- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
May 31, 1999
Dear Shareholder:
Since the Trust's last report, interest rates rose sharply as U.S.
economic growth remained strong, labor markets tightened and international
markets began to recover. In light of these factors, on May 18 members of the
Federal Reserve's Federal Open Market Committee announced that they had adopted
a bias towards higher interest rates, citing a concern that inflation might
start to accelerate.
BlackRock has adopted a cautious view of the bond market, as we believe
that there is a real possibility that the Federal Reserve will raise interest
rates in the near future. Additionally, because the Treasury yield curve has
already priced in Federal Reserve action, we believe that interest rates will
trade in a relatively narrow range until the economy shows signs of slowing.
This report contains comments from your Trust's managers regarding the
markets and portfolio in addition to the Trust's financial statements and a
detailed portfolio listing. We thank you for your continued investment in the
Trust.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
- ------------------- -------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
May 31, 1999
Dear Shareholder:
We are pleased to present the semi-annual report for The BlackRock Broad
Investment Grade 2009 Term Trust Inc. (the "Trust") for the six months ended
April 30, 1999. 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 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 over the period:
-----------------------------------------------------------
4/30/99 10/31/98 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $12.875 $13.25 (2.83%) $13.375 $12.75
- --------------------------------------------------------------------------------
NET ASSET VALUE
(NAV) $14.23 $15.01 (5.20%) $15.01 $14.12
- --------------------------------------------------------------------------------
10-YEAR U.S.
TREASURY NOTE 5.35% 4.61% 16.05% 5.42% 4.52%
- --------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
The past six months have witnessed continued rapid expansion of the U.S.
economy. GDP growth for the first quarter of 1999 is estimated at an annual
rate above 4%, far exceeding the historical non-inflationary level of 2%. While
BlackRock believes that growth may slow down in the second half of 1999, we
anticipate GDP to remain above 3% for the year. Despite the strong economic
growth, inflation has stayed surprisingly subdued. A significant factor in
maintaining low inflation in the U.S. economy stems from the increase in
industrial productivity. Higher productivity has allowed manufacturers to avoid
price increases despite tight labor markets.
The Treasury market briefly rallied early in the fourth quarter of 1998
before dramatically reversing in 1999. For the semi-annual period, the yield of
the 10-year Treasury security rose from 4.61% on October 31, 1998 to 5.35% on
April 30, 1999. The weak performance of the Treasury market can be attributed
to investors leaving the safe haven of Treasuries to purchase credit sensitive
or higher yielding securities in reaction to inflationary concerns voiced by
the Federal Reserve.
As interest rates rose and alleviated prepayments fear, mortgages
significantly outperformed the broader investment grade bond market. As
measured by the LEHMAN BROTHERS MORTGAGE INDEX, mortgages posted a 2.39% total
return versus 0.68% for the LEHMAN BROTHERS AGGREGATE INDEX. After
significantly underperforming Treasuries in 1998 mortgages experienced a
significant rally late in 1998 into the first four months of 1999. Although
yields have tightened significantly from early in the fourth quarter of 1998,
mortgages remain at attractive levels as a record issuance has come to market
and kept yields attractive. Although higher mortgage rates have allayed
prepayment fears that must be tempered with the fact mortgages rates still
remain at historically low levels.
The financial turmoil in Asia caused a decline in perceived corporate bond
credit quality ratings and as a result corporate bonds underperformed
Treasuries in 1998 for only the third time in the past decade. However, for the
semi-annual period,
2
<PAGE>
corporates as measured by MERRILL LYNCH U.S. CORPORATE MASTER INDEX, returned
1.81%, significantly outperforming the LEHMAN BROTHERS AGGREGATE INDEX'S 0.68%.
Although investors seeking greater yields than Treasuries contributed to the
outperformance, corporate profitability continues to be the driving factor of
corporate bond performance and profits growth remains under pressure from
overseas markets and a strong labor market. Deteriorating fundamentals (four
times as many downgrades as upgrades in the first quarter according to S&P)
combined with weakening profit growth and increased issuance will continue to
pressure the corporate 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, 1998 asset
composition:
SECTOR BREAKDOWN
- --------------------------------------------------------------------------------
COMPOSITION APRIL 30, 1999 OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 20% 20%
- --------------------------------------------------------------------------------
Corporate Bonds 17% 18%
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 16% 16%
- --------------------------------------------------------------------------------
Inverse-Floating Rate Mortgages 15% 14%
- --------------------------------------------------------------------------------
Interest Only Mortgage-Backed Securities 14% 15%
- --------------------------------------------------------------------------------
U.S. Gov't Securities 7% 5%
- --------------------------------------------------------------------------------
Municipal Bonds 5% 5%
- --------------------------------------------------------------------------------
Asset Backed Securities 4% 4%
- --------------------------------------------------------------------------------
Principal Only Mortgage-Backed Securities 2% 3%
- --------------------------------------------------------------------------------
We continued to focus on securities with final maturity dates (or "bullet"
maturities) that match the Trust's termination date of December 31, 2009.
Accordingly, the Trust increased its exposure in US Treasuries. The Trust
modestly decreased its exposure to mortgage-backed securities and corporate
bonds. Mortgage-backed securities cash flows and maturity dates can fluctuate
in response to interest rate movements. The average maturities of mortgage
bonds can extend when interest rates rise. Conversely, mortgage bonds tend to
prepay when interest rates fall, which forces the bond holder to reinvest cash
flows at lower yields. Specifically, the Trust decreased its positions in
Interest-Only Mortgage-Backed Securities and Principal-Only Mortgage-Backed
Securities.
