--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
--------------------------------------------------------------------------------
July 31, 2001
Dear Shareholder:
The semi-annual period has been marked by the Federal Reserve's aggressive
response to the dramatic U.S. led global economic slowdown. Year-to-date, the
Federal Open Market Committee (FOMC) has cut interest rates six times, easing a
total of 275 basis points. Currently, the overnight lending rate is at its
lowest level since May 1994. Investors are beginning to turn their attention
away from past interest rate cuts and are re-focusing on the potential actions
of this year's accommodative Fed. In recent FOMC minutes, investors were
somewhat surprised to see a degree of discord among committee members as to the
severity and timing of the final 50 basis point ease on May 15th. Coupled with a
more cautious 25 basis point cut in late June, it appears that the Fed will be
adopting a less aggressive posture.
Recently, released data has led some investors to conclude that the worst
may be behind us. U.S. factory orders, a figure specifically cited by the Fed as
a driver behind recent rate cuts, rebounded by 2.5% in May. Personal
consumption, another important factor in the U.S. consumer-driven economy, rose
by 0.5%, and both construction spending and manufacturing activity have been
stronger than expected. Finally, despite aggressively lowering interest rates
over the past six months, inflation concerns appear benign. Going forward, we
look to employment data as a leading indicator of economic recovery.
Corporations have been forced to layoff employees as demand for goods and
services has lagged in the first two quarters of the year. While consumer
activity has been reasonably resilient in the face of the weakness in
employment, further deterioration on the jobs front will most likely derail an
early recovery.
The Treasury yield curve, which began the year inverted, with shorter
maturity issues yielding more than longer maturities, steepened significantly
over the semi-annual period. However, the yield curve flattened slightly in June
in response to benign inflationary pressures and talks of a possible end to the
Fed's rate reduction program. Disappointment caused by the Fed's election to
dispense only 25 basis points of easing, coupled with stronger than expected
economic data, caused yields on short and intermediate maturity Treasuries to
rise. Short-term yields were especially hard-hit with yields on 2-year and
5-year maturities rising 25 and 21 basis points, respectively.
This semi-annual report contains a summary of market conditions during the
semi-annual period and a review of portfolio strategy by your Trust's managers
in addition to the Trust's unaudited financial statements and a detailed list of
the portfolio's holdings. Continued thanks for your confidence in BlackRock. We
appreciate the opportunity to help 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
July 31, 2001
Dear Shareholder:
We are pleased to present the unaudited semi-annual report for The
BlackRock Insured Municipal 2008 Term Trust Inc. (the "Trust") for the six
months ended June 30, 2001. We would like to take this opportunity to review the
Trust's stock price and net asset value (NAV) performance, summarize
developments in the fixed income markets 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 "BRM". The
Trust's investment objective is to manage a portfolio of municipal debt
securities that will return $15 per share (an amount equal to the Trust's
initial public offering price) to investors on or about December 31, 2008, while
providing current income exempt from regular Federal income tax. The Trust seeks
to achieve this objective by investing in high credit quality ("AAA" or insured
to "AAA") tax-exempt general obligation and revenue bonds issued by city, county
and state municipalities throughout the United States.
The table below summarizes the changes in the Trust's stock price and NAV
over the period:
-----------------------------------------------------
6/30/01 12/31/00 CHANGE HIGH LOW
--------------------------------------------------------------------------------
STOCK PRICE $15.60 $14.875 4.87% $15.875 $15.00
--------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $16.79 $16.62 1.02% $16.94 $16.61
--------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
Economic performance continued to deteriorate in the U.S. and abroad
through the second quarter as corporations continued to steadily unwind excess
inventories and capacity. While there has been some decline in consumption, the
bulk of the weakness has manifested itself in the business sector where capital
spending continues to plunge. Consequently, year-over-year industrial production
has turned negative for the first time since 1991. Weakness in the corporate
sector has begun to spread to the labor market. The unemployment rate has
drifted up to 4.5% from a low of 3.9% in October of last year, and the four-week
average of initial jobless claims rose to its highest level in nearly a decade.
Despite the weakness in the labor market and overall economy, the consumer
remains relatively upbeat. While many economic indicators are at 1990-91
recessionary levels, consumer confidence remains well above its readings of the
early nineties. The consumer seems buoyed by a faith in the Federal Reserve,
which has lowered its funds target rate by 275 basis points during 2001.
Sluggish growth combined with a benign inflationary environment should prompt
the Federal Reserve to maintain a low interest rate environment well into next
year.
Over the semi-annual period, the level and shape of the Treasury yield
curve were driven by expectations of Fed activity and the issuance of corporate
debt. Treasury yields steepened significantly in 2001 with yields on longer
maturity issues rising relative to yields on shorter maturities, but began to
flatten slightly in June due to expectations that the Fed was nearing the end of
its easing cycle. Yields on short and intermediate Treasuries rose with
short-term yields increasing most dramatically. Yields on 2-year and 5-year
maturities rose 25 and 21 basis points respectively for the second quarter. In
addition, corporate issuance of long-term debt represented a net sale of more
interest rate sensitive bonds. This further pressured longer dated securities
and the market in general. As of June 30, 2001, the 10-year Treasury was
yielding 5.41% versus 5.11% on December 31, 2000.
On a tax-adjusted basis, municipal bonds outperformed the taxable domestic
bond market for the semi-annual period ending June 30, 2001, returning 4.76% (as
measured by the LEHMAN MUNICIPAL BOND INDEX at a tax bracket of 39.6%) versus
3.62% for the LEHMAN AGGREGATE INDEX. Strong retail demand for municipal bonds
allowed the sector to show significant outperformance versus Treasuries across
the entire curve. In a dramatic reversal from most of 2000, the semi-annual
period finally saw municipal mutual fund portfolios experience positive cash
flows. The positive cash flow into municipal mutual funds continued for the
second quarter with year to date inflows totaling $3.45 billion. Municipals
benefited from retail's continued efforts to diversify out of equities and into
fixed income investments. Total supply year to date has increased by 39% versus
last year, with the
2
majority of the increase coming from the surge in refinancing activity. We
expect to see continued strong performance from the municipal market as retail
continues to express interest in the lower volatility of the fixed income
markets and attractive tax equivalent yields of municipal bonds.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and security types. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors and
coupons. Additionally, the Trust emphasizes securities whose maturity dates
match the termination date of the Trust.
Over the period, trading activity in the Trust remained relatively low, as
many of the securities in the Trust's portfolio continued to trade at prices
above where they were purchased. As trading activity that may result in the
Trust realizing a capital gain could require a taxable distribution as well as
reduce the Trust's income generating capacity, we continue to believe that
waiting to restructure the portfolio in a higher interest rate environment is
the most prudent portfolio management strategy. At present, we are confident
that the Trust is on schedule to achieve its primary investment objective of
returning $15 per share upon termination and will continue to seek investment
opportunities in the municipal market.
