- --------------------------------------------------------------------------------
THE BLACKROCK 1999 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
(IN LIQUIDATION)
- --------------------------------------------------------------------------------
ASSETS
Cash ........................................................... $ 414,549
------------
LIABILITIES
Investment advisory fee payable (Note 2) ....................... 24,024
Administration fee payable (Note 2) ............................ 8,409
Other accrued expenses ......................................... 175,673
------------
208,106
------------
NET ASSETS ..................................................... $ 206,443
============
Net assets were comprised of:
Paid-in capital in excess of par ............................ $ 206,443
============
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THE BLACKROCK 1999 TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN LIQUIDATION)
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (net of premium amortization of
$4,668,314 and interest expense of
$299,803) ................................................. $ 15,158,565
------------
Operating expenses
Investment advisory ......................................... 840,879
Administration .............................................. 210,220
Reports to shareholders ..................................... 58,000
Custodian ................................................... 57,000
Directors ................................................... 52,000
Transfer agent .............................................. 44,000
Independent accountants ..................................... 36,000
Registration ................................................ 27,000
Legal ....................................................... 10,000
Miscellaneous ............................................... 59,553
------------
Total operating expenses .................................. 1,394,652
------------
Net investment income .......................................... 13,763,913
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (NOTE 3)
Net realized loss on investments ............................... (2,465,589)
Net change in unrealized appreciation
on investments .............................................. (883,400)
------------
Net loss on investments ........................................ (3,348,989)
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................................... $ 10,414,924
============
See Notes to Financial Statements.
1
<PAGE>
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THE BLACKROCK 1999 TERM TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
(IN LIQUIDATION)
- --------------------------------------------------------------------------------
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 .............................................. $ 10,414,924
------------
Decrease in investments ........................................ 250,302,501
Net realized loss .............................................. 2,465,589
Decrease in unrealized appreciation ............................ 883,400
Decrease in interest receivable ................................ 2,993,704
Decrease in interest payable ................................... (176,843)
Decrease in accrued expenses and
other liabilities ........................................... (183,049)
------------
Total adjustments ........................................... 256,285,302
------------
Net cash flows provided by operating activities ................ $266,700,226
============
INCREASE (DECREASE) IN CASH
Net cash flows provided by operating activities ................ $266,700,226
------------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements ................... (38,344,942)
Cash dividends and distributions paid ....................... (227,977,355)
------------
Net cash flows used for financing activities ................... (266,322,297)
------------
Net increase in cash ........................................ 377,929
Cash at beginning of year ................................... 36,620
------------
Cash at end of year ......................................... $ 414,549
============
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THE BLACKROCK 1999 TERM TRUST INC.
STATEMENTS OF CHANGES
IN NET ASSETS
(IN LIQUIDATION)
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998
------------- -------------
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income ................. $ 13,763,913 $ 15,794,386
Net realized loss on
investments ........................ (2,465,589) (1,423,471)
Net change in unrealized
appreciation
on investments ..................... (883,400) (1,435,963)
------------- -------------
Net increase in net assets
resulting from
operations ......................... 10,414,924 12,934,952
Dividends and Distributions:
Dividends from net
investment income ..................... (35,096,926) (9,355,048)
Distributions from capital ............... (192,160,797) --
------------- -------------
Total dividends and
distributions ......................... (227,257,723) (9,355,048)
Total increase (decrease) ................ (216,842,799) 3,579,904
NET ASSETS
Beginning of year ........................ 217,049,242 213,469,338
------------- -------------
End of year (including
undistributed net investment
income of $0 and
$21,333,013, respectively) ............ $ 206,443 $ 217,049,242
============= =============
See Notes to Financial Statements.
2
<PAGE>
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THE BLACKROCK 1999 TERM TRUST INC.
