- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
CONSOLIDATEDANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
January 31, 1997
Dear Trust Shareholder:
The domestic fixed income markets over the past twelve months were once
again greatly influenced by interest rate volatility. 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 consolidated 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 achieve
your long-term investment goals.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
- -------------------- ------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
January 31, 1997
Dear Shareholder:
We are pleased to present the consolidated annual report for The BlackRock
1999 Term Trust Inc. ("the Trust") for the year ended December 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 New York Stock Exchange under the symbol "BNN". The
Trust's investment objective is to return $10 per share (its initial offering
price) to shareholders on or about December 31, 1999 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), asset-backed
securities and commercial mortgage-backed securities. All of the Trust's assets
must be rated at least "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 over the period:
-------------------------------------------------
12/31/96 12/31/95 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $8.875 $8.125 9.23% $8.875 $8.00
- --------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $9.53 $9.27 2.80% $9.59 $9.16
- --------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
While 1996 featured several major shifts in sentiment and some dramatically
sharp market moves, the net year-over-year yield changes turned out to be
modest. Yields rose sharply across the Treasury yield curve throughout the first
half of the year in response to data indicating accelerating economic growth,
including a sharp rise in commodity prices, which rekindled inflationary
concerns. The possibility of a stronger economy dampened investor expectations
of continued Federal Reserve easing of monetary policy and initiated whispers of
a potentially more restrictive Fed policy.
Largely softer economic data and continued moderation in the broad inflation
measures during the third and fourth quarters allowed the Fed to leave short
term interest rates unchanged at their most recent policy meetings.
Additionally, a stronger dollar, large foreign buying of U.S. Treasuries and
balanced budget hopes following the November elections also supported the
market. However, Alan Greenspan's mention of "irrational exuberance in the
financial markets" on December 4th rattled the Treasury market, leading to a
monthlong rise in rates. A resilient housing market and strong consumer
confidence also contributed to the market decline in late December.
The mortgage-backed securities (MBS) market significantly outperformed
Treasuries during 1996 as lower volatility and benign prepayments prompted
strong investor demand. Supply and demand technical conditions remained positive
throughout the period, as strong demand from the mortgage agencies (Fannie Mae
and Freddie Mac) in the third and fourth quarters helped support MBS prices even
as mortgage rates fell and homeowners refinanced at a faster pace during October
and November. For the year, the MBS market as measured by the LEHMAN BROTHERS
MORTGAGE INDEX posted a 5.35% total return versus the 3.63% return of the LEHMAN
BROTHERS AGGREGATE INDEX.
2
<PAGE>
Corporate bond returns exceeded those of Treasuries and mortgage securities
during the fourth quarter, underscoring a strong year for corporates as they
outperformed Treasuries during every month in 1996. The demand for yield, a
strong fundamental credit environment and the increased participation of foreign
investors were the major influences which drove corporate bond prices higher and
yields spreads to Treasuries narrower. BlackRock enters 1997 cautious on the
corporate sector. Despite the sound credit environment of 1996 and positive
credit momentum going into the new year, corporate bond spreads versus
Treasuries are fairly narrow.
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 December 31, 1995 asset
composition.
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
- --------------------------------------------------------------------------------
COMPOSITION DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Corporate Bonds 45% 22%
- --------------------------------------------------------------------------------
Stripped Mortgage-Backed Securities 19% 9%
- --------------------------------------------------------------------------------
Asset-Backed Securities 7% 4%
- --------------------------------------------------------------------------------
Adjustable Rate Mortgages 6% 12%
- --------------------------------------------------------------------------------
Municipal Securities 6% 4%
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs 5% 24%
- --------------------------------------------------------------------------------
Non Agency Multiple Class Mortgage Pass-Throughs 5% 5%
- --------------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 4% 9%
- --------------------------------------------------------------------------------
U.S. Government Securities 2% 2%
- --------------------------------------------------------------------------------
CMO Residuals 1% 1%
- --------------------------------------------------------------------------------
Taxable Zero Coupon Bonds 0% 8%
- --------------------------------------------------------------------------------
-------------------------------------------------------------------
RATING % OF CORPORATES
--------------------------------------
CREDIT RATING DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------------------------------------------------
AAA or equivalent 2% 0%
-------------------------------------------------------------------
AA or equivalent 9% 23%
-------------------------------------------------------------------
A or equivalent 56% 41%
-------------------------------------------------------------------
BBB or equivalent 33% 36%
-------------------------------------------------------------------
As we have discussed in the Trust's recent reports, we have been seeking to
achieve the Trust's primary investment objective of returning $10 per share to
investors on or about its termination date by emphasizing the purchase of
investment grade corporate bonds with maturity dates on or shortly before the
Trust's scheduled termination date. As of year-end, 45% of the Trust's assets
were invested in corporates, an increase of 23% since December 31, 1995. To a
lesser degree, the Trust has also been buying commercial mortgage-backed
securities (CMBS), which are securities backed by commercial (as opposed to the
more traditional residential) mortgage loans. CMBS deals are typically issued in
several pieces, or tranches, which carry different maturity dates and credit
ratings. Whenever possible, we have bought tranches which fit the Trust's
maturity profile.
3
<PAGE>
To fund the purchase of finite, or "bullet", maturity securities such as
corporates and CMBS, we have been selling bonds whose maturities may extend
beyond the Trust's termination date (we consider these bonds to have "tail
risk"). In our efforts to eliminate these bonds from the portfolio, a particular
focus has been placed on reducing mortgage-backed securities (MBS), whose actual
maturity dates may fluctuate depending on interest rate movements. Additionally,
MBS offer less predictable cash flows than corporates, which typically pay
semi-annually. We believe that the strategy of reducing the Trust's "tail risk"
will enhance the Trust's ability to return its initial offering price upon
termination. Additionally, the Trust's increased corporate holdings may help
produce a more stable income stream.
We appreciate your continued confidence and look forward to managing The
BlackRock 1999 Term Trust Inc. in the coming years to realize its investment
objectives. Please feel free to contact the mutual fund specialists at
BlackRock's marketing center at (800) 227-7BFM (7236) if you have any questions
that are not answered in this report. Additionally, you can reach us via e-mail
at [email protected].
