UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21184
Name of Fund: BlackRock Florida Municipal 2020 Term Trust (BFO)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Florida Municipal 2020 Term Trust, 55 East 52nd Street, New York, NY 10055
Registrants telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 07/31/2016
Date of reporting period: 07/31/2016
Item 1 | Report to Stockholders |
JULY 31, 2016
ANNUAL REPORT
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BlackRock California Municipal Income Trust (BFZ)
BlackRock Florida Municipal 2020 Term Trust (BFO)
BlackRock Municipal 2030 Target Term Trust (BTT)
BlackRock Municipal Income Investment Trust (BBF)
BlackRock New Jersey Municipal Income Trust (BNJ)
BlackRock New York Municipal Income Trust (BNY)
Not FDIC Insured May Lose Value No Bank Guarantee |
Table of Contents |
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Annual Report: |
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Financial Statements: | ||||
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54 | ||||
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59 | ||||
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66 | ||||
79 | ||||
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89 |
2 | ANNUAL REPORT | JULY 31, 2016 |
The Markets in Review |
Dear Shareholder,
Uneven economic outlooks and the divergence of monetary policies across regions have been the overarching themes driving financial markets over the past couple of years. In the latter half of 2015, as U.S. growth outpaced other developed markets, investors were focused largely on the timing of the Federal Reserves (the Fed) decision to end its near-zero interest rate policy. The Fed ultimately hiked rates in December, whereas the European Central Bank and the Bank of Japan took additional steps to stimulate growth, even introducing negative interest rates. The U.S. dollar had strengthened considerably ahead of these developments, causing profit challenges for U.S. companies that generate revenues overseas, and pressuring emerging market currencies and commodities prices.
Also during this time period, oil prices collapsed due to excess global supply. China, one of the worlds largest consumers of oil, was another notable source of stress for financial markets as the country showed signs of slowing economic growth and took measures to devalue its currency. Declining confidence in the countrys policymakers stoked investors worries about the potential impact of Chinas weakness on the global economy. Global market volatility increased and risk assets (such as equities and high yield bonds) suffered in this environment.
The elevated market volatility spilled over into 2016, but as the first quarter wore on, fears of a global recession began to fade, allowing markets to calm and risk assets to rebound. Central bank stimulus in Europe and Japan, combined with a more tempered outlook for rate hikes in the United States, helped bolster financial markets. A softening in U.S. dollar strength brought relief to U.S. exporters and emerging market economies. Oil prices rebounded as the worlds largest producers agreed to reduce supply.
Volatility spiked again in late June when the United Kingdom shocked investors with its vote to leave the European Union. Uncertainty around how the British exit might affect the global economy and political landscape drove investors to high-quality assets, pushing already low global yields to even lower levels. But markets recovered swiftly in July as economic data suggested that the negative impact had thus far been contained to the United Kingdom and investors returned to risk assets.
At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to adjust accordingly as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in todays markets.
Sincerely,
Rob Kapito
President, BlackRock Advisors, LLC
Rob Kapito
President, BlackRock Advisors, LLC
Total Returns as of July 31, 2016 | ||||||||
6-month | 12-month | |||||||
U.S. large cap equities |
13.29 | % | 5.61 | % | ||||
U.S. small cap equities |
18.76 | 0.00 | ||||||
International equities |
8.25 | (7.53 | ) | |||||
Emerging market equities |
19.52 | (0.75 | ) | |||||
3-month Treasury bills |
0.17 | 0.22 | ||||||
U.S. Treasury securities |
5.01 | 8.53 | ||||||
U.S. investment grade bonds |
4.54 | 5.94 | ||||||
Tax-exempt municipal |
3.27 | 7.06 | ||||||
U.S. high yield bonds |
13.84 | 5.01 | ||||||
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. |
THIS PAGE NOT PART OF YOUR FUND REPORT | 3 |
Municipal Market Overview |
For the Reporting Period Ended July 31, 2016 |
Municipal Market Conditions
Municipal bonds generated positive performance for the period due to falling interest rates and a favorable supply-and-demand environment. Interest rates were volatile in 2015 (bond prices rise as rates fall) leading up to a long-awaited rate hike from the Fed that ultimately came in December. However, ongoing reassurance from the Fed that rates would be increased gradually and would likely remain low overall resulted in strong demand for fixed income investments. Investors favored the relative yield and stability of municipal bonds amid bouts of volatility resulting from uneven U.S. economic data, volatile oil prices, global growth concerns, geopolitical risks (particularly the U.K.s decision to leave the European Union), and widening central bank divergence i.e., policy easing outside the United States while the Fed was posturing to commence policy tightening. During the 12 months ended July 31, 2016, municipal bond funds garnered net inflows of approximately $49 billion (based on data from the Investment Company Institute).
For the same 12-month period, total new issuance remained relatively strong from a historical perspective at $386 billion (though lower than the $417 billion issued in the prior 12-month period). A noteworthy portion of new supply during this period was attributable to refinancing activity (roughly 59%) as issuers continued to take advantage of low interest rates and a flatter yield curve to reduce their borrowing costs.
S&P Municipal Bond Index |
Total Returns as of July 31, 2016 |
6 months: 3.27% |
12 months: 7.06% |
A Closer Look at Yields
From July 31, 2015 to July 31, 2016, yields on AAA-rated 30-year municipal bonds decreased by 100 basis points (bps) from 3.12% to 2.12%, while 10-year rates fell by 79 bps from 2.19% to 1.40% and 5-year rates decreased 46 bps from 1.30% to 0.84% (as measured by Thomson Municipal Market Data). The municipal yield curve experienced significant flattening over the 12-month period with the spread between 2- and 30-year maturities flattening by 90 bps and the spread between 2- and 10-year maturities flattening by 69 bps.
During the same time period, on a relative basis, tax-exempt municipal bonds broadly outperformed U.S. Treasuries with the greatest outperformance experienced in longer-term issues. In absolute terms, the positive performance of municipal bonds was driven largely by falling interest rates as well as a supply/demand imbalance within the municipal market as investors sought income and incremental yield in an environment where opportunities became increasingly scarce. More broadly, municipal bonds benefited from the greater appeal of tax-exempt investing in light of the higher tax rates implemented in 2014. The asset class is known for its lower relative volatility and preservation of principal with an emphasis on income as tax rates rise.
Financial Conditions of Municipal Issuers
The majority of municipal credits remain strong, despite well-publicized distress among a few issuers. Four of the five states with the largest amount of debt outstanding California, New York, Texas and Floridahave exhibited markedly improved credit fundamentals during the slow national recovery. However, several states with the largest unfunded pension liabilities have seen their bond prices decline noticeably and remain vulnerable to additional price deterioration. On the local level, Chicagos credit quality downgrade is an outlier relative to other cities due to its larger pension liability and inadequate funding remedies. BlackRock maintains the view that municipal bond defaults will remain minimal and in the periphery while the overall market is fundamentally sound. We continue to advocate careful credit research and believe that a thoughtful approach to structure and security selection remains imperative amid uncertainty in a modestly improving economic environment.
The opinions expressed are those of BlackRock as of July 31, 2016, and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable.
The Standard & Poors Municipal Bond Index, a broad, market value-weighted index, seeks to measure the performance of the US municipal bond market. All bonds in the index are exempt from US federal income taxes or subject to the alternative minimum tax. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index.