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 yours,
/s/ Robert S. Kapito /s/ Michael P. Lustig
- ---------------------- --------------------------
Robert S. Kapito Michael P. Lustig
Vice Chairman and Portfolio Manager Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
3
<PAGE>
- --------------------------------------------------------------------------------
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 4/30/99: $12.875
- --------------------------------------------------------------------------------
Net Asset Value as of 4/30/99: $14.23
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 4/30/99 ($12.875)1: 6.41%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.06875
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.82500
- --------------------------------------------------------------------------------
1 Yield on closing stock price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 The distribution is not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS-143.9%
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS-51.9%
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage Participation
Certificates,
$2,689 Series 1353, Class 1353-S,
8/15/07 (ARM). ................... $ 179,271
245++ Series 1506, Class 1506-S,
5/15/08 (ARM). ................... 261,302
2,168++ Series 1510, Class 1510-G,
5/15/13 .......................... 2,230,959
400 Series 1534, Class 1534-IG,
2/15/10. ......................... 364,532
711 Series 1580, Class 1580-SD,
9/15/08. ......................... 725,152
3,000+ Series 1596, Class 1596-D,
10/15/13 ......................... 2,995,620
1,025++ Series 1626, Class 1626-SA,
12/15/08 (ARM) ................... 817,653
302 Series 1637, Class 1637-LE,
12/15/23 (ARM). .................. 280,588
Federal National Mortgage
Association, REMIC Pass-Through
Certificates,
855++ Trust 1992-43, Class 43-E,
4/25/22 . ........................ 869,808
61 Trust 1992-174, Class 174-S,
9/25/22 (ARM) .. ................. 118,695
858 Trust 1992-190, Class 190-S,
11/25/07 (ARM) ................... 858,584
1,000++ Trust 1993-49, Class 49-H,
4/25/13 .......................... 1,020,620
3,053+ Trust 1993-79, Class 79-PK,
4/25/22 .......................... 3,071,596
2,646+ Trust 1993-87, Class 87-J,
4/25/22 .......................... 2,509,334
1,000 Trust 1993-156, Class 156-SE,
10/25/19 (ARM) ................... 1,030,220
589 Trust 1993-191, Class 191-SD,
10/25/08 (ARM) ................... 527,000
687++ Trust 1993-202, Class 202-VB,
11/25/23 (ARM) ................... 627,030
692++ Trust 1993-214, Class 214-SK,
12/25/08 ......................... 733,797
1,177++ Trust 1994-13, Class 13-SM,
2/25/09 (ARM) .................... 1,160,181
246 Trust 1994-37, Class 37-SC,
3/25/24 (ARM) .................... 242,104
1,500++ Trust 1996-20, Class 20-SB,
10/25/08 (ARM) ................... 451,875
<CAPTION>
================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
PaineWebber Mortgage
Acceptance Corp. IV,
BBB $ 750 Series 1995-M1, Class D,
7.30%, 1/15/07**. ................ $ 760,505
----------
21,836,426
----------
INTEREST ONLY MORTGAGE-
BACKED SECURITIES-19.4%
AAA 14,190++ CS First Boston Mortgage
Securities Corp.,
Series 1997-C1, Class AX,
4/20/22** ........................ 1,326,664
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
1,272 Series 65, Class 65-I,
8/15/20 .......................... 306,428
534 Series 141, Class 141-H,
5/15/21 .......................... 148,957
2,550 Series 1645, Class 1645-IB,
9/15/08 .......................... 483,123
2,310 Series 1900, Class 1900-SV,
8/15/08 .......................... 329,698
32,043 Series 1995, Class 1995-SB,
10/15/27 ......................... 46,462
1,121 Series 2061, Class 2061-JR,
9/20/22 .......................... 189,166
Federal National Mortgage
Association, REMIC Pass-Through
Certificates,
4,000 Trust 1993-138, Class 138-JK,
5/25/19 .......................... 538,160
12,000 Trust 1993-191, Class 191-S,
10/25/07 ......................... 105,000
2,819 Trust 1993-223, Class 223-PT,
10/25/23 ......................... 391,431
1,572 Trust 1994-39, Class 39-PE,
1/25/23 .......................... 186,405
2,757 Trust 1994-42, Class 42-SO,
3/25/23 .......................... 310,470
1,250 Trust 1997-50, Class 50-HK,
8/25/27 .......................... 416,816
53,948 Trust 1997-81, Class 81-SD,
12/18/27 ......................... 44,092
1,500+ Trust 1997-90, Class 90-M,
1/25/28 .......................... 499,453
39 Trust G-21, Class 21-L,
7/25/21 .......................... 97,197
119 Trust G93-25, Class 25-J,
12/25/19 ......................... 359,998
AAA 19,791++ First Union-Lehman Brothers-
Bank of America,
Series 1998-C2, Class IO,
5/18/28 .......................... 772,141
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
======================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
GMAC Commercial Mortgage
Securities Inc.,
AAA $22,849 Series 1998-C2, Class X,
8/15/23 .............................. $ 943,181
Government National Mortgage
Association,
1,049 Trust 1998-24, Class 24-IB
5/20/23 .............................. 205,883
Merrill Lynch Mortgage Investors, Inc.,
AAA 5,910 Series 1997-C2, Class IO,
12/10/29 ............................. 412.465
Salomon Brothers Mortgage
Securities Inc. VI,
NR 178 Series 1987-3 Class B,
10/23/17 ............................. 47,020
----------
8,160,210
----------
PRINCIPAL ONLY MORTGAGE-
BACKED SECURITIES-3.3%
Federal Home Loan Mortgage Corp.,
Mortgage Participation
Certificates,
205 Series 1700, Class 1700-GA,
2/15/24 .............................. 148,599
Federal National Mortgage
Association, REMIC Pass-Through
Certificates,
1,341 Trust 1994-46, Class 46-D,
11/25/23 .............................. 998,012
122 Trust 1997-85, Class 85-LE,
10/25/23 .............................. 105,638
Salomon Brothers Mortgage
Securities Inc. VI,
NR 178 Series 1987-3, CIass A,
10/23/17 ............................. 148,574
----------
1,400,823
----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES-20.5%
AAA 462 Citicorp Mortgage
Securities, Inc.,
Series 1993-14, Class A4,
6.04%, 11/25/23 (ARM) ................. 367,066
BBB 500 DLJ Mortgage Acceptance Corp.,
Series 1997-CF1, 7.91%,
4/15/07** .... ....................... 495,246
A 750 FDIC REMIC Trust, Mortgage
Pass-Through Certificates,
Series 1994-C1, Class II-F,
8.70%, 9/25/25 ....................... 782,326