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 1999 TERM TRUST INC.
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BNN
- --------------------------------------------------------------------------------
Initial Offering Date: December 23, 1992
- --------------------------------------------------------------------------------
Closing Stock Price as of 12/31/96: $8.875
- --------------------------------------------------------------------------------
Net Asset Value as of 12/31/96: $9.53
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 12/31/96 ($8.875)1: 4.50%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.0333
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.40
- --------------------------------------------------------------------------------
- ----------
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 Distribution not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
CONSOLIDATED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--142.9%
MORTGAGE PASS-THROUGHS--7.6%
7,868++ Federal Home Loan Mortgage Corporation,
9.50%, 2/01/02 - 3/01/02, 15 Year $ 8,231,027
Federal National Mortgage Association,
1,260++ 7.516%, 7/01/99, Multifamily ... 1,287,241
5,960++ 8.775%, 8/01/99, Multifamily ... 6,213,800
----------
15,732,068
----------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--20.1%
AAA 3,300 CBA Mortgage Corporation,
Series 1993-C1, Class A-2, 12/25/03 3,371,311
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
2,038++ Series 172, Class 172-H,
5/15/20 ........................ 2,057,097
5,439++ Series 1127, Class 1127-F,
3/15/06 ........................ 5,588,633
3,482++ Series 1234, Class 1234-H,
5/15/99, (ARM) ................. 3,549,700
6,220+ Series 1329, Class 1329-SA,
8/15/99, (ARM) ................. 6,315,624
517 Series 1330, Class 1330-I,
9/15/99, (ARM) ................. 518,032
131 Series 1330, Class 1330-M,
9/15/99 (ARM) .................. 823,139
565 Series 1352, Class 1352-G,
9/15/97, (ARM) ................. 560,868
3,000 Series 1505, Class 1505-ID,
9/15/15, (I) ................... 343,125
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
43 Trust 1989-91, Class 91-E, 6/25/15 43,465
213 Trust 1991-146, Class 146-SB,
10/25/06, (ARM) ................ 221,588
888 Trust 1992-106, Class 106-S,
6/25/99, (ARM) ................. 932,476
2,326 Trust 1992-3, Class 3-S, 1/25/99,
(ARM) .......................... 2,557,881
1,000 Trust 1992-176, Class 176-FA,
10/25/99 ....................... 971,250
412 Trust 1993-193, Class 193-PC,
9/25/23 ........................ 378,979
19,468 Trust 1993-199, Class 199-SC,
10/25/14, (ARM) ................ 95,980
16,377 Trust 1993-226, Class 226-SB,
5/25/19 ........................ 568,765
4,530 Trust 1993-G33, Class P,
9/25/14, (I) ................... 476,812
324 Trust 1994-44, Class 44-T,
2/25/08, (I) ................... 1,112
5,081++ Government National Mortgage
Association Trust 1994-1,
Class 1-PL, 6/16/24, (I) ....... 883,810
AAA 4,344+ Merrill Lynch Trust XXXVI, 10/01/17 4,478,799
AAA 2,518 Residential Funding Mortgage Securities,
Series 1992-S1 Class A-6,
1/25/22 (ARM) .................. 2,690,839
AAA 163 Structured Asset Securities Corporation,
Series 1996, Class A, 2/25/28 .. 161,796
BBB+ 3,818 Wilshire Liquidating Trust, 144A
Series 1996, Class 4, 9/25/01 .. 3,778,627
----------
41,369,708
----------
CORPORATE BONDS--66.2%
FINANCE & BANKING--27.5%
Aa3 3,350 Associates Corporation of North
America, 6.75%, 10/15/99 ....... 3,388,156
A2 4,200 Citicorp, 9.75%, 8/01/99 ....... 4,536,588
AAA 2,000 General Electric Capital Corporation,
8.125%, 2/01/99 ................ 2,076,839
A3 3,000 Hartford National Corporation,
9.85%, 6/01/99 ................. 3,214,050
A2 3,000 Household Finance Corporation,
6.65%, 5/26/98 ................. 3,022,073
A1 4,000 International Lease Finance
Corporation, 6.30%, 11/01/99 ... 3,986,990
Baa3 2,000 Meditrust,
7.25%, 8/16/99 ................. 2,003,824
Aa3 3,000 Merrill Lynch & Company
Incorporated, 7.75%, 3/01/99 ... 3,089,493
A1 2,000 Morgan Stanley Group Incorporated,
5.625%, 3/01/99 ................ 1,976,046
Baa3 2,000 New American Capital, Inc., 144A
7.0625%, 4/12/00 ............... 2,011,250
Aa3 3,000 Norwest Corporation,
7.70%, 11/15/97 ................ 3,043,950
PaineWebber Group
Incorporated
Baa1 3,500 6.31%, 7/22/99 ................. 3,475,357
Baa1 2,189 7.00%, 3/01/00 ................. 2,204,600
Baa1 2,000 Potomac Capital Investment
Corporation, 6.73%, 8/09/99 .... 2,005,054
Baa1 2,000 Salomon, Inc.,
7.43%, 12/30/98 ................ 2,032,571
A2 3,000 Sears Overseas Finance,
Zero Coupon, 7/12/98 ........... 2,733,423
A2 4,000 Security Pacific Corporation,
9.75%, 5/15/99 ................. 4,298,766
A3 5,000 Shawmut National Corporation,
8.625%, 12/15/99 ............... 5,288,876
Smith Barney Holdings Incorporated,
A2 1,500 7.875%, 10/01/99 ............... 1,556,200
A2 529 7.98%, 3/01/00 ................. 550,834
----------
56,494,940
----------
CORPORATE BONDS
INDUSTRIALS--28.5%
Baa1 4,400 Alco Capital Resource Incorporated,
6.83%, 5/10/99 ................. 4,443,797
A1 1,895 Anheuser Busch Companies Incorporated,
8.75%, 12/01/99 ................ 2,019,824
5
See Notes to Consolidated Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
A1 $ 5,000 Bass America Incorporated,
6.75%, 8/01/99 ................. $ 5,046,400
Ford Motor Credit Company,
A1 1,000 8.00%, 1/15/99 ................. 1,033,350
A1 5,000 8.40%, 3/26/99 ................. 5,217,550
A3 5,000 General Motors Acceptance Corp.,