4 | ANNUAL REPORT | JULY 31, 2016 |
The Benefits and Risks of Leveraging |
Derivative Financial Instruments |
ANNUAL REPORT | JULY 31, 2016 | 5 |
Trust Summary as of July 31, 2016 | BlackRock California Municipal Income Trust |
Trust Overview |
BlackRock California Municipal Income Trusts (BFZ) (the Trust) investment objective is to provide current income exempt from regular U.S. federal income and California income taxes. The Trust seeks to achieve its investment objective by investing primarily in municipal obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and California income taxes. The Trust invests, under normal market conditions, at least 80% of its assets in municipal obligations that are investment grade quality. The Trust may invest directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Trusts investment objective will be achieved.
Trust Information | ||
Symbol on New York Stock Exchange (NYSE) |
BFZ | |
Initial Offering Date |
July 27, 2001 | |
Yield on Closing Market Price as of July 31, 2016 ($16.76)1 |
4.81% | |
Tax Equivalent Yield2 |
9.80% | |
Current Monthly Distribution per Common Share3 |
$0.0672 | |
Current Annualized Distribution per Common Share3 |
$0.8064 | |
Economic Leverage as of July 31, 20164 |
41% |
1 | Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results. |
2 | Tax equivalent yield assumes the maximum marginal federal and state tax rate of 50.93%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
3 | The distribution rate is not constant and is subject to change. |
4 | Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5. |
Performance |
Returns for the 12 months ended July 31, 2016 were as follows:
Returns Based On | ||||||||
Market Price | NAV | |||||||
BFZ1,2 |
20.72 | % | 8.92 | % | ||||
Lipper California Municipal Debt Funds3 |
22.31 | % | 11.51 | % |
1 | All returns reflect reinvestment of dividends and/or distributions. |
2 | The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on price and performance based on NAV. |
3 | Average return. |
The following discussion relates to the Trusts absolute performance based on NAV:
| Municipal bonds generated strong performance for the annual period. Municipals were aided by the sharp decline in Treasury yields, which was brought about by the slow global economy and the accommodative policies of the worlds central banks. (Bond prices rise as yields fall.) The gains were largely concentrated among intermediate- and longer-term bonds, while shorter-term issues produced much smaller returns. California municipal bonds outperformed the broader national tax-exempt market due to the states sound financial condition, robust employment growth and rising personal income. California municipals were also boosted by the favorable balance of supply and demand in the market. |
| The Trust was helped by its exposure to the long end of the yield curve, where performance was strongest. The portfolios fully invested posture and low level of cash reserves was an additional positive in the rising market. |
| Investments in AA-rated credits in the school district, transportation and health care sectors also aided results. AA-rated bonds generally experienced rising valuations thanks to Californias improving credit profile. At the sector level, allocations to the health care and utilities made the largest contributions to performance. |
| The Trust continued to employ leverage in order to increase income at a time in which the municipal yield curve was steep and short-term interest rates remained low. Leverage amplifies the effect of interest rate movements, which was a positive to performance during the past 12 months given that yields declined. |
| The Trust utilized ten-year U.S. Treasury futures contracts to manage exposure to a rise in interest rates, which had a slightly negative impact on performance given that the Treasury market finished with positive returns. |
6 | ANNUAL REPORT | JULY 31, 2016 |
BlackRock California Municipal Income Trust |
Market Price and Net Asset Value Per Share Summary |
7/31/16 | 7/31/15 | Change | High | Low | ||||||||||||||||
Market Price |
$ | 16.76 | $ | 14.65 | 14.40 | % | $ | 17.00 | $ | 14.55 | ||||||||||
Net Asset Value |
$ | 16.35 | $ | 15.84 | 3.22 | % | $ | 16.53 | $ | 15.64 |
Market Price and Net Asset Value History For the Past Five Years |
Overview of the Trusts Total Investments* |
ANNUAL REPORT | JULY 31, 2016 | 7 |
Trust Summary as of July 31, 2016 | BlackRock Florida Municipal 2020 Term Trust |
Trust Overview |
BlackRock Florida Municipal 2020 Term Trusts (BFO) (the Trust) investment objectives are to provide current income exempt from regular federal income tax and Florida intangible personal property tax and to return $15.00 per common share (the initial offering price per share) to holders of common shares on or about December 31, 2020. The Trust seeks to achieve its investment objectives by investing at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and Florida intangible personal property tax. The Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust actively manages the maturity of its bonds to seek to have a dollar-weighted average effective maturity approximately equal to the Trusts maturity date. The Trust may invest directly in such securities or synthetically through the use of derivatives. Effective January 1, 2007, the Florida intangible personal property tax was repealed.
There is no assurance that the Trust will achieve its investment objective of returning $15.00 per share.
Trust Information | ||
Symbol on NYSE |
BFO | |
Initial Offering Date |
September 30, 2003 | |
Termination Date (on or about) |
December 31, 2020 | |
Yield on Closing Market Price as of July 31, 2016 ($15.21)1 |
2.45% | |
Tax Equivalent Yield2 |
4.33% | |
Current Monthly Distribution per Common Share3 |
$0.031 | |
Current Annualized Distribution per Common Share3 |
$0.372 | |
Economic Leverage as of July 31, 20164 |
|
1 | Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results. |
2 | Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
3 | The distribution rate is not constant and is subject to change. |
4 | Percentage is less than 1% which represents TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5. |
Performance |
Returns for the 12 months ended July 31, 2016 were as follows:
Returns Based On | ||||||||
Market Price | NAV | |||||||
BFO1,2 |
5.24 | % | 3.41 | % | ||||
Lipper Other States Municipal Debt Funds3 |
20.84 | % | 10.74 | % |
1 | All returns reflect reinvestment of dividends and/or distributions. |
2 | The Trusts discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. |
3 | Average return. |
The following discussion relates to the Trusts absolute performance based on NAV:
| The Trust is scheduled to mature on or about December 31, 2020, and it therefore holds securities that will mature close to that date. Given that longer-term bonds generally delivered the best performance, the Trusts shorter maturity profile was a disadvantage in comparison to its Lipper category peers. |
| Municipal bonds generated strong performance in the annual period. Municipals were aided by the sharp decline in Treasury yields, which was brought about by the slow global economy and the accommodative policies of the worlds central banks. (Bond prices rise as yields fall.) The gains were largely concentrated among intermediate- and longer-term bonds, while shorter-term issues produced much smaller returns. In addition, lower-rated securities generally outpaced their higher-quality counterparts. |
| Florida municipal bonds underperformed the national market. The states strong economic momentum contributed to a higher average credit quality for its municipal market, which was a headwind at a time in which lower-quality issues outperformed. |
| The Trusts allocations to the health care and utilities sectors provided the largest contribution to returns. The Trusts positions in zero-coupon bonds, which outperformed current-coupon bonds, also benefited performance. Income in the form of coupon payments, which the Trust maximized through its fully invested posture, made up a meaningful portion of the Trusts total return for the period. However, the price declines of select distressed securities detracted from performance. |
8 | ANNUAL REPORT | JULY 31, 2016 |
BlackRock Florida Municipal 2020 Term Trust |
Market Price and Net Asset Value Per Share Summary |
7/31/16 | 7/31/15 | Change | High | Low | ||||||||||||||||
Market Price |
$15.21 | $14.82 | 2.63% | $15.30 | $14.78 | |||||||||||||||
Net Asset Value |
$15.50 | $15.37 | 0.85% | $15.50 | $15.23 |
Market Price and Net Asset Value History For the Past Five Years |
Overview of the Trusts Total Investments* |
ANNUAL REPORT | JULY 31, 2016 | 9 |
Trust Summary as of July 31, 2016 | BlackRock Municipal 2030 Target Term Trust |
Trust Overview |
BlackRock Municipal 2030 Target Term Trusts (BTT) (the Trust) investment objectives are to provide current income exempt from regular federal income tax (but which may be subject to the federal alternative minimum tax in certain circumstances) and to return $25.00 per common share (the initial offering price per share) to holders of common shares on or about December 31, 2030. The Trust seeks to achieve its investment objectives by investing at least 80% of its assets in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust actively manages the maturity of its bonds to seek to have a dollar weighted average effective maturity approximately equal to the Trusts maturity date. The Trust may invest directly in such securities or synthetically through the use of derivatives.