Additionally, the Trust employs leverage via auction rate preferred stock
to enhance its income by borrowing at short-term municipal rates and investing
the proceeds in longer maturity issues that have higher yields. The degree to
which the Trust can benefit from its use of leverage may affect its ability to
pay high monthly income. At June 30, 2001, the Trust's leverage amount was 37%
of total assets.
The following chart compares the Trust's current and December 31, 2000
asset composition:
--------------------------------------------------------------------------------
SECTOR BREAKDOWN
--------------------------------------------------------------------------------
SECTOR JUNE 30, 2001 DECEMBER 31, 2000
--------------------------------------------------------------------------------
County, City & State 25% 25%
--------------------------------------------------------------------------------
Utility/Power 21% 22%
--------------------------------------------------------------------------------
Hospital 12% 12%
--------------------------------------------------------------------------------
Education 11% 11%
--------------------------------------------------------------------------------
Transportation 7% 7%
--------------------------------------------------------------------------------
Tax Revenue 6% 5%
--------------------------------------------------------------------------------
Lease Revenue 5% 5%
--------------------------------------------------------------------------------
Water & Sewer 5% 5%
--------------------------------------------------------------------------------
Special District 5% 5%
--------------------------------------------------------------------------------
Housing 2% 2%
--------------------------------------------------------------------------------
Industrial & Pollution Control 1% 1%
--------------------------------------------------------------------------------
3
We look forward to managing the Trust to benefit from the opportunities
available in the fixed income markets and to meet its investment objectives. We
thank you for your investment in the BlackRock Insured Municipal 2008 Term Trust
Inc. Please feel free to contact our marketing center at (800) 227-7BFM (7236)
if you have specific questions which were not addressed in this report.
Sincerely,
/s/ Robert S. Kapito /s/ Kevin M. Klingert
----------------------------------- ---------------------------------------
Robert S. Kapito Kevin M. Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
--------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BRM
--------------------------------------------------------------------------------
Initial Offering Date: September 18, 1992
--------------------------------------------------------------------------------
Closing Stock Price as of 6/30/01: $15.60
--------------------------------------------------------------------------------
Net Asset Value as of 6/30/01: $16.79
--------------------------------------------------------------------------------
Yield on Closing Stock Price as of 6/30/01 ($15.60)(1): 5.10%
--------------------------------------------------------------------------------
Current Monthly Distribution per Common Share(2): $ 0.06625
--------------------------------------------------------------------------------
Current Annualized Distribution per Common Share(2): $ 0.79500
--------------------------------------------------------------------------------
(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 is not constant and is subject to change.
PRIVACY PRINCIPLES OF THE TRUST
The Trust is committed to maintaining the privacy of shareholders and to
safeguarding its non-public personal information. The following information is
provided to help you understand what personal information the Trust collects,
how we protect that information and why, in certain cases, we may share
information with select other parties.
Generally, the Trust does not receive any non-public personal information
relating to its shareholders, although certain nonpublic personal information of
its shareholders may become available to the Trust. The Trust does not disclose
any non-public personal information about its shareholders or former
shareholders to anyone, except as permitted by law or as is necessary in order
to service shareholder accounts (for example, to a transfer agent or third party
administrator).
The Trust restricts access to non-public personal information about the
shareholders to BlackRock employees with a legitimate business need for the
information. The Trust maintains physical, electronic and procedural safeguards
designed to protect the non-public personal information of its shareholders.
4
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
PORTFOLIO OF INVESTMENTS JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--157.1%
ALABAMA--0.3%
AAA $ 1,905 Mobile Impvt. Wt., Zero Coupon, 8/15/08, MBIA ...................... 8/02 @ 71.587 $ 1,300,334
-----------
ARIZONA--0.6%
AAA 4,000 Chandler, G.O., Zero Coupon, 7/01/08, FGIC ......................... No Opt. Call 2,960,080
-----------
CALIFORNIA--0.4%
AAA 1,890 California Hlth. Fac. Fin. Auth. Rev., Marin Gen. Hosp.,
Ser. A, 5.75%, 8/01/09, FSA ....................................... 8/03 @ 102 1,995,349
-----------
COLORADO--12.0%
AAA 2,000 E-470 Pub. Hwy. Auth. Rev., Ser. B, Zero Coupon, 9/01/11, MBIA ..... No Opt. Call 1,226,840
AAA 30,205++ Jefferson Cnty. Sch. Dist. No. R-001, G.O., 6.25%, 12/15/02, AMBAC . N/A 31,950,849
AAA 6,965 Regl. Transp. Dist., C.O.P., Trans. Vehicles Proj.
Ser. A, 5.00%, 6/01/08, MBIA ...................................... 6/07 @ 101 7,325,439
AAA 13,285++ Univ. of Colorado Hosp. Auth. Rev., Ser. A, 6.25%, 11/15/02, AMBAC . N/A 14,144,539
-----------
54,647,667
-----------
DISTRICT OF COLUMBIA--8.3%
Dist. of Columbia, G.O.,
AAA 195 Ser. B, 5.50%, 6/01/09, FSA ....................................... ETM 211,622
AAA 2,605 Ser. B, 5.50%, 6/01/09, FSA ....................................... No Opt. Call 2,793,029
AAA 17,950++ Ser. B, 6.30%, 6/01/02, MBIA ...................................... N/A 18,882,323
AAA 10,000 Ser. B-1, 5.50%, 6/01/08, AMBAC ................................... No Opt. Call 10,728,400
AAA 115++ Ser. E, 5.875%, 6/01/03, MBIA ..................................... N/A 122,915
AAA 2,955 Ser. E, 5.875%, 6/01/08, MBIA ..................................... 6/03 @ 102 3,109,813