6.125%, 9/18/98 ................ 4,997,828
A2 1,755 Kern River Funding, 144A
6.42%, Series A, 3/31/01 ....... 1,752,146
Baa2 3,000 MCN Investment Corporation,
5.84%, 2/01/99 ................. 2,971,467
Baa2 4,000 Nabisco Brands Incorporated,
8.30%, 4/15/99 ................. 4,142,240
A2 2,000 National Fuel Gas Company,
5.58%, 3/01/99 ................. 1,968,620
Baa3 3,000 News America Holdings Incorporated,
9.125%, 10/15/99 ............... 3,196,288
Baa3 2,000 Occidental Petroleum Corporation,
6.08%, 11/26/99 ................ 1,972,180
BBB 2,750 Pulte Home Corporation,
10.125%, 7/15/99 ............... 2,928,640
BBB 3,600 TCI Communications,
7.25%, 6/15/99 ................. 3,610,128
A1 3,000 Texaco Capital Incorporated,
9.00%, 12/15/99 ................ 3,212,550
A3 1,000 Textron Financial Corporation, 144A
7.125%, 10/05/99 ............... 1,014,688
Baa1 3,000 TTX Company,
6.28%, 6/28/99 ................. 2,991,175
Baa2 2,500 Union Oil Company,
8.40%, 1/15/99 ................. 2,599,017
A1 4,000 Walt Disney Corporation, 144A
1.50%, 10/20/99 ................ 3,509,948
----------
58,627,836
----------
CORPORATE BONDS
UTILITIES--8.1%
A1 4,750 Alabama Power Company,
6.375%, 8/01/99 ................ 4,759,215
A2 4,000 Atlanta Gas Light Company,
7.30%, 12/10/99 ................ 4,095,588
A2 2,000 California Petroleum Transport
Corporation, 7.30%, 4/01/99 .... 2,041,048
Aa2 2,650 Duke Power Company,
8.00%, 11/01/99 ................ 2,764,262
A3 3,040 Puget Sound Power & Light Company,
7.875%, 10/01/97 ............... 3,082,212
----------
16,742,325
----------
CORPORATE BONDS
YANKEE--OTHER--2.1%
A3 1,272 Nova Corporation of Alberta,
7.25%, 7/06/99 ................. 1,293,090
Baa3 3,000 Republic of Colombia,
8.75%, 10/06/99 ................ 3,116,065
----------
4,409,155
----------
ASSET-BACKED SECURITIES--7.9%
AAA 2,520++ Banc One Auto Grantor Trust,
Series 1996-A, Class A, 6.10%,
10/15/02 ....................... 2,523,708
AAA 5,000++ Dayton Hudson Credit Card Trust,
Series 1995-1, Class A, 6.10%,
2/25/02 ........................ 5,007,031
AAA 3,124++ Fifth Third Bank Auto Trust,
Series 1996-B, Class A, 6.45%, . 3,138,363
AAA 3,139++ Ford Credit Grantor Trust,
Series 1995-B, Class A, 5.90%,
10/15/00 ....................... 3,136,773
BBB 2,556 Telmex Trust,
Series 1996, 5.94%, 4/01/97 .... 2,555,965
----------
16,361,840
----------
STRIPPED MORTGAGE-BACKED
SECURITIES--27.5%
Federal Home Loan Mortgage Corporation,
Multiclass Mortgage Participation
Certificates,
47 Series G-2, Class M, 7/25/18 (I/O) 872,665
28 Series 201, Class 201-C, 2/15/23 (I/O) 784,970
44+ Series 1105, Class 1105-D,
3/15/16 (I/O) .................. 874,318
22 Series 1195, Class 1195-H,
3/15/05 (I/O) .................. 203,312
8,777+ Series 1359, Class 1359-C,
9/15/99 (P/O) .................. 7,829,934
5,086 Series 1440, Class 1440-PK,
8/15/18 (I/O) .................. 584,881
492 Series 1444, Class 1444-K,
1/15/00, (ARM) (I/O) ........... 452,547
4,669 Series 1473, Class 1473- JA,
2/15/05 (I/O) .................. 321,231
1,595 Series 1719 Class 1719-C,
4/15/99 (P/O) .................. 1,450,703
9,269+ Series 1887 Class 1887- J,
7/15/99 (P/O) .................. 8,066,647
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
2,015++ Trust 225, Class 1 2/01/23 (P/O) 1,510,976
43 Trust 1990-119, Class 119-G,
10/25/20 (I/O) ................. 795,936
61+ Trust 1991-7, Class 7-K,
2/25/21 (I/O) .................. 1,705,800
1,985 Trust 1991-159 Class 159-D,
10/25/04 (I/O) ................. 235,972
2,628 Trust 1992-59, Class 59-A,
8/25/06 (P/O) .................. 2,391,089
1,443 Trust 1992-62, Class 192-H,
5/25/99 (P/O) .................. 1,262,796
See Notes to Consolidated Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
$ 5,654++ Trust 1992-193, Class 193-JA,
9/25/04 (I/O) .................. $ 367,764
12,000+ Trust 1993-152, Class 152-C,
6/25/22 (P/O) .................. 10,920,000
2,901++ Trust 1993-236, Class 236-C,
10/25/23 (P/O) ................. 2,349,428
4,733 Trust 1992-203, Class 203-JA,
6/25/05 (I/O) .................. 146,439
4,772++ Trust 1993-111, Class 111-A,
11/25/17 (P/O) ................. 4,479,987
6,296 Trust 1994-15, Class 15-N,
9/25/15 (I/O) .................. 405,324
6,862 Trust 1994-47, Class B,
9/25/22 (I/O) .................. 6,308,683
AAA 10,000 Merrill Lynch Trust,
Trust XLIII, Class F, 8/27/15 (I/O) 1,919,813
AAA 40,016 Sears Mortgage Corporation,
Series 1992-7, Class 7-X,
5/25/22 (I/O) .................. 462,690
----------
56,703,905
----------
COLLATERALIZED MORTGAGE OBLIGATION
RESIDUALS--
Federal Home Loan Mortgage
Corporation,
8 Series 1115, Class 1115-R, 8/15/06 41,500
----------
U.S GOVERNMENT SECURITIES--2.3%
United States Treasury Notes,
4,265+ 6.00%, 8/15/99 ................. 4,264,318
550++ 6.375%, 5/15/99 ................ 554,724
----------
4,819,042
----------
MUNICIPAL BONDS--8.7%
AAA 2,000 Alameda County. California Pension,
Series A, 7.35%, 12/01/99 ...... 2,061,680
Baa1 2,295 Essex County,
Zero Coupon .................... 1,926,468
AAA 1,500 Long Beach California Pension,
6.26%, 9/01/99 ................. 1,503,105
Baa1 500 Los Angeles County California Pension,
Series A, 7.81%, 6/30/99 ....... 516,055
AAA 2,605 Massachusetts St. Hsg Fin Agcy.,
Series C, 6.85%, 4/01/19 ....... 2,451,045
Baa1 5,000 New York, New York,
Series G, 6.23%, 2/01/99 ....... 4,983,450
AAA 497 North Slope Borough Alaska,
Series A, Zero Coupon, 6/30/99 . 425,044
AAA 3,000 Ventura County California Pension
Oblig., 5.92%, 11/01/99 ........ 2,980,530
AAA 1,000 Western Minnesota Muni. Pwr Agcy.