The Trusts Board approved a name change from BlackRock Municipal Target Term Trust to BlackRock Municipal 2030 Target Term Trust effective March 1, 2016. The Trust continues to trade under the symbol BTT.
There is no assurance that the Trust will achieve its investment objective of returning $25.00 per share.
Trust Information | ||
Symbol on NYSE |
BTT | |
Initial Offering Date |
August 30, 2012 | |
Termination Date (on or about) |
December 31, 2030 | |
Current Distribution Rate on Closing Market Price as of July 31, 2016 ($24.24)1 |
3.96% | |
Tax Equivalent Rate2 |
7.00% | |
Current Monthly Distribution per Common Share3 |
$0.080 | |
Current Annualized Distribution per Common Share3 |
$0.960 | |
Economic Leverage as of July 31, 20164 |
34% |
1 | Current Distribution Rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate may consist of income, net realized gains and/or a return of capital. See the financial highlights for the actual sources and character of distributions. Past performance does not guarantee future results. |
2 | Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
3 | The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain at fiscal year end. |
4 | Represents RVMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to RVMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5. |
Performance |
Returns for the 12 months ended July 31, 2016 were as follows:
Returns Based On | ||||||||
Market Price | NAV | |||||||
BTT1,2 |
21.67 | % | 16.57 | % | ||||
Lipper General & Insured Municipal Debt Funds (Leveraged)3 |
21.89 | % | 11.98 | % |
1 | All returns reflect reinvestment of dividends and/or distributions. |
2 | The Trusts discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. |
3 | Average return. |
The following discussion relates to the Trusts absolute performance based on NAV:
| Municipal bonds generated strong performance in the annual period. Municipals were aided by the sharp decline in Treasury yields, which was brought about by the slow global economy and the accommodative policies of the worlds central banks. (Bond prices rise as yields fall.) The gains were largely concentrated among intermediate- and longer-term bonds, while shorter-term issues produced much smaller returns. In addition, lower-rated securities generally outpaced their higher-quality counterparts. |
| The Trusts allocations to the health care and transportation sectors provided the largest contribution to returns. Positions in zero-coupon bonds also contributed to performance due to their longer duration profile and relatively higher yields. (Duration is a measure of interest-rate sensitivity.) The Trusts overall duration exposure contributed positively to performance given that bond yields declined. |
| The Trust continued to employ leverage in order to increase income at a time which the municipal yield curve was steep and short-term interest rates remained low. Leverage amplifies the effect of interest rate movements, which was a positive to performance during the past 12 months. |
| The Trust utilized ten-year U.S. Treasury futures contracts to manage exposure to a rise in interest rates during the first half of the reporting period. This aspect of the Trusts strategy had a slightly negative impact on performance given that the Treasury market finished with positive returns in that interval. The Trust eliminated this strategy mid-way through the period. |
10 | ANNUAL REPORT | JULY 31, 2016 |
BlackRock Municipal 2030 Target Term Trust |
Market Price and Net Asset Value Per Share Summary |
7/31/16 | 7/31/15 | Change | High | Low | ||||||||||||||||
Market Price |
$ | 24.24 | $ | 20.80 | 16.54 | % | $ | 24.44 | $ | 20.19 | ||||||||||
Net Asset Value |
$ | 25.38 | $ | 22.73 | 11.66 | % | $ | 25.73 | $ | 22.44 |
Market Price and Net Asset Value History Since Inception |
1 | Commencement of operations. |
Overview of the Trusts Total Investments* |
ANNUAL REPORT | JULY 31, 2016 | 11 |
Trust Summary as of July 31, 2016 | BlackRock Municipal Income Investment Trust |
Trust Overview |
BlackRock Municipal Income Investment Trusts (BBF) (the Trust) investment objective is to provide current income exempt from regular federal income tax and Florida intangible personal property tax. The Trust seeks to achieve its investment objective by investing at least 80% of its assets in municipal bonds, the interest of which is exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax and Florida intangible) personal property tax. The Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives. Due to the repeal of the Florida intangible personal property tax, in September 2008, the Board gave approval to permit the Trust the flexibility to invest in municipal obligations regardless of geographical location since municipal obligations issued by any state or municipality that provides income exempt from regular federal income tax would now satisfy the foregoing objective and policy.
On December 18, 2015, the Boards of the Trust and BlackRock Municipal Bond Investment Trust (BIE) approved the reorganization of BIE with and into the Trust, with the Trust continuing as the surviving trust after the reorganization. At a special shareholder meeting on March 21, 2016, the shareholders of the Trust approved the reorganization of BIE with and into the Trust, which was effective on May 16, 2016.
No assurance can be given that the Trusts investment objective will be achieved.
Trust Information | ||
Symbol on NYSE |
BBF | |
Initial Offering Date |
July 27, 2001 | |
Yield on Closing Market Price as of July 31, 2016 ($16.00)1 |
5.43% | |
Tax Equivalent Yield2 |
9.59% | |
Current Monthly Distribution per Common Share3 |
$0.072375 | |
Current Annualized Distribution per Common Share3 |
$0.868500 | |
Economic Leverage as of July 31, 20164 |
39% |
1 | Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results. |
2 | Tax equivalent yield assumes the maximum marginal federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
3 | The distribution rate is not constant and is subject to change. |
4 | Represents VRDP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VRDP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5. |
Performance |
Returns for the 12 months ended July 31, 2016 were as follows:
Returns Based On | ||||||||
Market Price | NAV | |||||||
BBF1,2 |
26.29 | % | 8.40 | % | ||||
Lipper General & Insured Municipal Debt Funds (Leveraged)3 |
21.89 | % | 11.98 | % |
1 | All returns reflect reinvestment of dividends and/or distributions. |
2 | The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on price and performance based on NAV. |
3 | Average return. |
The following discussion relates to the Trusts absolute performance based on NAV:
| Municipal bonds generated strong performance for the annual period. Municipals were aided by the sharp decline in Treasury yields, which was brought about by the slow global economy and the accommodative policies of the worlds central banks. (Bond prices rise as yields fall.) The gains were largely concentrated among intermediate- and longer-term bonds, while shorter-term issues produced much smaller returns. In addition, lower-rated securities generally outpaced their higher-quality counterparts. |
| The Trust was helped by its exposure to the long end of the yield curve, where performance was strongest. Leverage helped augment returns in this portion of the portfolio, as well. However, leverage had less of an impact in the second half of the period due to the Feds interest rate increase in December 2015. |
| Holdings in AA and A rated securities, including investments in transportation, tax-backed (states) and health care sectors, aided performance. Positions in the utilities and tax-backed (local) sectors were also additive. |
| The Trust utilized U.S. Treasury futures contracts to manage exposure to a rise in interest rates, which had a slightly negative impact on performance given that the Treasury market finished with positive returns. |
12 | ANNUAL REPORT | JULY 31, 2016 |
BlackRock Municipal Income Investment Trust |
Market Price and Net Asset Value Per Share Summary |
7/31/16 | 7/31/15 | Change | High | Low | ||||||||||||||||
Market Price |
$ | 16.00 | $ | 13.44 | 19.05 | % | $ | 17.00 | $ | 13.28 | ||||||||||
Net Asset Value |
$ | 15.47 | $ | 15.14 | 2.18 | % | $ | 15.62 | $ | 14.92 |
Market Price and Net Asset Value History For the Past Five Years |
Overview of the Trusts Total Investments* |
ANNUAL REPORT | JULY 31, 2016 | 13 |
Trust Summary as of July 31, 2016 | BlackRock New Jersey Municipal Income Trust |
Trust Overview |
BlackRock New Jersey Municipal Income Trusts (BNJ) (the Trust) investment objective is to provide current income exempt from regular federal income tax and New Jersey gross income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and New Jersey gross income taxes. The Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Trusts investment objective will be achieved.
