerably.
Over the period, the Trust's NAV ranged from $12.45 to $11.67 and ended the
period at $12.40 per share, an increase of 3.85% since the beginning of the
fiscal period. At the beginning of the fiscal period, BCT was trading at a stock
price of $10.00 while at the end of this fiscal period (April 30) the Trust
closed at $10.50. During what was considered the height of tax-selling season,
the Trust declined to an all time low of $9.875 per share (as of November 18).
As of the date of this letter, the Trust's shares were trading at a price of
$11.375 per share, which is a 13.83% discount to its net asset value of $13.20
per share. The current annual dividend per share is $0.975, which is equivalent
to 8.57% on the current stock price.
The Trust seeks to return $15 per share (the initial offering price) to
investors on or about December 31, 2009 while providing high monthly income.
Although it is not a guarantee, BlackRock believes the Trust can achieve its
investment objective. The primary investment strategy of the Trust is to closely
match the maturity value of the assets of the portfolio with the future return
of the initial investment ($15.00) on or about December 31, 2009. The Trust's
portfolio is actively managed in relation to market conditions, interest rate
changes and, importantly, the remaining term to maturity of the Trust in order
to return the full initial investment by the end of 2009.
The Fixed Income Markets
During the past four months, interest rates across all parts of the yield
curve have declined substantially, contrasting sharply with the substantial
increases in interest rates that occurred through most of 1994. Coming off of
the worst twelve month period for fixed income securities since systematic
record keeping began nearly seventy years ago, the bond market has rallied
significantly since the beginning of 1995 as yields across the curve have fallen
dramatically.
The Federal Reserve increased the Fed funds rate for the sixth time in ten
months on November 15, 1994. During the final weeks of 1994, the market appeared
to be betting that the Fed's actions would be successful as the yield curve
flattened dramatically with the yield of the 30-year Treasury increasing only
slightly while the yield of the 2-year Treasury rose substantially. As a result,
leveraged portfolios that generally capitalize on the relative steepness of the
yield curve (such as the Trust) witnessed a reduction in income. The flattening
of the yield curve hampered the Trust's income generating ability and ultimately
contributed to a reduction of the Trust's dividend effective January 1995.
The Fed's seventh intervention came on February 1, 1995 with a 50 basis
point increase in the Fed funds rate, bringing the overnight lending rate that
banks charge each other to borrow cash to 6.00%. The Fed's continued efforts to
combat inflation appear to be effective, as the belief that inflation will
remain low has resulted in interest rates falling dramatically, particularly in
recent weeks. The yield of the 10-year Treasury (the Treasury Note that most
closely reflects the interest rate sensitivity of the Trust) has declined more
than 150 basis points (or 1.5 percentage points) since October 31, 1994. On June
1, 1995 the yield of the 10-year Treasury Note was 6.19%.
Although the recent market rally has afforded fixed income investors an
opportunity to recoup losses suffered through most of 1994, BlackRock remains
cautiously optimistic concerning the near-term future of the bond market.
Investor
2
<PAGE>
sentiment clearly indicates that inflationary fears that consumed the market
during most of 1994 have dissipated. However, the steep decline in market rates
could stimulate a resurgence in consumption and the potential for renewed
inflationary pressures. In addition, the momentum with which the economy entered
1995 and the weakness of the dollar could prove the arrival of a "soft landing"
to be premature.
The last quarter of 1994 capped a year of tremendous change in the
mortgage-backed securities market, reflecting trends that developed throughout
the year and have since continued into 1995. Importantly, despite the recent
decline of interest rates, prepayment speeds remain relatively slow across all
coupon types compared to the levels seen in 1993 after declines in interest
rates. In addition, supply has continued to diminish across all sectors of the
mortgage market including fixed-rate pass-throughs, adjustable rate mortgages
and CMOs. The lack of supply of mortgage-backed securities contributed to
tighter yield spreads relative to their Treasury benchmarks, helping mortgages
to outperform Treasuries during the first few months of 1995.
Having underperformed during the latter months of 1994, the corporate market
has outperformed other sectors during the first several months of 1995 primarily
due to its longer duration. In addition, similar to mortgage-backed securities,
the corporate sector also benefitted from favorable supply and demand
technicals.
The Trust's Portfolio and Investment Strategy
The portfolio continues to maintain a high credit quality bias, focusing
primarily on four sectors of the fixed income markets-mortgage pass-through
securities, corporates, Treasuries and commercial mortgage backed securities.
Consistent with the changes in value in the market place during the Trust's
semi-annual period ended April 30, BlackRock has made several modifications to
the Trust's portfolio in an attempt to take advantage of these dislocations. The
chart below illustrates the changes in portfolio composition that have occurred
during the semi-annual period ended April 30, 1995. Exposure to derivative
securities remains low and the portfolio continues to maintain a bias toward
strong credit quality. Going forward, BlackRock will continue to actively manage
the portfolio, adjusting the Trust's holdings based on our view of relative
value while keeping consistent with the Trust's primary objective of returning
the $15 and maintaining attractive levels of monthly income.