AAA 2,000 Dist. of Columbia, Hosp. Rev., Children's Hosp., Ser. A, 6.25%,
7/15/08, FGIC ..................................................... 7/02 @ 102 2,083,040
-----------
37,931,142
-----------
FLORIDA--0.5%
AAA 2,080 Tampa Fla. Wtr. & Swr. Rev., 5.50%, 10/01/08, FSA (WI) ............. No Opt. Call 2,169,003
GEORGIA--2.8%
AAA 7,000++ Atlanta, C.O.P., Pretrial Det. Ctr., 6.25%, 12/01/02, MBIA ......... N/A 7,462,980
AAA 5,000 Georgia St., G.O., Ser. E, 5.25%, 2/01/10 .......................... No Opt. Call 5,331,150
-----------
12,794,130
-----------
ILLINOIS--15.2%
AAA 14,205 Chicago O' Hare Intl. Arprt. Rev., Ser. A, 6.25%, 1/01/08, MBIA .... 1/05 @ 102 15,362,423
AAA 3,105 Chicago Pub. Bldg. Comm. Bldg. Rev., Ser. A, Zero Coupon,
1/01/07, MBIA ..................................................... ETM 2,464,966
Chicago Sch. Fin. Auth., G.O., Ser. A, FGIC,
AAA 13,000 6.25%, 6/01/07 .................................................... 6/02 @ 102 13,532,740
AAA 9,150 6.25%, 6/01/09 .................................................... 6/02 @ 102 9,519,935
Aaa 5,980 Cook Cnty. High Sch. Dist. No. 201 J. Sterling Morton Twnshp.,
Zero Coupon, 12/01/09, FGIC ....................................... No Opt. Call 4,039,311
AAA 8,985 Du Page Cnty. Fst. Presv. Dist., Zero Coupon, 11/01/08 ............. No Opt. Call 6,465,875
AAA 10,300++ Illinois Hlth. Fac. Auth. Rev., Alexian Med. Ctr. Proj.,
Ser. A, 6.35%, 1/01/02, MBIA ...................................... N/A 10,687,177
Met. Pier & Expo. Auth. Ded. St. Tax Rev. Auth., FGIC,
AAA 1,570 Ser. A, Zero Coupon, 6/15/08 ...................................... ETM 1,160,481
AAA 8,600 Ser. A, Zero Coupon, 6/15/08 ...................................... No Opt. Call 6,294,426
-----------
69,527,334
-----------
INDIANA--2.3%
Indiana Hlth. Fac. Fin. Auth. Hosp. Rev. & Impvt.,
Ancilla Sys. Inc., MBIA
AAA 1,805++ Ser. A, 6.25%, 7/01/02 ............................................ N/A 1,902,253
AAA 3,860 Ser. A, 6.25%, 7/01/08 ............................................ 7/02 @ 102 4,162,161
AAA 1,385++ Ser. B, 6.25%, 7/01/02 ............................................ N/A 1,459,624
AAA 2,965 SER. B, 6.25%, 7/01/08 ............................................ 7/02 @ 102 3,197,100
-----------
10,721,138
-----------
See Notes to Financial Statements.
5
-----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
IOWA--0.9%
AAA $ 85 Iowa Fin. Auth., Sngl. Fam. Mtg. Rev., Ser. F, 6.35%,
7/01/09, AMBAC .................................................... 1/03 @ 102 $ 88,081
AAA 4,195 Muscatine, Elec. Rev., 5.00%, 1/01/08, FSA ......................... 8/01 @ 100 4,217,108
-----------
4,305,189
-----------
KENTUCKY--0.6%
AAA 3,890 Owensboro, Elec. Lt. & Pwr. Rev., Ser. B, Zero Coupon,
1/01/09, AMBAC .................................................... No Opt. Call 2,776,526
-----------
LOUISIANA--1.2%
AAA 5,000++ Louisiana Pub. Fac. Auth. Hosp. Rev., Lafayette Gen.
Med. Ctr. Proj., 6.30%, 10/01/02, FSA ............................. N/A 5,298,450
------------
MASSACHUSETTS--4.7%
AAA 4,465++ Chelsea, Sch. Proj. Loan, 6.00%, 6/15/04, AMBAC .................... N/A 4,869,752
Massachusetts Bay Trans. Auth. Rev., Ser. B, MBIA,
AAA 200++ 6.00%, 3/01/03 .................................................... N/A 213,014
AAA 5,800 6.00%, 3/01/10 .................................................... 3/03 @ 102 6,099,976
AAA 10,000 Massachusetts St. Hsg. Fin. Agcy. Hsg. Proj., Ser. A, 5.95%,
10/01/08, AMBAC ................................................... 4/03 @ 102 10,415,700
-----------
21,598,442
-----------
MICHIGAN--4.5%
Lake Orion, Cmnty. Sch. Dist., AMBAC,
AAA 3,290++ 6.60%, 5/01/05 .................................................... N/A 3,670,521
AAA 3,285++ 6.70%, 5/01/05 .................................................... N/A 3,676,572
AAA 8,920++ Michigan St. Bldg. Auth. Rev., Fac. Proj., Ser. IIA, 6.25%,
10/01/02, AMBAC ................................................... N/A 9,461,801
AAA 3,400 Wyandotte, Elec. Rev., 6.25%, 10/01/08, MBIA ....................... No Opt. Call 3,754,314
-----------
20,563,208
-----------
MISSOURI--1.6%
AAA 7,315 Kansas City, Sch. Dist. Bldg. Corp. Leasehold Rev.,
Cap. Impvts. Proj., Ser. A, 6.50%, 2/01/08, FGIC .................. 8/01 @ 102 7,472,273
-----------
NEVADA--4.6%
AAA 6,490++ Clark Cnty. Fld. Ctrl., 6.30%, 11/01/01, AMBAC ..................... N/A 6,629,016
Director St. Dept. Las Vegas Monorail, AMBAC,
AAA 2,085 Zero Coupon, 1/01/09 .............................................. No Opt. Call 1,471,906
AAA 3,585 Zero Coupon, 1/01/10 .............................................. No Opt. Call 2,396,214
Washoe Cnty. Arpt. Auth. Rev., Ser. B, MBIA,
AAA 3,135 5.70%, 7/01/07 .................................................... 7/03 @ 102 3,301,280
AAA 2,645 5.75%, 7/01/08 .................................................... 7/03 @ 102 2,787,804
AAA 4,135++ Washoe Cnty. Sch. Dist., G.O., Ser. A, 6.20%, 10/01/02, AMBAC ...... N/A 4,341,129
-----------
20,927,349
-----------
NEW JERSEY--12.8%
AAA 30,275 New Jersey Econ. Dev. Auth., Mkt. Trans. Fac. Rev., Ser. A,
5.80%, 7/01/08, MBIA .............................................. 7/04 @ 102 32,377,902
New Jersey St., G.O., Ser. D, MBIA,
AAA 8,370++ 6.00%, 2/15/03 .................................................... N/A 8,904,843
AAA 16,125 6.00%, 2/15/09 .................................................... 2/03 @ 102 16,966,725
-----------
58,249,470
-----------
NEW YORK--12.7%
New York City, G.O., MBIA,
AAA 5,000 Ser. E, 6.125%, 8/01/06 ........................................... No Opt. Call 5,539,900
AAA 15,500 Ser. E, 6.20%, 8/01/07 ............................................ No Opt. Call 17,355,505
AAA 5,000 Ser. G, 5.75%, 2/01/08 ............................................ 2/06 @ 101.5 5,414,100
New York St. Env. Fac. Corp., P.C.R., Ser. D,
AAA 5,945 6.50%, 5/15/07 .................................................... 11/04 @ 102 6,553,412
AAA 2,245 6.50%, 11/15/07 ................................................... 11/04 @ 102 2,474,753
AAA 15,915 New York St., G.O., Ser. F, 5.25%, 9/15/09, MBIA ................... 9/08 @ 101 17,050,694
AAA 3,395 New York St. Thruway Auth. Svc. Contract Rev.,
Local Hwy. & Brdg., Ser. A, 5.40%, 1/01/09, MBIA .................. 1/05 @ 102 3,583,524
-----------
57,971,888
-----------
See Notes to Financial Statements.