FINANCIAL HIGHLIGHTS (IN LIQUIDATION)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999** 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year ........................... $ 10.04 $ 9.88 $ 9.53 $ 9.27 $ 8.42
-------- -------- -------- -------- --------
Net investment income (net of interest
expense of $0.01, $0.15, $0.30, $0.26 and
$0.33, respectively) .................................... 0.64 0.74 0.57 0.64 0.63
Net realized and unrealized gain (loss) ................... (0.17) (0.15) 0.15 0.03 0.77
-------- -------- -------- -------- --------
Net increase from investment operations ...................... 0.47 0.59 0.72 0.67 1.40
-------- -------- -------- -------- --------
Dividends and distributions:
Dividends from net investment income ......................... (1.62) (0.43) (0.37) (0.41) (0.55)
Distributions from capital ................................... (8.89) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ............................ (10.51) (0.43) (0.37) (0.41) (0.55)
-------- -------- -------- -------- --------
Net asset value, end of year* ................................ -- $ 10.04 $ 9.88 $ 9.53 $ 9.27
======== ======== ======== ======== ========
Market value, end of year* ................................... -- $ 9.75 $ 9.38 $ 8.88 $ 8.14
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN ...................................... 7.95% 8.65% 5.86% 14.21% 15.25%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ........................................... 0.64% 0.70% 0.68% 0.65% 0.74%
Operating expenses and interest expense ...................... 0.78% 2.26% 3.65% 3.42% 4.40%
Operating expenses, interest expense and
excise taxes ............................................... 0.78% 2.34% 3.77% 3.47% 4.47%
Net investment income ........................................ 6.30% 7.33% 5.86% 6.86% 7.12%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ............................ $218,628 $215,606 $208,747 $201,998 $192,717
Portfolio turnover ........................................... 23% 22% 76% 106% 165%
Net assets, end of year (in thousands) ....................... $ 206 $217,049 $213,469 $206,004 $200,313
Reverse repurchase agreements
outstanding, end of year
(in thousands) ............................................ -- $ 38,345 $ 87,604 $ 94,960 $ 92,861
Asset coverage ............................................... -- $ 6,660 $ 3,437 $ 3,169 $ 3,157
</TABLE>
- ----------
* Net asset value and market value are published in BARRON's each Saturday and
THE WALL STREET JOURNAL each Monday.
** On December 16, 1999 substantially all of the Trust's assets were distributed
to shareholders and all outstanding shares were redeemed. Per share operating
performance for the year ended December 31, 1999 has been calculated based on
the average number of shares outstanding for the period ended December 16,
1999 of 21,610,583.
+ 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 year reported. Dividends and distributions 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.
++ 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 years 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.
3
<PAGE>
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THE BLACKROCK 1999 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
(IN LIQUIDATION)
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION &
ACCOUNTING
POLICIES
The BlackRock 1999 Term Trust Inc. (the "Trust"), a Maryland corporation was a
diversified closed-end management investment company. The investment objective
of the Trust was to manage a portfolio of investment grade fixed income
securities that would return $10 per share (the initial public offering price
per share) to investors on or about December 31, 1999. On December 16, 1999 a
liquidating distribution of $10.15 per share was made whereby substantially all
of the Trust's assets were distributed to shareholders and all outstanding
shares were redeemed. The remaining assets will be used to pay expenses
incurred, but not yet paid. Any assets remaining subsequent to the payment of
these expenses will be distributed to the Trust's former shareholders.
The following is a summary of significant accounting policies that was
followed by the Trust.
SECURITIES VALUATION: The Trust valued mortgage-backed, asset-backed, and other
debt securities, interest rate swaps, caps, floors and non-exchange traded
options on the basis of current market quotations provided by dealers or pricing
services approved by the Trust's Board of Directors.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions were
recorded on the trade date. Realized and unrealized gains and losses were
calculated on the identified cost basis. Interest income was recorded on the
accrual basis and the Trust accreted discount and amortized premium on
securities purchased using the interest method. Expenses were recorded on the
accrual basis which required the use of certain estimates by management.