- - --------------------------------------------------------------------------------
Composition April 30, 1995 October 31, 1994
- - --------------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 40% 35%
- - --------------------------------------------------------------------------------
Corporate Bonds-Finance 13% 14%
- - --------------------------------------------------------------------------------
FHA Project Loans 9% 6%
- - --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 8% 2%
- - --------------------------------------------------------------------------------
Mortgage Pass-Throughs 6% 11%
- - --------------------------------------------------------------------------------
Corporate Bonds-Industrial 6% 9%
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Zero Coupon Bonds 4% 4%
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Canadian Provincial Securities 4% -
- - --------------------------------------------------------------------------------
Asset Backed Securities 3% 4%
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Corporate Bonds-Sovereign & Provincial 3% 12%
- - --------------------------------------------------------------------------------
Municipal Bonds 2% 2%
- - --------------------------------------------------------------------------------
Corporate Bonds-Utility 1% 1%
- - --------------------------------------------------------------------------------
U.S. Government Security 1% -
- - --------------------------------------------------------------------------------
Within the mortgage pass-through sector, the Trust continues to emphasize
current and lower coupon agency pass-throughs and multi-family mortgage
securities as these securities offer excellent prepayment and strong cash flow
predictability. In addition, the Trust has recently increased its allocation to
commercial mortgage-backed securities which provide attractive spreads over
Treasury securities in addition to excellent prepayment protection and cash flow
predictability. The Trust's CMO exposure (approximately one-third of net assets)
is heavily concentrated in PAC bonds. PACs (or Planned Amortization Class
securities) have a high degree of cash flow predictability and offer attractive
spreads over Treasuries and pass-through securities.
The Trust's corporate allocation has been slightly modified in recent
months, selling select issues that had performed particularly well during the
market rally. Specifically, the Trust has reduced its exposure to the auto
sector as well as U.S. dollar
3
<PAGE>
denominated international issues. Both sectors presented strong selling
opportunities as spreads tightened substantially during the recent market rally.
In addition, the threat of a slowdown in car sales could put pricing pressure on
the auto sector. The Trust continues to maintain its high allocation to the
finance sector.
The sharp decline in interest rates year-to-date could lead to an increase
in prepayment speeds and price volatility of mortgage-backed securities (MBS).
In response, the Trust would look to modestly lighten its mortgage exposure so
as to somewhat insulate the portfolio from prepayments while still deriving the
yield advantage of the mortgage sector. Specifically, the Trust would look to
lighten its allocation to some fixed-rate pass-through securities which could
experience significant prepayments and spread widening. ARMs, whose coupons
periodically adjust to a spread over a specified index, FHA project loans and
short average life CMOs offer relatively predictable cash flows and could be
excellent pass-through mortgage security alternatives in the coming months. In
the corporate market, the decline in interest rates could lead to an increase in
new corporate issuance. BlackRock will look to selectively add to its corporate
holdings while maintaining its bias toward strong credit quality.
We thank you for your investment in The BlackRock Broad Investment Grade
2009 Term Trust. Please feel free to contact us at (800) 227-7BFM (7236) if you
have specific questions which were not addressed in this semi-annual report.
Sincerely,
Robert S. Kapito Keith T. Anderson
Managing Director and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
- - --------------------------------------------------------------------------------
The BlackRock Broad Investment Grade 2009 Term Trust Inc.
- - --------------------------------------------------------------------------------
Symbol on American Stock Exchange: BCT
- - --------------------------------------------------------------------------------
Initial Offering Date: June 17, 1993
- - --------------------------------------------------------------------------------
Closing Stock Price as of 4/30/95: $10.50
- - --------------------------------------------------------------------------------
Net Asset Value as of 4/30/95: $12.40
- - --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 4/30/95:1 9.29%
- - --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.08125
- - --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.975
- - --------------------------------------------------------------------------------
- - --------------
1Yield on closing stock price is calculated by annualizing the current monthly
distribution per share and dividing it by the closing stock price per share.
2The distribution is not constant and is subject to change.