6
-----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA--8.5%
AAA $ 1,000++ Cumberland Cnty., C.O.P., Civic Ctr. Proj., Ser. A, 6.375%,
12/01/04, AMBAC ................................................... N/A $ 1,113,040
North Carolina Eastn. Mun. Pwr. Agcy. Sys. Rev., Ser. B,
AAA 13,500 6.125%, 1/01/09, FGIC ............................................. No Opt. Call 14,964,210
AAA 5,000 7.00%, 1/01/08, CAPMAC ............................................ No Opt. Call 5,736,150
AAA 14,675 7.25%, 1/01/07, CAPMAC ............................................ No Opt. Call 16,815,789
------------
38,629,189
------------
OHIO--2.2%
AAA 2,410++ Cleveland, G.O., 6.40%, 11/15/04, MBIA ............................. N/A 2,681,535
AAA 6,095 Hamilton City, Elec. Sys. Rev., Ser. A, 6.125%, 10/15/08, FGIC ..... 10/02 @ 102 6,400,786
AAA 1,000++ Ohio St. Bldg. Auth. Fac. Rev., Juvenile Correctional Proj.,
6.50%, 10/01/04, AMBAC ............................................ N/A 1,112,510
------------
10,194,831
------------
PENNSYLVANIA--13.1%
AAA 4,000 Allegheny Cnty. Hosp. Dev. Auth. Rev., Magee Women's Hosp.,
6.25%, 10/01/08, FGIC ............................................. 10/02 @ 102 4,204,080
Dauphin Cnty. Gen. Auth. Hosp. Rev., HAPSCO-Western
Pennsylvania Hosp. Proj., MBIA,
AAA 5,000 6.25%, 7/01/08 .................................................... ETM 5,452,200
AAA 10,000 6.25%, 7/01/08 .................................................... 7/02 @ 102 10,449,200
AAA 6,600 Erie Cnty. Hosp. Auth. Rev., St. Vincent Hlth. Ctr. Proj.,
Ser. A, 6.25%, 7/01/08, MBIA ...................................... 7/02 @ 102 6,896,472
AAA 3,500 Indiana Cnty. Indl. Dev. Auth., P.C.R., New York St.
Elec. & Gas Corp., Ser. A,
6.00%, 6/01/06, MBIA .............................................. No Opt. Call 3,825,675
AAA 6,500 Pennsylvania Hsg. Fin. Agcy. Rev., Rental Hsg., Ser. C, 6.25%,
7/01/07, FNMA ..................................................... 7/02 @ 102 6,712,940
AAA 7,450++ Pennsylvania St., G.O., Ser. A, 6.50%, 11/01/01, FGIC .............. N/A 7,651,746
AAA 3,175 Philadelphia, G.O., 4.10%, 9/15/08, FSA ............................ No Opt. Call 3,163,030
AAA 10,930++ Pittsburgh, G.O., Ser. D, 6.00%, 9/01/02, AMBAC .................... N/A 11,523,281
------------
59,878,624
------------
TEXAS--26.9%
AAA 13,000++ Austin Pub. Impvt., G.O., 6.10%, 9/01/02, AMBAC .................... N/A 13,476,320
Austin Util. Sys. Rev.,
AAA 11,515 Ser. A, Zero Coupon, 11/15/08, MBIA ............................... No Opt. Call 8,314,060
AAA 5,000 Ser. A, Zero Coupon, 11/15/09, AMBAC .............................. No Opt. Call 3,403,799
AAA 5,000 Ser. A, Zero Coupon, 11/15/09, MBIA ............................... No Opt. Call 3,403,800
AAA 7,000 6.25%, 11/15/08, AMBAC ............................................ 11/02 @ 102 7,376,250
AAA 5,000 6.625%, 11/15/08, AMBAC ........................................... No Opt. Call 5,754,350
Baytown, G.O., AMBAC,
AAA 2,385++ 6.40%, 2/01/02 .................................................... N/A 2,435,395
AAA 2,840 6.40%, 2/01/08 .................................................... 2/02 @ 100 2,882,430
AAA 9,930 Circle C Mun. Util. Dist. No. 3 Rev., 6.50%, 11/15/09, FGIC ........ 11/01 @ 100 10,026,420
Coppell Indpt. Sch. Dist., MBIA,
AAA 1,430 6.10%, 8/15/09 .................................................... ETM 1,613,269
AAA 2,495 6.10%, 8/15/09 .................................................... 8/02 @ 100 2,555,903
AAA 4,390 Houston Indpt. Sch. Dist., Zero Coupon, 8/15/09, AMBAC ............. No Opt. Call 3,022,998
AAA 16,135 Houston Wtr. & Swr. Sys. Rev., Jr. Lien, Ser. C, 6.25%,
12/01/09, MBIA .................................................... 12/02 @ 102 16,992,414
AAA 6,000 San Antonio Elec. & Gas Rev., Ser. B, Zero Coupon, 2/01/10, FGIC ... ETM 4,018,380
Texas Mun. Pwr. Agcy. Rev.,
AAA 15,000 Zero Coupon, 9/01/08, AMBAC ....................................... No Opt. Call 10,928,848
AAA 16,175 Zero Coupon, 9/01/09, AMBAC ....................................... No Opt. Call 11,115,622
AAA 7,000 5.00%, 9/01/10, FGIC .............................................. 9/04 @ 100 7,117,950
AAA 5,900 Texas St. Pub. Fin. Auth. Bldg. Rev., Ser. B, 6.25%,
2/01/09, AMBAC .................................................... No Opt. Call 6,621,157
AAA 2,275 Ysleta Indpt. Sch. Dist. Rev., Zero Coupon, 8/15/08, PSFG .......... No Opt. Call 1,660,795
------------
122,720,160
------------
See Notes to Financial Statements.
