--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
--------------------------------------------------------------------------------
July 31, 2002
Dear Shareholder:
The semi-annual period ended June 30, 2002, saw general turmoil in the
equity markets. Bond markets, particularly municipal securities, proved to be a
viable shelter from unstable economic conditions and experienced strong inflows
throughout the period. Municipal bonds outperformed Treasuries returning 4.64%
versus 3.61% respectively as measured by the Lehman Brothers Municipal Bond
Index* and the Lehman Brothers Treasury Index** for the six months ended June
30, 2002.
The first half of 2002 was markedly different from the last six months of
2001, as the Federal Reserve Board (the "Fed") left interest rates unchanged.
After a 225 basis point decline in interest rates during the latter half of
2001, and the uncertainty of the economic recovery in the first half of this
year, the Fed remained cautious about the state of the economy. Fears of
inflation remained subdued, allowing the Fed to remain on hold and maintain the
lowest interest rates in decades.
The past six months also saw a 20% increase in new municipal issuance
totaling $162 billion, as compared to the same time period last year. Both
retail and institutional investment in municipals remained high and continued to
drive performance as investors sought lower volatility alternatives with
attractive taxable equivalent yields. While economic indicators remained
positive during the period, the instability of the equity and capital
markets--as a result of corporate governance and accounting issues, fears of
renewed terrorist acts and geopolitical instability--weighed on investor
confidence, an integral component of economic recovery.
The volatility, which continues to be seen throughout all sectors of the
market, can be disconcerting for investors. We encourage you to consult with
your financial advisor to help establish a strategy that best fits your overall
goals and risk tolerance.
The semi-annual report includes a summary of market conditions over the
last six months, a review of the strategy employed by your Trust's portfolio
managers, the Trust's unaudited financial statements and a listing of the
portfolio's holdings. We thank you for your continued confidence in BlackRock
and 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
Chief Executive Officer President
BlackRock Advisors, Inc. BlackRock Advisors, Inc.
* The Lehman Brothers Municipal Bond Index measures the performance of the
investment grade long-term tax-exempt bond market. The Index is unmanaged
and cannot be purchased directly.
** The Lehman Brothers Treasury Index measures the performance of the public
obligations of the U.S. Treasury. The Index is unmanaged and cannot be
purchased directly.
1
July 31, 2002
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, 2002. 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 closed-end bond fund whose shares are traded on
the New York Stock Exchange under the symbol "BRM". The Trust's investment
objectives are to provide current income that is exempt from regular Federal
income tax and to return $15 per share (an amount equal to the Trust's initial
public offering price) to investors on or about December 31, 2008. The Trust
seeks to achieve these objectives 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 share price and NAV:
--------------------------------------------------------------------------------
06/30/02 12/31/01 Change High Low
--------------------------------------------------------------------------------
Share Price $16.30 $15.70 3.82% $16.30 $15.57
--------------------------------------------------------------------------------
Net Asset Value (NAV) $17.23 $16.80 2.56% $17.23 $16.71
--------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
Economic performance was mixed during the semi-annual period ended June 30,
2002, as volatility and instability were prevalent throughout all sectors of the
market. The U.S. economy showed signs of recovery, but mixed economic data and
dismal performance in the equity markets caused a massive unwinding of Fed
tightening expectations. Structural imbalances in the U.S. economy became
evident and the effects of the short-term stimulus post September 11th
diminished, causing the Fed to remain on hold and leave the Federal Funds rate
unchanged at 1.75%. Positive economic data included a rise in first quarter 2002
GDP of 6.1%, the fastest rate in two years, strong manufacturing data, an 8.4%
rise in first quarter 2002 productivity and the Consumer Confidence Index
advancing from year-end levels. Low inventory levels should support
manufacturing data, but we are skeptical about the continued strength of
consumer demand, which is essential to a sustained economic recovery. The
long-term sustainability of the highly leveraged consumer remains a pivotal
issue to the strength of the economic recovery. Although fundamentals support a
recovery, declining equities and a plummeting dollar continue to erode investor
confidence. We remain uncertain that a near-term business investment recovery
will materialize, as pricing power remains weak. While second quarter weakness
may be overstated, the likely outcome is one of several quarters of sub-par
growth in the 2.5%-3.0% range.
Year-to-date, rates have fallen across the yield curve. The Treasury market
returned 3.61% during the period, posting exceptionally strong months in April
and June as risk aversion dominated the markets. Over the course of the period,
the yield curve steepened in reaction to mixed economic data and a proliferation
of negative headlines in the corporate sector. Looking ahead, the budget surplus
of 2001 is unlikely to be sustained due to anemic tax revenues and a sharp rise
in defense spending, which should result in larger auction sizes. However, the
allowable debt limit set by Congress will soon be reached, possibly leading the
Treasury to pursue additional methods of financing until it can return to
regular auctions. As of June 30, 2002, the 10-year Treasury was yielding 4.80%
versus 5.05% on December 31, 2001.
On a tax-adjusted basis, municipal bonds outperformed the taxable domestic
bond market for the semi-annual period ended June 30, 2002, returning 7.55% (as
measured by the LEHMAN MUNICIPAL BOND INDEX at a tax bracket of 38.6%) versus
3.79% for the LEHMAN AGGREGATE INDEX. Retail investment has reached record
highs, as investors searched for a lower volatility asset class providing high
after-tax returns. Institutional demand has also remained strong and is being
fueled by increased profitability on the part of insurance companies, the search
for stable income and asset allocation trades away from segments of the market
experiencing higher volatility. Over the period, strong demand was met by
significant new issuance as the first quarter of
2
2002 posted a 10% increase over the same period in 2001 and was the largest
first quarter total on record. Through June, new bond issuance remained robust,
bringing total year-to-date issuance to nearly $170 billion, and is on pace to
be the largest issuance year in history. The municipal yield curve remains
historically steep, as the short end of the curve has outperformed Treasuries
over the recent months while longer maturities performed in line with their
Treasury counterparts.
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 results in the Trust
realizing a capital gain could require a taxable distribution as well as reduce
its 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 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 the
end of the period, the Trust's leverage amount was approximately 36% of total
assets.