Trust Information | ||
Symbol on NYSE |
BNJ | |
Initial Offering Date |
July 27, 2001 | |
Yield on Closing Market Price as of July 31, 2016 ($16.79)1 |
4.97% | |
Tax Equivalent Yield2 |
9.65% | |
Current Monthly Distribution per Common Share3 |
$0.0696 | |
Current Annualized Distribution per Common Share3 |
$0.8352 | |
Economic Leverage as of July 31, 20164 |
38% |
1 | Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results. |
2 | Tax equivalent yield assumes the maximum marginal federal and state tax rate of 48.48%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
3 | The distribution rate is not constant and is subject to change. |
4 | Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5. |
Performance |
Returns for the 12 months ended July 31, 2016 were as follows:
Returns Based On | ||||||||
Market Price | NAV | |||||||
BNJ1,2 |
21.76 | % | 11.81 | % | ||||
Lipper New Jersey Municipal Debt Funds3 |
21.92 | % | 11.82 | % |
1 | All returns reflect reinvestment of dividends and/or distributions. |
2 | The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on price and performance based on NAV. |
3 | Average return. |
The following discussion relates to the Trusts absolute performance based on NAV:
| Municipal bonds generated strong performance in the annual period. Municipals were aided by the sharp decline in Treasury yields, which was brought about by the slow global economy and the accommodative policies of the worlds central banks. (Bond prices rise as yields fall. The gains were largely concentrated among intermediate- and longer-term bonds, while shorter-term issues produced much smaller returns. New Jersey municipal bonds performed particularly well as a result of the highly favorable supply-and-demand profile in the states market. |
| At a time of falling yields, the Trusts positions in longer-duration and longer-dated bonds generally provided the largest absolute returns. (Duration is a measure of interest-rate sensitivity.) The Trusts positions in the tax-backed (state and local), transportation, education and corporate sectors made positive contributions to performance. The Trusts exposure to lower-coupon and zero-coupon bonds, both of which outperformed, also aided returns. |
| Lower-rated bonds within the investment grade category outperformed during the period. In addition to offering higher incremental yield, the market segment benefited from a tightening of yield spreads that was fueled in part by investors elevated appetite for risk. In this environment, the Trusts exposure to these higher-yielding bonds was a positive contributor to performance. |
| Leverage amplifies the effect of interest-rate movements, which was a positive to performance during the past 12 months given that yields declined. |
| The Trust utilized a mix of U.S. Treasury futures contracts to manage exposure to a rise in interest rates, which had a slightly negative impact on performance at a time in which the Treasury market finished with positive returns. |
14 | ANNUAL REPORT | JULY 31, 2016 |
BlackRock New Jersey Municipal Income Trust |
Market Price and Net Asset Value Per Share Summary |
7/31/16 | 7/31/15 | Change | High | Low | ||||||||||||||||
Market Price |
$ | 16.79 | $ | 14.61 | 14.92 | % | $ | 16.95 | $ | 14.00 | ||||||||||
Net Asset Value |
$ | 16.41 | $ | 15.55 | 5.53 | % | $ | 16.60 | $ | 15.23 |
Market Price and Net Asset Value History For the Past Five Years |
Overview of the Trusts Total Investments* |
ANNUAL REPORT | JULY 31, 2016 | 15 |
Trust Summary as of July 31, 2016 | BlackRock New York Municipal Income Trust |
Trust Overview |
BlackRock New York Municipal Income Trusts (BNY) (the Trust) investment objective is to provide current income exempt from regular federal income tax and New York State and New York City personal income taxes. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax) and New York State and New York City personal income taxes. The Trust invests at least 80% of its assets in municipal bonds that are investment grade quality at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.
No assurance can be given that the Trusts investment objective will be achieved.
Trust Information | ||
Symbol on NYSE |
BNY | |
Initial Offering Date |
July 27, 2001 | |
Yield on Closing Market Price as of July 31, 2016 ($16.71)1 |
4.31% | |
Tax Equivalent Yield2 |
8.72% | |
Current Monthly Distribution per Common Share3 |
$0.06 | |
Current Annualized Distribution per Common Share3 |
$0.72 | |
Economic Leverage as of July 31, 20164 |
38% |
1 | Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results. |
2 | Tax equivalent yield assumes the maximum marginal federal and state tax rate of 50.59%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields. |
3 | The distribution rate is not constant and is subject to change. |
4 | Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5. |
Performance |
Returns for the 12 months ended July 31, 2016 were as follows:
Returns Based On | ||||||||
Market Price | NAV | |||||||
BNY1,2 |
21.02 | % | 12.13 | % | ||||
Lipper New York Municipal Debt Funds3 |
20.33 | % | 10.69 | % |
1 | All returns reflect reinvestment of dividends and/or distributions. |
2 | The Trust moved from a discount to NAV to a premium during the period, which accounts for the difference between performance based on price and performance based on NAV. |
3 | Average return. |
The following discussion relates to the Trusts absolute performance based on NAV:
| Municipal bonds generated strong performance for the annual period. Municipals were aided by the sharp decline in Treasury yields, which was brought about by the slow global economy and the accommodative policies of the worlds central banks. (Bond prices rise as yields fall.) The gains were largely concentrated among intermediate- and longer-term bonds, while shorter-term issues produced much smaller returns. New York municipal bonds performed well in the period, as the states healthy economy, robust overall financial position and general lack of pension-funding issues contributed to strong investor demand. |
| At a time of falling yields, the Trusts positions in longer-duration and longer-dated bonds generally provided the largest absolute returns. (Duration is a measure of interest-rate sensitivity.) The Trusts positions in the health care, transportation and education sectors made positive contributions to performance. The Trusts exposure to lower-coupon and zero-coupon bonds, both of which outperformed, also aided returns. |
| Lower-rated bonds within the investment grade category outperformed during the period. In addition to offering higher incremental yield, the market segment benefited from a tightening of yield spreads that was fueled in part by investors elevated appetite for risk. In this environment, the Trusts exposure to these higher-yielding bonds contributed to performance. |
| Leverage amplifies the effect of interest-rate movements, which was a positive to performance during the past 12 months given that yields declined. |
| The Trust utilized a mix of U.S. Treasury futures contracts to manage exposure to a rise in interest rates, which had a slightly negative impact on performance at a time in which the Treasury market finished with positive returns. |
16 | ANNUAL REPORT | JULY 31, 2016 |
BlackRock New York Municipal Income Trust |