7
-----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
UTAH--3.5%
Intermountain Pwr. Agcy. Pwr. Supply Rev., Ser. B, MBIA,
AAA $ 2,215 6.00%, 7/01/07 .................................................... ETM $ 2,455,062
AAA 1,285 6.00%, 7/01/07 .................................................... No Opt. Call 1,411,881
AAA 1,550++ Salt Lake Cnty. Mun. Bldg. Auth. Lease Rev., Ser. A, 6.05%,
10/01/04, MBIA .................................................... N/A 1,656,717
AAA 10,300 Utah St., G.O., Ser. F, 5.00%, 7/01/10 ............................. 7/07 @ 100 10,620,330
-------------
16,143,990
-------------
WASHINGTON--14.2%
AAA 12,850 King Cnty., G.O., Ser. D, 5.55%, 12/01/08, MBIA .................... 12/07 @ 102 13,936,210
Snohomish Cnty. Sch. Dist., G.O., MBIA,
AAA 2,235++ 6.10%, 12/01/03 ................................................... N/A 2,427,970
AAA 1,765 6.10%, 12/01/08 ................................................... 12/03 @ 102 1,884,579
Washington St. Hlth. Care Fac. Auth. Rev., MBIA,
AAA 1,010 Catholic Hlth. Initiatives A, 5.30%, 12/01/08 ..................... No Opt. Call 1,067,580
AAA 1,000 Catholic Hlth. Initiatives A, 5.40%, 12/01/10 ..................... 6/10 @ 101 1,061,590
AAA 9,000 Virginia Mason Oblig. Group, 6.30%, 2/15/09 ....................... 2/03 @ 102 9,475,200
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 3,000 Nuclear Proj. No. 2, 5.55%, 7/01/10, FGIC ......................... 7/03 @ 102 3,085,350
AAA 13,635 Nuclear Proj. No. 2, Ser. A, 6.25%, 7/01/09, MBIA ................. 7/02 @ 102 14,229,759
AAA 5,550 Nuclear Proj. No. 3, Zero Coupon, 7/01/07, BIGI ................... No Opt. Call 4,264,564
AAA 2,000 Nuclear Proj. No. 3, Zero Coupon, 7/01/08, BIGI ................... No Opt. Call 1,456,920
AAA 11,000 Ser. A, 5.80%, 7/01/07, FSA ....................................... No Opt. Call 11,939,950
-------------
64,829,672
-------------
WEST VIRGINIA--2.7%
AAA 11,600 West Virginia St. Pkwys. Econ. Dev. & Tourism Auth., 5.70%,
5/15/09, FGIC ..................................................... 5/03 @ 102 12,128,844
-------------
TOTAL LONG-TERM INVESTMENTS (COST $667,336,520) .................... 717,734,282
-------------
SHORT-TERM INVESTMENTS**--0.9%
KANSAS--0.3%
A-1+ 1,100 Kansas St. Dept. Trans. Hwy. Rev., Ser. B-2, 3.30%,
7/02/01, FRDD ..................................................... N/A 1,100,000
-------------
NEW YORK--0.4%
A-1+ 1,890 New York City, G.O., Ser. B-2, 3.15%, 7/02/01, FRDD ................ N/A 1,890,000
-------------
TEXAS--0.2%
A-1+ 1,000 Harris Cnty. Hlth. Fac. Dev. Corp. Rev., St. Lukes
Episcopal Hosp., Ser. A, 3.30%, 7/02/01, FRDD ..................... N/A 1,000,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $3,990,000) ..................... 3,990,000
-------------
TOTAL INVESTMENTS--158.0% (COST $671,326,520) ...................... 721,724,282
Other assets in excess of liabilities--1.3% ........................ 6,113,003
Liquidation value of preferred stock--(59.3)% ...................... (271,000,000)
-------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100% ................. $ 456,837,285
=============
----------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** For purposes of amortized cost valuation, the maturity dates of these
instruments is considered to be the earlier of the next date on which the
security can be redeemed at par, or the next date on which the rate of
interest is adjusted.
+ Option call provisions: date (month/year) and price of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
++ This bond is prerefunded. See glossary for definition.
See Notes to Financial Statements.
8
--------------------------------------------------------------------------------
KEY TO ABBREVIATIONS:
AMBAC -- American Municipal Bond Assurance Corporation
BIGI -- Bond Investors Guaranty Insurance Company
CAPMAC -- Capital Markets Assurance Company
C.O.P. -- Certificate of Participation
ETM -- Escrowed to Maturity
FGIC -- Financial Guaranty Insurance Company
FNMA -- Federal National Mortgage Association
FRDD -- Floating Rate Daily Demand
FSA -- Financial Security Assurance
G.O. -- General Obligation
MBIA -- Municipal Bond Insurance Association
P.C.R. -- Pollution Control Revenue
PSFG -- Permanent School Fund Guaranty
WI -- When Issued
--------------------------------------------------------------------------------
See Notes to Financial Statements.
9
--------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $671,326,520)
(Note 1) ................................................ $ 721,724,282
Cash ...................................................... 73,780
Interest receivable ....................................... 10,755,436
Receivable for investments sold ........................... 55,000
Other assets .............................................. 6,266
-------------
732,614,764
-------------
LIABILITIES
Payable for securities purchased .......................... 2,178,135
Dividends payable--common stock ........................... 1,802,470
Dividends payable--preferred stock ........................ 191,750
Investment advisory fee payable (Note 2) .................. 210,141
Administration fee payable (Note 2) ....................... 60,040
Deferred directors fees (Note 1) .......................... 26,270
Other accrued expenses .................................... 308,673
-------------
4,777,479
-------------
NET INVESTMENT ASSETS ..................................... $ 727,837,285
=============
Net investment assets were comprised of:
Common stock:
Par value (Note 4) .................................... $ 272,071
Paid-in capital in excess of par ...................... 377,481,620
Preferred stock (Note 4) ................................ 271,000,000
-------------
648,753,691
Undistributed net investment income (Note 1) ............ 29,010,770
Accumulated net realized loss (Note 1) .................. (324,938)
Net unrealized appreciation (Note 1) .................... 50,397,762
-------------
Net investment assets, June 30, 2001 ...................... $ 727,837,285
=============
Net assets applicable to common shareholders .............. $ 456,837,285
=============
Net asset value per share:
($456,837,285 / 27,207,093 shares of
common stock issued and outstanding) .................... $16.79
======
--------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2001 (UNAUDITED)
--------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (Note 1) ....................................... $20,447,716
-----------
Expenses
Investment advisory ..................................... 1,267,304
Administration .......................................... 362,087
Auction agent ........................................... 354,500
Custodian ............................................... 67,500
Reports to shareholders ................................. 41,500
Directors ............................................... 38,500
Independent accountants ................................. 19,500
Registration ............................................ 16,500
Transfer agent .......................................... 14,000
Legal ................................................... 11,500
Miscellaneous ........................................... 97,402
-----------
Total expenses .......................................... 2,290,293
-----------
Net investment income ..................................... 18,157,423
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments .......................... 33,948
Net change in unrealized appreciation
on investments .......................................... 1,977,257
-----------
Net gain on investments ................................... 2,011,205
-----------
NET INCREASE IN NET INVESTMENT
ASSETS RESULTING FROM OPERATIONS .......................... $20,168,628
===========
See Notes to Financial Statements.