Supply, Series A,
6.05%, 1/01/99 ................. 997,040
----------
17,844,417
----------
CERTIFICATE OF DEPOSIT--2.4%
5,000 MBNA America Bank, N.A.
6.15%, 6/19/98 ................. 5,000,000
------------
Total Long-Term Investments before
outstanding put options purchased--
142.7% (cost $294,676,530) ..... 294,146,736
CONTRACTS+++ PUT OPTIONS PURCHASED--0.2%
----------
250 U.S. Treasury Note 7.00%, 7/15/96
@ 102, expiring 7/02/97 ........ 378,900
------------
Total long-term investments including
put options purchased--142.9%
(cost $295,035,905) ............ 294,525,636
------------
SHORT-TERM INVESTMENTS--
DISCOUNT NOTE--2.9%
5,955 Federal Home Loan Mortgage Discount
6.50%, 1/2/97 (cost $5,953,925) 5,953,925
------------
Total Investments before security
sold short--145.8%
(cost $300,989,830) ............ 300,479,561
SECURITY SOLDSHORT--(7.3%)
15,000 United States Treasury Note
6.125%, 8/31/98
(proceeds $14,960,156) ......... (15,065,550)
------------
Total Investments, net of
security sold short--138.5% .... 285,414,011
Liabilities in excess of other
assets--(38.5%) ................ (79,409,638)
------------
NET ASSETS--100% ............... $206,004,373
============
- ----------
* 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.
+++ One contract equals 100,000 face value.
@ Partial principal amount pledged as collateral for futures transactions.
(a) Security was purchased on a discount basis, the interest rate shown has been
adjusted to reflect a money market equivalent.
- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM -- Adjustable Rate Mortgage.
CMO -- Collateralized Mortgage Obligation.
CMT -- Constant Maturity Treasury
I -- Denotes a CMO with Interest only characteristics.
I/O -- Interest Only
P -- Denotes a CMO with Principal only characteristics.
P/O -- Principal Only
REMIC -- Real Estate Mortgage Investment Conduit.
- --------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
CONSOLIDATED STATEMENT OF ASSETS
AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $300,989,830)
(Note 1) ................................................ $300,479,561
Cash ....................................................... 28,306
Deposits with brokers as collateral for investments
sold short (Note 1) ...................................... 15,375,000
Interest receivable ........................................ 3,875,236
Deferred organization expenses and other assets ............ 37,263
-------------
319,795,366
-------------
LIABILITIES
Reverse repurchase agreements (Note 4) ..................... 94,959,650
Investments sold short, at value
(proceeds $14,960,156) (Note 1) .......................... 15,065,550
Payable for investments purchased .......................... 1,917,679
Dividends payable .......................................... 719,633
Interest payable ........................................... 889,873
Advisory fee payable (Note 2) .............................. 59,072
Administration fee payable (Note 2) ........................ 14,768
Other accrued expenses ..................................... 164,768
-------------
113,790,993
-------------
NET ASSETS ................................................. $206,004,373
=============
Net assets were comprised of:
Common stock, at par (Note 5) ........................... 216,106
Paid-in capital in excess of par ........................ 202,928,542
-------------
203,144,648
Undistributed net investment income ..................... 10,133,007
Accumulated net realized losses ......................... (6,657,542)
Net unrealized depreciation ............................. (615,740)
-------------
Net assets, December 31, 1996 ........................... $206,004,373
=============
Net asset value per share:
($206,004,373 / 21,610,583 shares of
common stock issued and outstanding) .................... $9.53
=====
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (net of premium amortization of
$6,821,622 and net of interest expense of
$5,593,491) $15,266,831
------------
Operating expenses
Investment advisory ....................................... 812,307
Administration ............................................ 203,077
Custodian ................................................. 60,000
Directors ................................................. 40,000
Reports to shareholders ................................... 75,000
Transfer agent ............................................ 10,000
Audit ..................................................... 15,000
Miscellaneous ............................................. 99,270
------------
Total operating expenses ................................ 1,314,654
------------
Net investment income before excise tax ...................... 13,952,177
Excise tax ................................................ 100,000
------------
Net investment income ........................................ 13,852,177
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ............................................... 2,216,336
Futures ................................................... (586,723)
Short sales ............................................... (1,377,344)
------------
252,269
------------
Net change in unrealized appreciation (depreciation) on:
Investments ............................................... (313,686)
Futures ................................................... (641,302)
Short sales ............................................... 1,359,130
------------
404,142
------------
Net gain on investments ................................... 656,411
------------
Net Increase In Net Assets Resulting
from Operations .............................................. $14,508,588
============
See Notes to Consolidated Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows provided by operating activities:
Interest received ........................................ $ 27,515,810
Operating expenses paid and excise taxes ................. (1,574,033)
Interest expense paid .................................... (5,612,191)
Purchase of short-term portfolio
investments, net ....................................... (4,489,159)
Purchase of long-term portfolio investments .............. (345,602,546)
Proceeds from disposition of long-term
portfolio investments .................................. 337,687,982
Variation margin on futures .............................. (1,111,070)
Other .................................................... 18,328
-------------
Net cash flows provided by operating activities .......... 6,833,121
-------------
Cash flows used for financing activities:
Increase in reverse repurchase agreements ................ 2,098,525