Market Price and Net Asset Value Per Share Summary |
7/31/16 | 7/31/15 | Change | High | Low | ||||||||||||||||
Market Price |
$ | 16.71 | $ | 14.54 | 14.92 | % | $ | 16.91 | $ | 14.10 | ||||||||||
Net Asset Value |
$ | 15.94 | $ | 14.97 | 6.48 | % | $ | 16.15 | $ | 14.80 |
Market Price and Net Asset Value History For the Past Five Years |
Overview of the Trusts Total Investments* |
ANNUAL REPORT | JULY 31, 2016 | 17 |
BlackRock California Municipal Income Trust (BFZ) (Percentages shown are based on Net Assets) |
Portfolio Abbreviations |
ACA | American Capital Access Holding Ltd. | COP | Certificates of Participation | ISD | Independent School District | |||||
AGC | Assured Guarantee Corp. | DFA | Development Finance Agency | LRB | Lease Revenue Bonds | |||||
AGM | Assured Guaranty Municipal Corp. | EDA | Economic Development Authority | M/F | Multi-Family | |||||
AMBAC | American Municipal Bond Assurance Corp. | EDC | Economic Development Corp. | MRB | Mortgage Revenue Bonds | |||||
AMT | Alternative Minimum Tax (subject to) | ERB | Education Revenue Bonds | NPFGC | National Public Finance Guarantee Corp. | |||||
ARB | Airport Revenue Bonds | FHA | Federal Housing Administration | OTC | Over-the-Counter | |||||
BAM | Build America Mutual Assurance Co. | GARB | General Airport Revenue Bonds | PILOT | Payment in Lieu of Taxes | |||||
BARB | Building Aid Revenue Bonds | GO | General Obligation Bonds | PSF-GTD | Permanent School Fund Guaranteed | |||||
BHAC | Berkshire Hathaway Assurance Corp. | HFA | Housing Finance Agency | RB | Revenue Bonds | |||||
CAB | Capital Appreciation Bonds | IDA | Industrial Development Authority | S/F | Single-Family | |||||
CIFG | CDC IXIS Financial Guaranty | IDB | Industrial Development Board | SONYMA | State of New York Mortgage Agency |
See Notes to Financial Statements.
18 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock California Municipal Income Trust (BFZ) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 19 |
Schedule of Investments (continued) |
BlackRock California Municipal Income Trust (BFZ) |
Notes to Schedule of Investments |
(a) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
(b) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(c) | Represents a beneficial interest in a trust. The collateral deposited into the trust is federally tax-exempt revenue bonds issued by various state or local governments, or their respective agencies or authorities. The security is subject to remarketing prior to its stated maturity. |
(d) | Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Trust. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details of municipal bonds transferred to TOB Trusts. |
(e) | All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Trust could ultimately be required to pay under the agreements, which expire between October 1, 2016 and August 1, 2018, is $14,013,534. See Note 4 of the Notes to Financial Statements for details. |
See Notes to Financial Statements.
20 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock California Municipal Income Trust (BFZ) |
(f) | During the year ended July 31, 2016, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at July 31, 2015 |
Net Activity |
Shares Held at July 31, 2016 |
Value at July 31, 2016 |
Income | |||||||||||||||
BIF California Municipal Money Fund |
6,380,903 | (6,380,903 | ) | | | $ | 3 | |||||||||||||
BlackRock Liquidity Funds, MuniCash, Institutional Class |
| 3,771,908 | 3,771,908 | $ | 3,771,908 | 1,010 | ||||||||||||||
Total |
$ | 3,771,908 | $ | 1,013 | ||||||||||||||||
|
|
|
|
(g) | Current yield as of period end. |
Derivative Financial Instruments Outstanding as of Period End |
Futures Contracts
Contracts Short |
Issue | Expiration | Notional Value |
Unrealized (Depreciation) |
||||||||||||||||
(52 | ) | 5-Year U.S. Treasury Note | September 2016 | USD | 6,344,813 | $ | 8,146 | |||||||||||||
(63 | ) | 10-Year U.S. Treasury Note | September 2016 | USD | 8,381,953 | 16,280 | ||||||||||||||
(31 | ) | Long U.S. Treasury Bond | September 2016 | USD | 5,407,562 | (106,299 | ) | |||||||||||||
|
Total |
|
$ | (81,873 | ) | |||||||||||||||
|
|
Derivative Financial Instruments Categorized by Risk Exposure |
As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:
Assets Derivative Financial Instruments | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||||
Futures contracts |
Net unrealized appreciation1 | | | | | $ | 24,426 | | $ | 24,426 | ||||||||||
Liabilities Derivative Financial Instruments | ||||||||||||||||||||
Futures contracts |
Net unrealized depreciation1 | | | | | $ | 106,299 | | $ | 106,299 | ||||||||||
1 Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current days variation margin is reported within the Statements of Assets and Liabilities. |
|
For the year ended July 31, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:
Net Realized Gain (Loss) From: | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||
Futures contracts |
| | | | $ | (953,509 | ) | | $ | (953,509 | ) | |||||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||||||||||||
Futures contracts |
| | | | $ | (38,759 | ) | | $ | (38,759 | ) |
Average Quarterly Balances of Outstanding Derivative Financial Instruments |
Futures contracts: | ||||
Average notional value of contracts long |
$ | 164,560 | 1 | |
Average notional value of contracts short |
$ | 19,959,439 | ||
1 Actual amounts for the period are shown due to limited outstanding derivative financial instruments as of each quarter. |
|
For more information about the Trusts investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Trusts policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 21 |
Schedule of Investments (concluded) |
BlackRock California Municipal Income Trust (BFZ) |
The following tables summarize the Trusts investments and derivative financial instruments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments1 |
| $ | 869,092,403 | | $ | 869,092,403 | ||||||||||
Short-Term Securities |
$ | 3,771,908 | | | 3,771,908 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 3,771,908 | $ | 869,092,403 | | $ | 872,864,311 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivative Financial Instruments2 | ||||||||||||||||
Assets: |
||||||||||||||||
Interest rate contracts |
$ | 24,426 | | | $ | 24,426 | ||||||||||
Liabilities: |
||||||||||||||||
Interest rate contracts |
(106,299 | ) | | | (106,299 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | (81,873 | ) | | | $ | (81,873 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
1 See above Schedule of Investments for values in each sector. |
| |||||||||||||||
2 Derivative financial instruments futures contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
|
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: |
||||||||||||||
Cash |
$ | 115,411 | | | $ | 115,411 | ||||||||
Cash pledged for futures contracts |
249,000 | | | 249,000 | ||||||||||
Liabilities: |
||||||||||||||
Loan for TOB Trust Certificates |
| $ | (2,045,025 | ) | | (2,045,025 | ) | |||||||
TOB Trust Certificates |
| (181,645,774 | ) | | (181,645,774 | ) | ||||||||
VMTP Shares at Liquidation Value |
| (171,300,000 | ) | | (171,300,000 | ) | ||||||||
|
|
|
|
|
|
|
||||||||
Total |
$ | 364,411 | $ | (354,990,799 | ) | | $ | (354,626,388 | ) | |||||
|
|
|
|
|
|
|
During the year ended July 31, 2016, there were no transfers between levels.
