- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
November 30, 1996
Dear Trust Shareholder:
Interest rate volatility in the domestic fixed income markets was once
again a major factor over the past twelve months. Significant swings in the pace
of U.S. economic growth influenced the bond market's performance, as every
release of economic data led to market participant speculation regarding the
direction of Federal Reserve monetary policy.
Despite strong growth and rising wage pressures, the Fed's decision not to
raise interest rates at their two most recent policy meetings has markedly
increased the stakes in the bond market. The rationale behind the Fed's decision
not to raise interest rates appears to focus on the benign inflation data
released during the third quarter. Should economic growth slow and inflation
remain benign, the Fed will be proven correct in their inaction and the market
would be expected to rally significantly. On the other hand, signs of a stronger
economy could result in weaker bond prices as the likelihood of a Fed tightening
would increase.
BlackRock maintains a positive view on the bond market. On balance, the
outlook for moderate inflation remains intact, suggesting that further declines
in interest rates are likely. In addition to this favorable fundamental
backdrop, foreign demand for U.S. bonds has increased due to the renewed
attractiveness of the U.S. bond market on a global basis.
This annual report is designed to help you stay informed about your
investment and represents our ongoing commitment to improving our communication
with you. We hope you find this report useful now and in the future. We
appreciate your confidence and look forward to helping you reach your long-term
investment goals.
Sincerely,
/s/Laurence D. Fink /s/Ralph L. Schlosstein
- -------------------- -----------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
November 30, 1996
Dear Shareholder:
We are pleased to present the annual report for The BlackRock Broad
Investment Grade 2009 Term Trust Inc. ("the Trust") for the fiscal year ended
October 31, 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, actively managed closed-end bond fund whose
shares are traded on the American Stock Exchange under the symbol "BCT". The
Trust's investment objective is to return $15 per share (its initial offering
price) to shareholders on or about December 31, 2009 while providing high
current income. Although there can be no guarantee, BlackRock is confident that
the Trust can achieve its investment objectives. The Trust seeks these
objectives by investing in investment grade fixed income securities, including
corporate debt securities, mortgage-backed securities backed by U.S. Government
agencies (such as Fannie Mae, Freddie Mac or Ginnie Mae) and commercial
mortgage-backed securities. Historically, the Trust has been primarily invested
in corporate debt securities and collateralized mortgage obligations (CMOs). All
of the Trust's assets must be rated "BBB" by Standard & Poor's or "Baa" by
Moody's at the time of purchase or be issued or guaranteed by the U.S.
government or its agencies.
The table below summarizes the performance of the Trust's stock price and
NAV (the market value of its bonds per share) over the period:
<TABLE>
<CAPTION>
10/31/96 10/31/95 CHANGE HIGH LOW
<S> <C> <C> <C> <C> <C>
Stock Price $11.00 $11.125 (1.12%) $11.75 $10.25
Net Asset Value (NAV) $13.46 $13.40 0.45% $13.91 $12.37
</TABLE>
THE FIXED INCOME MARKETS
Significant swings in the pace of U.S. economic growth influenced the
performance of the fixed income markets during the year ended October 31, 1996.
Throughout the fourth quarter of 1995 and through the first six weeks of 1996,
weak inflationary data and sluggish retail demand spurred two reductions of
short term interest rates totaling 50 basis points (0.50%) by the Federal
Reserve to 5.25%. In response to these reductions, as well as the sharp decline
in interest rates throughout 1995, economic growth began to pick up in
mid-February and accelerated throughout the second quarter of 1996. Economic
growth as measured by Gross Domestic Product (GDP) was measured at an annualized
4.7% for the second quarter of 1996, which led investors to believe that the
Federal Reserve would be forced to raise interest rates for the first time in
over a year to curb the pace of the economy. However, the pace of economic
growth has slowed during the past few months. Softer economic data and continued
moderation in the broad inflation measures during the third quarter of 1996
allowed the Fed to leave short term interest rates unchanged at their August and
September policy meetings.
Yields of most maturity Treasuries posted minimal net changes over the past
twelve months. As an example, the yield of the 10-Year Treasury note ended
October 1996 at 6.34%, 32 basis points higher than the October 31, 1995 closing
yield of 6.02%. However, the modest net change in yield levels masks
considerable intra-year movements. After falling to a low of 5.52% in
mid-January, the yield of the 10-year Treasury rose to 7.05% in July in response
to stronger economic data before rallying to 6.34% at the end of the fiscal
year.
The market for mortgage-backed securities (MBS) posted strong performance
versus the broader investment grade bond market during 1996. Prepayments, as
measured by the MBA Refinancing Index, displayed considerable stability as
homeowners refinanced their mortgages at a relatively stable rate. An equally
important contributor to mortgage
2
<PAGE>
performance was a strong technical environment, as new issue supply declined
from its May peak. Additionally, financial institution demand for MBS increased
in light of an overall scarcity of high quality fixed income products with a
yield advantage over Treasuries.