Cash dividends paid ...................................... (8,907,784)
-------------
Net cash flows used for financing activities ............. (6,809,259)
-------------
Net increase in cash ....................................... 23,862
Cash at beginning of year .................................. 4,444
-------------
Cash at end of year ........................................ $ 28,306
=============
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 ............................................ $ 14,508,588
-------------
Increase in investments .................................... (5,885,212)
Net realized loss .......................................... (252,269)
Increase in unrealized depreciation ........................ (404,142)
Increase in interest receivable ............................ (166,134)
Increase in deposits with brokers for
short sales ................................................ (8,160,000)
Decrease in variation margin ............................... 116,955
Decrease in other assets ................................... 32,364
Increase in securities sold short .......................... 7,853,370
Decrease in payable for investments
purchased .................................................. (1,082,321)
Increase in interest payable ............................... 431,300
Decrease in accrued expenses and
other liabilities .......................................... (159,378)
-------------
Total adjustments ....................................... (7,675,467)
-------------
Net cash flows provided by operating activities ......... $ 6,833,121
=============
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
CONSOLIDATED STATEMENTS OF CHANGES
IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
-------- --------
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment income ................ $13,852,177 $13,722,658
Net realized gain (loss) on
investments, futures
and short sales .................... 252,269 (158,034)
Net change in unrealized
appreciation on
investments, futures
and short sales .................... 404,142 16,715,341
------------- -------------
Net increase in net assets
resulting from
operations ......................... 14,508,588 30,279,965
Dividends from net investment
income ............................... (8,817,020) (11,886,169)
------------- -------------
Total increase ......................... 5,691,568 18,393,796
NET ASSETS
Beginning of year ...................... 200,312,805 181,919,009
------------- -------------
End of year ............................ $206,004,373 $200,312,805
============= =============
See Notes to Consolidated Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock 1999 Term Trust Inc.
Consolidated Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 23,
*1992*
Year Ended December 31, Through
---------------------------------------------- December 31,
1996 1995 1994 1993 1992
--------- -------- -------- -------- -------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $ 9.27 $ 8.42 $ 9.26 $ 9.40 $ 9.45
-------- -------- -------- -------- --------
Net investment income (net of $.26, $.33, $.15, $.01
and $.00, respectively, of interest expense) ....... .64 .63 .72 .73 .01
Net realized and unrealized gain (loss) on investments. .03 .77 (.93) (.19) (.02)
-------- -------- -------- -------- --------
Net increase (decrease) from investment operations ....... .67 1.40 (.21) .54 (.01)
-------- -------- -------- -------- --------
Dividends from net investment income ..................... (.41) (.55) (.63) (.68) --
-------- -------- -------- -------- --------
Capital charge with respect to issuance of shares ........ -- -- -- -- (.04)
-------- -------- -------- -------- --------
Net asset value, end of period** ......................... $ 9.53 $ 9.27 $ 8.42 $ 9.26 $ 9.40#
======== ======== ======== ======== ========
Market value, end of period** ............................ $ 8.875 $ 8.13 $ 7.50 $ 9.50 $ 10.00
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+: ................................ 14.21% 15.25% (14.88%) 1.74% 5.82%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses@ ...................................... 0.65% 0.74% 0.71% 0.79% 0.91%++
Net investment income .................................... 6.86% 7.12% 8.17% 7.74% 3.35%++
SUPPLEMENTAL DATA:
Average net assets (in thousands) ........................ $201,998 $192,717 $189,828 $202,158 $178,963
Portfolio turnover ....................................... 106% 165% 109% 62% 0%
Net assets, end of period (in thousands) ................. $206,004 $200,313 $181,919 $200,126 $178,629
Reverse repurchase agreements outstanding, end of
period (in thousands) ................................. $ 94,960 $ 92,861 $ 79,443 $ 47,100 --
Asset coverage+++ ........................................ $ 3,169 $ 3,157 $ 3,290 $ 5,249 --
</TABLE>
- ----------
* Commencement of investment operations.
** Net asset value and market value published in The Wall Street Journal each
Monday. #Net asset value immediately after the closing of the first public
offering was $9.41. @The ratios of operating expenses, including interest
expense, to average net assets were 3.42%, 4.40%, 2.46%, 1.36% and 0.91% for
the periods indicated above, respectively. The ratios of operating expenses,
including interest expense and excise tax, to average net assets were 3.47%,
4.47%, 2.49%, 1.36%, and 0.91% 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 each period reported. Dividends are assumed, for
purposes of this calculation, to be reinvested at prices obtained under the
Trust's dividend reinvestment plan. This calculation does not reflect
brokerage commissions. Total investment return for periods of less than one
full year are not annualized.
++ Annualized.
+++ Per $1,000 of reverse repurchase agreement 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.
10
<PAGE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
The BlackRock 1999 Term Trust Inc. (the "Trust"), a Maryland corporation is
a diversified closed-end management investment company.
The investment objective of the Trust is to manage a portfolio of investment
grade fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or about December 31, 1999 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.
On July 19, 1996 the Trust transferred a substantial portion of its total
assets to a 100% owned regulated investment company subsidiary called BNN
Subsidiary, Inc. These consolidated financial statements include the operations
of both the Trust and its wholly-owned subsidiary after elimination of all
intercompany transactions and balances.