10
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS (UNAUDITED)
--------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
OPERATIONS:
Net investment income ............................................................ $ 18,157,423 $ 35,381,235
Net realized gain (loss) on investments .......................................... 33,948 (19,108)
Net change in unrealized appreciation on investments ............................. 1,977,257 14,541,901
------------ ------------
Net increase in net investment assets resulting from operations ................ 20,168,628 49,904,028
------------ ------------
DIVIDENDS:
To common shareholders from net investment income ................................ (10,814,559) (21,629,152)
To preferred shareholders from net investment income ............................. (4,574,220) (10,564,692)
------------ ------------
Total dividends ................................................................ (15,388,779) (32,193,844)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from additional issuance of preferred shares ........................ -- 64,032,840
------------ ------------
Total increase ................................................................. 4,779,849 81,743,024
------------ ------------
NET INVESTMENT ASSETS
Beginning of period ................................................................ 723,057,436 641,314,412
------------ ------------
End of period (including undistributed net investment income of
$29,010,770 and $25,792,372, respectively) ....................................... $727,837,285 $723,057,436
============ ============
See Notes to Financial Statements.
11
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
--------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ----------------------------------------------------
JUNE 30, 2001 2000 1999 1998 1997 1996
---------------- -------- -------- -------- -------- --------
PER COMMON SHARE OPERATING PERFORMANCE:
Net asset value, beginning of the period ............. $ 16.62 $ 16.00 $ 17.06 $ 16.80 $ 15.90 $ 16.08
-------- -------- -------- -------- -------- --------
Net investment income (a) .......................... .67 1.30 1.21 1.20 1.18 1.17
Net realized and unrealized gain (loss)
on investments (a) ............................... .07 .54 (1.23) .11 .78 (.27)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations ... .74 1.84 (.02) 1.31 1.96 .90
-------- -------- -------- -------- -------- --------
Dividends and distributions:
Dividends from net investment income to:
Common shareholders .............................. (.40) (.80) (.80) (.80) (.79) (.79)
Preferred shareholders ........................... (.17) (.38) (.24) (.25) (.27) (.25)
Distributions from net realized gain on
investments to:
Common shareholders .............................. -- -- -- -- -- (.03)
Preferred shareholders ........................... -- -- -- -- -- (.01)
Distributions in excess of net realized gain on
investments to:
Common shareholders .............................. -- -- -- ** ** **
Preferred shareholders ........................... -- -- -- ** ** **
-------- -------- -------- -------- -------- --------
Total dividends and distributions .................... (.57) (1.18) (1.04) (1.05) (1.06) (1.08)
-------- -------- -------- -------- -------- --------
Capital charge with respect to issuance of
preferred shares ................................... -- (.04) -- -- -- --
-------- -------- -------- -------- -------- --------
Net asset value, end of period* ...................... $ 16.79 $ 16.62 $ 16.00 $ 17.06 $ 16.80 $ 15.90
======== ======== ======== ======== ======== ========
Market value, end of period* ......................... $ 15.60 $ 14.88 $ 13.75 $ 16.13 $ 15.25 $ 14.50
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+ ............................. 7.58% 14.40% (10.14)% 11.21% 10.97% 13.56%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS:++
Expenses ............................................. 1.01%+++ 1.05% .93% .88% .92% .95%
Net investment income before preferred
stock dividends (a) ................................ 8.01%+++ 8.06% 7.30% 7.10% 7.19% 7.32%
Preferred stock dividends ............................ 2.02%+++ 2.40% 1.47% 1.49% 1.03% 1.64%
Net investment income available to common
shareholders (a) ................................... 5.99%+++ 5.66% 5.83% 5.61% 5.56% 5.68%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (000) ...... $457,174 $438,958 $452,317 $458,993 $444,895 $434,692
Portfolio turnover 1% 3% 1% 0% 11% 8%
Net assets of common shareholders,
end of period (000) ................................ $456,837 $452,057 $435,314 $464,236 $457,192 $432,609
Preferred stock outstanding (000) $271,000 $271,000 $206,000 $206,000 $206,000 $206,000
Asset coverage per share of preferred stock,
end of period ...................................... $ 67,161 $ 66,735 $ 77,857 $ 81,361 $ 80,508 $ 77,525
----------
* Net asset value and market value are published in BARRON'S on Saturday and
THE WALL STREET JOURNAL on Monday.
** Actual amount paid to common shareholders was $0.005235, $0.004814 and
$0.00271 for the years ended December 31, 1998, 1997, and 1996,
respectively. Actual amount paid to preferred shareholders was $0.001696,
$0.00154 and $0.00084 per common share for the years ended December 31,
1998, 1997 and 1996, 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 and distributions,
are assumed for purposes of this calculation, to be reinvested at prices
obtained under the Trust's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions. Total investment returns for
periods less than one full year are not annualized. Past performance is not
a guarantee of future results.
++ Ratios are calculated on the basis of income and expenses applicable to both
the common and preferred stock, relative to the average net assets of common
shareholders.
+++ Annualized.
(a) As required, effective January 1, 2001, the Fund had adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing market discount on debt securities. The change in accounting
policy had no impact on the total net assets of the Trust. The reclass of
this change for the six months ended June 30, 2001 to the net investment
income from net realized and unrealized gains and losses per common share
were less than $0.005 per share. The ratio of net investment income to
average net assets on common shares increased from 5.97% to 5.99% and from
7.99% to 8.01% on net investment income before preferred stock dividends.
Per share, ratios and supplemental data for prior periods have not been
restated to reflect this change in presentation.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for Trust's common shares.
See Notes to Financial Statements.
12
--------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION The BlackRock Insured Municipal 2008 Term Trust
& ACCOUNTING Inc. (the "Trust"), was organized in Maryland on
POLICIES August 7, 1992 as a diversified, closed-end
management investment company. The Trust's
investment objective is to manage a diversified portfolio of high quality
securities that will return $15 per share to investors on or about December 31,
2008 while providing current income exempt from regular Federal income tax. The
ability of issuers of debt securities held by the Trust to meet their
obligations may be affected by economic developments in the specific industry or
region. No assurance can be given that the Trust's investment objective will be
achieved.
The following is a summary of significant accounting policies followed by the
Trust:
SECURITIES VALUATION: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
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 bond dealers, market transactions in comparable securities and
various relationships between securities in determining values. Short-term
investments are valued at amortized cost. 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.
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. The Trust also records interest income
on an accrual basis and amortizes premium and accretes discount, respectively,
to interest income on securities purchased using the interest method.
FEDERAL INCOME TAXES: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient net income to shareholders. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, no Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Net long-term
capital gains, if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
ESTIMATES: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
DEFERRED COMPENSATION PLAN: Under a deferred compensation plan approved by the
Board of Directors on February 24, 2000, non-interested Directors may elect to
defer receipt of all or a portion of their annual compensation.