GMAC Commercial Mortgage
Securities Inc.,
AAA 300++ Series 1998-C2, Class A-2,
6.42%, 8/15/08 ....................... 300,885
AAA 500 GS Mortgage Securities Corp.,
Series 1996-PL, Class A2,
7.41%, 2/15/27 ....................... 513,692
<CAPTION>
=======================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
LTC Commercial Mortgage
Pass-Through Certificates,
AA- $ 500 Series 1994-1, Class 1-D,
10.00%, 6/15/26 ...................... $ 516,186
AAA 401 Series 1996-1, Class 1-A,
7.06%, 4/15/28** ..................... 405,798
Merrill Lynch Mortgage Investors Inc.,
BBB 500 Series 1995-C1, Class D,
7.97%, 5/25/15 ....................... 493,255
BBB 500 Series 1996-C1, Class D,
7.42%, 4/25/28 ....................... 492,558
BBB 500 Morgan Stanley Capital 1 Inc.,
Series 1995-GAL1, Class D,
8.25%, 8/15/27** ..................... 513,437
AAA 750 New York City Mortgage Loan Trust,
Multifamily Mortgage Pass-Through
Class A-2,
6.75%, 6/25/11** ..................... 752,812
BBB+ 600 Nomura Asset Capital Corp.,
Series 1993-M1, Class A3,
7.64%, 11/25/03** .................... 603,577
AAA 1,000 Prudential Securities Secured
Financing Corp.,
Series 1998-C1, Class A1B,
6.506%, 7/15/08 ...................... 997,951
BBB 456 Resolution Trust Corp.,
Series 1994-C2, Class D,
8.00%, 4/25/25 ....................... 454,118
Aa2 438 Salomon Brothers Mortgage
Securities VII,
Series 1997-TZH, Class A1,
7.15%, 3/25/22** ..................... 450,992
AA 500 Structured Asset Securities Corp.,
Series 1996-CFL, Class B,
6.303%, 2/25/28 ...................... 504,298
----------
8,644,197
----------
CORPORATE BONDS-25.1%
FINANCE & BANKING-9.9%
A3 500 Amsouth Bancorporation,
6.75%, 11/01/25 ....................... 507,255
A2 600 Equitable Life Assured Society,
6.95%, 12/01/05** ..................... 621,596
A 400 Lehman Brothers Holding Inc.,
6.75%, 9/24/01 ........................ 403,583
BB+ 500 Macsaver Financial Services Inc.,
7.875%, 8/01/03 ....................... 360,000
A+ 500 Metropolitan Life Insurance Co.,
6.30%, 11/01/03** ..................... 502,287
Aa3 1,000 Morgan Stanley Group, Inc.,
10.00%, 6/15/08 ....................... 1,236,490
BBB+ 500 PaineWebber Group, Inc.,
8.875%, 3/15/05 ....................... 551,810
----------
4,183,021
----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDUSTRIALS-8.3%
A2 $ 100++/@ American Airlines Inc., Secured
Equipment Trust, Series 1990-M,
10.44%, 3/04/07 ........................ $ 119,347
A1 1,000 Dow Capital BV,
9.20%, 6/01/10 ......................... 1,174,660
A+ 500 Ralcorp Holdings, Inc.,
8.75%, 9/15/04 ......................... 550,035
A- 500 Ralston Purina Co.,
9.25%, 10/15/09 ........................ 597,715
BBB- 500 Seagram Joseph E. & Sons, Inc.,
7.00%, 4/15/08 ......................... 507,475
AA- 500 Tele-Communications, Inc.,
8.25%, 1/15/03 ......................... 540,000
----------
3,489,232
----------
UTILITIES-2.6%
A 500 360 Communications Co.,
7.50%, 3/01/06 ......................... 531,225
Baa2 500 Ohio Edison Co.,
8.625%, 9/15/03 ........................ 546,645
----------
1,077,870
----------
YANKEE-4.3%
BBB- 500 Empresa Electric Guacolda SA,
7.95%, 4/30/03** ....................... 455,601
BBB+ 170 Empresa Electric Pehuenche,
7.30%, 5/01/03 ......................... 167,586
A- 500 Israel Electric Corp. Ltd.,
7.25%, 12/15/06** ...................... 493,705
Baa2 1,000 Petrozuata Finance Inc.,
7.63%, 4/01/09** ....................... 706,880
----------
1,823,772
----------
10,573,895
----------
ASSET BACKED SECURITIES-5.8%
AAA 1,230 Chase Credit Card Master Trust,
Series 1997-5, Class A,
6.194%, 8/15/05 ........................ 1,239,692
A 254 Global Rated Eligible Asset Trust, **/@@
Series 1998-A, Class A-1,
7.33%, 9/15/07 ......................... 131,813
Aa2 494 Pegasus Aviation Lease
Securitization,
Series 1999-1, Class A-1,
6.30%, 3/25/29 ......................... 488,432
Structured Mortgage Asset
Residential Trust,**/@@
A 613 Series 1997-2,
8.24%, 3/15/06 ......................... 284,506
A 674 Series 1997-3,
8.57%, 4/15/06 ......................... 290,423
----------
2,434,866
----------
<CAPTION>
============================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY
SECURITIES-10.1%
$ 625 Small Business Administration
Participation Certificate,
Series 1998-10, Class 10-A,
6.12%, 2/01/08 ......................... $ 618,748
U.S. Treasury Bonds,
500 5.25%, 11/15/28 ........................ 462,655
1,500++ 6.375%, 8/15/27 ........................ 1,601,955
U.S. Treasury Notes,
1,200++ 4.75%, 11/15/08 ........................ 1,146,180
385 6.625%, 5/15/07 ........................ 414,837
----------
4,244,375
----------
TAXABLE MUNICIPAL BONDS-7.7%
AA- 500 Fresno California Pension
Obligation, Series 1994,
7.80%, 6/01/14 ........................ 542,565
AAA 500 Kern County California
Pension Obligation,
6.98%, 8/15/09 ........................ 521,285
Los Angeles County California
Pension Obligation,
AAA 1,000 Series A, 8.62%, 6/30/06 ............... 1,131,180
AAA 500 Series D, 6.97%, 6/30/08.. ............. 520,940
AAA 500 Orleans Parish Louisiana
School Board, Series A,
6.60%, 2/01/08. ....................... 507,930
----------
3,223,900
----------
NOTIONAL
AMOUNT
(000)
---------------
OPTIONS PURCHASED -0.1%
CALL OPTIONS PURCHASED
5,000 Interest Rate Swap,
3 month LIBOR over 5.60%
expires 8/07/00 ........................ 56,251
----------
Total investments before short-term
investment and outstanding call
options written and investments
sold short (cost $60,487,407) .......... 60,574,943
-----------
PRINCIPAL
AMOUNT
(000)
---------------
SHORT-TERM INVESTMENT-0.9%
DISCOUNT NOTE
365 Federal Home Loan Bank,
4.80%, 5/03/99 (cost $364,903).......... 364,903
-----------
Total investments before outstanding
call options written and
investments sold short
(cost $60,852,310)...................... 60,939,846
-----------
NOTIONAL
AMOUNT
(000)
---------------
CALL OPTIONS WRITTEN-(0.0%)
Interest Rate Swap,
(8,000) 3 month LIBOR over 5.50%
expires 8/10/99 (premium
received $49,000) ...................... (9,533)
----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
==================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENTS SOLD SHORT-(12.3%)
$(5,000) U.S. Treasury Bonds,
6.125%, 11/15/27
(proceeds $5,623,438) .............. $(5,175,800)
-----------
Total investments, net of outstanding
call options written and