The following chart shows the Trust's asset composition:
SECTOR BREAKDOWN
--------------------------------------------------------------------------------
SECTOR JUNE 30, 2002 DECEMBER 31, 2001
--------------------------------------------------------------------------------
City, County & State 25% 23%
--------------------------------------------------------------------------------
Power 22% 22%
--------------------------------------------------------------------------------
Education 11% 12%
--------------------------------------------------------------------------------
Hospital 10% 10%
--------------------------------------------------------------------------------
Transportation 9% 8%
--------------------------------------------------------------------------------
Tax Revenue 7% 6%
--------------------------------------------------------------------------------
Lease Revenue 6% 6%
--------------------------------------------------------------------------------
Water & Sewer 4% 4%
--------------------------------------------------------------------------------
District 2% 5%
--------------------------------------------------------------------------------
Housing 2% 2%
--------------------------------------------------------------------------------
Industrial & Pollution Control 2% 2%
--------------------------------------------------------------------------------
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
BlackRock Advisors, Inc. BlackRock Advisors, Inc.
-------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
-------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BRM
--------------------------------------------------------------------------------
Initial Offering Date: September 18, 1992
-------------------------------------------------------------------------------
Closing Share Price as of 6/30/02: $16.30
-------------------------------------------------------------------------------
Net Asset Value as of 6/30/02: $17.23
--------------------------------------------------------------------------------
Yield on Closing Share Price as of 6/30/02 ($16.30)(1): 4.88%
--------------------------------------------------------------------------------
Current Monthly Distribution per Common Share(2): $ 0.06625
-------------------------------------------------------------------------------
Current Annualized Distribution per Common Share(2): $ 0.79500
-------------------------------------------------------------------------------
(1) Yield on closing share price is calculated by dividing the current
annualized distribution per share by the closing share price.
(2) The 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, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--156.7%
ALABAMA--1.7%
AAA $ 6,555 Birmingham Jefferson Civic, Ctr. Auth., Ser. A, 4.25%, 1/01/09, FSA .. No Opt. Call $ 6,764,695
AAA 1,905++ Mobile Impvt. Wt., Zero Coupon, 8/15/02, MBIA ........................ N/A 1,309,935
-----------
8,074,630
-----------
ALASKA--0.9%
AAA 4,000 Anchorage Alaska, Ser. B, 3.75%, 7/01/09, MBIA ...................... No Opt. Call 4,007,200
-----------
ARIZONA--1.8%
AAA 4,000 Chandler, GO, Zero Coupon, 7/01/08, FGIC ............................ No Opt. Call 3,205,840
AAA 1,000 Phoenix Str. & Hwy. Rev., 4.25%, 7/01/09, FGIC ....................... No Opt. Call 1,036,740
AAA 4,200 Pima Cnty. Str. & Hwy. Rev., 4.125%, 7/01/09, FGIC .................. 7/08 @ 101 4,322,136
-----------
8,564,716
-----------
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 ............................. 1,979,813
-----------
COLORADO--11.5%
AAA 2,000 E-470 Pub. Hwy. Auth. Rev., Ser. B, Zero Coupon, 9/01/11, MBIA ...... No Opt. Call 1,333,860
AAA 30,205++ Jefferson Cnty. Sch. Dist. No. R-001, GO, 6.25%, 12/15/02, AMBAC .... N/A 31,170,956
AAA 6,965 Regl. Transp. Dist., COP, Trans. Vehicles Proj.,
Ser. A, 5.00%, 6/01/08, MBIA ...................................... 6/07 @ 101 7,505,414
AAA 13,285++ Univ. of Colorado Hosp. Auth. Rev., Ser. A, 6.25%, 11/15/02, AMBAC .. N/A 13,793,019
-----------
53,803,249
-----------
DISTRICT OF COLUMBIA--4.1%
Dist. of Columbia, GO,
AAA 195 Ser. B, 5.50%, 6/01/09, FSA ....................................... ETM 217,105
AAA 2,605 Ser. B, 5.50%, 6/01/09, FSA ....................................... No Opt. Call 2,871,935
AAA 10,000 Ser. B-1, 5.50%, 6/01/08, AMBAC ................................... No Opt. Call 10,990,700
AAA 320++ Ser. E, 5.875%, 6/01/03, MBIA ..................................... N/A 338,931
AAA 2,750 Ser. E, 5.875%, 6/01/08, MBIA ..................................... ETM 2,900,205
AAA 2,000 Dist. of Columbia, Hosp. Rev., Children's Hosp.,
Ser. A, 6.25%, 7/15/08, FGIC 9/02 @ 102 2,042,660
-----------
19,361,536
-----------
FLORIDA--1.0%
AAA 2,280 Broward Cnty., COP, Florida Sch. Brd., Ser. B, 4.25%, 7/01/09, FSA .. No Opt. Call 2,359,504
AAA 2,080 Tampa Fla. Wtr. & Swr. Rev., 5.50%, 10/01/08, FSA ................... No Opt. Call 2,310,048
-----------
4,669,552
-----------
GEORGIA--4.9%
AAA 7,000++ Atlanta, COP, Pretrial Det. Ctr., 6.25%, 12/01/02, MBIA ............. N/A 7,279,860
AAA 5,000 Georgia St., GO, Ser. E, 5.25%, 2/01/10 ............................. No Opt. Call 5,460,200
AAA 10,000 Monroe Cnty., PCR, Pwr. Co. Plant Vogtle Proj.,
4.20%, 1/01/12, AMBAC ............................................. No Opt. Call 10,287,600
-----------
23,027,660
-----------
HAWAII--1.4%
AAA 6,510 Hawaii St., GO, Ser. CY, 4.00%, 2/01/09, FSA ......................... No Opt. Call 6,611,035
-----------
ILLINOIS--13.2%
AAA 14,205 Chicago O'Hare Intl. Arprt. Rev., Ser. A, 6.25%, 1/01/08, MBIA ....... 1/05 @ 102 15,465,978
AAA 3,105 Chicago Pub. Bldg. Comm. Bldg. Rev., Ser. A,
Zero Coupon, 1/01/07, MBIA ......................................... ETM 2,661,358
Chicago Sch. Fin. Auth., GO, Ser. A, FGIC,
AAA 13,000 6.25%, 6/01/07 ..................................................... 8/02 @ 102 13,313,300
AAA 9,150 6.25%, 6/01/09 ..................................................... 8/02 @ 102 9,370,515
Aaa 5,980 Cook Cnty. High Sch. Dist. No. 201, J. Sterling Morton Twnshp.,
Zero Coupon, 12/01/09, FGIC ........................................ No Opt. Call 4,403,134
AAA 8,985 Du Page Cnty. Fst. Presv. Dist., Zero Coupon, 11/01/08 ............... No Opt. Call 7,025,551
Aaa 1,455 Kane & Du Page Cntys. Cmnty. Unit Sch., Dist. No. 303
St. Charles, Ser. A, 3.75%, 1/01/09, FSA ......................... No Opt. Call 1,453,181
See Notes to Financial Statements.