4
<PAGE>
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The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Portfolio of Investments
April 30, 1995 (Unaudited)
- - --------------------------------------------------------------------------------
S&P Principal
Rating Amount Value
(unaudited) (000) Description (Note 1)
- - --------------------------------------------------------------------------------
Long-Term Investments-149.1%
Mortgage Pass-Throughs- 22.5%
Federal Housing Administration,
$1,447 7.625%, Clc Citizen Village .......... $ 1,388,689
1,475 9.25%, Clc New Perspective ........... 1,553,157
1,953 8.28%, Non Put Reilly ................ 1,970,907
Government National Mortgage
Association,
1,956(D) 7.00% ................................ 1,851,416
495(D) 8.00% ................................ 494,542
980 6.50%, 1 Year CMT (ARM) .............. 1,001,875
-----------
8,260,586
-----------
Multiple Class Mortgage
Pass-Throughs-60.2%
795 Community Program Loan Trust,
Series 1987-A, Class A4 .............. 624,075
Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation
Certificates,
3,500(D)(D) Series 1255, Class 1255-H ............ 3,582,005
1,641(D)(D) Series 1401, Class 1401-MC1, ......... 250,063
11 Series 1430, Class 1430-KA (I) ....... 484,000
199 Series 1433, Class 1433-S ............ 116,181
9 Series 1459, Class 1459-JA (I) ....... 369,450
2,168(D)(D) Series 1510, Class 1510-G (P) ........ 2,033,177
3,000(D)(D) Series 1596, Class 1596-D ............ 2,674,124
1,000 Series 1730, Class 1730-K (P) ........ 946,560
Federal National Mortgage
Association, REMIC Pass-Through
Certificates,
516 Series 1994-22, Class 22-SA .......... 294,079
4,090(D)(D) Trust 1993-140, Class 140-K (P) ...... 3,669,466
1,000(D) Trust 1993-49, Class 49-H (P) ........ 931,563
3,053(D) Trust 1993-79, Class 79-PK (P) ....... 2,772,218
2,646(D) Trust 1993-87, Class 87-J (P) ........ 2,318,557
-----------
22,065,518
-----------
Commercial Mortgage-
Backed Securities-11.6%
BBB 400 American Southwest Financial
Securities Corp,
Series 1994-C2, Class A4 ............. 381,047
BBB 500 Citibank New York NA, Multifamily
Mortgage, Ser. 1994-1, Class M2 ...... 454,837
Baa2* 800 DLJ Mortgage Acceptance Corp.,
Series1992-MF3, Class B .............. 835,541
BBB+ 750 FDIC Remic Trust, Mortgage
Pass-Through Certificates,
Series 1994-C1, Class 2-F ............ 716,208
right col.
- - --------------------------------------------------------------------------------
S&P Principal
Rating Amount Value
(unaudited) (000) Description (Note 1)
- - --------------------------------------------------------------------------------
BBB $ 600 Nomura Asset Capital Corporation,
Series 93-M1, Class A3 ............... $ 565,687
Resolution Trust Corporation,
AA 826 Series 1991, Class M5-A .............. 842,861
BBB 496 Series 1994-C2, Class D .............. 468,269
----------
4,264,450
----------
Corporate Bonds - Finance-20.0%
A+ 500 Banc One Corp., 10.00%, 8/15/10 ...... 582,110
A 650 Bankers Trust N.Y. Corp., Subordinated
Debenture, 9.40%, 3/01/01 ............ 694,176
A 500 Chemical Bank New York Trust Co.,
7.25%, 9/15/02 ....................... 485,855
A- 500 First Union Corp.,
7.25%, 2/15/03 ....................... 485,773
A+ 500 Goldman Sachs Group,
7.875%, 1/15/03 ...................... 489,635
AA 500 Metropolitan Life Insurance Co.,
6.30%, 11/01/03 ...................... 452,401
A+ 1,000 Morgan Stanley Group Inc.,
10.00%, 6/15/08 ...................... 1,145,980
A- 1,000 NCNB Corp., 9.375%, 9/15/09 ............ 1,096,500
Baa3* 500 New American Capital Incorporated,
7.6875%, Series C, 4/12/00 ........... 500,000
BBB+ 500 Paine Webber Group Incorporated,
8.875%, 3/15/05 ...................... 508,765
BBB+ 1,000 Reliaster Financial Corporation,
6.625%, 9/15/03 ...................... 911,106
----------
7,352,301
----------
Corporate Bonds - Industrial-9.0%
BBB- 100 American Airlines Inc. Secured
Equipment Trust,
10.44%, Series 1990-M, 3/04/07 ....... 113,044
AA- 500 Anheuser Busch Cos Inc.,
9.00%, 12/01/09 ...................... 551,015
BBB 500 Occidental Petroleum Corp.,
10.125%, 9/15/09 ..................... 573,500
BBB- 500 Ralcorp Holdings, Incorporated,
8.75%, 9/15/04 ....................... 512,565
A- 500 Ralston Purina Co., Debenture,
9.25%, 10/15/09 ...................... 538,905
A 500 Seagram Joseph E & Sons Inc.,
7.00%, 4/15/08 ....................... 461,015
A+ 500 Texaco Capital Inc.,
Guaranteed Debenture,
8.625%, 6/30/10 ...................... 537,895
----------
3,287,939
----------
See Notes to Financial Statements.
5
<PAGE>
left col.