Corporates posted modestly better total returns than the broad investment
grade bond market for the twelve months ended October 31, 1996, as investor
demand rose for bonds with a yield advantage (or "spread") over comparable
maturity Treasuries. We believe that corporate profits have peaked and that
yield spreads have narrowed to extremely tight levels versus Treasuries, making
corporate bonds expensively priced. On the other hand, it appears unlikely that
the economy will weaken substantially and cause significant price weakness in
the corporate bond market.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market outlook and the Trust's investment objectives. The
following chart compares the Trust's current and October 31, 1995 asset
composition:
<TABLE>
<CAPTION>
======================================================================================
COMPOSITION OCTOBER 31, 1996 OCTOBER 31, 1995
<S> <C> <C>
Agency Multiple Class Mortgage Pass-Throughs 30% 28%
Commercial Mortgage-Backed Securities 16% 11%
Adjustable Rate Mortgage Securities 13% 17%
Corporate Bonds--Finance & Banking 8% 10%
Stripped Mortgage-Backed Securities 7% --
Corporate Bonds--Sovereign & Provincial 6% 6%
Corporate Bonds--Industrial 6% 6%
Municipal Bonds 5% 4%
Corporate Bonds--Utilities 3% 2%
Mortgage Pass-Throughs 3% 6%
U.S. Gov't Securities 2% 3%
Non-Agency Multiple Class Mortgage Pass-Throughs 1% 3%
FHA Project Loans -- 4%
======================================================================================
</TABLE>
The Trust took advantage of the strong 1996 year-to-date total return
performance of the mortgage-backed securities (MBS) market, which saw mortgages
as represented by the Lehman Brothers Mortgage Index outperform the broader
investment grade bond market (represented by the Lehman Brothers Aggregate
Index) by 4.41% to 2.84%. Over the past few months, however, BlackRock has taken
a decidedly defensive outlook on the mortgage market given the tight yield
spread levels at which mortgages are currently trading and our anticipation of a
pick-up in interest rate volatility. Accordingly, the Trust reduced its exposure
to several sectors of the mortgage market.
The reduction in mortgages was most pronounced in the collateralized
mortgage obligation (CMO) and pass-through sectors. The Fund's remaining
mortgage holdings emphasize seasoned securities, which have weathered several
interest rate cycles and are expected to provide more prepayment stability
should interest rates decline significantly. The sale of residential mortgage
securities raised cash to purchase commercial mortgage-backed securities (CMBS),
which have continued to post excellent total returns despite ongoing high levels
of new issuance. CMBS deals are typically issued in several pieces, or tranches,
which carry different credit ratings. As investor participation in the CMBS
market continues to increase, the yield advantage of buying a lower rated
security has decreased. Given these narrow credit spreads, the Trust's recent
purchases have emphasized higher rated CMBS tranches due to the relatively small
degree of yield differential.
3
<PAGE>
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the fixed income markets as well as to
maintain the Trust's ability to meet its investment objectives. We thank you for
your investment in the BlackRock Broad Investment Grade 2009 Term Trust Inc.
Please feel free to contact our marketing center at (800) 227-7BFM (7236) if you
have specific questions which were not addressed in this report.
Sincerely,
/s/ Robert S. Kapito /s/ Michael P. Lustig
- -------------------- ---------------------
Robert S. Kapito Michael P. Lustig
Vice Chairman and Portfolio Manager Principal 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 10/31/96: $11.00
Net Asset Value as of 10/31/96: $13.46
Yield on Closing Stock Price as of 10/31/96 ($11.00)1: 8.18%
Current Monthly Distribution per Share2: $0.0750
Current Annualized Distribution per Share2: $0.9000
===============================================================================
- ----------
1Yield on closing stock price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2The distribution is not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
S&P/
MOODY'S PRINCIPAL
RATINGS* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--143.6%
MORTGAGE PASS-THROUGHS--4.2%
Government National Mortgage
Association,
$1,691+ 7.00%, 1/15/24 - 2/15/24 ............ $1,660,481
----------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--63.2%
AAA 795 Community Program Loan Trust,
Series 1987-A, Class A4,
4.50%, 10/01/18 ..................... 682,706
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates (REMIC),
1,127+ Series 1506, Class 1506-S,
5/15/08 (ARM) .................... 1,014,068
2,168++ Series 1510, Class 1510-G,
5/15/13 .......................... 2,165,940
3,000++ Series 1596, Class 1596-D,
10/15/13 ......................... 2,869,440
331 Series 1637, Class 1637-LE,
12/15/23 (ARM) ................... 246,083
Federal National Mortgage
Association, REMIC Pass-Through
Certificates,
137 Trust 1992-174, Class 174-S,
9/25/22 (ARM) .................... 358,188
536 Trust 1992-192, Class 192-SB,
11/25/07 (ARM) ................... 495,016
1,613+ Trust 1992-196, Class 196-SA,
11/25/07 (ARM) ................... 1,284,599
1,000++ Trust 1993-49, Class 49-H,
4/25/13 .......................... 993,160
3,053+ Trust 1993-79, Class 79-PK,
4/25/22 .......................... 2,963,622
2,646++ Trust 1993-87, Class 87-J,
4/25/22 .......................... 2,468,374
207 Trust 1993-94, Class 94-S,
5/25/23 (ARM) .................... 125,302
4,000++ Trust 1993-138, Class 138-JK,
5/25/19 (I) ...................... 1,071,600
4,090+ Trust 1993-140, Class 140-K,
8/25/13 .......................... 4,035,971
614+ Trust 1993-183, Class 183-SE,
10/25/23 (ARM) ................... 484,949
589 Trust 1993-191, Class 191-SD,
10/25/08 (ARM) ................... 427,918
461++ Trust 1993-202, Class 202-VB,