5
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
---------------------------------------------------------------------------------------------------------------------
ILLINOIS--(CONTINUED)
Met. Pier & Expo. Auth. Ded. St. Tax Rev. Auth., Ser. A, FGIC,
AAA $ 1,570 Zero Coupon, 6/15/08 ............................................... ETM $ 1,256,424
AAA 8,600 Zero Coupon, 6/15/08 ............................................... No Opt. Call 6,823,498
-----------
61,772,939
-----------
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 1,841,100
AAA 3,860 Ser. A, 6.25%, 7/01/08 ............................................. 8/02 @ 102 4,181,538
AAA 1,385++ Ser. B, 6.25%, 7/01/02 ............................................. N/A 1,412,700
AAA 2,965 Ser. B, 6.25%, 7/01/08 ............................................. 8/02 @ 102 3,211,984
-----------
10,647,322
-----------
IOWA--0.9%
AAA 4,195 Muscatine Elec. Rev., 5.00%, 1/01/08, FSA ........................... 8/02 @ 100 4,229,902
-----------
KANSAS--0.2%
AAA 1,000 Kansas St. Dev. Fin. Auth. Rev., Pub. Wtr.
Sply., 4.00%, 4/01/09, AMBAC ...................................... No Opt. Call 1,017,060
-----------
KENTUCKY--0.7%
AAA 3,890 Owensboro Elec. Lt. & Pwr. Rev., Ser. B,
Zero Coupon, 1/01/09, AMBAC ....................................... No Opt. Call 3,004,830
-----------
LOUISIANA--1.1%
AAA 5,000++ Louisiana Pub. Fac. Auth. Hosp. Rev., Lafayette Gen. Med. Ctr. Proj.,
6.30%, 10/01/02, FSA .............................................. N/A 5,160,350
-----------
MASSACHUSETTS--4.6%
AAA 4,465++ Chelsea Sch. Proj. Loan, 6.00%, 6/15/04, AMBAC ...................... N/A 4,896,185
Massachusetts Bay Trans. Auth. Rev., Ser. B, MBIA,
AAA 200++ 6.00%, 3/01/03 .................................................... N/A 209,896
AAA 5,800 6.00%, 3/01/10 .................................................... 3/03 @ 102 6,063,204
AAA 10,000 Massachusetts St. Hsg. Fin. Agcy. Hsg. Proj.,
Ser. A, 5.95%, 10/01/08, AMBAC .................................... 4/03 @ 102 10,331,400
-----------
21,500,685
-----------
MICHIGAN--5.0%
Lake Orion, Cmnty. Sch. Dist., AMBAC,
AAA 3,290++ 6.60%, 5/01/05 .................................................... N/A 3,701,053
AAA 3,285++ 6.70%, 5/01/05 .................................................... N/A 3,704,363
AAA 8,920++ Michigan St. Bldg. Auth. Rev., Fac. Proj.,
Ser. IIA, 6.25%, 10/01/02, AMBAC .................................. N/A 9,206,599
AAA 3,000 Michigan St. Trunk Line, Ser. A, 4.125%, 11/01/08, FSA .............. No Opt. Call 3,108,630
AAA 3,400 Wyandotte, Elec. Rev., 6.25%, 10/01/08, MBIA ........................ No Opt. Call 3,831,086
-----------
23,551,731
-----------
MISSOURI--1.6%
AAA 7,255 Kansas City, Sch. Dist. Bldg. Corp. Leasehold Rev., Cap. Impvts. Proj.,
Ser. A, 6.50%, 2/01/08, FGIC ...................................... 7/02 @ 102 7,336,981
-----------
NEVADA--3.1%
Director St. Dept. Business & Ind. Rev. Las Vegas Monorail Proj., AMBAC,
AAA 2,085 Zero Coupon, 1/01/09 .............................................. No Opt. Call 1,589,124
AAA 3,585 Zero Coupon, 1/01/10 .............................................. No Opt. Call 2,582,706
Washoe Cnty. Arpt. Auth., Sys. Impvt. Rev., Ser. B, MBIA,
AAA 3,135 5.70%, 7/01/07 .................................................... 7/03 @ 102 3,283,129
AAA 2,645 5.75%, 7/01/08 .................................................... 7/03 @ 102 2,778,520
AAA 4,135++ Washoe Cnty. Sch. Dist., GO, Ser. A, 6.20%, 10/01/02, AMBAC ......... N/A 4,225,887
-----------
14,459,366
-----------
NEW JERSEY--12.9%
AAA 30,275++ New Jersey Econ. Dev. Auth., Mkt. Trans. Fac. Rev.,
Ser. A, 5.80%, 7/01/04, MBIA ...................................... N/A 33,114,189
AAA 1,750 New Jersey St. Transp. Trust Fund Auth., Transp. Sys., Ser. C,
5.25%, 12/15/08, AMBAC ............................................ No Opt. Call 1,929,603
See Notes to Financial Statements.