investments sold short-132.5%
(cost $55,179,872) ................. 55,754,513
Liabilities in excess of other
assets-(32.5%) ..................... (13,661,353)
-----------
NET ASSETS-100% ..................... $42,093,160
===========
</TABLE>
- ---------------------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** Private placements restricted as to resale.
+ 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
transactions.
@@ Illiquid securities representing 1.68% of portfolio assets.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM - Adjustable Rate Mortgage.
LIBOR - London InterBank Offer Rate.
REMIC - Real Estate Mortgage Investment Conduit.
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments, at value
(cost $60,852,310) (Note 1) ........................ $60,939,846
Cash ................................................. 1,992
Deposit with broker as collateral for investment
sold short (Note 1) ................................ 5,400,000
Interest receivable .................................. 767,659
Interest rate cap, at value
(amortized cost $90,487) (Notes 1 & 3) ............. 32,029
Unrealized appreciation on interest rate swaps
(Note 1 & 3) ....................................... 10,250
Receivable for investments sold ...................... 4,429
Other assets (Note 1) ................................ 1,322
-----------
67,157,527
-----------
LIABILITIES
Reverse repurchase agreements (Note 4) ............... 19,472,717
Investment sold short, at value
(proceeds $5,623,438) (Note 1)...................... 5,175,800
Interest payable ..................................... 286,995
Due to broker-variation margin (Notes 1 & 3) ......... 91,406
Investment advisory fee payable (Note 2) ............. 19,301
Call options written, at value
(premium received $49,000) (Note 1)................. 9,533
Administration fee payable (Note 2) .................. 5,264
Other accrued expenses ............................... 3,351
-----------
25,064,367
-----------
NET ASSETS ........................................... $42,093,160
===========
Net assets were comprised of:
Common stock:
Par value (Note 5) ................................ $ 29,571
Paid-in capital in excess of par .................. 40,680,858
-----------
40,710,429
Undistributed net investment income ................. 2,529,793
Accumulated net realized loss ....................... (1,636,466)
Net unrealized appreciation ......................... 489,404
-----------
Net assets, April 30, 1999 .......................... $42,093,160
===========
Net asset value per share:
($42,093,160 \d 2,957,093 shares of
common stock issued and outstanding) ............... $14.23
======
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (net of premium amortization of
$354,146 and interest expense of $505,862) ......... $ 2,331,896
-----------
Operating Expenses
Investment advisory ................................. 117,589
Administration ...................................... 32,070
Reports to shareholders ............................. 13,000
Audit ............................................... 10,500
Custodian ........................................... 9,000
Directors ........................................... 7,000
Transfer agent ...................................... 4,500
Legal ............................................... 3,500
Miscellaneous ....................................... 12,967
-----------
Total operating expenses ............................ 210,126
-----------
Net investment income before excise tax ............... 2,121,770
Excise tax ............................................ 33,028
-----------
Net investment income ................................. 2,088,742
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ......................................... (182,382)
Futures ............................................. (127,910)
Swaps ............................................... (20,284)
Written options ..................................... 81,250
-----------
(249,326)
-----------
Net change in unrealized
appreciation (depreciation) on:
Investments ......................................... (3,594,813)
Interest rate cap ................................... 23,333
Futures ............................................. (10,487)
Swaps ............................................... 2,807
Short sales ......................................... 450,751
Written options ..................................... 280,904
-----------
(2,847,505)
-----------
Net loss on investments ............................... (3,096,831)
-----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................. $(1,008,089)
===========
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
RECONCILIATION OF NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net decrease in net assets resulting from
operations ........................................... $(1,008,089)
-----------
Increase in investments ................................. (1,075,993)
Net realized loss ....................................... 249,326
Decrease in unrealized appreciation ..................... 2,847,505
Decrease in interest rate cap ........................... 15,979
Increase in receivable from investments sold ............ (4,429)
Increase in Interest receivable ......................... (13,247)
Decrease due to broker-variation margin ................. 93,106
Decrease in deposits with brokers for
investments sold short ............................... 418,750
Decrease in other assets ................................ 4,875
Decrease in written options ............................. (81,250)
Increase in interest payable ............................ 93,831
Decrease in accrued expenses and other
liabilities .......................................... (42,369)
-----------
Total adjustments ...................................... 2,506,084
-----------
Net cash flows provided by operating activities ......... $ 1,497,995
===========
INCREASE (DECREASE IN CASH)
Net cash flows provided by operating activities ......... $ 1,497,995
-----------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements .............. (297,369)
Cash dividends paid .................................... (1,293,621)
-----------
Net cash flows used for financing activities ............ (1,590,990)
-----------
Net decrease in cash ................................... (92,995)
Cash at beginning of period ............................ 94,987