Deferred amounts earn a return for the Directors as though equivalent dollar
amounts had been invested in common shares of other BlackRock funds selected by
the Directors. This has the same economic effect for the Directors as if the
Directors had invested the deferred amounts in such other BlackRock funds.
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the Trust. The
Trust may, however, elect to invest in common shares of those funds selected by
the Directors in order to match its deferred compensation obligations.
NEW ACCOUNTING POLICIES: Effective January 1, 2001, the Trust has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies, as
revised, and began amortizing market discount on debt securities. Prior to
January 1, 2001, the Trust amortized premiums and original issue discount on
debt securities. The cumulative effect of this accounting policy change had no
impact on the total net assets of the Trust. This resulted in a $449,754
increase to undistributed net investment income of securities and a
corresponding decrease in net unrealized appreciation, based on securities held
by the Trust on January 1, 2001.
The effect of this change for the six months ended June 30, 2001 was to
increase net investment income by $45,248:decrease net unrealized appreciation
by $18,480 and decrease net realized gains by $26,768. The Statement of Changes
in Net Investment Assets and the Financial Highlights of the Trust for prior
periods have not been restated to reflect this change.
13
NOTE 2. AGREEMENTS The Trust has an Investment Advisory Agreement
with BlackRock Advisors, Inc., (the "Advisor"),
which is a wholly-owned subsidiary of BlackRock, Inc., which in turn is an
indirect majority-owned subsidiary of PNC Financial Services Group, Inc. The
Trust has an Administration Agreement with Princeton Administrators, L.P. (the
"Administrator"), an indirect wholly-owned affiliate of Merrill Lynch & Co.,
Inc.
The investment advisory fee paid to the Advisor is computed weekly and
payable monthly at an annual rate of 0.35% of the Trust's average weekly net
investment assets. The administration fee paid to the Administrator is also
computed weekly and payable monthly at an annual rate of 0.10% of the Trust's
average weekly net investment assets.
Pursuant to the agreements, the Advisor provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Advisor. The Administrator pays occupancy and
certain clerical and accounting costs of the Trust. The Trust bears all other
costs and expenses.
NOTE 3. PORTFOLIO Purchases and sales of investments, other than
SECURITIES short-term investments, for the six months ended
June 30, 2001, aggregated $5,348,848 and
$4,594,000, respectively.
The Federal income tax basis of the Trust's investments at June 30, 2001 was
$671,164,070, and accordingly, net unrealized appreciation was $50,560,212
(gross unrealized appreciation--$50,577,245, gross unrealized depreciation
--$17,033).
For Federal income tax purposes, the Trust had a capital loss carryforward at
December 31, 2000 of approximately $53,000 of which $34,000 will expire in 2007
and $19,000 will expire in 2008. Accordingly, no capital gain distribution is
expected to be paid to shareholders until net gains have been realized in excess
of such amounts.
NOTE 4. CAPITAL There are 200 million shares of $.01 par value
common stock authorized. The Trust may classify or
reclassify any unissued shares of common stock into one or more series of
preferred stock. Of the 27,207,093 common shares outstanding at June 30, 2001,
the Advisor owned 7,093 shares. As of June 30, 2001, there were 10,840 preferred
shares outstanding as follows: Series T28--2,060, Series R28--2,060, Series
T7--4,660, and Series R7--2,060, which includes 2,600 shares of Series T7 issued
on March 10, 2000.
On March 10, 2000, the Trust reclassified 2,600 shares of common stock and
issued an additional 2,600 shares of Series T7 preferred shares. The additional
shares issued have identical rights and features of the existing Series T7
preferred shares. Estimated offering costs of $317,160 and underwriting
discounts of $650,000 have been charged to paid-in capital in excess of par of
the common shares.
Dividends on Series T7 shares and R7 shares are cumulative at a rate which is
reset every 7 days based on the results of an auction. Dividends on Series T28
shares are cumulative at a rate which is reset every 28 days based on the
results of an auction. Series R28 shares paid dividends monthly at a rate
established at the initial offering through May 17, 1994. Thereafter, rates on
Series R28 shares reset every 28 days based on the results of an auction.
Dividend rates ranged from 2.40% to 5.10% during the six months ended June 30,
2001.
The Trust may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
preferred stock would be less than 200%.
The preferred stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at $25,000 per share plus any accumulated or
unpaid dividends whether or not declared. The preferred stock is also subject to
mandatory redemption at $25,000 per share plus any accumulated or unpaid
dividends, whether or not declared if certain requirements relating to the
composition of the assets and liabilities of the Trust as set forth in the
Articles of Incorporation are not satisfied.
The holders of preferred stock have voting rights equal to the holders of
common stock (one vote per share) and will vote together with holders of shares
of common stock as a single class. However, holders of preferred stock are also
entitled to elect two of the Trust's directors. In addition, the Investment
Company Act of 1940 requires that along with approval by stockholders that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred stock, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
stock, and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
NOTE 5. DIVIDENDS Subsequent to June 30, 2001, the Board of
Directors of the Trust declared a dividend from
undistributed earnings of $0.06625 per common
share payable, August 1, 2001 to shareholders of
record on July 16, 2001.
For the period July 1, 2001 to July 31, 2001 dividends declared on preferred
shares totalled $591,555 in aggregate for the four outstanding preferred share
series.
14
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), common
shareholders may elect to have all distributions of dividends and capital gains
reinvested by State Street Bank and Trust Company (the "Plan Agent") in Trust
shares pursuant to the Plan. Shareholders who elect not to 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 under the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment 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 income tax that may be payable on
such dividends or distributions.
The Trust reserves the right to amend or terminate the Plan as applied to
any dividend or distribution paid subsequent to written notice of the change
sent to all shareholders of the Trust at least 90 days before the record date
for the dividend or distribution. The Plan also may be amended or terminated by
the Plan Agent upon at least 90 days written notice to all shareholders of the
Trust. All correspondence concerning the Plan should be directed to the Plan
Agent at (800) 699-1BFM. The address is on the front of this report.
15
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
Quarterly performance and other information regarding the Trust may be
found on BlackRock's website, which can be accessed at
HTTP://WWW.BLACKROCK.COM/FUNDS/CEFUNDS.HTML. This reference to BlackRock's
website is intended to allow investors public access to quarterly information
regarding the Trust and is not intended to incorporate BlackRock's website into
this report.