See Notes to Financial Statements.
22 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments July 31, 2016 |
BlackRock Florida Municipal 2020 Term Trust (BFO) (Percentages shown are based on Net Assets) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 23 |
Schedule of Investments (continued) |
BlackRock Florida Municipal 2020 Term Trust (BFO) |
Notes to Schedule of Investments |
(a) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
(b) | Non-income producing security. |
(c) | Issuer filed for bankruptcy and/or is in default of interest payments. |
(d) | When-issued security. |
(e) | Zero-coupon bond. |
(f) | During the year ended July 31, 2016, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at July 31, 2015 |
Net Activity |
Shares Held at July 31, 2016 |
Value at July 31, 2016 |
Net Income |
|||||||||||||||
BlackRock Liquidity Funds, MuniCash, Institutional Class |
| 1,836,731 | $ | 1,836,731 | $ | 1,836,731 | $ | 1,529 | ||||||||||||
FFI Institutional Tax-Exempt Fund |
550,062 | (550,062 | ) | | | 61 | ||||||||||||||
Total |
$ | 1,836,731 | $ | 1,590 | ||||||||||||||||
|
|
|
|
(g) | Current yield as of period end. |
For Trust compliance purposes, the Trusts sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments. For information about the Trusts policy regarding valuation of investments, refer to the Notes to Financial Statements.
The following tables summarize the Trusts investments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments1 |
| $ | 85,751,650 | | $ | 85,751,650 | ||||||||||
Short-Term Securities |
$ | 1,836,731 | | | 1,836,731 | |||||||||||
|
|
|||||||||||||||
Total |
$ | 1,836,731 | $ | 85,751,650 | | $ | 87,588,381 | |||||||||
|
|
|||||||||||||||
1 See above Schedule of Investments for values in each sector. |
|
See Notes to Financial Statements.
24 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (concluded) |
BlackRock Florida Municipal 2020 Term Trust (BFO) |
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of July 31, 2016, cash of $25,110 was categorized as Level 1 within the disclosure hierarchy.
During the year ended July 31, 2016, there were no transfers between levels.
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 25 |
Schedule of Investments July 31, 2016 |
BlackRock Municipal 2030 Target Term Trust (BTT) (Percentages shown are based on Net Assets) |
See Notes to Financial Statements.
26 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 27 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
28 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 29 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
30 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 31 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
32 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 33 |
Schedule of Investments (continued) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
Notes to Schedule of Investments |
(a) | Zero-coupon bond. |
(b) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(c) | Variable rate security. Rate as of period end. |
(d) | Security is collateralized by municipal bonds or U.S. Treasury obligations. |
(e) | When-issued security. |
(f) | Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end. |
(g) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
(h) | Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Trust. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details of municipal bonds transferred to TOB Trusts. |
(i) | All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Trust could ultimately be required to pay under the agreements, which expires between November 1, 2018 to November 15, 2020, is $128,689,318. See Note 4 of the Notes to Financial Statements for details. |
(j) | During the year ended July 31, 2016, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at July 31, 2015 |
Net Activity |
Shares Held at July 31, 2016 |
Value at July 31, 2016 |
Income | |||||||||||||||
BlackRock Liquidity Funds, MuniCash, Institutional Class |
| 96,809,834 | 96,809,834 | $ | 96,809,834 | $ | 36,605 | |||||||||||||
FFI Institutional Tax-Exempt Fund |
79,878,725 | (79,878,725 | ) | | | 10,914 | ||||||||||||||
Total |
$ | 96,809,834 | $ | 47,519 | ||||||||||||||||
|
|
|
|
(k) | Current yield as of period end. |
Derivative Financial Instruments Categorized by Risk Exposure |
For the year ended July 31, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:
Net Realized Gain (Loss) From: | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||
Futures contracts |
| | | | $ | (304,681 | ) | | $ | (304,681 | ) | |||||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||||||||||||
Futures contracts |
| | | | $ | 330,635 | | $ | 330,635 |
See Notes to Financial Statements.
34 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (concluded) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
Average Quarterly Balances of Outstanding Derivative Financial Instruments |
Futures contracts: | ||||
Average notional value of contracts short |
$ | 31,921,875 |
For more information about the Trusts investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments. For information about the Trusts policy regarding valuation of investments, refer to the Notes to Financial Statements.
The following table summarizes the Trusts investments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments1 |
| $ | 2,697,935,821 | | $ | 2,697,935,821 | ||||||||||
Short-Term Securities |
$ | 96,809,834 | | | 96,809,834 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 96,809,834 | $ | 2,697,935,821 | | $ | 2,794,745,655 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
1 See above Schedule of Investments for values in each state or political subdivision. |
|
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: |
||||||||||||||||
Bank overdraft |
| $ | (670,028 | ) | | $ | (670,028 | ) | ||||||||
RVMTP Shares at Liquidation Value |
| (750,000,000 | ) | | (750,000,000 | ) | ||||||||||
TOB Trust Certificates |
| (184,114,916 | ) | | (184,114,916 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
| $ | (934,784,944 | ) | | $ | (934,784,944 | ) | ||||||||
|
|
|
|
|
|
|
|
During the year ended July 31, 2016, there were no transfers between levels.
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 35 |
Schedule of Investments July 31, 2016 |
BlackRock Municipal Income Investment Trust (BBF) (Percentages shown are based on Net Assets) |
See Notes to Financial Statements.
36 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock Municipal Income Investment Trust (BBF) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 37 |
Schedule of Investments (continued) |
BlackRock Municipal Income Investment Trust (BBF) |
Notes to Schedule of Investments |
(a) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(b) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
See Notes to Financial Statements.
38 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock Municipal Income Investment Trust (BBF) |
(c) | When-issued security. |
(d) | Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Trust. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details of municipal bonds transferred to TOB Trusts. |
(e) | All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Trust could ultimately be required to pay under the agreements, which expires between October 1, 2016 to November 15, 2019, is $11,993,812. See Note 4 of the Notes to Financial Statements for details. |
(f) | During the year ended July 31, 2016, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at July 31, 2015 |
Net Activity |
Shares Held at July 31, 2016 |
Value at July 31, 2016 |
Income | |||||||||||||||||||
BlackRock Liquidity Funds, MuniCash, Institutional Class |
| 40,725 | $ | 40,725 | $ | 40,725 | $ | 281 | ||||||||||||||||
FFI Institutional Tax-Exempt Fund |
478,351 | (478,351 | ) | | | 85 | ||||||||||||||||||
Total |
$ | 40,725 | $ | 366 | ||||||||||||||||||||
|
|
(g) | Current yield as of period end. |
Derivative Financial Instruments Outstanding as of Period End |
Futures Contracts
Contracts Short |
Issue | Expiration |
Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
(24 | ) | 5-Year U.S. Treasury Note | September 2016 | USD | 2,928,375 | $ | 4,554 | |||||||||||||||||||
(21 | ) | 10-Year U.S. Treasury Note | September 2016 | USD | 2,793,984 | (2,355 | ) | |||||||||||||||||||
(9 | ) | Long U.S. Treasury Bond | September 2016 | USD | 1,569,938 | (34,954 | ) | |||||||||||||||||||
(1 | ) | Ultra U.S. Treasury Bond | September 2016 | USD | 190,531 | 1,780 | ||||||||||||||||||||
Total | $ | (30,975 | ) | |||||||||||||||||||||||
|
|
Derivative Financial Instruments Categorized by Risk Exposure |
As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:
Assets Derivative Financial Instruments | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contracts |
Total | |||||||||||||||||||||||
Futures contracts |
Net unrealized appreciation1 | | | | | $ | 6,334 | | $ | 6,334 | ||||||||||||||||||||
Liabilities Derivative Financial Instruments | ||||||||||||||||||||||||||||||
Futures contracts |
Net unrealized depreciation1 | | | | | $ | 37,309 | | $ | 37,309 | ||||||||||||||||||||
1 Includes cumulative (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current days variation margin is reported within the Statements of Assets and Liabilities. |
|
For the year ended July 31, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:
Net Realized Gain (Loss) From: | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contracts |
Total | |||||||||||||||||||||
Futures contracts |
| | | | $ | (357,719 | ) | | $ | (357,719 | ) | |||||||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||||||||||||||||||||||
Futures contracts |
| | | | $ | (17,742 | ) | | $ | (17,742 | ) |
Average Quarterly Balances of Outstanding Derivative Financial Instruments |
Futures contracts: | ||||
Average notional value of contracts short |
$ | 5,481,852 |
For more information about the Trusts investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 39 |
Schedule of Investments (concluded) |
BlackRock Municipal Income Investment Trust (BBF) |
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Trusts policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.