6
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
---------------------------------------------------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
New Jersey St., GO, Ser. D, MBIA,
AAA $ 8,370++ 6.00%, 2/15/03 .................................................... N/A $ 8,766,068
AAA 16,125 6.00%, 2/15/09 .................................................... 2/03 @ 102 16,834,500
-----------
60,644,360
-----------
NEW MEXICO--0.7%
AAA 3,385 New Mexico Fin. Auth. Rev., Pub. Proj. Ser. A, 3.80%, 6/01/08 ....... No Opt. Call 3,432,695
-----------
NEW YORK--12.5%
New York City, GO, MBIA,
AAA 5,000 Ser. E, 6.125%, 8/01/06 ........................................... No Opt. Call 5,605,450
AAA 15,500 Ser. E, 6.20%, 8/01/07 ............................................ No Opt. Call 17,635,745
AAA 5,000 Ser. G, 5.75%, 2/01/08 ............................................ 2/06 @ 101.5 5,423,700
New York St. Env. Fac. Corp., Ser. D, PCR,
AAA 5,945 6.50%, 5/15/07 .................................................... 11/04 @ 102 6,591,281
AAA 2,245 6.50%, 11/15/07 ................................................... 11/04 @ 102 2,489,054
AAA 15,915 New York St., GO, Ser. F, 5.25%, 9/15/09, MBIA 9/08 @ 101 17,404,326
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 3,599,990
-----------
58,749,546
-----------
NORTH CAROLINA--8.4%
AAA 1,000++ Cumberland Cnty., COP, Civic Ctr. Proj.,
Ser. A, 6.375%, 12/01/04, AMBAC ................................... N/A 1,122,790
North Carolina Eastn. Mun. Pwr. Agcy. Sys. Rev., Ser. B,
AAA 13,500 6.125%, 1/01/09, FGIC ............................................. No Opt. Call 15,349,365
AAA 5,000 7.00%, 1/01/08, CAPMAC ............................................ No Opt. Call 5,845,250
AAA 14,675 7.25%, 1/01/07, CAPMAC ............................................ No Opt. Call 17,086,249
-----------
39,403,654
-----------
OHIO--2.2%
AAA 2,410++ Cleveland, GO, 6.40%, 11/15/04, MBIA ................................ N/A 2,701,634
AAA 6,095 Hamilton City, Elec. Sys. Rev., Ser. A, 6.125%, 10/15/08, FGIC ...... 10/02 @ 102 6,286,566
AAA 1,000++ Ohio St. Bldg. Auth. Fac. Rev., Juvenile Correctional
Proj., 6.50%, 10/01/04, AMBAC ..................................... N/A 1,118,080
-----------
10,106,280
-----------
OREGON--1.1%
AAA 2,905 Oregon St. Dept. Admin. Svcs., COP,
Ser. A, 5.00%, 11/01/08, FSA ....................................... No Opt. Call 3,102,395
Aaa 2,000 Washington & Clackamas Cntys. Sch. Dist. No. 23,
GO, 3.75%, 6/15/08, MBIA .......................................... No Opt. Call 2,033,820
-----------
5,136,215
-----------
PENNSYLVANIA--13.0%
AAA 4,000 Allegheny Cnty. Hosp. Dev. Auth. Rev., Magee Women's Hosp.,
6.25%, 10/01/08, FGIC 10/02 @ 102 4,119,040
Dauphin Cnty. Gen. Auth. Hosp. Rev., HAPSCO-Western
Pennsylvania Hosp. Proj., MBIA,
AAA 5,000 6.25%, 7/01/08 .................................................... ETM 5,540,200
AAA 10,000 6.25%, 7/01/08 .................................................... 8/02 @ 102 10,208,600
AAA 6,600 Erie Cnty. Hosp. Auth. Rev., St. Vincent Hlth. Ctr. Proj.,
Ser. A, 6.25%, 7/01/08, MBIA ...................................... 8/02 @ 102 6,753,912
AAA 3,500 Indiana Cnty. Indl. Dev. Auth. PCR, New York St. Elec. & Gas Corp.,
Ser. A, 6.00%, 6/01/06, MBIA ...................................... No Opt. Call 3,898,335
AAA 6,500 Pennsylvania Hsg. Fin. Agcy. Rev., Rental Hsg.,
Ser. C, 6.25%, 7/01/07, FNMA ...................................... 7/02 @ 102 6,649,630
Pennsylvania St., Dept. Gen. Svcs., COP, FSA,
AAA 2,075 4.50%, 5/01/08 .................................................... No Opt. Call 2,185,328
AAA 2,120 4.50%, 11/01/08 ................................................... No Opt. Call 2,241,603
AAA 2,165 4.50%, 5/01/09 .................................................... No Opt. Call 2,272,535
AAA 2,220 4.50%, 11/01/09 ................................................... No Opt. Call 2,337,505
AAA 3,175 Philadelphia, GO, 4.10%, 9/15/08, FSA ............................... No Opt. Call 3,283,426
AAA 10,930++ Pittsburgh, GO, Ser. D, 6.00%, 9/01/02, AMBAC ....................... N/A 11,230,247
-----------
60,720,361
-----------
See Notes to Financial Statements.
7
----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION PROVISIONS+ (NOTE 1)
----------------------------------------------------------------------------------------------------------------------
TENNESSEE--0.2%
Aaa $ 1,000 Clarksville Wtr., Swr. & Gas Rev., 4.30%, 2/01/09, FSA ............... No Opt. Call $ 1,035,840
-----------
TEXAS--23.6%
AAA 13,000++ Austin Pub. Impvt., GO, AMBAC, 6.10%, 9/01/02 ........................ N/A 13,100,880
Austin Util. Sys. Rev.,
AAA 11,515 Ser. A, Zero Coupon, 11/15/08, MBIA ................................ No Opt. Call 8,962,124
AAA 5,000 Ser. A, Zero Coupon, 11/15/09, AMBAC ............................... No Opt. Call 3,669,650
AAA 5,000 Ser. A, Zero Coupon, 11/15/09, MBIA ................................ No Opt. Call 3,669,650
AAA 7,000 6.25%, 11/15/08, AMBAC ............................................. 11/02 @ 102 7,246,890
AAA 5,000 6.625%, 11/15/08, AMBAC ............................................ No Opt. Call 5,875,200