11/25/23 (ARM) ................... 399,053
1,177++ Trust 1994-13, Class 13-SM,
2/25/09 (ARM) .................... 900,405
- --------------------------------------------------------------------------------
S&P/
MOODY'S PRINCIPAL
RATINGS* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
$ 748+ Trust 1994-37, Class 37-SC,
3/25/24 (ARM) .................... $ 539,590
4,051 Trust 1994-42, Series 42-SO,
3/25/23 (ARM) .................... 569,739
1,500+ Trust 1996-20, Class 20-SB,
10/25/08 (ARM) ................... 465,000
119 Trust G93-25, Class 25-J,
12/25/19 (I) ..................... 470,840
246 Trust G93-27, Class 27-SE,
8/25/23 (ARM) .................... 129,830
----------
25,161,393
----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES--22.9%
A 400@ American Southwest Financial
Securities Corporation, Series
1994-C2, Class A4,
8.00%, 8/25/10 ...................... 404,764
BBB 500 Citibank New York NA,
Multifamily Mortgage, Series 1994-1,
Class M2, 144A 8.00%, 1/25/19 ....... 507,753
Baa2 800 DLJ Mortgage Acceptance
Corporation, Series 1992-MF3,
Class B, 10.25%, 6/18/07 ............ 812,585
BBB+ 750 FDIC Remic Trust, Mortgage
Pass-Through Certificates,
Series 1994-C1, Class II-F,
8.70%, 9/25/25 ...................... 770,625
AAA 500 GS Mortgage Securities Corporation,
Series 1996- PL, Class A2,
7.41%, 2/15/27 ...................... 507,500
LTC Commercial Mortgage
Pass-Through Certificates,
A 500 Series 1994-1, Class 1-D,
10.00%, 6/15/26 ..................... 555,076
AAA 496 Series 1996-1 Class 1-A, 144A,
7.06%, 4/15/28 494,487
Merrill Lynch Mortgage Investors
Incorporated,
BBB 500 Series 1995-C1, Class D,
7.944%, 5/25/15 ..................... 510,123
BBB 500 Series 1996-C1, Class D,
7.42%, 4/25/28 ...................... 492,801
BBB 500 Morgan Stanley Capital 1
Incorporated, Commercial
Mortgage Pass-Through,
Series 1995-GA 1, Class D, 144A
8.25%, 8/15/27 ...................... 519,150
See Notes to Financial Statements.
5
<PAGE>
- --------------------------------------------------------------------------------
S&P/
MOODY'S PRINCIPAL
RATINGS* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
AAA $ 750 New York City Mortgage Loan Trust,
Multifamily Mortgage Pass-Through
Class A-2, 144A
6.75%, 6/25/2011 .................... $ 720,235
BBB 600 Nomura Asset Capital Corporation,
Series 1993-M1, Class A3, 144A
7.64%, 11/25/03 ..................... 606,139
PaineWebber Mortgage
Acceptance Corporation IV,
BBB 750 Series 1995-M1, Class D, 144A
7.30%, 1/15/07 ...................... 740,917
BBB 500 Series 1995-M2, Class D, 144A
7.20% 12/1/03 ....................... 496,209
A 476 Resolution Trust Corporation,
Series 1994-C2, Class D,
8.00%, 4/25/25 ...................... 486,183
AAA 500 Structured Asset Securities
Corporation, Series
1996-CFL, Class B,
6.303%, 2/25/28 ..................... 486,848
---------
9,111,395
---------
CORPORATE BONDS--33.4%
FINANCE & BANKING--10.9%
A3 500 Amsouth Bancorporation,
6.75%, 11/01/25 ..................... 488,718
A 600 Equitable Life Assured Society, 144A
6.95%, 12/01/05 ..................... 595,461
BBB- 500 Macsaver Financial Services
Incorporated,
7.875%, 8/01/03 ..................... 505,071
A1 500 Metropolitan Life Insurance Co., 144A
6.30%, 11/01/03 ..................... 486,380
A+ 1,000 Morgan StanleyGroup Incorporated,
10.00%, 6/15/08 ..................... 1,211,790
Baa3 500 New American Capital Incorporated,
Series C, 144A 6.9375%, 4/12/00 ..... 503,750
BBB+ 500 PaineWebber Group Incorporated,
8.875%, 3/15/05 ..................... 548,090
---------
4,339,260
---------
CORPORATE BONDS (CONT'D)
INDUSTRIALS--8.4%
A3 100 American Airlines Inc. Secured
Equipment Trust,
Series 1990-M,
10.44%, 3/04/07 ..................... 121,009
BBB- 500@ Burlington Industries Incorporated,
7.25%, 9/15/05 ...................... 494,701
BBB 500 Occidental Petroleum Corporation,
10.125%, 9/15/09 .................... 619,495
BBB- 500 Ralcorp Holdings, Incorporated,
8.75%, 9/15/04 ...................... 548,275
A- 500 Ralston Purina Co., Debenture,
9.25%, 10/15/09 ..................... 584,570
A 500 Seagram Joseph E & Sons Inc.,
7.00%, 4/15/08 ...................... 497,005
BBB- 500 Tele-Communications Inc.,
8.25%, 1/15/03 ...................... 494,420
---------
3,359,475
---------
CORPORATE BONDS (CONT'D)
UTILITIES--4.8%
BBB- $ 500 360 Communications Co.,
7.50%, 3/01/06 ...................... $ 497,605
BBB- 391 Mobile Energy Services Co. L. L. C.,
8.665%, 1/01/17 ..................... 404,800
BBB- 500 NRG Energy Incorporated, 144A
7.625%, 2/01/06 ..................... 474,903
Baa2 500 Ohio Edison Company,
8.625%, 9/15/03 ..................... 533,959
---------
1,911,267
---------
CORPORATE BONDS (CONT'D)
SOVEREIGN & PROVINCIAL--9.3%
A 500 China Light & Power,
7.50%, 4/15/06 ...................... 506,616
A1 1000 Dow Capital B V,
9.20%, 6/01/10 ...................... 1,128,450
BBB- 500 Empresa Electric Guacolda Sa, 144A
7.95%, 4/30/03 ...................... 511,223
BBB+ 500 Empresa Electric Pehuhuenche,
7.30%, 5/01/03 ...................... 508,799
A+ 525 Quebec Province,
7.50%, 7/15/02 ...................... 546,431
A3 500 Siam Commercial Bank, 144A
7.50%, 3/15/06 ...................... 499,167
---------
3,700,686
---------
STRIPPED MORTGAGE-BACKED
SECURITIES--9.6%
Federal Home Loan
Mortgage Corporation
29 Series 65, Class 65-I,
8/15/20 (I/O) ....................... 770,190
12 Series 141, Class 141-H,
5/15/21 (I/O) ....................... 361,855
Federal National Mortgage
Association,
1,273 Trust 2, Class 2,
2/01/17 (I/O) ....................... 386,420
9 Trust G-21, Class 21-L,
7/25/21 (I/O) ....................... 248,721
4,083++ Trust 226, Class 2,
6/01/23 (I/O) ....................... 1,206,055
1,000 Trust 1994-46, Series 46-D,
11/25/23 (P/O) ...................... 427,340
Salomon Brothers Mortgage
Securities Inc. VI,
354 Series 1987-3, Class B,
10/23/17 (I/O) ...................... 138,208
354 Series 1987-3, Class A,
10/23/17 (P/O) ...................... 265,572