ANNUAL MEETING OF TRUST SHAREHOLDERS. There have been no material changes
in the Trust's investment objectives or policies that have not been approved by
the shareholders or to its charter or by-laws or in the principal risk factors
associated with investment in the Trust. There have been no changes in the
persons who are primarily responsible for the day-to-day management of the
Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 24, 2001 to vote on
the following matter: (1) To elect three Directors as follows:
DIRECTOR: CLASS TERM EXPIRING
------- ----- ----- -------
Frank J. Fabozzi ........ II 3 years 2004
Walter F. Mondale ....... II 3 years 2004
Ralph L. Schlosstein .... II 3 years 2004
Directors whose term of office continues beyond this meeting are Andrew
F. Brimmer, Richard E. Cavanagh, Kent Dixon, Laurence D. Fink and James
Clayburn La Force, Jr.
Shareholders elected the three Directors. The results of the voting
were as follows:
VOTES FOR* VOTES AGAINST* ABSTENTIONS*
-------- ------------ ----------
Frank J. Fabozzi ........ 10,609 -- 3
Walter F. Mondale ....... 25,662,596 -- 534,341
Ralph L. Schlosstein .... 25,742,327 -- 454,610
----------
* The votes represent common and preferred shareholders voting as a single
class, except for Frank J. Fabozzi who was voted on and elected by the
preferred shareholders only.
16
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
INVESTMENT SUMMARY
--------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE:
The BlackRock Insured Municipal 2008 Term Trust's investment objective is to
provide current income exempt from regular Federal income tax and to return $15
per share (the initial public offering price per share) to investors on or about
December 31, 2008.
WHO MANAGES THE TRUST?
BlackRock Advisors, Inc. (the "Advisor") manages the Trust. The Advisor is a
wholly-owned subsidiary of BlackRock, Inc. ("BlackRock"), which is one of the
largest publicly traded investment management firms in the United States with
$213 billion of assets under management as of June 30, 2001. BlackRock manages
assets on behalf of more than 3,300 institutions and 200,000 individuals
worldwide, including nine of the ten largest companies in the U.S. as determined
by Fortune Magazine, through a variety of equity, fixed income, liquidity and
alternative investment separate accounts and mutual funds, including the
BLACKROCK FUNDS and BLACKROCK PROVIDENT INSTITUTIONAL FUNDS. In addition,
BlackRock provides risk management and technology services to a growing number
of institutional investors under the BLACKROCK SOLUTIONS name. Clients are
served from BlackRock's headquarters in New York City, as well as offices in
Wilmington, DE, Edinburgh, Scotland, Tokyo, Japan, and Hong Kong. BlackRock is a
member of The PNC Financial Services Group, Inc. ("PNC"), one of the largest
diversified financial services organizations in the United States, and is
majority-owned by PNC and by BlackRock employees.
WHAT CAN THE TRUST INVEST IN?
The Trust intends to invest at least 80% of its total assets in a diversified
portfolio of municipal obligations insured as to the timely payment of both
principal and interest. The Trust may invest up to 20% of its total assets in
uninsured municipal obligations which are rated Aaa by Moody's or AAA by S&P, or
are determined by the Advisor to be of comparable credit quality (guaranteed,
escrowed or backed in trust).
WHAT IS THE ADVISOR'S INVESTMENT STRATEGY?
The Advisor will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($15 per share)
at maturity. The Advisor will implement a conservative strategy that will seek
to closely match the maturity or call provisions of the assets of the portfolio
with the future return of the initial investment at the end of 2008. 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 or called,
if any, 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
portfolio of municipal obligations and retaining a small portion of its income
each year.
In addition to seeking the return of the initial offering price, the Advisor
also seeks to provide current income exempt from regular Federal income tax 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 to enhance the income of the portfolio. In order to maintain
competitive yields as the Trust approaches maturity and depending on market
conditions, the Advisor 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 will be reinvested
in securities with maturities which coincide with the remaining term of the
Trust. 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. If market conditions,
such as interest rate volatility, force a choice between current income and
risking the return of the initial offering price, it is likely the return of the
initial offering price will be emphasized.
17
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's common 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 first business
day of the month. For shares held in the shareholder's name, dividends may be
reinvested in additional shares of the Trust through the Trust's transfer agent,
State Street Bank and Trust Company. 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 issuance of preferred
stock. 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.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the Trust in a declining rate
environment, but can cause net assets to decline faster than the market in a
rapidly rising rate environment. The Advisor'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 the Advisor 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 CONSIDERATION. 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 the issuance of preferred stock,
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 (NYSE symbol: BRM) 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.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects only to do so to a
limited extent. An investment in these securities involves special risks.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
MUNICIPAL OBLIGATIONS. Municipal obligations include debt obligations issued by
states, cities, and local authorities, and possessions and certain territories
of the United States to obtain funds for various public purposes, including the
construction of public facilities, the refinancing of outstanding obligations
and the obtaining of funds for general operating expenses and for loans to other
public institutions and facilities. The value of municipal debt securities
generally varies inversely with changes in prevailing market interest rates.
Depending on the amount of call protection that the securities in the Trust
have, the Trust may be subject to certain reinvestment risks in environments of
declining interest rates.
ALTERNATIVE MINIMUM TAX (AMT). The Trust may invest in securities subject to
AMT. The Trust currently holds no securities that are subject to AMT.
18
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THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
GLOSSARY
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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.
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: Income generated by securities in a portfolio
and distributed to shareholders after the
deduction of expenses. The Trust declares and
pays dividends to common shareholders on a
monthly basis.
DIVIDEND REINVESTMENT: Shareholders may have all dividends and
distributions of capital gains automatically
reinvested into additional shares of a fund.
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.
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 common shares. It is the
underlying value of a single common share on
a given day. Net asset value for the Trust is
calculated weekly and published in Barron's
on Saturday and The Wall Street Journal on
Monday.
PREMIUM: When a fund's stock price is greater than its
net asset value, the fund is said to be
trading at a premium.
PREREFUNDED BONDS: These securities are collateralized by U.S.
Government securities which are held in
escrow and are used to pay principal and
interest on the tax exempt issue and retire
the bond in full at the date indicated,
typically at a premium to par.
19
BLACKROCK [LOGO]
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
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Kevin M. Klingert, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
Anne Ackerley, SECRETARY
INVESTMENT ADVISOR
BlackRock Advisors, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
(800) 227-7BFM
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 543-6217
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
AUCTION AGENT
Deutsche Bank
4 Albany Street
New York, NY 10006
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
LEGAL COUNSEL -- INDEPENDENT DIRECTORS
Debevoise & Plimpton
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of June 30, 2001 were not audited
and accordingly, no opinion is expressed on them.
This report is for shareholder information.This is not a prospectus intended
for use in the purchase or sale of any securities.
Statements and other information contained in this report are as dated and
are subject to change.
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
c/o Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 543-6217
09247K-10-9
09247K-30-7
09247K-40-6
[Logo] Printed on recycled paper 09247K-50-5
THE BLACKROCK
INSURED MUNICIPAL
2008 TERM
TRUST INC.
==========================
SEMI-ANNUAL REPORT
JUNE 30, 2001
BLACKROCK [LOGO]