Coppell Indpt. Sch. Dist., MBIA,
AAA 1,430 6.10%, 8/15/09 ..................................................... ETM 1,655,697
AAA 2,495 6.10%, 8/15/09 ..................................................... 8/02 @ 100 2,506,926
AAA 4,390 Houston Indpt. Sch. Dist., Zero Coupon, 8/15/09, AMBAC ............... No Opt. Call 3,255,844
AAA 16,135 Houston Wtr. & Swr. Sys. Rev., Jr. Lien,
Ser. C, 6.25%, 12/01/09, MBIA ..................................... 12/02 @ 102 16,778,625
AAA 6,000 San Antonio Elec. & Gas Rev., Ser. B, Zero Coupon, 2/01/10, FGIC ..... ETM 4,355,520
Texas Mun. Pwr. Agcy. Rev.,
AAA 590 Zero Coupon, 9/01/08, AMBAC ........................................ ETM 468,437
AAA 14,410 Zero Coupon, 9/01/08, AMBAC ........................................ No Opt. Call 11,306,086
AAA 630 Zero Coupon, 9/01/09, AMBAC ........................................ ETM 475,089
AAA 15,545 Zero Coupon, 9/01/09, AMBAC ........................................ No Opt. Call 11,507,497
AAA 7,000 5.00%, 9/01/10, FGIC ............................................... 9/04 @ 100 7,156,310
AAA 5,900 Texas St. Pub. Fin. Auth. Bldg. Rev.,
Ser. B, 6.25%, 2/01/09, AMBAC ...................................... No Opt. Call 6,759,984
AAA 2,275 Ysleta Indpt. Sch. Dist. GO, Zero Coupon, 8/15/08, PSFG .............. No Opt. Call 1,788,082
-----------
110,538,491
-----------
UTAH--3.5%
Intermountain Pwr. Agcy. Pwr. Supply Rev., Ser. B, MBIA,
AAA 2,215 6.00%, 7/01/07 ..................................................... ETM 2,503,548
AAA 1,285 6.00%, 7/01/07 ..................................................... No Opt. Call 1,444,468
AAA 1,550++ Salt Lake Cnty. Mun. Bldg. Auth. Lease Rev.,
Ser. A, 6.05%, 10/01/04, MBIA ..................................... N/A 1,701,156
AAA 10,300 Utah St., GO, Ser. F, 5.00%, 7/01/10 ................................. 7/07 @ 100 10,849,402
-----------
16,498,574
-----------
WASHINGTON--14.0%
AAA 12,850 King Cnty., GO, Ser. D, 5.55%, 12/01/08, MBIA ........................ 12/07 @ 102 14,326,722
Snohomish Cnty. Sch. Dist., GO, MBIA,
AAA 2,235++ 6.10%, 12/01/03 .................................................... N/A 2,413,509
AAA 1,765 6.10%, 12/01/08 .................................................... 12/03 @ 102 1,896,369
Washington St. Hlth. Care Fac. Auth. Rev., MBIA,
AAA 1,010 Catholic Hlth. Initiatives A, 5.30%, 12/01/08 ...................... No Opt. Call 1,105,617
AAA 1,000 Catholic Hlth. Initiatives A, 5.40%, 12/01/10 ...................... 6/10 @ 101 1,098,370
AAA 9,000 Virginia Mason Oblig. Group, 6.30%, 2/15/09 ........................ 2/03 @ 102 9,399,240
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 3,000 Nuclear Proj. No. 2, 5.55%, 7/01/10, FGIC .......................... 7/03 @ 102 3,105,570
AAA 13,635 Nuclear Proj. No. 2, Ser. A, 6.25%, 7/01/09, MBIA .................. No Opt. Call 13,907,700
AAA 5,550 Nuclear Proj. No. 3, Zero Coupon, 7/01/07, BIGI .................... No Opt. Call 4,623,539
AAA 2,000 Nuclear Proj. No. 3, Zero Coupon, 7/01/08, BIGI .................... No Opt. Call 1,576,680
AAA 11,000 Ser. A, 5.80%, 7/01/07, FSA ........................................ No Opt. Call 12,237,610
-----------
65,690,926
-----------
WEST VIRGINIA--2.9%
AAA 1,550 West Virginia Econ. Dev. Auth. Rev., Correctional Juvenile & Pub., Ser. A,
4.25%, 6/01/08, MBIA ............................................... No Opt. Call 1,600,406
AAA 11,600 West Virginia St. Pkwys. Econ. Dev. & Tourism Auth.,
5.70%, 5/15/09, FGIC .............................................. 5/03 @ 102 12,181,160
-----------
13,781,566
-----------
WISCONSIN--1.3%
AAA 6,080 Wisconsin St., GO, Ser. C, 4.00%, 5/01/09, MBIA ..................... No Opt. Call 6,166,640
-----------
TOTAL LONG-TERM INVESTMENTS (COST $682,768,511) 734,685,705
-----------
See Notes to Financial Statements.
8
----------------------------------------------------------------------------------------------------------------------
Principal
Amount Option Call Value
Rating* (000) Description Provisions+ (Note 1)
---------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS**--0.4%
CALIFORNIA--0.4%
A-1 $800 Orange Cnty. Spec. Fin. Auth., Teeter Plan Rev.,
Ser. D, 1.15%, 7/03/02, AMBAC, FRDD ............................... N/A $ 800,000
VMIG1 890 Santa Clara Elec. Rev., Ser. A, 1.10%, 7/04/02, AMBAC, FRDD ......... N/A 890,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,690,000) ...................... 1,690,000
-------------
TOTAL INVESTMENTS--157.1% (COST $684,458,511) ....................... 736,375,705
Other assets in excess of liabilities--0.7% ......................... 3,449,275
Preferred shares at redemption value, including
dividends payable--(57.8)% ........................................ (271,094,532)
-------------
Net Assets Applicable to Common Shareholders--100% ................... $ 468,730,448
=============
----------------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** For purposes of amortized cost valuation, the maturity date 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.
+ Date (month/year) and prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at later dates.
++ This bond is prefunded. See Glossary for definition.