---------
3,804,361
---------
U.S GOVERNMENT SECURITY--2.5%
1,000 Small Business Administration
Participation Certificate,
7.35%, Series 1995-10,
Class 10-C, 8/01/05 ................. 1,012,500
---------
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
S&P/
MOODY'S PRINCIPAL
RATINGS* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--7.8%
AA- $ 500 Fresno California Pension
Obligation, Taxable, Series 1994,
7.80%, 6/01/14 ......................$ 522,220
AAA 500 Kern County California
Pension Obligation, Taxable,
6.98%, 8/15/09 ...................... 489,580
Los Angeles County California
Pension, Taxable,
AAA 1,000 Series A, 8.62%, 6/30/06 ............ 1,120,110
AAA 500 Series D, 6.97%, 6/30/08 ............ 493,980
AAA 500 Orleans Parish Louisiana
School Board, Taxable,
Ref, Series A,
6.60%, 2/01/08 ...................... 483,290
---------
3,109,180
---------
Total Long-Term Investments
-143.6% (cost $56,156,489) .........$57,169,998
Liabilities in excess of other
assets--(43.6%) ....................(17,364,885)
-----------
NET ASSETS--100% ...................$39,805,113
===========
- ----------
* Using the higher of Standard & Poor's or Moody's Rating.
+ Partial principal amount pledged as collateral for reverse
repurchase agreements.
++ Entire principal amount pledged as collateral for reverse
repurchase agreements.
@ Entire principal amount pledged as collateral for futures trans-
actions.
================================================================================
KEY TO ABBREVIATIONS
ARM --Adjustable Rate Mortgage.
CMT --Constant Maturity Treasury.
I --Denotes a CMO with Interest only characteristics.
I/O --Interest only.
P/O --Principal only.
REMIC --Real Estate Mortgage Investment Conduit.
================================================================================
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments, at value
(cost $56,156,489) (Note 1) ............................. $ 57,169,998
Cash ...................................................... 20,258
Interest receivable ....................................... 829,431
Deferred organization expenses and other assets............ 11,646
------------
58,031,333
------------
LIABILITIES
Reverse repurchase agreements (Note 4) .................... 18,081,000
Dividends payable ......................................... 34,287
Interest payable .......................................... 36,096
Advisory fee payable (Note 2) ............................. 13,775
Administration fee payable (Note 2) ....................... 4,948
Variation margin payable on open futures
contracts (Note 1) ...................................... 15,782
Other accrued expenses .................................... 40,332
------------
18,226,220
------------
NET ASSETS ................................................ $ 39,805,113
============
Net assets were comprised of:
Common stock:
Par value (Note 5) .................................... $ 29,571
Paid-in capital in excess of par ...................... 40,699,403
------------
40,728,974
Undistributed net investment income ............... 244,192
Accumulated net realized loss ........................... (1,939,890)
Net unrealized appreciation ............................. 771,837
------------
Net assets, October 31, 1996 ............................ $ 39,805,113
============
Net asset value per share:
($39,805,113 / 2,957,093 shares of
common stock issued and outstanding) .................... $ 13.46
============
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest earned (including net amortization of
premium of $1,068,144 and net of interest
expense of $1,043,524) .................................... $ 3,376,323
----------
Operating Expenses
Investment advisory ......................................... 218,431
Administration .............................................. 59,572
Reports to shareholders ..................................... 63,366
Custodian ................................................... 18,410
Audit ....................................................... 13,702
Directors ................................................... 11,903
Legal ....................................................... 8,976
Transfer agent .............................................. 8,483
Miscellaneous ............................................... 31,048
-----------
Total operating expenses .................................... 433,891
-----------
Net investment income ......................................... 2,942,432
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ................................................. 643,677
Short sales ................................................. (16,935)
Futures ..................................................... (537,061)
-----------
89,681
-----------
Net change in unrealized
appreciation (depreciation) on:
Investments ................................................. (226,070)
Futures ..................................................... 63,011
-----------
(163,059)
-----------
Net loss on investments ....................................... (73,378)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS .................................................. $ 2,869,054
===========
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows provided by operating activities:
Interest received, net of interest purchased .............. $ 4,162,152
Operating expense paid .................................... (419,293)
Interest expense paid ..................................... (1,090,384)
Purchase of long-term portfolio investments ............... (35,022,990)
Proceeds from disposition of long-term portfolio
investments ............................................. 33,228,474
Other ..................................................... 2,257,586
------------
Net cash flows provided by operating activities ........... 3,115,545
------------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements ................. (408,000)