-----------
Cash at end of period .................................. $ 1,992
===========
- --------------------------------------------------------------------------------
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,
1999 1998
------------------ ---------------
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income ................ $ 2,088,742 $ 3,533,934
Net realized gain (loss) ............. (249,326) 498,937
Net change in unrealized
appreciation (depreciation) ......... (2,847,505) 212,726
----------- -----------
Net increase (decrease) in net
assets resulting from
operations .......................... (1,008,089) 4,245,597
Dividends from
net investment income ............... (1,293,621) (2,661,192)
----------- -----------
Total increase (decrease) ............ (2,301,710) 1,584,405
NET ASSETS
Beginning of period .................... 44,394,870 42,810,465
----------- -----------
End of period .......................... $42,093,160 $44,394,870
=========== ===========
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 30,
1999
-----------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ....................... $ 15.01
-------
Net investment income (net of interest
expense of $0.17, $0.36, $0.36, $0.35, $0.68,
and $0.34)................................................ .71
Net realized and unrealized gain (loss) on investments ..... (1.05)
-------
Net increase (decrease) from investment operations ......... (.34)
-------
Dividends and distributions:
Dividends from net investment income ....................... (.44)
Distributions from net realized gain on investments ........ -
Distributions from paid-in capital ......................... -
-------
Total dividends and distributions .......................... (.44)
-------
Capital charge with respect to issuance of shares .......... -
-------
Net asset value, end of period* ............................ $ 14.23
=======
Per share market value, end of period* ..................... $ 12.88
=======
TOTAL INVESTMENT RETURN+ ................................... 1.89%
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses# ........................................ .99%+++
Net investment income ...................................... 9.80%+++
SUPPLEMENTAL DATA:
Average net assets (in thousands) .......................... $42,997
Portfolio turnover ......................................... 8%
Net assets, end of period (in thousands) ................... $42,093
Reverse repurchase agreements outstanding,
end of period (in thousands) .............................. $19,472
Asset coverage++ ........................................... $ 3,162
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ....................... $ 14.48 $ 13.46 $ 13.40 $ 11.94 $ 14.56
------- ------- ------- ------- ---------
Net investment income (net of interest
expense of $0.17, $0.36, $0.36, $0.35, $0.68,
and $0.34)................................................ 1.20 1.10 1.00 .85 .95
Net realized and unrealized gain (loss) on investments ..... .23 .82 (.03) 1.60 (2.48)
------- ------- ------- ------- -------
Net increase (decrease) from investment operations ......... 1.43 1.92 .97 2.45 (1.53)
------- ------- ------- ------- -------
Dividends and distributions:
Dividends from net investment income ....................... (.90) (.90) (.91) (.85) (.95)
Distributions from net realized gain on investments ........ - - - - (.02)
Distributions from paid-in capital ......................... - - - (.14) (.09)
------- ------- ------- ------- -------
Total dividends and distributions .......................... (.90) (.90) (.91) (.99) (1.06)
------- ------- ------- ------- -------
Capital charge with respect to issuance of shares .......... - - - - (.03)
------- ------- ------- ------- -------
Net asset value, end of period* ............................ $ 15.01 $ 14.48 $ 13.46 $ 13.40 $ 11.94
======= ======= ======= ======= =======
Per share market value, end of period* ..................... $ 13.25 $ 12.13 $ 11.00 $ 11.13 $ 10.00
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN+ ................................... 17.15% 19.05% 6.67% 22.43% (20.41%)
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses# ........................................ 1.01% 1.02% 1.12% 1.00% 1.04%
Net investment income ...................................... 8.13% 8.03% 7.59% 6.78% 7.31%
SUPPLEMENTAL DATA:
Average net assets (in thousands) .......................... $43,482 $40,416 $38,786 $37,080 $38,468
Portfolio turnover ......................................... 25% 36% 58% 116% 41%
Net assets, end of period (in thousands) ................... $44,395 $42,810 $39,805 $39,634 $35,320
Reverse repurchase agreements outstanding,
end of period (in thousands) .............................. $19,770 $20,363 $18,081 $18,489 $16,003
Asset coverage++ .......................................... $ 3,246 $ 3,102 $ 3,209 $ 3,144 $ 3,207
</TABLE>
- ----------
* Net asset value and market value are published in THE WALL STREET JOURNAL
each Monday.
# The ratios of operating expenses, including interest expense and excise
tax, to average net assets were 3.51%+++, 3.51%, 3.65%, 3.81%, 6.42%,
3.65%, for the periods indicated above, respectively.
+ Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of the period 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 periods of less than one year are not
annualized.
++ Per $1,000 of reverse repurchase agreements outstanding.
+++ Annualized.
The information above represents the unaudited operating performance 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.
11
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK BROAD INVESTMENT
GRADE 2009 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION The BlackRock Broad Investment Grade 2009
& ACCOUNTING Term Trust Inc. (the "Trust"), a Maryland
POLICIES corporation, is a diversified, closed-end
management investment company. 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 and asset-backed
securities, interest rate swaps, caps, floors and non-exchange traded options
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 60 days or less are valued at
amortized cost, if their term to maturity from date of purchase is 60 days or
less. Short-term securities with a term to maturity greater than 60 days from
the date of purchase are valued at current market quotations until maturity.