-----------------------------------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation FRDD -- Floating Rate Daily Demand
BIGI -- Bond Investors Guaranty Insurance Company FSA -- Financial Security Assurance
CAPMAC -- Capital Markets Assurance Company GO -- General Obligation
COP -- Certificate of Participation MBIA -- Municipal Bond Insurance Association
ETM -- Escrowed to Maturity PCR -- Pollution Control Revenue
FGIC -- Financial Guaranty Insurance Company PSFG -- Permanent School Fund Guaranty
FNMA -- Federal National Mortgage Association
-----------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
9
-------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $684,458,511) (Note 1) ........... $736,375,705
Cash ......................................................... 518,558
Interest receivable .......................................... 10,673,691
Other assets ................................................. 79,447
------------
747,647,401
------------
LIABILITIES
Dividends payable--common shares ............................. 1,802,470
Payable for securities purchased ............................. 5,561,239
Investment advisory fee payable (Note 2) ..................... 212,300
Administration fee payable (Note 2) .......................... 60,657
Deferred Directors fees (Note 1) ............................. 53,466
Other accrued expenses ....................................... 132,289
------------
7,822,421
------------
PREFERRED SHARES AT REDEMPTION VALUE
$.01 par value per share and $25,000 liquidation
value per share applicable to 10,840 shares,
including dividends payable (Note 1 & 4) ................... 271,094,532
------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS .......................................... $468,730,448
============
Composition of Net Assets Applicable to
Common Shareholders:
Par value (Note 4) ......................................... $ 272,071
Paid-in capital in excess of par ........................... 377,589,494
Undistributed net investment income (Note 1) ............... 38,497,331
Accumulated net realized gain .............................. 454,358
Net unrealized appreciation (Note 1) ....................... 51,917,194
------------
Net assets applicable to common shareholders,
June 30, 2002 .............................................. $468,730,448
============
Net asset value per common share:
($468,730,448 / 27,207,093 shares of
common stock issued and outstanding) ....................... $17.23
======
-------------------------------------------------------------------------------
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (Note 1) ...................................... $ 19,950,899
------------
Expenses
Investment advisory .................................... 1,273,746
Administration ........................................... 363,927
Auction agent .......................................... 355,941
Custodian .............................................. 78,812
Reports to shareholders ................................ 38,642
Directors .............................................. 38,581
Legal .................................................. 25,769
Independent accountants ................................ 25,201
Registration ........................................... 15,621
Transfer agent ......................................... 13,783
Miscellaneous .......................................... 11,927
------------
Total expenses ....................................... 2,241,950
Less fees paid indirectly (Note 2) ..................... (8,799)
------------
Net expenses ........................................... 2,233,151
------------
Net investment income .................................... 17,717,748
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments ......................... 764,883
Net change in unrealized appreciation
on investments ......................................... 5,829,742
------------
Net gain on investments .................................. 6,594,625
------------
DIVIDENDS TO PREFERRED SHAREHOLDERS
FROM NET INVESTMENT INCOME ............................... (1,837,134)
------------
NET INCREASE IN NET ASSETS APPLICABLE
TO COMMON SHAREHOLDERS
RESULTING FROM OPERATIONS ................................ $ 22,475,239
============
See Notes to Financial Statements.
10
-------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
-------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 2002 2001(1)
------------- ------------
INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS:
OPERATIONS:
Net investment income .................................................................. $ 17,717,748 $ 36,198,617
Net realized gain on investments ....................................................... 764,883 188,050
Net change in unrealized appreciation (depreciation) on investments .................... 5,829,742 (2,296,483)
Dividends to preferred shareholders from net investment income ......................... (1,837,134) (7,367,624)
Distributions to preferred shareholders from net realized gain on investments .......... -- (50,283)
------------- -------------
Net increase in net assets resulting from operations ................................. 22,475,239 26,672,277
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS:
FROM NET INVESTMENT INCOME ............................................................. (10,814,538) (21,642,306)
From net realized gain on investments .................................................. -- (125,534)
------------- -------------
Total dividends and distributions .................................................... (10,814,538) (21,767,840)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Unused offering costs relating to issuance of preferred shares ......................... -- 107,874
------------- -------------
Total increase ....................................................................... 11,660,701 5,012,311
------------- -------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
Beginning of period ...................................................................... 457,069,747 452,057,436
------------- -------------
End of period (including undistributed net investment income of
$38,497,331 and $33,431,255, respectively) ............................................. $ 468,730,448 $ 457,069,747
============= =============
------------
(1) Prior year amounts have been restated to conform to the current period's
presentation under the provisions of EITF D-98 (Note 1).
See Notes to Financial Statements.
11
--------------------------------------------------------------------------------
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
--------------------------------------------------------------------------------
SIX MONTHS ENDED, YEAR ENDED DECEMBER 31,(1)
JUNE 30, 2002 ------------------------------------------------------
2001 2000 1999 1998 1997
-------------- ---- --------- -------- --------- ---------
PER COMMON SHARE OPERATING PERFORMANCE:
Net asset value, beginning of the period(2)................ $ 16.80 $ 16.62 $ 16.00 $ 17.06 $ 16.80 $ 15.90
-------- -------- -------- -------- --------- ---------
Investment operations:
Net investment income(3) ................................ 0.65 1.33 1.30 1.21 1.20 1.18
Net realized and unrealized gain (loss) on investments(3) 0.25 (0.08) 0.54 (1.23) 0.11
0.78
Dividends and distributions to preferred shareholders from:
Net investment income ................................... (0.07) (0.27) (0.38) (0.24) (0.25) (0.27)
Net realized gain on investments ........................ -- 0.00(4) -- -- -- --
In excess of net realized gain on investments ........... -- -- -- -- 0.00(5) 0.00(5)
-------- -------- -------- -------- --------- ---------
Net increase (decrease) from investment operations ........ 0.83 0.98 1.46 (0.26) 1.06 1.69
-------- -------- -------- -------- --------- ---------
Dividends and distributions to common shareholders from:
Net investment income ................................... (0.40) (0.80) (0.80) (0.80) (0.80) (0.79)
Net realized gain on investments ........................ -- 0.00(4) -- -- -- --
In excess of net realized gain on investments ........... -- -- -- -- 0.00(5) 0.00(5)
-------- -------- -------- -------- --------- ---------
Total dividends and distributions ......................... (0.40) (0.80) (0.80) (0.80) (0.80) (0.79)
-------- -------- -------- -------- --------- ---------
Capital charge with respect to issuance of preferred shares -- -- (0.04) -- -- --
-------- -------- -------- -------- --------- ---------
Net asset value, end of period(2).......................... $ 17.23 $ 16.80 $ 16.62 $ 16.00 $ 17.06 $ 16.80
======== ======== ======== ======== ========= =========
Market value, end of period(2)............................. $ 16.30 $ 15.70 $ 14.88 $ 13.75 $ 16.13 $ 15.25
======== ======== ======== ======== ========= =========
TOTAL INVESTMENT RETURN(6) ................................ 6.43% 11.06% 14.40% (10.14)% 11.21% 10.97%
======== ======== ======== ======== ========= =========
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS(7):
Expenses paid before fees paid indirectly ................. 0.98%(8) 1.02% 1.05% 0.93% 0.88% 0.92%
Expenses after fees paid indirectly ....................... 0.97%(8) 1.01% 1.05% 0.93% 0.88% 0.92%
Net investment income before preferred share dividends(3).. 7.72%(8) 7.87% 8.06% 7.30% 7.10% 7.19%
Preferred share dividends ................................. 0.80%(8) 1.60% 2.40% 1.47% 1.49% 1.62%
Net investment income available to common shareholders(3).. 6.92%(8) 6.27% 5.66% 5.83% 5.61% 5.57%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (000) ........... $462,887 $460,153 $438,958 $452,317 $ 458,993 $ 444,895
Portfolio turnover ........................................ 5% 3% 3% 1% 0% 11%
Net assets of common shareholders, end of period (000) .... $468,730 $457,070 $452,057 $435,314 $ 464,236 $ 457,192
Preferred shares outstanding (000) ........................ $271,000 $271,000 $271,000 $206,000 $ 206,000 $ 206,000
Asset coverage per preferred share, end of period ......... $ 68,250 $ 67,178 $ 66,735 $ 77,857 $ 81,361 $ 80,508
----------
(1) Prior periods have been restated to conform to the current period's
presentation under the provision of EITF D-98 (Note 1).