Cash dividends paid ....................................... (2,712,798)
------------
Net cash flows used for financing activities .............. (3,120,798)
------------
Net decrease in cash ........................................ (5,253)
Cash at beginning of year ................................... 25,511
------------
Cash at end of year ......................................... $ 20,258
============
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 ........ $ 2,869,054
------------
Decrease in investments .................................... 1,498,875
Net realized gain on investments ............................ (89,681)
Decrease in unrealized appreciation ........................ 163,059
Increase in interest receivable ............................. (257,695)
Decrease in receivable for investment sold .................. 1,072,748
Decrease in deferred organization expenses
and other assets .......................................... 9,893
Decrease in payable for investments purchased ............... (2,108,553)
Decrease in interest payable ................................ (46,860)
Increase in accrued expenses and other liabilities .......... 4,705
------------
Total adjustments ......................................... 246,491
------------
Net cash flows provided by operating activities ............. $ 3,115,545
============
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENTS OF CHANGES IN
NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
INCREASE (DECREASE) IN OCTOBER 31, OCTOBER 31,
NET ASSETS 1996 1995
---- ----
Operations:
Net investment income ...................... $ 2,942,432 $ 2,513,128
Net realized gain (loss) on
investments, short sales
and futures .............................. 89,681 (1,973,140)
Net unrealized appreciation
(depreciation) on
investments and futures .................. (163,059) 6,693,935
------------ ------------
Net increase in net
assets resulting from
operations ............................... 2,869,054 7,233,923
------------ ------------
Dividends & Distributions to shareholders:
Dividends from
net investment income .................... (2,698,240) (2,513,128)
Distributions from
paid-in capital .......................... -- (406,938)
------------ ------------
Total dividends and
distributions .............................. (2,698,240) (2,920,066)
------------ ------------
Total increase ............................. 170,814 4,313,857
NET ASSETS
Beginning of year ............................ 39,634,299 35,320,442
------------ ------------
End of year .................................. $ 39,805,113 $ 39,634,299
============ ============
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
June 25,
Year Ended October 31, 1993* to
---------------------- October 31,
PER SHARE OPERATING PERFORMANCE: 1996 1995 1994 1993
------ ----- ----- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................... $ 13.40 $ 11.94 $ 14.56 $ 14.10
----------- ---------- ---------- -------
Net investment income (net of interest expense of
$.35, $.68, $.34 and $.02) ......................... 1.00 0.85 0.95 0.28
Net realized and unrealized gain (loss) on investments (0.03) 1.60 (2.48) 0.52
----------- ---------- ---------- ----------
Net increase (decrease) from investment operations ..... 0.97 2.45 (1.53) 0.80
----------- ---------- ---------- ----------
Dividends from net investment income ................... (0.91) (0.85) (0.95) (0.27)
Distributions from realized capital gains .............. -- -- (0.02) --
Distributions from paid-in capital ..................... -- (0.14) (0.09) --
----------- ---------- ---------- ----------
Total dividends and distributions ...................... (0.91) (0.99) (1.06) (0.27)
----------- ---------- ---------- ----------
Capital charge with respect to issuance of shares ...... -- -- (0.03) (0.07)
----------- ---------- ---------- ----------
Net asset value, end of period** ....................... $ 13.46 $ 13.40 $ 11.94 $ 14.56#
========== =========== ========== ==========
Per share market value, end of period** ................ $ 11.00 $ 11.125 $ 10.00 $ 13.75
========== =========== ========== ==========
TOTAL INVESTMENT RETURN+ ............................... 6.67% 22.43% (20.41%) (0.60%)
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses @ ................................... 1.12% 1.00% 1.04% .97%++
Net investment income .................................. 7.59% 6.78% 7.31% 5.66%++
SUPPLEMENTAL DATA:
Average net assets (in thousands) ...................... $38,786 $37,080 $38,468 $41,195
Portfolio turnover ..................................... 58% 116% 41% 27%
Net assets, end of period (in thousands) ............... $39,805 $39,634 $35,320 $43,051
Reverse repurchase agreements outstanding, end of period
(in thousands) ....................................... $18,081 $18,489 $16,003 $18,375
Asset coverage+++ ...................................... $ 3,209 $ 3,144 $ 3,207 $ 3,343
</TABLE>
- ----------
* 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. @ The ratios of operating expenses, including interest expense,
to average net assets were 3.81%, 6.42%, 3.65%, 1.31% for the periods
indicated above, respectively.
+ Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market price on the last day of 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.
Total investment return does not reflect brokerage commissions. Total
investment returns for less than one full year are not annualized.
++ Annualized.
+++ Per $1,000 of reverse repurchase agreements outstanding.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for 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.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING The BlackRock Broad Investment Grade 2009 Term Trust
POLICIES Inc. (the"Trust"), a Maryland corporation, is a diver-
sified, 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 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.
Options, when used by the Trust, help in maintaining a targeted duration.