The following is a summary of significant accounting policies followed by
the Trust.
SECURITIES VALUATION: The Trust values mortgage-backed, asset-backed and other
debt securities on the basis of current market quotations provided by dealers or
pricing services approved by the Trust's Board of Directors. In determining the
value of a particular security, pricing services may use certain information
with respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities, various relationships observed in the
market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange- traded
options are valued at their last sales price as of the close of options trading
on 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
determine that such price does not reflect its fair value, in which case it will
be valued at its fair value as determined by the Trust's Board of Directors. Any
securities or other assets for which such current market quotations are not
readily available are valued at fair 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
was 60 days or less, or by amortizing their value on the 61st day prior to
maturity, if their original term to maturity from date of purchase exceeded 60
days.
In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
OPTION SELLING/PURCHASING: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
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
positions so that changes in interest rates
11
<PAGE>
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 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's or a security's price would be expected to
change by approximately one percent with a one percent change in interest rates,
while a duration of "five" would imply that the price would move approximately
five percent in relation to a one percent change in interest rates. Futures
contracts can be sold to effectively shorten an otherwise longer duration
portfolio. In the same sense, futures contracts can be purchased to lengthen a
portfolio that is shorter than its duration target. Thus, by buying or selling
futures contracts, the Trust can effectively hedge more volatile positions so
that changes in interest rates do not change the duration of the portfolio
unexpectedly.
The Trust may invest in financial futures contracts primarily for the
purpose of hedging its existing portfolio securities or securities the Trust
intends to purchase against fluctuations in value caused by changes in
prevailing market interest rates. Should interest rates move unexpectedly, the
Trust may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. The use of futures transactions involves the
risk of imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets. The Trust is also at 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 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 secur-ity short, or a loss, unlimited as
to dollar amount, will be recognized upon the termination of a short sale if the
market price is less or greater 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
12
<PAGE>
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 December 31, 1996.
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 and amortizes premium on
securities purchased using the interest method.
TAXES: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no federal income tax provision is required. As part of its tax planning
strategy, the Trust may 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 net realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards are distributed at least
annually. Dividends and distributions are recorded on the ex-dividend date.
DEFERRED ORGANIZATION EXPENSES: A total of $70,000 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.
A total of $50,000 was incurred in connection with the organization of the
subsidiary Fund. These costs have been deferred and are being amortized ratably
over a period beginning the date the Trust commenced investment operations and
ending at the Trust's termination date.
RECLASSIFICATION OF CAPITAL ACCOUNTS: The Trust accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect caused by
applying this statement was to decrease paid-in capital and increase
undistributed net investment income by $100,000 due to certain expenses not
being deductible for tax purposes. Net investment income, net realized gains and
net assets were not affected by this change.
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 Prudential Mutual Fund
Management, Inc. ("PMF"), an indirect, wholly-owned subsidiary of The Prudential
Insurance Co. of America.
The investment advisory fee paid to the Adviser is computed weekly and payable
monthly at an annual rate of 0.40% of the Trust's average weekly net assets. The
administration fee paid to PMF is also computed weekly and payable monthly at an
annual rate of 0.10% of the Trust's average weekly net assets.
Pursuant to the agreements, the Adviser provides continuous supervision of the
investment portfolio and pays the compensation of officers of the Trust who are
affiliated persons of the Adviser. PMF pays occupancy and certain clerical and
accounting costs of the Trust. The Trust bears all other costs and expenses.
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term
invesments and dollar rolls, for the year ended December 31, 1996 aggregated
$344,520,215 and $318,564,593 respectively.
The Trust may invest up to 40% of its total assets in securities which are
not readily marketable, including those which are restricted as to disposition
under securities law ("restricted securities"). At December 31, 1996, the Trust
held 0.02% of its portfolio in illiquid securities.
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. 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 December 31, 1996
was substantially the same as the basis for financial reporting and,
accordingly, net unrealized depreciation for federal income tax purposes was
$510,269 (gross unrealized appreciation -- $3,148,959; gross unrealized
depreciation -- $3,659,228).
13
<PAGE>
For federal income tax purposes, the Trust's year-end is December 31 and its
wholly-owned subsidiary's year-end is June 30.
For federal income tax purposes, the Trust had a capital loss carryforward
at December 31, 1996 of approximately $6,505,000 of which $4,283,000 expires in
2001 $1,985,000 expires in 2002 and $237,000 expires in 2004. Accordingly, no
capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of such amounts.
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 will be based upon
competitive market rates at the time of issuance. At the time the Trust enters
into a reverse repurchase agreement, it will establish and maintain a segregated
account with the lender the value of which at least equals the principal amount
of the reverse repurchase transaction, including accrued interest.
The average daily balance of reverse repurchase agreements outstanding
during the year ended December 31, 1996 was approximately $106,395,580 at a
weighted average interest rate of approximately 5.59%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the year ended
December 31, 1996 was $120,413,969 as of January 31, 1996 which was 29% of total
assets. The amount of reverse repurchase agreements outstanding at December 31,
1996 was $94,959,650 which was 29.7% 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 dollar rolls during the
year ended December 31, 1996.
NOTE 5. CAPITAL
There are 200 million shares of $.01 par value common stock authorized. Of the
21,610,583 shares outstanding at December 31, 1996, the Adviser owned 10,583
shares.
NOTE 6. DIVIDENDS
On February 3, 1997 the Board of Directors of the Trust declared a dividend from
undistributed earnings of $0.0333 per share payable February 28, 1997 to
shareholders of record on February 14, 1997.