- - --------------------------------------------------------------------------------
S&P Principal
Rating Amount Value
(unaudited) (000) Description (Note 1)
- - --------------------------------------------------------------------------------
Corporate Bonds - Sovereign &
Provincial-5.3%
A $1,000 Dow Capital B V, 9.20%, 6/01/10 ........ $ 1,095,120
AA- 950 Korea Electric Power Corporation,
2003 Note, 6.375%, 12/01/03 .......... 857,756
-----------
1,952,876
-----------
Corporate Bonds - Utility-1.4%
BBB- 500 Ohio Edison Co.,
8.625%, 9/15/03 ...................... 515,396
-----------
13,108,512
-----------
Asset-Backed Securities-4.0%
800 Discover Card MasterTrust I,
Series 1993-3, Class A, 6.20% ........ 731,744
800 NationsBank Corp.,
Series 1993-2, Class A, 6.00% ........ 725,496
-----------
1,457,240
-----------
Zero Coupon Bond-5.9%
6,685(D) Financing Corp. (Fico) Strip ............ 2,170,151
-----------
U.S. Government
Security-0.2%
80 U.S. Treasury Notes,
5.75%, 8/15/03 ........................ 73,500
-----------
Municipal Bonds-2.8%
AA- 500 Fresno California Pension Obligation,
Series 1994, 7.80%, 6/01/14 ........... 478,020
BBB+ 555 Lake County Florida Resource
Recovery Revenue,
7.125%, 10/01/99 ...................... 540,344
-----------
1,018,364
-----------
Canadian Provincial
Securities-6.2%
BBB+ 1,000 Newfoundland Province,
11.625%, 10/15/07 .................... 1,266,520
A+ 525 Quebec Province Canada,
7.50%, 7/15/02 ....................... 516,851
BBB+ 500 Saskatchewan Province,
7.125%, 3/15/08 ...................... 473,200
-----------
2,256,571
-----------
right col.
- - --------------------------------------------------------------------------------
S&P Principal
Rating Amount Value
(unaudited) (000) Description (Note 1)
- - --------------------------------------------------------------------------------
Total investments before
investment sold
short-(cost $57,485,992) $54,674,892
-----------
Investment Sold
Short-(35.4%)
$12,800 U.S. Treasury Bonds,
7.50%, 11/15/24
(proceeds $11,854,000) $12,972,032)
-----------
Total investments, net of
short sale-113.7% 41,702,860
Liabilities in excess of other
assets-(13.7%) (5,030,491)
-----------
NET ASSETS-100% $36,772,369
===========
- - -------------
* S&P rating is unavailable; Moody's rating is indicated.
(D) (Partial) principal amount pledged as collateral for reverse
repurchase agreements.
(D)(D) Entire principal amount pledged as collateral for reverse
repurchase agreement.
- - --------------------------------------------------------------------------------
Key to Abbreviations
ARM -Adjustable Rate Mortgage.
REMIC -Real Estate Mortgage Investment Conduit.
I -Denotes a CMO with interest only characteristics.
P -Denotes a CMO with principal only characteristics.
- - --------------------------------------------------------------------------------
See Notes to Financial Statements.
6
<PAGE>
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The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Statement of Assets and Liabilities
April 30, 1995
(Unaudited)
- - --------------------------------------------------------------------------------
Assets
Investments, at value
(cost $57,485,992) (Note 1) .................................. $54,674,892
-----------
Cash ........................................................... 300,574
Deposit with brokers as collateral for
investment sold short (Note 1) ............................... 13,408,000
Interest receivable ............................................ 592,749
Receivable for investments sold ................................ 1,743,955
Deferred organization expenses and other ....................... 59,843
-----------
70,780,013
-----------
Liabilities
Reverse repurchase agreements (Note 4) ......................... 18,233,000
Investment sold short, at value
(proceeds $11,854,000) (Note 1) .............................. 12,972,032
Interest payable 484,250
Payable for investments purchased .............................. 2,269,910
Dividends payable .............................................. 51,954
Advisory fee payable (Note 2) .................................. 16,616
Administration fee payable (Note 2) ............................ 4,532
Other accrued expenses ......................................... 75,350
-----------
34,107,644
-----------
Net Assets ..................................................... $36,672,369
===========
Net assets were comprised of:
Common stock, at par value (Note 5) ........................ $ 29,571
Paid-in capital in excess of par ........................... 40,842,032
-----------
40,871,603
Accumulated net realized losses .............................. (270,102)
Net unrealized depreciation .................................. (3,929,132)
-----------
Net assets, April 30, 1995 ................................... $36,672,369
===========
Net asset value per share:
($36,672,369 / 2,957,093 shares of
common stock issued and outstanding) ......................... $12.40
======
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- - --------------------------------------------------------------------------------
The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Statement of Operations
Six Months Ended April 30, 1995
(Unaudited)
- - --------------------------------------------------------------------------------
Net Investment Income
Income
Interest earned (including net accretion of
discount of $48,438 and net of interest
expense of $489,792) ....................................... $ 1,369,137
-----------
Expenses
Investment advisory .......................................... 97,083
Administration ............................................... 26,477
Audit ........................................................ 9,869
Custodian .................................................... 7,029
Directors .................................................... 5,352
Reports to shareholders ...................................... 4,289
Transfer agent ............................................... 4,008
Legal ........................................................ 1,968
Miscellaneous ................................................ 14,878
-----------
Total operating expenses ..................................... 170,953
-----------
Net investment income .......................................... 1,198,184
-----------
Realized and Unrealized Gain (Loss) on
Investments (Note 3)
Net realized gain (loss) on:
Investments .................................................. (541,859)
Short sales .................................................. 201,062
Futures ...................................................... 143,153
-----------
(197,644)
-----------
Net change in unrealized
appreciation (depreciation) on:
Investments .................................................. 3,419,635
Short sales .................................................. (1,540,522)
Futures ...................................................... (49,206)
-----------
1,829,907
-----------
Net gain on investments ........................................ 1,632,263
-----------
Net Increase in Net Assets Resulting from
Operations ................................................... $ 2,830,447
===========
See Notes to Financial Statements.