(2) Net asset value and market value are published in BARRON'S on Saturday and
THE WALL STREET JOURNAL on Monday.
(3) As required, January 1, 2001, the Trust adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began accreting
market discount on debt securities. The effect of this accounting policy
change had no impact on the total net assets of the Trust. Per share,
ratios and supplement data for years prior to 2001 have not been restated
to reflect this change.
(4) Actual amount paid to common shareholders was $0.004614 for the year ended
December 31, 2001. Actual amount paid to preferred shareholders was
$0.001848 per common share for the year ended December 31, 2001.
(5) Actual amount paid to common shareholders was $0.005235 and $0.004814 for
the years ended December 31, 1998 and 1997, respectively. Actual amount
paid to preferred shareholders was $0.001696 and $0.00154 per common share
for the years ended December 31, 1998 and 1997, respectively.
(6) Total investment return is calculated assuming a purchase of a common share
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, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment returns for less than a full year are not annualized. Past
performance is not a guarantee of future results.
(7) Ratios are calculated on the basis of income and expenses applicable to
both the common and preferred shares relative to the average net assets of
common shareholders.
(8) Annualized
The information above represents the unaudited operating performance data for a
common share outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. This information has been
determined based upon financial information provided in the financial statements
and market value data for the 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 & ACCOUNTING POLICIES
The BlackRock Insured Municipal 2008 Term Trust Inc. (the "Trust"), was
organized in Maryland on June 30, 1992 as a diversified closed-end management
investment company under the Investment Company Act of 1940. The Trust's
investment objectives are to provide current income exempt from regular Federal
income tax and to return $15 per share to investors on or about December 31,
2008. 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 objectives 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 selected under the supervision of the
Trust's 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. Short-term investments
may be 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 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 to interest income on
securities purchased using the interest method.
SEGREGATION: In cases in which the Investment Company Act of 1940, as amended
and the interpretive positions of the Securities and Exchange Commission ("SEC")
require that the Trust segregate assets in connection with certain Trust
investments (e.g., when issued securities, reverse repurchase agreements or
futures contracts), the Trust will, consistent with certain interpretive letters
issued by the SEC, designate on its books and records cash or other liquid debt
securities having a market value at least equal to the amount that would
otherwise be required to be physically segregated.
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 these
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 as though equivalent dollar amounts had been
invested in common shares of other BlackRock Trusts 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 Trusts.
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 Trusts selected by
the Directors in order to match its deferred compensation obligations.
CHANGE IN FINANCIAL STATEMENT CLASSIFICATION FOR AMPS: In accordance with the
provisions of EITF D-98, "Classification and Measurement of Redeemable
Securities," effective for the current period, the Trust has reclassified its
Auction Market Preferred Shares ("AMPS") outside of permanent equity in the net
assets section of the Statement of Assets and Liabilities. In addition,
distributions to AMPS shareholders are now classified as a component of net
assets resulting from operations on the Statement of Operations and Changes in
Net Assets and as a component of the investment operations in the Financial
Highlights. Prior year amounts presented have been restated to conform to this
period's presentation. This change has no impact on the net assets applicable to
common shares of the Trust.
13
NOTE 2. AGREEMENTS
The Trust has an Investment Advisory Agreement with BlackRock Advisors, Inc.,
(the "Advisor"), 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
asset value. The liquidation value of any outstanding preferred shares of the
Trust is not taken into account in determining the Trust's weekly net asset
value. The total dollar amounts paid to the Advisor by the Trust under the
Investment Advisory Agreement for the six months ended June 30, 2002 and the
years ended December 31, 2001, 2000 and 1999 were $1,273,746, $2,559,177,
$2,449,544 and $2,304,109, respectively. 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 asset value. The total dollar amounts
paid to the Administrator by the Trust under the Administration Agreement for
the six months ended June 30, 2002 and the years ended December 31, 2001, 2000
and 1999 were $363,927, $733,162, $699,870 and $658,317, respectively.
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, which include reimbursements to the Advisor for certain
operational support services provided to the Trust.
Pursuant to the terms of the custody agreement, the Trust receives earnings
credits from its custodian when positive cash balances are maintained, which are
used to offset custody fees. The earnings credits for the period ended June 30,
2002, were approximately $8,799.
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments,
for the six months ended June 30, 2002, aggregated $41,146,941 and $37,729,600,
respectively.
The Federal income tax basis of the Trust's investments at June 30, 2002 was
$684,187,142, and accordingly, net unrealized appreciation was $52,188,563
(gross unrealized appreciation--$52,193,545, gross unrealized depreciation
--$4,982).
NOTE 4. CAPITAL
There are 200 million common shares of $.01 par value authorized. The Trust may
classify or reclassify any unissued common shares into one or more series of
preferred shares. Of the 27,207,093 common shares outstanding at June 30, 2002,
the Advisor owned 7,093 shares. As of June 30, 2002, 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. 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 1.00% to 1.85% during the six
months ended June 30, 2002.
The Trust may not declare dividends or make other distributions on common
shares 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 shares are 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 shares are 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 shares have voting rights equal to the holders of
common shares (one vote per share) and will vote together with holders of shares
of common stock as a single class. However, holders of preferred shares 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 shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares, 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, 2002, the Board of Directors of the Trust declared a
dividend of $0.06625 per common share payable, August 1, 2002 to shareholders of
record on July 15, 2002. For the period July 1, 2002 to July 31, 2002 dividends
declared on preferred shares totaled $314,271, 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 EquiServe Trust Company, N.A. (the "Plan Agent") in Trust shares
pursuant to the Plan. Shareholders who do not participate in the Plan will
receive all distributions in cash paid by check and 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 Plan 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 acquire shares for the participants' accounts,
by the purchase of outstanding shares on the open market ("open market
purchases") on the New York Stock Exchange or elsewhere. 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. 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. There is no
direct service charge to participants in the Plan; however, the Trust reserves
the right to amend the Plan to include a service charge payable by the
participants. All correspondence concerning the Plan should be directed to the
Plan Agent at (800) 699-1BFM or 150 Royall Street, Canton, MA 02021.