Duration is a measure of the price sensitivity of a security or a portfolio to
relative changes in interest rates. For instance, a duration of "one" means that
a portfolio'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.
Option selling and purchasing is used by the Trust to effectively hedge more
volatile positions so that changes in interest rates do not change the duration
of the portfolio unexpectedly. In general, the Trust uses options to hedge a
long or short position or an overall portfolio that is longer or shorter than
the benchmark security. A call option gives the purchaser of the option the
right (but not obligation) to
11
<PAGE>
buy, and obligates the seller to sell (when the option is exercised), the
underlying position at the exercise price at any time or at a specified time
during the option period. A put option gives the holder the right to sell and
obligates the writer to buy the underlying position at the exercise price at any
time or at a specified time during the option period. Put options can be
purchased to effectively hedge a position or a portfolio against price declines
if a portfolio is long. In the same sense, call options can be purchased to
hedge a portfolio that is shorter than its benchmark against price changes. The
trust can also sell (or write) covered call options and put options to hedge
portfolio positions.
The main risk that is associated with purchasing options is that the option
expires without being exercised. In this case, the option expires worthless and
the premium paid for the option is considered the loss. The risk associated with
writing call options is that the Trust may forego the opportunity for a profit
if the market value of the underlying position increases and the option is
exercised. The risk in writing put options is that the Trust may incur a loss if
the market value of the underlying position decreases and the option is
exercised. In addition, as with futures contracts, the Trust risks not being
able to enter into a closing transaction for the written option as the result of
an illiquid market.
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" means that a portfolio or a security's price would be expected to
change by approximately one percent with a one percent change in interest rates,
while a duration of "five" would imply that the price would move approximately
five percent in relation to a one percent change in interest rates. Futures
contracts can be sold to effectively shorten an otherwise longer duration
portfolio. In the same sense, futures contracts can be purchased to lengthen a
portfolio that is shorter than its duration target. Thus, by buying or selling
futures contracts, the Trust can effectively "hedge" more volatile positions so
that changes in interest rates do not change the duration of the portfolio
unexpectedly.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets. The Trust is also at risk of not being able to
enter into a closing transaction for the futures contract because of an illiquid
secondary market. In addition, since futures are used to shorten or lengthen a
portfolio's duration, there is a risk that the portfolio may have temporarily
performed better without the hedge or that the Trust may lose the opportunity to
realize appreciation in the market price of the underlying positions.
SHORT SALES: The Trust may make short sales of securities as a method of
hedging potential price declines in similar securities owned. 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 loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Trust. The Trust did not engage in
securities lending during the year ended October 31, 1996.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on
12
<PAGE>
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 sufficient amounts 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 may be distributed annually.
Dividends and distributions are recorded on the ex-dividend date.
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.
ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS The Trust has an Investment Advisory Agreement with
BlackRock Financial Management, Inc. (the "Adviser"), a
wholly-owned corporate subsidiary of PNC Asset Management Group, Inc., the
holding company 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 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 contin- uous 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.
NOTE 3. PORTFOLIO Purchases and sales of investment securities, other than
SECURITIES short-term investments and dollar rolls, for the year
ended October 31, 1996 aggregated $32,914,437 and
$32,465,017, respectively.
The Trust may invest in securities which are not readily marketable, including
those which are restricted as to disposition under securities law ("restricted
securities"). At October 31, 1996, the Trust held 12.5% of its portfolio assets
in securities restricted as to resale.
The Trust may from time to time purchase in the secondary market certain
mortgage pass-through securities packaged or master serviced byPNC Mortgage
Securities Corp. (or Sears Mortgage if PNC Mortgage Securities Corp. succeeded
to rights and duties of Sears) or mortgage related securities containing loans
or mortgages originated by PNCBank or its affiliates.It is possible under
certain circumstances, PNC Mortgage Securities Corp. or its affiliates could
have interests that are in conflict with the holders of these mortgage backed
securities, and such holders could have rights against PNC Mortgage Securities
Corp. or its affiliates.
The federal income tax basis of the Trust's investments at October 31, 1996
was substantially the same as the basis for financial reporting and,
accordingly, net unrealized appreciation for federal income tax purposes was
$771,837 (gross unrealized appreciation--1,681,549, gross unrealized
depreciation--909,712).
For Federal income tax purposes, the Trust had a capital loss carryforward at
October 31, 1996 of approximately $2,200,000 which will expire in 2003.
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net gains have been realized in excess of such amount.
At October 31, 1996 the Trust entered into financial futures contracts.
Details of open contracts at October 31, 1996 are as follows:
13
<PAGE>
<TABLE>
<CAPTION>
VALUE AT
NUMBER OF EXPIRATION VALUE AT OCTOBER 31, UNREALIZED
CONTRACTS TYPE DATE TRADE DATE 1996 DEPRECIATION
- --------- ---- ---- ---------- ---- ------------
<S> <C> <C> <C> <C> <C>
Short Position:
10 yr. U.S.
30 T-Note Dec. 96 $3,166,740 $3,288,750 $ (122,010)
30 yr. U.S.
25 T-Bond Dec. 96 2,705,338 2,825,000 (119,662)
----------
$ (241,672)
==========
</TABLE>
NOTE 4. BORROWINGS REVERSE REPURCHASE AGREEMENTS: The Trust may enter
into reverse repurchase agreements with qualified,
third party broker-dealers as determined by and under the direction of the
Trust's Board of Directors. Interest on the value of 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 will establish and maintain a segregated account with the lender,
the value of which at least equals the principal amount of the reverse
repurchase transactions including accrued interest.