7
<PAGE>
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- - --------------------------------------------------------------------------------
The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Statement of Cash Flows
Six Months Ended April 30, 1995
(Unaudited)
- - --------------------------------------------------------------------------------
Increase (Decrease) in Cash
Cash flows used for operating activities:
Interest purchased, net of interest received $ 1,845,751
Operating expenses paid (313,808)
Interest expense paid (197,633)
Purchase of long-term portfolio investments (19,133,920)
Proceeds from disposition of long-term portfolio
investments 18,097,721
Other (744,974)
------------
Net cash flows used for operating activities (446,863)
------------
Cash flows provided by financing activities:
Increase in reverse repurchase agreements 2,230,237
Cash dividends paid (1,487,922)
------------
Net cash flows provided by financing activities 742,315
------------
Net increase in cash 295,452
Cash at beginning of period 5,122
------------
Cash at end of period $ 300,574
============
Reconciliation of Net Increase in
Net Assets Resulting from Operations
to Net Cash Flows Provided by
Operating Activities
Net increase in net assets resulting from operations $ 2,830,447
------------
Increase in investments (2,394,679)
Net realized loss on investments 197,644
Increase in unrealized appreciation (1,829,907)
Decrease in interest receivable 35,260
Increase in deposits with brokers (5,548,000)
Increase in payable for investment
sold short 5,398,272
Increase in receivable for investments sold (1,477,526)
Increase in deferred organization expenses
and other assets (36,868)
Increase in payable for investments purchased 2,192,322
Increase in interest payable 292,159
Decrease in accrued expenses and other liabilities (105,987)
------------
Total adjustments (3,277,310)
------------
Net cash flows used for operating activities $ (446,863)
============
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- - --------------------------------------------------------------------------------
The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Statements of Changes in
Net Assets
(Unaudited)
- - --------------------------------------------------------------------------------
Six Months
Ended Year Ended
April 30, October 31,
1995 1994
----------- -----------
Increase (Decrease) in
Net Assets
Operations:
Net investment income ..................... $ 1,198,184 $ 2,812,643
Net realized gain (loss) on
investments, short sales
and futures .............................. (197,644) (56,431)
Net unrealized appreciation
(depreciation) on
investments, short sales
and futures .............................. 1,829,907 (7,263,829)
----------- -----------
Net increase (decrease) in net
assets resulting from
operations ............................... 2,830,447 (4,507,617)
----------- -----------
Distributions to shareholders:
Dividends from
net investment income .................... 1,198,184) (2,813,817)
Distributions from
realized capital gains ................... (16,027) (51,279)
Distributions from
paid-in capital .......................... (264,309) (276,506)
----------- -----------
Total dividends and
distributions ............................. (1,478,520) (3,141,602)
----------- -----------
Capital share transactions:
Additional capital charge
with respect to initial
offering of shares ....................... - (81,400)
----------- -----------
- (81,400)
----------- -----------
Total increase (decrease) ................ 1,351,927 (7,730,619)
Net Assets
Beginning of period ........................ 35,320,442 43,051,061
----------- -----------
End of period .............................. $36,672,369 $35,320,442
=========== ===========
See Notes to Financial Statements.