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, or collections of 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 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
12
<PAGE>
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.
INTEREST RATE SWAPS: In an interest rate swap, one investor pays a floating
rate of interest on a notional principal amount and receives a fixed rate of
interest on the same notional principal amount for a specified period of time.
Alternatively, an investor may pay a fixed rate and receive a floating rate.
Rate swaps are efficient as asset/liability management tools. In more complex
swaps, the notional principal amount may decline (or amortize) over time.
During the term of the swap, changes in the value of the swap are
recognized as unrealized gains or losses by "marking-to-market" to reflect the
market value of the swap. When the swap is terminated, the Trust will record 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, if any.
The Trust is exposed to credit loss in the event of non-performance by the
other party to the swap. However, the Trust closely monitors swaps and does not
anticipate non-performance by any counterparty.
SWAP OPTIONS: Swap options are similar to options on securities except that
instead of selling or purchasing the right to buy or sell a security, the
writer or purchaser of the swap option is granting or buying the right to enter
into a previously agreed upon interest rate swap agreement at any time before
the expiration of the option. Premiums received or paid from writing or
purchasing options are recorded as liabilities or assets and are 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
commission, 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
loss on investment transactions.
The main risk that is associated with purchasing swap options is that the
swap option expires without being exercised. In this case, the option expires
worthless and the premium paid for the swap option is considered the loss. The
main risk that is associated with the writing of a swap option is the market
risk of an unfavorable change in the value of the interest rate swap underlying
the written swap option.
Swap options may be used by the Trust to manage the duration of the
Trust's portfolio in a manner similar to more generic options described above.
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. 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
13
<PAGE>
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.
INTEREST RATE CAPS: Interest rate caps are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
excess, if any, of a floating rate over a specified fixed or floating rate.
Interest rate caps are intended to both manage the duration of the
Trust's portfolio and its exposure to changes in short term rates. Owning
interest rate caps reduces the portfolio's duration, making it less sensitive
to changes in interest rates from a market value perspective. The effect on
income involves protection from rising short term rates, which the Trust
experiences primarily in the form of leverage.
The Trust is exposed to credit loss in the event of non-performance by the
other party to the interest rate cap. However, the Trust does not anticipate
non-performance by any counterparty.
Transactions fees paid or received by the Trust are recognized as assets
or liabilities and amortized or accreted into interest expense or income over
the life of the interest rate cap. The asset or liability is subsequently
adjusted to the current market value of the interest rate cap purchased or
sold. Changes in the value of the interest rate cap are recognized as
unrealized gains and losses.
INTEREST RATE FLOORS: Interest rate floors are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
deficiency, if any, of a floating rate under a specified fixed or floating
rate.
Interest rate floors are used by the Trust to both manage the duration of
the portfolio and its exposure to changes in short-term interest rates. Selling
interest rate floors reduces the portfolio's duration, making it less sensitive
to changes in interest rates from a market value perspective. The Trust's
leverage provides extra income in a period of falling rates. Selling floors
reduces some of that advantage by partially monetizing it as an up front
payment which the Trust receives.
The Trust is exposed to credit loss in the event of non-performance by the
other party to the interest rate floor. However, the Trust does not anticipate
non-performance by any counterparty.
Transactions fees paid or received by the Trust are recognized as assets
or liabilities and amortized or accreted into interest expense or income over
the life of the interest rate floor. The asset or liability is subsequently
adjusted to the current market value of the interest rate floor purchased or
sold. Changes in the value of the interest rate floor are recognized as
unrealized gains and losses.
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.
FEDERAL INCOME TAXES: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient 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.
14
<PAGE>
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.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS The Trust has an Investment Advisory Agreement
with BlackRock Financial Management, Inc. (the
"Adviser"), a wholly-owned corporate subsidiary of BlackRock Advisors, Inc.,
which is an indirect majority-owned subsidiary of PNC Bank, N.A., 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 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.
NOTE 3. PORTFOLIO Purchases and sales of investment securities,
SECURITIES other than short-term investments and dollar
rolls, for the six months ended April 30, 1999
aggregated $6,049,423 and $5,063,593, 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 April 30, 1999, the Trust held 17.1% 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 by PNC 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 PNC Bank or its affiliates, including Midland Loan
Services, Inc. It is possible under certain circumstances, PNC Mortgage
Securities Corp. or its affiliates, including Midland Loan Services, Inc. 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, including Midland Loan Services, Inc.
The federal income tax basis of the Trust's investments at April 30, 1999
was $60,881,228, and accordingly, net unrealized appreciation for federal
income tax purposes was $58,618 (gross unrealized appreciation-$2,359,975,
gross unrealized depreciation-$2,301,357).
For Federal income tax purposes, the Trust had a capital loss
carryforward at October 31, 1998 of approximately $1,400,000 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.
Details of open financial futures contracts at April 30, 1999 are as
follows:
<TABLE>
<CAPTION>
VALUE AT
NUMBER OF EXPIRATION VALUE AT APRIL 30, UNREALIZED
CONTRACTS TYPE DATE TRADE DATE 1999 DEPRECIATION
- ---------------- ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Long Position: 30 yr. U.S.
45 T-Bond Jun. 99 $5,445,466 $5,408,437 $ (37,029)
=========
</TABLE>
The Trust entered into an interest rate cap. Under this agreement, the
Trust receives the excess, if any, of a floating rate over a fixed rate. The
Trust paid a transaction fee for the agreement. Details of the cap at April 30,
1999 are as follows:
<TABLE>
<CAPTION>
NOTIONAL VALUE AT
AMOUNT FIXED FLOATING TERMINATION AMORTIZED APRIL 30, UNREALIZED
(000) RATE RATE DATE COST 1999 DEPRECIATION
- ---------- ---------- -------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
$5,000 6.00% 3 mth. LIBOR 2/19/02 $90,487 $32,029 $ (58,458)
=========
</TABLE>
Details of open interest rate swap at April 30, 1999 are as follows:
<TABLE>
<CAPTION>
NOTIONAL
AMOUNT FLOATING TERMINATION UNREALIZED
(000) TYPE RATE RATE DATE APPRECIATION
- ----------- --------------- -------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 5,000 Interest rate 3 mth. 3 mth. T-Bill 9/10/03 $10,250
LIBOR +0.8175% =======
</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
15
<PAGE>
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
for the six months ended April 30, 1999 was approximately $19,211,121 at a
weighted average interest rate of approximately 5.24%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the period
was $20,394,998 as of March 31, 1999 which was 30% 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 six months ended April 30, 1999.