The average daily balance of reverse repurchase agreements outstanding during
the year ended October 31, 1996 was approximately 18,575,000 at a weighted
average interest rate of approximately 5.53%. The maximum amount of reverse
repurchase agreements outstanding at any month-end during the period was
21,063,399 as of November 30, 1995 which was 34.74% of total assets.
DOLLAR ROLLS: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date. The Trust did not enter into any dollar roll
transactions during the year ended October 31, 1996.
NOTE 5. CAPITAL There are 200 million shares of $.01 par value common
stock authorized. Of the 2,957,093 shares outstanding
at October 31, 1996, the Adviser owned 7,093 shares.
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 Subsequent to October 31, 1996, the Board of Directors
of the Trust declared a dividend from undistributed
earnings of $0.075 per share payable November 29, 1996 to shareholders of record
on November 15, 1996.
14
<PAGE>
NOTE 7. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
============================================================================================
NET REALIZED AND
UNREALIZED
GAINS (LOSSES) ON
NET INVESTMENT INVESTMENTS, SHORT
INCOME SALES AND FUTURES
TOTAL PER PER
QUARTERLY PERIOD INCOME AMOUNT SHARE AMOUNT SHARE
- ---------------- ------ ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
November 1, 1994
to January 31, 1995 $664,982 $585,925 $0.20 $141,533 $0.05
February 1, 1995
to April 30, 1995 704,154 612,259 0.20 1,490,730 0.51
May 1, 1995
to July 31, 1995 741,423 647,495 0.22 1,299,819 0.44
August 1, 1995
to October 31, 1995 773,028 667,449 0.23 1,788,713 0.60
November 1, 1995
to January 31, 1996 767,322 663,112 0.22 1,299,170 0.44
February 1, 1996
to April 30, 1996 858,987 759,155 0.26 (3,541,090) (1.20)
May 1, 1996
to July 31, 1996 850,061 747,149 0.26 309,851 0.10
August 1, 1996
to October 31, 1996 899,953 773,016 0.26 1,858,691 0.63
</TABLE>
<TABLE>
<CAPTION>
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING DIVIDENDS
FROM OPERATIONS AND DISTRIBUTIONS
SHARE PRICE
PERIOD END
PER PER NET ASSET
QUARTERLY PERIOD AMOUNT SHARE AMOUNT SHARE HIGH LOW VALUE
- ---------------- ------ ----- ------ ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
November 1, 1994
to January 31, 1995 $727,458 $0.25 $757,742 $0.26 $11.000 $ 9.875 $11.93
February 1, 1995
to April 30, 1995 2,102,989 0.71 720,778 0.24 10.750 10.250 12.40
May 1, 1995
to July 31, 1995 1,947,314 0.66 720,792 0.25 11.625 10.500 12.82
August 1, 1995
to October 31, 1995 2,456,162 0.83 720,754 0.24 11.375 10.625 13.40
November 1, 1995
to January 31, 1996 1,962,282 0.66 702,286 0.23 11.750 11.125 13.83
February 1, 1996
to April 30, 1996 (2,781,935) (0.94) 665,320 0.23 11.750 10.375 12.66
May 1, 1996
to July 31, 1996 1,057,000 0.36 665,318 0.22 10.750 10.250 12.80
August 1, 1996
to October 31, 1996 2,631,707 0.89 665,316 0.23 11.125 10.625 13.46
============================================================================================
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The BlackRock Broad Investment Grade 2009 Term Trust Inc.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The BlackRock Broad Investment Grade
2009 Term Trust Inc. as of October 31, 1996 and the related statements of
operations and of cash flows for the year then ended and of changes in net
assets for each of the two years in the period then ended, and financial
highlights for each of the three years in the period then ended and the period
June 25, 1993 (commencement of investment operations) to October 31, 1993. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1996 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock Broad
Investment Grade 2009 Term Trust Inc. at October 31, 1996 and the results of its
operations, its cash flows, the changes in its net assets and the financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
/s/Deloitte & Touche LLP
- -----------------------
Deloitte & Touche LLP
New York, New York
December 6, 1996
16
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------
We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during its fiscal year ended October 31, 1996.
During the fiscal year ended October 31, 1996, the Trust paid dividends
totalling $.91 per share all of which is taxable as ordinary income. For federal
income tax purposes, the aggregate of any dividends and short-term capital gains
distributions you received are reportable in your 1996 federal income tax return
as ordinary income.Further, we wish to advise you that your income dividends do
not qualify for the dividends received deduction.
For the purpose of preparing your 1996 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form 1099
DIV which will be mailed to you in January 1997.
- --------------------------------------------------------------------------------
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 pursuant to the Plan. Shareholders who do not participate in the Plan
will receive all distributions in cash paid by check in United States dollars
mailed directly to the shareholders of record (or if the shares are held in
street or other nominee name, then to the nominee) by the Custodian, as dividend
disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market, on the American
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares under the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state and 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.
17
<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" or the "Adviser") is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages over $43
billion of assets across the government, mortgage, corporate and municipal
sectors. These assets are managed on behalf of institutional and individual
investors in 21 closed-end funds, which trade on either the New York Stock or
American Stock exchanges, several open-end funds and separate accounts for more
than 100 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 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 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 Adviser 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 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 will be
sufficient to return the initial offering price to investors. On a continuous
basis, the Trust will seek its objective by actively managing its assets in
relation to market conditions, interest rate changes and, importantly, the
remaining term to maturity of the Trust.