The following tables summarize the Trusts investments and derivative financial instruments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments1 |
| $ | 256,363,137 | | $ | 256,363,137 | ||||||||||
Short-Term Securities |
$ | 40,725 | | | 40,725 | |||||||||||
|
|
|||||||||||||||
Total |
$ | 40,725 | $ | 256,363,137 | | $ | 256,403,862 | |||||||||
|
|
|||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Derivative Financial Instruments2 | ||||||||||||||||
Assets: |
||||||||||||||||
Interest rate contracts |
$ | 6,334 | | | $ | 6,334 | ||||||||||
Liabilities: |
||||||||||||||||
Interest rate contracts |
(37,309 | ) | | | (37,309 | ) | ||||||||||
|
|
|||||||||||||||
Total |
$ | (30,975 | ) | | | $ | (30,975 | ) | ||||||||
|
|
|||||||||||||||
1 See above Schedule of Investments for values in each sector.
2 Derivative financial instruments are futures contracts are valued at the unrealized appreciation (depreciation) on the instrument.
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows: |
| |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Cash |
$ | 63,209 | | | $ | 63,209 | ||||||||||
Cash pledged for futures contracts |
88,850 | | | 88,850 | ||||||||||||
Liabilities: |
||||||||||||||||
TOB Trust Certificates |
| $ | (47,192,958 | ) | | (47,192,958 | ) | |||||||||
VRDP Shares at Liquidation Value |
| (52,000,000 | ) | | (52,000,000 | ) | ||||||||||
|
|
|||||||||||||||
Total |
$ | 152,059 | $ | (99,192,958 | ) | | $ | (99,040,899 | ) | |||||||
|
|
During the ended July 31, 2016, there were no transfers between levels.
See Notes to Financial Statements.
40 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments July 31, 2016 |
BlackRock New Jersey Municipal Income Trust (BNJ) (Percentages shown are based on Net Assets) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 41 |
Schedule of Investments (continued) |
BlackRock New Jersey Municipal Income Trust (BNJ) |
See Notes to Financial Statements.
42 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock New Jersey Municipal Income Trust (BNJ) |
Notes to Schedule of Investments |
(a) | Issuer filed for bankruptcy and/or is in default of interest payments. |
(b) | Non-income producing security. |
(c) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(d) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
(e) | Zero-coupon bond. |
(f) | Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Trust. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details of municipal bonds transferred to TOB Trusts. |
(g) | All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Trust could ultimately be required to pay under the agreements, which expires between June 15, 2019 to September 1, 2020, is $7,516,838. See Note 4 of the Notes to Financial Statements for details. |
(h) | During the year ended July 31, 2016, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at July 31, 2015 |
Net Activity |
Shares Held at July 31, 2016 |
Value at July 31, 2016 |
Income | |||||||||||||||
BIF New Jersey Municipal Money Fund |
1,096,513 | (1,096,513 | ) | | | $ | 117 | |||||||||||||
BlackRock Liquidity Funds, MuniCash, Institutional Class |
| 1,695,856 | 1,695,856 | $ | 1,695,856 | 473 | ||||||||||||||
Total |
$ | 1,695,856 | $ | 590 | ||||||||||||||||
|
|
|
|
(i) | Current yield as of period end. |
Derivative Financial Instruments Outstanding as of Period End |
Futures Contracts
Contracts Short |
Issue | Expiration |
Notional |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||
(13 | ) | 5-Year U.S. Treasury Note | September 2016 | USD | 1,586,203 | $ | 960 | |||||||||||||||||
(37 | ) | 10-Year U.S. Treasury Note | September 2016 | USD | 4,922,734 | (29,368 | ) | |||||||||||||||||
(13 | ) | Long U.S. Treasury Bond | September 2016 | USD | 2,267,688 | (56,859 | ) | |||||||||||||||||
(2 | ) | Ultra U.S. Treasury Bond | September 2016 | USD | 381,063 | (13,177 | ) | |||||||||||||||||
Total | $ | (98,444 | ) | |||||||||||||||||||||
|
|
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 43 |
Schedule of Investments (continued) |
BlackRock New Jersey Municipal Income Trust (BNJ) |
Derivative Financial Instruments Categorized by Risk Exposure |
As of year end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:
Assets Derivative Financial Instruments | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||||||||||||||
Futures contracts |
Net unrealized appreciation1 | | | | | $ | 960 | | $ | 960 | ||||||||||||||||||||
Liabilities Derivative Financial Instruments | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||||||||||||||
Futures contracts |
Net unrealized depreciation1 | | | | | $ | 99,404 | | $ | 99,404 | ||||||||||||||||||||
1 Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current days variation margin is reported within the Statement of Assets and Liabilities. |
|
For the year ended June 30, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:
Net Realized Gain (Loss) From: | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||||||||||||
Futures contracts |
| | | | $ | (484,262 | ) | | $ | (484,262 | ) | |||||||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||||||||||||||||||||||
Futures contracts |
| | | | $ | (81,886 | ) | | $ | (81,886 | ) |
Average Quarterly Balances of Outstanding Derivative Financial Instruments |
Futures contracts: | ||||
Average notional value of contracts short |
$ | 7,130,457 |
For more information about the Master Portfolios investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Trusts policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.
The following tables summarize the Trusts investments and derivative financial instruments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments1 |
| $ | 200,102,310 | | $ | 200,102,310 | ||||||||||
Short-Term Securities |
$ | 1,695,856 | | | 1,695,856 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 1,695,856 | $ | 200,102,310 | $ | 201,798,166 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Derivative Financial Instruments2 | ||||||||||||||||
Assets: |
||||||||||||||||
Interest rate contracts |
$ | 960 | | | $ | 960 | ||||||||||
Liabilities: |
||||||||||||||||
Interest rate contracts |
(99,404 | ) | | | (99,404 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | (98,444 | ) | | | $ | (98,444 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
1 See above Schedule of Investments for values in each sector. |
| |||||||||||||||
2 Derivative financial instruments are futures contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
|
See Notes to Financial Statements.