NOTE 7. QUARTERLY DATA
(UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND NET INCREASE (DECREASE)
UNREALIZED IN NET ASSETS
NET INVESTMENT GAIN (LOSS) RESULTING FROM
QUARTERLY TOTAL INCOME ON INVESTMENTS OPERATIONS
PERIOD INCOME AMOUNT PER SHARE AMOUNT PER SHARE AMOUNT PER SHARE
------ ------ ------------------ --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1995 to
March 31, 1995 ..... $3,703,131 $2,529,371 $0.12 $7,632,725 $0.35 $10,162,096 $0.47
April 1, 1995 to
June 30, 1995 ...... 3,230,192 3,702,625 0.17 4,453,014 0.21 8,155,639 0.38
July 1, 1995 to
September 30, 1995.. 3,679,565 3,368,830 0.15 1,661,736 0.08 5,030,566 0.23
October 1, 1995 to
December 31, 1995... 4,669,971 4,121,832 0.19 2,809,832 0.13 6,931,664 0.32
January 1, 1996 to
March 31, 1996 ..... 5,287,663 3,471,143 0.16 (2,199,782) (0.10) 1,271,361 0.06
April 1, 1996 to
June 30, 1996 ...... 4,729,785 3,206,101 0.15 (329,565) (0.02) 2,876,536 0.13
July 1, 1996 to
September 30, 1996.. 5,839,947 3,588,405 0.17 1,290,366 0.06 4,878,771 0.23
October 1, 1996 to
December 31, 1996... 4,700,456 3,586,528 0.16 1,895,392 0.09 5,481,920 0.25
</TABLE>
DIVIDENDS PERIOD
AND END
QUARTERLY DISTRIBUTIONS SHARE PRICE NET ASSET
PERIOD AMOUNT PER SHARE HIGH LOW VALUE
------ -------------------- -------------- -----
January 1, 1995 to
March 31, 1995 ..... $3,106,725 $0.14 $8 3/8 $7 3/8 $8.74
April 1, 1995 to
June 30, 1995 ...... 3,106,738 0.15 9 7 7/8 8.98
July 1, 1995 to
September 30, 1995.. 2,431,144 0.11 8 1/4 7 3/4 9.10
October 1, 1995 to
December 31, 1995... 3,241,562 0.15 8 3/8 8 9.27
January 1, 1996 to
March 31, 1996 ..... 1,620,786 0.08 8 1/2 8 9.25
April 1, 1996 to
June 30, 1996 ...... 2,158,859 0.09 8 1/2 8 1/8 9.29
July 1, 1996 to
September 30, 1996.. 2,158,881 0.11 8 1/2 8 3/8 9.41
October 1, 1996 to
December 31, 1996... 2,878,494 0.13 8 3/4 8 5/8 9.53
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and
Board of Directors of
The BlackRock 1999 Term Trust Inc.:
We have audited the accompanying consolidated statement of assets and
liabilities of The BlackRock 1999 Term Trust Inc. and its subsidiary, including
the consolidated portfolio of investments, as of December 31, 1996, and the
related consolidated statements of operations and of cash flows for the year
then ended, the consolidated statement of changes in net assets for each of the
two years in the period then ended, and the consolidated financial highlights
for each of the four years in the period then ended and for the period December
23, 1992 (commencement of investment operations) to December 31, 1992. These
consolidated financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these consolidated 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 December
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 consolidated financial statements and financial highlights
present fairly, in all material respects, the consolidated financial position of
The BlackRock 1999 Term Trust Inc. and its subsidiary, as of December 31, 1996,
the results of their operations, their cash flows, the changes in their 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
February 3, 1997
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THE BLACKROCK 1999 TERM TRUST INC.
TAX INFORMATION
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We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during its fiscal year ended December 31, 1996.
During the fiscal year ended December 31, 1996, the Trust paid dividends of
$0.4080 per share from net investment 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.
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DIVIDEND REINVESTMENT PLAN
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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 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 New York
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.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Plan Agent at (800) 699-1BFM. The addresses are on the front of
this report.
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ADDITIONAL INFORMATION
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There have been no material changes in the investment objectives 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.
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THE BLACKROCK 1999 TERM TRUST INC.
INVESTMENT SUMMARY
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THE TRUST'S INVESTMENT OBJECTIVE
The Trust's investment objective is to manage a portfolio of investment grade
fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or about December 31, 1999 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
approximately $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 traded either on the New York Stock
Exchange or American Stock Exchange, 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,
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) and corporate debt
securities.
WHAT IS THE ADVISER'S INVESTMENT STRATEGY?
The Adviser will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($10 per share)
at maturity. The Trust will implement a conservative strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment at the end of 1999. 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 Adviser
also seeks to provide high monthly income to investors. The portfolio managers
will attempt to achieve this objective by investing in securities that provide
competitive income. In addition, leverage will be used (in an amount up to
331/3% of total assets) to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Adviser will attempt to purchase securities with call
protection or maturities as close to the Trust's maturity date as possible.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates. Since the Trust's primary goal is to return the initial offering price at
maturity, any cash that the Trust receives prior to its maturity date (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) will be reinvested in securities with maturities which coincide with
the remaining term of the Trust. Since shorter-term securities typically yield
less than longer-term securities, this strategy will likely result in a decline
in the Trust's income over time. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the yield curve (i.e. if the Trust has three years left until its maturity,
the Adviser will attempt to maintain a yield at a spread over a 3-year
Treasury). It is important to note that the Trust will be managed so as to
preserve the integrity of the return of the initial offering price.
17
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HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, Boston
Financial Data Services. Investors who wish to hold shares in a brokerage
account should check with their financial advisor to determine whether their
brokerage firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN A TERM TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. Leverage permits the Trust to borrow
money at short-term rates and reinvest that money in longer-term assets which
typically offer higher interest rates. The difference between the cost of the
borrowed funds and the income earned on the proceeds that are invested in longer
term assets is the benefit to the Trust from leverage. In general, the portfolio
is typically leveraged at approximately 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 fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rising rate environment. BlackRock's portfolio managers continuously monitor and
regularly review the Trust's use of leverage and the Trust may reduce, or
unwind, the amount of leverage employed should BlackRock consider that reduction
to be in the best interests of the shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
RETURN OF INITIAL INVESTMENT. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
LEVERAGE. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, which involves special risks. The Trust's net asset value and
market value may be more volatile due to its use of leverage.
MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange and as such are subject to supply
and demand influences. As a result, shares may trade at a discount or a premium
to their net asset value.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The cashflow 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 movements on these securities are generally more
sensitive to interest rate movements than securities that make periodic coupon
payments. These securities appreciate in value over time and can play an
important role in helping the Trust achieve its primary objective.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
NON-U.S SECURITIES. The Trust may invest 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
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
marketprice.
18
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THE BLACKROCK 1999 TERM TRUST INC.
GLOSSARY
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ADJUSTABLE RATE MORTGAGE-
BACKED SECURITIES (ARMS): Mortgage instruments with interest rates that
adjust at periodic intervals at a fixed amount
over the market levels of interest rates as
reflected in specified indexes. ARMS are backed by
mortgage loans secured by real property.
ASSET-BACKED SECURITIES: Securities backed by various types of receivables
such as automobile and credit card receivables.
CLOSED-END FUND: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange.
The fund invests in a portfolio of securities in
accordance with its stated investment objectives
and policies.
COLLATERALIZED Mortgage-backed securities which separate mortgage
MORTGAGE OBLIGATIONS (CMOS): pools into short-, medium-, and long-term
securities with different priorities for receipt
of principal and interest. Each class is paid a
fixed or floating rate of interest at regular
intervals. Also known as multiple-class mortgage
pass-throughs.
DISCOUNT: When a fund's net asset value is greater than its
stock price the fund is said to be trading at a
discount.
DIVIDEND: This is income generated by securities in a
portfolio and distributed to shareholders after
the deduction of expenses. This Trust declares and
pays dividends on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all distributions
of dividends and capital gains automatically
reinvested into additional shares of the Trust.
FHA: Federal Housing Administration, a government
agency that facilitates a secondary mortgage
market by providing an agency that guarantees
timely payment of interest and principal on
mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by
purchasing mortgages from lenders such as savings
institutions and reselling them to investors by
means of mortgage-backed securities. Obligations
of FHLMC are not guaranteed by the U.S.
government, however; they are backed by FHLMC's
authority to borrow from the U.S. government. Also
known as Freddie Mac.
FNMA: Federal National Mortgage Association, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by
purchasing mortgages from lenders such as savings
institutions and reselling them to investors by
means of mortgage-backed securities. Obligations
of FNMA are not guaranteed by the U.S. government,
however; they are backed by FNMA's authority to
borrow from the U.S. government. Also known as
Fannie Mae.
GNMA: Government National Mortgage Association, a
government agency that facilitates a secondary
mortgage market by providing an agency that
guarantees timely payment of interest and
principal on mortgages. GNMA's obligations are
supported by the full faith and credit of the U.S.
Treasury. Also known as Ginnie Mae.
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).
19
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INTEREST-ONLY Mortgage securities that receive only the interest
SECURITIES (I/O): 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.
MORTGAGE DOLLAR ROLLS: A mortgage dollar roll is a transaction in which
the Trust sells mortgage-backed securities for
delivery in the current month and simultaneously
contracts to repurchase substantially similar
(although not the same) securities on a specified
future date. During the "roll" period, the Trust
does not receive principal and interest payments
on the securities, but is compensated for giving
up these payments by the difference in the current
sales price (for which the security is sold) and
lower price that the Trust pays for the similar
security at the end date as well as the interest
earned on the cash proceeds of the initial sale.
MORTGAGE PASS-THROUGHS: Mortgage-backed securities issued by Fannie Mae,
Freddie Mac or Ginnie Mae.
MULTIPLE-CLASS PASS-THROUGHS: Collateralized Mortgage Obligations.
NET ASSET VALUE (NAV): Net asset value is the total market value of all
securities and other assets held by the Trust,
plus income accrued on its investments, minus any
liabilities including accrued expenses, divided by
the total number of outstanding shares. It is the
underlying value of a single share on a given day.
Net asset value for the Trust is calculated weekly
and published in Barron's on Saturday and The New
York Times or The Wall Street Journal each Monday.
PRINCIPAL-ONLY Mortgage securities that receive only the
SECURITIES(P/O): principal cash flows from an underlying pool 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 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
SECURITIES: separated into two classes that receive different
proportions of the interest and principal
distributions from underlying mortgage-backed
securities. IO's and PO's are examples of strips.
20
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BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- --------------------------------------------------------------------------------
TAXABLE TRUSTS
- --------------------------------------------------------------------------------
PERPETUAL TRUSTS STOCK MATURITY
SYMBOL DATE
------ ----
The BlackRock Income Trust Inc. ......................... BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
TERM TRUSTS
The BlackRock 1998 Term Trust Inc. ...................... BBT 12/98
The BlackRock 1999 Term Trust Inc. ...................... BNN 12/99
The BlackRock Target Term Trust Inc. .................... BTT 12/00
The BlackRock 2001 Term Trust Inc. ...................... BLK 06/01
The BlackRock Strategic Term Trust Inc. ................. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. ........ BQT 12/04
The BlackRock Advantage Term Trust Inc. ................. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
Tax-Exempt Trusts
STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ ----
The BlackRock Investment Quality Municipal Trust Inc. ............ BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. . RAA N/A
The BlackRock Florida Investment Quality Municipal Trust ......... RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc... RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. ... RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. ................... BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. ............. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. .. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust .......... BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. .... BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. .................. BMT 12/10
If you would like further information, please call BlackRock at (800) 227-7BFM
(7236)
21
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BLACKROCKFINANCIAL MANAGMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------
BlackRock Financial Management Inc. (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages approximately $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 traded either on the New York Stock Exchange or the American
Stock Exchange, several open-end funds and over 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 market, 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 propriety 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 propriety analytical tools are used for
evaluating, investing in and designing investment strategies and portfolio of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. BlackRock introduced the first closed-end mortgage fund, the first
taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAAf rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund having specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
22
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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
Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 01702-4077
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 1999 TERM TRUST INC.
c/o Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM
[Logo]Printed on recycled paper
09247T-10-0
THE BLACKROCK
1999 TERM
TRUST INC.
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CONSOLIDATED
ANNUAL REPORT
DECEMBER 31, 1996
[Logo]