TAXES: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies. Therefore,
no federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Trust declared and paid dividends and
distributions monthly, first from net investment income, then from net realized
short-term capital gains and from capital in liquidation. Net long-term capital
gains, if any, in excess of loss carryforwards were distributed at least
annually. Dividends and distributions were recorded on the ex-dividend date.
Income distributions and capital gain distributions were determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
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 had an Investment Advisory Agreement with BlackRock Financial
Management, Inc. (the "Adviser") a wholly-owned subsidiary of BlackRock
Advisors, Inc., which is a wholly-owned subsidiary of BlackRock, Inc., which in
turn is an indirect majority-owned subsidiary of PNC Bank Corp. The Trust had an
Administration Agreement with Prudential Investments Fund Manage- ment LLC
("PIFM"), a wholly-owned subsidiary of The Prudential Insurance Co. of America.
The investment advisory fee paid to the Adviser was computed weekly and
payable monthly at an annual rate of 0.40% of the Trust's average weekly net
assets. The Investment Advisory Agreement terminated on December 16, 1999 in
conjunction with the liquidation of the Trust. The administration fee paid to
PIFM was also computed weekly and payable monthly at an annual rate of 0.10% of
the Trust's average weekly net assets. The Administration Agreement terminated
on December 16, 1999 in conjunction with the liquidation of the Trust.
Pursuant to the agreements, the Adviser provided continuous supervision of
the investment portfolio and paid the compensation of officers of the Trust who
were affiliated persons of the Adviser. PIFM paid occupancy and certain clerical
and accounting costs of the Trust. The Trust bore all other costs and expenses.
NOTE 3. PORTFOLIO
SECURITIES
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the year ended December 31, 1999 aggregated $33,524,632
and $277,595,276, respectively. For federal income tax purposes, the Trust had a
capital loss carryforward of approximately 10,396,000 that expired on December
31, 1999.
NOTE 4. BORROWINGS
REVERSE REPURCHASE AGREEMENTS: The Trust entered into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and under
the
4
<PAGE>
direction of the Trust's Board of Directors. Interest on the value of reverse
repurchase agreements issued and outstanding was based upon competitive market
rates at the time of issuance. At the time the Trust entered into a reverse
repurchase agreement, it established and maintained a segregated account with
the lender, the value of which at least equaled 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, 1999 was approximately $5,572,878 at a weighted
average interest rate of approximately 5.10%. The maximum amount of reverse
repurchase agreements outstanding at any month-end during the year ended
December 31, 1999 was $29,219,904 as of January 31, 1999 which was 13.4% of
total assets.
NOTE 5. CAPITAL
There were 200 million shares of $.01 par value common stock authorized. Prior
to the liquidation of the Trust on December 16, 1999, there were 21,610,583
shares outstanding of which 10,583 shares were owned by the Adviser.
5
<PAGE>
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THE BLACKROCK 1999 TERM TRUST INC. (IN LIQUIDATION)
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and
Board of Directors of
The BlackRock 1999 Term Trust Inc.:
We have audited the accompanying statement of assets and liabilities of The
BlackRock 1999 Term Trust Inc. (In Liquidation), including the portfolio of
investments, as of December 31, 1999, and the related statements of operations
and of cash flows for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1999, by correspondence with the custodian and brokers. 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.
As more fully described in Note 1, on December 16, 1999 a liquidating
distribution was made to shareholders and all outstanding shares were redeemed.
The remaining Trust assets will be used to pay expenses incurred, but not yet
paid.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock 1999
Term Trust Inc. (In Liquidation) as of December 31, 1999, the results of its
operations, its cash flows, the changes in its net assets and the financial
highlights for the respective stated years in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
New York, New York
February 11, 2000
6
<PAGE>
Blackrock
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
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.
400 Bellevue Parkway
Wilmington, DE 19809
(800) 227-7BFM
ADMINISTRATOR
Prudential Investments 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
Four Times Square
New York, NY 10036
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 Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM
THE BLACKROCK
1999 TERM
TRUST INC.
(IN LIQUIDATION)
=================
ANNUAL REPORT
DECEMBER 31, 1999
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