15
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THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
ADDITIONAL INFORMATION
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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.
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.
The Annual Meeting of Trust Shareholders was held May 23, 2002 to vote on the
following matter:
To elect three Directors as follows:
Directors: Class Term Expiring
------- ------ ----- --------
Andrew F. Brimmer ............... III 3 years 2005
Kent Dixon ...................... III 3 years 2005
Laurence D. Fink* ............... III 3 years 2005
Directors whose term of office continues beyond this meeting are Richard E.
Cavanagh, James Clayburn La Force, Jr., Frank J. Fabozzi, Walter F. Mondale and
Ralph Schlosstein.
Shareholders elected the three Directors. The results of the voting were as
follows:
Votes for** Votes Against** Abstentions**
---------- ------------- ------------
Andrew F. Brimmer .............. 26,269,920 -- 322,235
Kent Dixon ..................... 26,274,774 -- 317,381
Laurence D. Fink* .............. 26,274,260 -- 317,895
-----------
* Laurence D. Fink has resigned his positions as Director and Chairman of the
Board effective August 22, 2002. The Board of Directors elected Ralph L.
Schlosstein as the new Chairman of the Board, and appointed Robert S.
Kapito as the new President of the Trust and as a new Director of the Board
effective August 22, 2002.
** The votes represent common and preferred shareholders voting as a single
class.
Certain of the officers of the Trust listed on the back cover of this
Report to Shareholders, are also officers of the Advisor. They serve in the
following capacities for the Advisor: Robert S. Kapito--Director and Vice
Chairman, Kevin M. Klingert--Director and Managing Director, Henry
Gabbay--Managing Director and Anne Ackerley--Managing Director.
16
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THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
INVESTMENT SUMMARY
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THE TRUST'S INVESTMENT OBJECTIVE:
The BlackRock Insured Municipal 2008 Term Trust's investment objectives are 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
$250 billion of assets under management as of June 30, 2002. BlackRock manages
assets on behalf of institutional and individual investors worldwide through a
variety of equity, fixed income, liquidity and alternative investment products,
including the BLACKROCK FUNDS and BLACKROCK PROVIDENT INSTITUTIONAL FUNDS. In
addition, BlackRock provides risk management and investment system services to a
growing number of institutional investors under the BLACKROCK SOLUTIONS name.
Clients are served from the Company's headquarters in New York City, as well as
offices in Boston, Edinburgh, Hong Kong, San Francisco, Tokyo and Wilmington.
BlackRock is a member of The PNC Financial Services Group (NYSE: PNC), 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)
on or about December 31, 2008. The Advisor will implement a 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 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 may be reinvested in
securities with maturities which coincide with the remaining term of the Trust.
Since shorter-term securities typically yield less than longer-term securities,
this strategy will likely result in a decline in the Trust's income over time.
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 its transfer agent,
EquiServe Trust Company, N.A. 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 THE TRUST
The Trust employs leverage primarily through the issuance of preferred shares.
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 increases the duration (or price sensitivity of the net assets with
respect to change in interest rates) of the Trust, which can improve the
performance of the Trust in a declining interest rate environment, but can cause
net assets to decline faster in a rapidly rising interest 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 THE TRUST
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
INVESTMENT OBJECTIVES. Although the objectives of the Trust are to provide
current income exempt from regular Federal income tax and to return $15 per
share to investors on or about December 31, 2008, there can be no assurance that
these objectives will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
LEVERAGE. The Trust utilizes leverage through the issuance of preferred shares,
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.
MUNICIPAL OBLIGATIONS. 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.
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. These securities involve 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.
ALTERNATIVE MINIMUM TAX (AMT). The Trust may invest in securities subject to
alternative minimum tax.
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 Trust invests in
a portfolio of securities in accordance with its stated
investment objectives and policies.
DISCOUNT: When a Trust's net asset value is greater than its market
price, the Trust is said to be trading at a discount.
DIVIDEND: Income generated by securities in a portfolio and
distributed to shareholders after the deduction of expenses.
The Trust declares and pays dividends to common shareholders
on a monthly basis.
DIVIDEND
REINVESTMENT: Common shareholders may have all dividends and distributions
of capital gains automatically reinvested into additional
shares of the Trust.
MARKET PRICE: Price per share of a security trading in the secondary
market. For a closed-end Trust, this is the price at which
one share of the Trust 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, including 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 Trust's market price is greater than its net asset
value, the Trust 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 to retire
the bond in full at the date indicated, typically at a
premium to par.
19
-------------------------------- -----------------------------------------
[LOGO BLACKROCK]
-------------------------------- -----------------------------------------
DIRECTORS
Ralph L. Schlosstein, CHAIRMAN* ------------------------------
Andrew F. Brimmer THE [LOGO BLACKROCK]
Richard E. Cavanagh INSURED MUNICIPAL
Kent Dixon 2008 TERM
Frank J. Fabozzi TRUST INC.
Robert S. Kapito* ------------------------------
James Clayburn La Force, Jr. SEMI-ANNUAL REPORT
Walter F. Mondale JUNE 30, 2002
OFFICERS [LOGO (SM) BLACKROCK]
Robert S. Kapito, 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
State Street Bank and Trust Company
1 Heritage Drive
North Quincy, MA 02171
TRANSFER AGENT
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
(800) 699-1BFM
AUCTION AGENT
Deutsche Bank
4 Albany Street
New York, NY 10006
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
4 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, 2002 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 Trust shares.
Statements and other information contained in this report are as dated and
are subject to change.
* Laurence D. Fink has resigned his positions as Director and Chairman of the
Board effective August 22, 2002. The Board of Directors elected Ralph L.
Schlosstein as the new Chairman of the Board, and appointed Robert S.
Kapito as the new President of the Trust and as a new Director of the Board
effective August 22, 2002.
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-20-8
09247K-30-7
09247K-40-6
[RECYCLE LOGO] Printed on recycled paper 09247K-50-5
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