8
<PAGE>
- - -------------------------------------------------------------------------------
The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Financial Highlights (Unaudited)
For the Period
PER SHARE For the Six June 25,
OPERATING Months Ended Year Ended 1993* to
PERFORMANCE: April 30, October 31, Octoberd 31,
1995 1994 1993
------- ------- -------
Net asset value, beginning
of the period $ 11.94 $ 14.56 $ 14.10
------- ------- -------
Net investment income
(net of interest
expense of $.17, $.34
and $.02) 0.41 0.95 0.28
Net realized and
unrealized gain (loss)
on investments, short
sales and futures 0.55 (2.48) 0.52
------- ------- -------
Net increase (decrease)
from investment
operations 0.96 (1.53) 0.80
------- ------- -------
Dividends from net
investment income (0.41) (0.95) (0.27)
Distributions from realized
capital gains (0.01) (0.02) -
Distributions from paid-in
capital (0.08) (0.09) -
------- ------- -------
Total dividends and
distributions (0.50) (1.06) (0.27)
------- ------- -------
Capital charge with respect
to issuance of shares - (0.03) (0.07)
Net asset value, end of
period** $ 12.40 $ 11.94 $ 14.56#
======= ======= =======
Per share market value,
end of period** $ 10.50 $ 10.00 $ 13.75
======= ======= =======
TOTAL INVESTMENT
RETURN(D) 10.06% (20.41%) (0.60%)
RATIOS TO AVERAGE
NET ASSETS
Operating expenses 0.97%(D)(D) 1.04% 0.97%(D)(D)
Net investment income 6.80%(D)(D) 7.31% 5.66%(D)(D)
SUPPLEMENTAL DATA:
Average net assets
(in thousands) $35,524 $38,468 $41,195
Portfolio turnover 55% 41% 27%
Net assets, end of period
(in thousands) $36,672 $35,320 $43,051
Reverse repurchase
agreements outstanding,
end of period
(in thousands) $18,233 $16,003 $18,375
Asset coverage(D)(D) $ 3,011 $ 3,207 $ 3,343
- - -----------------
* Commencement of investment operations.
** Net Asset Value and market value are published in The Wall Street
Journal each Monday.
# Net asset value immediately after the closing of the first public
offering was $14.03.
(D) Total investment return is calculated assuming a purchase of common
stock at the current market value on the first day and a sale at the
current market value on the last day of the period reported. Dividends
and distributions, if any, are assumed for purposes of this
calculation, to be reinvested at prices obtained under the Trust's
dividend reinvestment plan. This calculation does not reflect
brokerage commissions. Total investment returns for less than one full
year are not annualized.
(D)(D) Annualized.
(D)(D)(D) Per $1,000 of reverse repurchase agreements outstanding.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each of the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's shares.
See Notes to Financial Statements.
Right col.
- - --------------------------------------------------------------------------------
The BlackRock Broad Investment
Grade 2009 Term Trust Inc.
Notes to Financial Statements (Unaudited)
- - --------------------------------------------------------------------------------
Note 1. Accounting
Policies
The BlackRock Broad Investment Grade 2009 Term Trust Inc. (the "Trust"), a
Maryland corporation, is a diversified, closed-end management investment
company. The Trust had no transactions until June 16, 1993, when it sold 7,093
shares of common stock for $100,012 to BlackRock Financial Management, Inc.
Investment operations commenced on June 25, 1993. The investment objective of
the Trust is to manage a portfolio of fixed income securities that will return
$15 per share to investors on or shortly before December 31, 2009 while
providing high monthly income. 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 securities
and other debt securities on the basis of current market quotations provided by
dealers or pricing services approved by the Trust's Board of Directors. In
determining the value of a particular security, pricing services may use certain
information with respect to transactions in such securities, quotations from
dealers, market transactions in comparable securities, various relationships
observed in the market between securities, and calculated yield measures based
on valuation technology commonly employed in the market for such securities.
Exchange-traded options are valued at their last sales price as of the close of
options trading on the applicable exchanges. In the absence of a last sale,
options are valued at the average of the quoted bid and asked prices as of the
close of business. A futures contract is valued at the last sale price as of the
close of the commodities exchange on which it trades unless the Trust's Board of
Directors determines that such price does not reflect its fair value, in which
case it will be valued at its fair value as determined by the Trust's Board of
Directors. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, if their term to maturity from date of purchase is 60
days or less, or by amortizing their value on the 61st day
9
<PAGE>
left col.
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 and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
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"
Right col.
means that a portfolio's or a security's price would be expected to change by
approximately one percent with a one percent change in interest rates, while a
duration of "five" would imply that the price would move approximately five
percent in relation to a one percent change in interest rates. 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 the 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. When the Trust makes a
short sale, it may borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any payments received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as to
dollar amount, will be recognized upon the termination of a short sale if the
market price is greater or less than the proceeds originally received.
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
10
<PAGE>
left col.
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
any securities lending during the six months ended April 30, 1995.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes discount or amortizes premium 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 amounts.
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 at least
annually. Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Deferred Organization Expenses: A total of $30,000 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") and an Administration Agreement with Middlesex
Administrators L.P. (the "Administrator"), an indirect wholly-owned subsidiary
of Merrill Lynch & Co., Inc.
The investment fee paid to the Adviser is computed weekly and payable monthly
at an annual rate of 0.55% of the Trust's average weekly net assets. The
administration fee paid to the Administrator is also computed weekly and payable
monthly at an annual rate of 0.15% 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. The
Administrator pays occupancy and certain clerical and accounting costs of the
Trust. The Trust bears all other costs and expenses.