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, 1999, the Adviser owned 7,093 shares.
NOTE 6. DIVIDENDS Subsequent to April 30, 1999, the Board of
Directors of the Trust declared a dividend
from undistributed earnings of $0.06875 per share payable May 28, 1999 to
shareholders of record on May 14, 1999.
16
<PAGE>
- --------------------------------------------------------------------------------
THE 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
reinvested by State Street Bank and Trust Company (the "Plan Agent") in Trust
shares pursuant to the Plan. Shareholders who do not participate in the Plan
will receive all distributions in cash paid by check in United States dollars
mailed directly to the shareholders of record (or if the shares are held in
street or other nominee name, then to the nominee) by the transfer agent, as
dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the American
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment 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.
The Trust reserves the right to amend or terminate the Plan as applied to
any dividend or distribution paid subsequent to written notice of the change
sent to all shareholders of the Trust at least 90 days before the record date
for the dividend or distribution. The Plan also may be amended or terminated by
the Plan Agent upon at least 90 days' written notice to all shareholders of the
Trust. All correspondence concerning the Plan should be directed to the Plan
Agent at (800) 699-1BFM. The addresses are on the front of this report.
17
<PAGE>
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THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
YEAR 2000 READINESS DISCLOSURE. The Trust is currently in the process of
evaluating its information technology infrastructure for Year 2000 compliance.
Substantially all of the Trust's information systems are supplied by the
Adviser. The Adviser has advised the Trust that it is currently evaluating
whether such systems are year 2000 compliant and that it expects to incur costs
of up to approximately five hundred thousand dollars to complete such
evaluation and to make any modifications to its systems as may be necessary to
achieve Year 2000 compliance. The Adviser has advised the Trust that it has
fully tested its systems for Year 2000 compliance. The Trust may be required to
bear a portion of such cost incurred by the Adviser in this regard. The Adviser
has advised the Trust that it does not anticipate any material disruption in
the operations of the Trust as a result of any failure by the Adviser to
achieve Year 2000 compliance. There can be no assurance that the costs will not
exceed the amount referred to above or that the Trust will not experience a
disruption in operations.
The Adviser has advised the Trust that it is in the process of evaluating
the Year 2000 compliance of various suppliers of the Adviser and the Trust. The
Adviser has advised the Trust that it has communicates with such suppliers to
determine their Year 2000 compliance status and the extent to which the Adviser
or the Trust could be affected by any supplier's Year 2000 compliance issues.
To date the Adviser has received responses from all such suppliers with respect
to their Year 2000 compliance, and there can be no assurance that the systems
of such suppliers, who are beyond the Trust's control, will be Year 2000
compliant. In the event that any of the Trust's significant suppliers do not
successfully and timely achieve Year 2000 compliance, the Trust's business or
operations could be adversely affected. The Adviser has advised the Trust that
it is in the process of preparing a contingency plan for Year 2000 compliance
by its suppliers. There can be no assurance that such contingency plan will be
successful in preventing a disruption of the Trust's operations.
The Trust is designating this disclosure as its Year 2000 readiness
disclosure for all purposes under the Year 2000 Information and Readiness
Disclosure Act and the foregoing information shall constitute a Year 2000
statement for purposes of that Act.
ANNUAL MEETING OF TRUST SHAREHOLDERS. There have been no material changes
in the Trust's investment objectives or policies that have not been approved by
the shareholders or to its charter or by-laws or in the principal risk factors
associated with investment in the Trust. There have been no changes in the
persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 19, 1999 to vote on
the following matters:
(1) To elect three Directors to serve as follows:
<TABLE>
<CAPTION>
DIRECTOR CLASS TERM EXPIRING
-------- ----- ----- ---------
<S> <C> <C> <C>
Frank J. Fabozzi .................................................................... II 3 years 2002
Walter F. Mondale ................................................................... II 3 years 2002
Ralph L. Schlosstein ................................................................ II 3 years 2002
Directors whose term of office continues beyond this meeting are Andrew F. Brimmer, Richard E. Cavanagh, Kent
Dixon, Laurence D. Fink, James Grosfeld and James Clayburn La Force, Jr.
</TABLE>
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 1999.
Shareholders elected the three Directors and ratified the selection of
Deloitte & Touche LLP. The results of the voting was as follows:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS
----------- --------------- ------------
<S> <C> <C> <C>
Frank J. Fabozzi ............................... 2,611,006 0 62,854
Walter F. Mondale .............................. 2,604,151 0 69,709
Ralph L. Schlosstein ........................... 2,614,056 0 59,804
Ratification of Deloitte & Touche LLP .......... 2,630,764 6,434 36,662
</TABLE>
18
<PAGE>
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THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock Broad Investment Grade 2009 Term 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 an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $141
billion on behalf of taxable and tax-exempt clients worldwide. Strategies
include fixed income, equity and cash and may incorporate both domestic and
international securities. Domestic fixed income strategies utilize the
government, mortgage, corporate and municipal bond sectors. BlackRock manages
twenty-one closed-end funds that are traded on either the New York or American
stock exchanges, and a $25 billion family of open-end equity and bond funds.
Current accounts number over 450, domiciled in the United States and overseas.
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|M/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.
19
<PAGE>
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the 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 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|M/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.