In addition to seeking the return of the initial offering price, the 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
331/3% of the total assets) to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Adviser will attempt to purchase securities with call
protection or maturities as close to the Trust's maturity date as possible.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates. Since the Trust's primary goal is to return the initial offering price at
maturity, any cash that the Trust receives prior to its maturity date (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) will be reinvested in securities with maturities which coincide with
the remaining term of the Trust. Since shorter-term securities typically yield
less than longer-term securities, this strategy will likely result in a decline
in the Trust's income over time. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the curve (i.e. if the Trust has three years left until its maturity, the
Adviser will attempt to maintain a yield at a spread over a 3-year Treasury). It
is important to note that the Trust will be managed so as to preserve the
integrity of the return of the initial offering price.
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 adviser. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional
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shares of the Trust through the Trust's transfer agent, State Street Bank &
Trust Company. Investors who wish to hold shares in a brokerage account should
check with their financial adviser to determine whether their brokerage firm
offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN A TERM TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. Leverage permits the Trust to borrow
money at short-term rates and reinvest that money in longer-term assets which
typically offer higher interest rates. The difference between the cost of the
borrowed funds and the income earned on the proceeds that are invested in
longer-term assets is the benefit to the Trust from leverage. In general, the
portfolio is typically leveraged at approximately 331/3% of total assets.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the Trust in a declining rate
environment, but can cause net assets to decline faster than the market in a
rapidly rising rate environment. BlackRock's portfolio managers continuously
monitor and regularly review the Trust's use of leverage and the Trust may
reduce, or unwind, the amount of leverage employed should BlackRock consider
that reduction to be in the best interests of the shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
RETURN OF INITIAL INVESTMENT. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
LEVERAGE. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, which involves special risks. The Trust's net asset value and
market value may be more volatile due to its use of leverage.
MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the 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 receive no cash flows prior to maturity;
therefore, interim price movement on the securities are generally more sensitive
to interest rate movements then securities that make periodic coupon payments.
These securities appreciate in value over time and can play an important role in
helping the Trust achieve its primary objectives.
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 less than 10% of its total assets in
non-U.S. dollar-denominated securities which involve special risks such as
currency, political and economic risks, although under current market conditions
the Trust 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.
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THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE-BACKED Mortgage instruments with interest rates
SECURITIES (ARMS): 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 Trust is said to be
trading at a discount.
DIVIDEND: Income generated by securities in a
portfolio and distributed to shareholders
after the deduction of expenses. This Trust
declares and pays dividends on a monthly
basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all dividends
and distributions of capital gains
automatically reinvested into additional
shares of the Trust.
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
U.S. 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 Mortgage securities that receive only the
SECURITIES (I/O): 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
WALL STREET JOURNAL each Monday.
PRINCIPAL-ONLY principal cash flows from an underlying pool
SECURITIES (P/O): of mortgage loans or underlying pass-through
securities. Also known as a STRIP.
PROJECT LOANS: Mortgages for multi-family, low- to
middle-income housing.
PREMIUM: When a Trust's stock price is greater than
its net asset value, the Trust is said to be
trading at a premium.
REMIC: A real estate mortgage investment conduit is
a multiple-class security backed by
mortgage-backed securities or whole mortgage
loans and formed as a trust, corporation,
partnership, or segregated pool of assets
that elects to be treated as a REMIC for
federal tax purposes. Generally, Fannie Mae
REMICs are formed as trusts and are backed
by mortgage-backed securities.
RESIDUALS: Securities issued in connection with
collateralized mortgage obligations that
generally represent the excess cash flow
from the mortgage assets underlying the CMO
after payment of principal and interest on
the other CMO securities and related
administrative expenses.
REVERSE REPURCHASE In a reverse repurchase agreement, the Trust
AGREEMENTS: sells securities and agrees to repurchase
them at a mutually agreed date and price.
During this time, the Trust continues to
receive the principal and interest payments
from that security. At the end of the term,
the Trust receives the same securities that
were sold for the same initial dollar amount
plus interest on the cash proceeds of the
initial sale.
STRIPPED MORTGAGE-BACKED Arrangements in which a pool of assets is
SECURITIES: 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.
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BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAXABLE TRUSTS
- --------------------------------------------------------------------------------
MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
---------- ------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
TERM TRUSTS
The BlackRock 1998 Term Trust Inc. BBT 12/98
The BlackRock 1999 Term Trust Inc. BNN 12/99
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BLK 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
TAX-EXEMPT TRUSTS
- --------------------------------------------------------------------------------
MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
---------- ------
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE DO NOT
HESITATE TO CALL BLACKROCK AT (800) 227-7BFM (7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
22
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BLACKROCK FINANCIAL MANAGEMENT, INC.
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 $43 billion of assets
across the government, mortgage, corporate and municipal sectors. These assets
are managed on behalf of many individual investors in twenty-one closed-end
funds traded on either the New York or American stock exchanges, and several
open-end funds and on behalf of more than 100 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, Ford Motor Company Pension Plan,
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 a 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 DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
23
<PAGE>
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
Karen H. Sabath, Secretary
INVESTMENT ADVISER
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
ADMINISTRATOR
PrincetonAdministrators, 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
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
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 Princeton Administrators L.P.
P.O.Box 9095
Princeton, NJ 08543-9095
(800) 227-7BFM
Printed on recycled paper 092472-10-6
THE BLACKROCK
BROAD INVESTMENT
GRADE 2009
TERM TRUST INC.
================================================================================
ANNUAL REPORT
OCTOBER 31, 1996