Right col.
On February 28, 1995, the Advisor was acquired by PNC Bank, N.A. Following the
acquisition, the Advisor 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 six months ended April 30, 1995 aggregated $21,326,242
and $19,699,032, respectively.
The Trust may invest without limit in securities which are not readily
marketable, including those which are restricted as to disposition under
securities law ("restricted securities"). At April 30, 1995, the Trust held no
illiquid or restricted securities.
The federal income tax basis of the Trust's investments at April 30, 1995 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized depreciation for federal income tax purposes was $3,929,132
(gross unrealized appreciation-$287,728, gross unrealized
depreciation-$4,216,860).
Note 4. Borrowings
Reverse Repurchase Agreements: The Trust enters into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and under
the direction of the Trust's Board of Directors. Interest on the value of
reverse repurchase agreements issued and outstanding is based upon competitive
market rates at the time of issuance. At the time the Trust enters into a
reverse repurchase agreement, it establishes and maintains 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 six months ended April 30, 1995 was approximately $16,211,094 at a weighted
average interest rate of approximately 5.88%. The maximum amount of reverse
repurchase agreements outstanding at any month-end during the period was
$18,233,000 as of April 30, 1995 which was 25.76% of total assets.
Dollar Rolls: The Trust enters 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 is compensated by the interest earned
on the cash proceeds of the initial sale and by the lower repurchase price at
the future date.
The Trust did not enter into any dollar roll transactions during the six
months ended April 30, 1995.
11
<PAGE>
Left col.
Note 5. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
2,957,093 shares outstanding at April 30, 1995, the Adviser owned 7,093 shares.
Right Col.
Offering costs ($280,662) incurred in connection with the underwriting of the
Trust's shares have been charged to paid-in capital in excess of par.
Note 6. Dividends
Since April 30, 1995, the Board of Directors of the Trust declared a dividend
from undistributed earnings of $0.08125 per share payable May 31, 1995 and June
30, 1995 to shareholders of record on May 15, 1995 and June 15, 1995,
respectfully.
Full Col.
Note 7. Quarterly Data
(Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------
Net realized and
(unrealized) Net increase (decrease)
gains (losses) on in net assets
Net Investment investments, short resulting Dividends
income sales and futures from operations and Distributions Share price
Period and
Quarterly Total Per Per Per Per net asset
period income Amount share Amount share Amount share Amount share High Low value
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 25,
1993* to
July 31,
1993 .... $196,991 $168,453 $0.06 $ 479,475 $0.16 $ ,647,928 $0.22 - - $15.125 $15.00 $14.27
August 1,
1993 to
October
31, 1993 . 810,237 636,459 0.22 1,076,594 .36 1,713,053 0.58 $807,738 $0.27 15.125 13.625 14.56
November 1,
1993 to
January 31,
1994 ..... 750,669 699,944 0.24 (686,532) (0.23) 13,412 0.00 803,738 0.27 14.25 13.00 14.29
February 1,
1994 to
April 30,
1994 ..... 762,203 759,779 0.25 (4,994,640) (1.69) (4,234,861) (1.43) 785,401 0.27 13.125 11.00 12.57
May 1,
1994 to
July 31,
1994 ..... 849,082 685,632 0.23 (87,558) (0.03) 598,074 0.20 776,233 0.26 11.75 11.00 12.53
August 1,
1994 to
October 31,
1994 ..... 851,883 667,288 0.23 1,551,530) (0.53) (884,242) (0.30) 776,230 0.26 11.75 10.00 11.94
November 1,
1994 to
January 31,
1995 ..... 664,982 585,925 0.20 141,533 0.05 727,458 0.25 757,742 0.26 11.000 9.875 11.93
February 1,
1995 to
April 30,
1995 ..... 704,155 612,259 0.21 1,490,730 0.50 2,102,989 0.71 720,778 0.24 10.750 10.250 12.40
- - ------------------------------------------------------------------------------------------------------------------------------
<FN>
*Commencement of Investment Operations.
</FN>
</TABLE>
12
<PAGE>
- - --------------------------------------------------------------------------------
BLACKROCK BROAD INVESTMENT GRADE 2009 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 & 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 transfer agent, as dividend disbursing
agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market, on the American
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue 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 fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income taxes that
may be payable on such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days' written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Plan Agent at (800) 669-1BFM. The address is on the front of
this report.
- - --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- - --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders, or to its charter or
by-laws, or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
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 1,790,979 Votes Against 26,800 Votes Withheld 41,305
The Annual Meeting of Trust Shareholders was held May 16, 1995 to vote on
the following matters:
(1) To elect three Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
James Grosfeld I 3 years 1998
James Clayburn La Force, Jr. I 3 years 1998
Richard E. Cavanagh I 3 years 1998
(1) Directors whose term of office continues beyond this meeting are Frank
J. Fabozzi, Andrew F. Brimmer, Kent Dixon, Laurence D. Fink and Ralph L.
Schlosstein.