INTEREST-ONLY SECURITIES (IO). The yield to maturity on an IO class is
extremely sensitive to the rate of principal payments (including prepayments)
on the related underlying Mortgage Assets, and a rapid rate of principal
payments may have a material adverse effect on such security's yield to
maturity. If the underlying Mortgage Assets experience greater than anticipated
prepayments of principal, the Trust may fail to recoup fully its initial
investment in these securities even if the securities are rated AAA by S&P or
Aaa by Moody's.
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.
20
<PAGE>
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THE BLACKROCK BROAD INVESTMENT GRADE 2009 TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ADJUSTABLE RATE MORTGAGE- Mortgage instruments with interest rates that adjust
BACKED SECURITIES (ARMS): 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-backed securities which separate mortgage
pools into short-, medium-, and
MORTGAGE OBLIGATIONS long-term securities with different priorities for
(CMOS): 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.
COMMERCIAL MORTGAGE Mortgage-backed securities secured or backed by
BACKED SECURITIES (CMBS): mortgage loans on commercial properties.
DISCOUNT: When a fund's net asset value is greater than its
stock price the fund is said to be trading at a
discount.
DIVIDEND: This is income generated by securities in a portfolio
and distributed to shareholders after the deduction
of expenses. This Trust declares and pays dividends
on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all distributions of
dividends and capital gains automatically reinvested
into additional shares of the Trust.
FHA: Federal Housing Administration, a government agency
that facilitates a secondary mortgage market by
providing an agency that guarantees timely payment of
interest and principal on mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by purchasing
mortgages from lenders such as savings institutions
and reselling them to investors by means of
mortgage-backed securities. Obligations of FHLMC are
not guaranteed by the U.S. government, however, they
are backed by FHLMC's authority to borrow from the
U.S. government. Also known as Freddie Mac.
FNMA: Federal National Mortgage Association, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by purchasing
mortgages from lenders such as savings institutions
and reselling them to investors by means of
mortgage-backed securities. Obligations of FNMA are
not guaranteed by the U.S. government, however, they
are backed by FNMA's authority to borrow from the
U.S. government. Also known as Fannie Mae.
GNMA: Government National Mortgage Association, a
government agency that facilitates a secondary
mortgage market by providing an agency that
guarantees timely payment of interest and principal
on mortgages. GNMA's obligations are supported by the
full faith and credit of the U.S. Treasury. Also
known as Ginnie Mae.
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).
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
INTEREST-ONLY SECURITIES: Mortgage securities including CMBS that receive only
the interest cash flows from an underlying pool of
mortgage loans or underlying pass-through securities.
Also known as a STRIP.
INVERSE-FLOATING RATE Mortgage instruments with coupons that adjust at
MORTGAGES: periodic intervals according to a formula which sets
inversely with a market level interest rate index.
MARKET PRICE: Price per share of a security trading in the
secondary market. For a closed-end fund, this is the
price at which one share of the fund trades on the
stock exchange. If you were to buy or sell shares,
you would pay or receive the market price.
MORTGAGE DOLLAR ROLLS: A mortgage dollar roll is a transaction in which the
Trust sells mortgage-backed securities for delivery
in the current month and simultaneously contracts to
repurchase substantially similar (although not the
same) securities on a specified future date. During
the "roll" period, the Trust does not receive
principal and interest payments on the securities,
but is compensated for giving up these payments by
the difference in the current sales price (for which
the security is sold) and lower price that the Trust
pays for the similar security at the end date as well
as the interest earned on the cash proceeds of the
initial sale.
MORTGAGE PASS-THROUGHS: Mortgage-backed securities issued by Fannie Mae,
Freddie Mac or Ginnie Mae.
MULTIPLE-CLASS Collateralized Mortgage Obligations.
PASS-THROUGHS:
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities and other assets held by the Trust, plus
income accrued on its investments, minus any
liabilities including accrued expenses, divided by
the total number of outstanding shares. It is the
underlying value of a single share on a given day.
Net asset value for the Trust is calculated weekly
and published in BARRON'S on Saturday, THE NEW YORK
TIMES and THE WALL STREET JOURNAL on Monday.
PRINCIPAL-ONLY SECURITIES Mortgage securities that receive only the principal
cash flows from an underlying pool of mortgage loans
or underlying pass-through securities. Also known as
STRIPS.
PROJECT LOANS: Mortgages for multi-family, low- to middle-income
housing.
PREMIUM: When a fund's stock price is greater than its net
asset value, the fund is said to be trading at a
premium.
REMIC: A real estate mortgage investment conduit is a
multiple-class security backed by mortgage-backed
securities or whole mortgage loans and formed as a
trust, corporation, partnership, or segregated pool
of assets that elects to be treated as a REMIC for
federal tax purposes. Generally, Fannie Mae REMICs
are formed as trusts and are backed by
mortgage-backed securities.
RESIDUALS: Securities issued in connection with collateralized
mortgage obligations that generally represent the
excess cash flow from the mortgage assets underlying
the CMO after payment of principal and interest on
the other CMO securities and related administrative
expenses.
REVERSE REPURCHASE In a reverse repurchase agreement, the Trust sells
AGREEMENTS: 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 separated
SECURITIES: into two classes that receive different proportions
of the interest and principal distributions from
underlying mortgage-backed securities. IO's and PO's
are examples of strips.
</TABLE>
22
<PAGE>
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BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- --------------------------------------------------------------------------------
TAXABLE TRUSTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS ---------- ---------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
The BlackRock High Yield Trust BHY N/A
TERM TRUSTS
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
- --------------------------------------------------------------------------------
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS --------- ---------
<S> <C> <C>
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE CALL BLACKROCK AT (800) 227-7BFM
(7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
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.
Walter F. Mondale
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
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 543-6217
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
The accompanying financial statement as of April 30, 1999 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 Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 543-6217
- -----------------------------------
THE BLACKROCK
BROAD INVESTMENT
GRADE 2009
TERM TRUST INC.
- ----------------------------------------------------------------------------
SEMI-ANNUAL REPORT
APRIL 30, 1999
[GRAPHIC OMITTED] Printed on recycled paper 092472-10-6
[GRAPHIC OMITTED]