(2)To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 1995.
Shareholders elected the three Directors and ratified the selection of
Deloitte & Touche LLP. The results of the voting was as follows:
Votes For Votes Against Votes Withheld
--------- ------------- --------------
James Grosfeld 2,502,211 - 31,807
James Clayburn La Force, Jr. 2,502,211 - 31,807
Richard E. Cavanagh 2,500,508 - 33,510
Ratification of Deloitte
& Touche LLP 2,472,112 25,103 36,803
13
<PAGE>
- - --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
INVESTMENT SUMMARY
- - --------------------------------------------------------------------------------
The Trust's Investment Objective
The Trust's investment objective is to manage a portfolio of fixed income
securities that will return $15 per share (the initial public offering price per
share) to investors on or about December 31, 2009 while providing high monthly
income.
Who Manages the Trust?
BlackRock Financial Management, Inc. ("BlackRock") is the investment adviser for
the Trust. BlackRock is a registered investment adviser specializing in fixed
income securities. Currently, BlackRock manages over $27 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 over 75 separate accounts for various clients
in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset Management
Group 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), corporate debt
securities and privately issued mortgage-backed securities.
What is the Adviser's Investment Strategy?
The Adviser will manage the assets of the Trust in accordance with the Trust's
investment objective and policies to return the initial offering price ($15 per
share) at maturity. The Adviser applies an investment strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment on or about December 31, 2009. 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 through a small amount of retained income each
year will be sufficient to return the initial offering price to investors. The
Trust's portfolio is actively managed 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 Trust 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%
of the portfolio assets) to seek to enhance the income of the portfolio. 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 reflect 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.
How Are the Trust's Shares Purchased and Sold? Does the Trust Pay Dividends
Regularly?
The Trust's shares are traded on the American 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
14
<PAGE>
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. Since inception, the range of leverage utilized by the Trust
generally has been between 20% and 33%.
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 in a rapidly rising environment, it can cause net assets to
decline faster. The Trust may reduce, or unwind, the amount of leverage employed
should BlackRock consider that reduction to be in the best interests of the
Trust. BlackRock's portfolio managers continuously monitor and regularly review
the Trust's use of leverage and maintain the ability to unwind the leverage if
that course is chosen.
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 American Stock Exchange (AMEX symbol: BCT) 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 are generally more volatile than
securities that pay interest periodically but appreciate in value over time and
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 a portion of its 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.
15
<PAGE>
- - --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
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 Association, 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.
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 a
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.
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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 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.
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
Agreements:
In a reverse repurchase agreement, the Trust 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 distribution from
underlying mortgage-backed securities. IO's and PO's are examples of strips.
17
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BlackRock Financial Management, Inc.
Summary of Closed-End Funds
- - --------------------------------------------------------------------------------
Taxable Trusts
- - --------------------------------------------------------------------------------
Maturity
Perpetual Trusts Stock Symbol Date
------------ --------
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
Term Trusts
The BlackRock 1998 Term Trust Inc. BBT 12/98
The BlackRock 1999 Term Trust Inc. BNN 12/99
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BLK 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
Tax-Exempt Trusts
- - --------------------------------------------------------------------------------
Maturity
Perpetual Trusts Stock Symbol Date
------------ --------
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal
Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal
Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal
Trust Inc. RNY N/A
Term Trusts
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term
Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term
Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
If you would like further information please do not hesitate to call BlackRock
at (800) 227-7BFM or consult with your financial advisor.
18
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_______________________________________________________________________________
BLACKROCK FINANCIAL MANAGEMENT L.P.
AN OVERVIEW
_______________________________________________________________________________
BlackRock Financial Management (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages over $27 billion of net
assets in portfolios of government, mortgage, corporate and municipal
securities. These assets are managed on behalf of many individual investors in
twenty-one closed-end funds and three open-end funds and on behalf of more than
75 institutional clients in the United States and overseas. BlackRock's
institutional investor base includes Chrysler Corporation Master Retirement
Trust, General Retirement System of the City of Detroit, State Treasurer of
Florida, General Electric Pension Trust and Unisys Corporation Master Trust.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individuals and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities markets, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. BlackRock introduced the first closed-end mortgage fund, the first
taxable and tax-exempt closed- end funds to offer a finite term, the first
closed-end fund to achieve a AAAf rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund having specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
If you would like further information
please call BlackRock at (800) 227-7BFM
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Left col.
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
Middlesex Administrators L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
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
The accompanying financial statements as
of April 30, 1995 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 Broad Investment Grade 2009 Term Trust Inc.
c/o Middlesex Administrators L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
(800) 227-7BFM
092472-10-6
Right col.
The BlackRock
Broad Investment
Grade 2009
Term Trust Inc.
- - -------------------
Semi-Annual Report
April 30, 1995