44 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (concluded) |
BlackRock New Jersey Municipal Income Trust (BNJ) |
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: |
||||||||||||||
Cash |
$ | 35,518 | | | $ | 35,518 | ||||||||
Cash pledged for futures contracts |
119,750 | | | 119,750 | ||||||||||
Liabilities: |
||||||||||||||
TOB Trust Certificates |
| $ | (17,889,909 | ) | | (17,889,909 | ) | |||||||
VMTP Shares at Liquidation Value |
| (59,100,000 | ) | | (59,100,000 | ) | ||||||||
|
|
|
|
|
|
|
||||||||
Total |
$ | 155,268 | $ | (76,989,909 | ) | | $ | (76,834,641 | ) | |||||
|
|
|
|
|
|
|
During the year ended July 31, 2016, there were no transfers between levels.
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 45 |
Schedule of Investments July 31, 2016 |
BlackRock New York Municipal Income Trust (BNY) (Percentages shown are based on Net Assets) |
See Notes to Financial Statements.
46 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock New York Municipal Income Trust (BNY) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 47 |
Schedule of Investments (continued) |
BlackRock New York Municipal Income Trust (BNY) |
See Notes to Financial Statements.
48 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (continued) |
BlackRock New York Municipal Income Trust (BNY) |
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 49 |
Schedule of Investments (continued) |
BlackRock New York Municipal Income Trust (BNY) |
Notes to Schedule of Investments |
(a) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(b) | Variable rate security. Rate as of period end. |
(c) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
(d) | Zero-coupon bond. |
(e) | Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Trust. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details of municipal bonds transferred to TOB Trusts. |
(f) | All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Trust could ultimately be required to pay under the agreement, which expires on February 15, 2019, is $661,936. See Note 4 of the Notes to Financial Statements for details. |
(g) | During the year ended July 31, 2016, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at July 31, 2015 |
Net Activity |
Shares Held at July 31, 2016 |
Value at July 31, 2016 |
Income | |||||||||||||||
BIF New York Municipal Money Fund |
4,552,128 | (4,552,128 | ) | | | $ | 789 | |||||||||||||
BlackRock Liquidity Funds, MuniCash, Institutional Class |
| 214,518 | 214,518 | $ | 214,518 | 833 | ||||||||||||||
Total |
$ | 214,518 | $ | 1,622 | ||||||||||||||||
|
|
|
|
(h) | Current yield as of period end. |
Derivative Financial Instruments Outstanding as of Period End |
Futures Contracts
Contracts Short |
Issue | Expiration |
Notional |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||
(23 | ) | 5-Year U.S. Treasury Note | September 2016 | USD | 2,806,359 | $ | 706 | |||||||||||||||||
(55 | ) | 10-Year U.S. Treasury Note | September 2016 | USD | 7,317,578 | (27,099 | ) | |||||||||||||||||
(21 | ) | Long U.S. Treasury Bond | September 2016 | USD | 3,663,188 | (107,483 | ) | |||||||||||||||||
(5 | ) | Ultra U.S. Treasury Bond | September 2016 | USD | 952,656 | (21,256 | ) | |||||||||||||||||
Total | $ | (155,132 | ) | |||||||||||||||||||||
|
|
Derivative Financial Instruments Categorized by Risk Exposure |
As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:
Assets Derivative Financial Instruments | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency Exchange Contracts |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||||
Futures contracts |
Net unrealized appreciation1 | | | | | $ | 706 | | $ | 706 | ||||||||||
Liabilities Derivative Financial Instruments | ||||||||||||||||||||
Futures contracts |
Net unrealized depreciation1 | | | | | $ | 155,838 | | $ | 155,838 | ||||||||||
1 Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current days variation margin is reported within the Statements of Assets and Liabilities. |
|
See Notes to Financial Statements.
50 | ANNUAL REPORT | JULY 31, 2016 |
Schedule of Investments (concluded) |
BlackRock New York Municipal Income Trust (BNY) |
For the year ended July 31, 2016, the effect of derivative financial instruments in the Statements of Operations was as follows:
Net Realized Gain (Loss) From: | Commodity Contracts |
Credit Contracts |
Equity Contracts |
Foreign Currency |
Interest Rate Contracts |
Other Contacts |
Total | |||||||||||
Futures contracts |
| | | | $ | (787,920 | ) | | $ | (787,920 | ) | |||||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||||||||||||
Futures contracts |
| | | | $ | (92,514 | ) | | $ | (92,514 | ) |
Average Quarterly Balances of Outstanding Derivative Financial Instruments |
Futures contracts: | ||||
Average notional value of contracts short |
$ | 10,923,895 |
For more information about the Trusts investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.
Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Trusts policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.
The following tables summarize the Trusts investments and derivative financial instruments categorized in the disclosure hierarchy:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments1 |
| $ | 329,867,577 | | $ | 329,867,577 | ||||||||||
Short-Term Securities |
$ | 214,518 | | | 214,518 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 214,518 | $ | 329,867,577 | | $ | 330,082,095 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Derivative Financial Instruments2 | ||||||||||||||||
Assets: |
||||||||||||||||
Interest rate contracts |
$ | 706 | | | $ | 706 | ||||||||||
Liabilities: |
||||||||||||||||
Interest rate contracts |
(155,838 | ) | | | (155,838 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | (155,132 | ) | | | $ | (155,132 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
1 See above Schedule of Investments for values in each sector. |
| |||||||||||||||
2 Derivative financial instruments are futures contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
|
The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Cash |
$ | 39,799 | | | $ | 39,799 | ||||||||||
Cash pledged for futures contracts |
197,250 | | | 197,250 | ||||||||||||
Liabilities: |
||||||||||||||||
Loan for TOB Trust Certificates |
$ | (435,000 | ) | (435,000 | ) | |||||||||||
TOB Trust Certificates |
| (31,345,202 | ) | | (31,345,202 | ) | ||||||||||
VMTP Shares at Liquidation Value |
| (94,500,000 | ) | | (94,500,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 237,049 | $ | (126,280,202 | ) | | $ | (126,043,153 | ) | |||||||
|
|
|
|
|
|
|
|
During the year ended July 31, 2016, there were no transfers between levels.
See Notes to Financial Statements.
ANNUAL REPORT | JULY 31, 2016 | 51 |
Statements of Assets and Liabilities |
July 31, 2016 | BlackRock California Municipal Income Trust (BFZ) |
BlackRock Florida Municipal 2020 Term Trust (BFO) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
BlackRock Municipal Income Investment Trust (BBF) |
||||||||||||
Assets | ||||||||||||||||
Investments at value unaffiliated1 |
$ | 869,092,403 | $ | 85,751,650 | $ | 2,697,935,821 | $ | 256,363,137 | ||||||||
Investments at value affiliated2 |
3,771,908 | 1,836,731 | 96,809,834 | 40,725 | ||||||||||||
Cash |
115,411 | 25,110 | | 63,209 | ||||||||||||
Cash pledged for futures contracts |
249,000 | | | 88,850 | ||||||||||||
Receivables: | ||||||||||||||||
Interest |
11,789,877 | 927,316 | 22,389,160 | 2,978,612 | ||||||||||||
Investments sold |
1,154,947 | 5,000 | | 487,720 | ||||||||||||
Dividend affiliated |
426 | 343 | 11,843 | 49 | ||||||||||||
Prepaid expenses |
60,224 | 5,083 | 57,419 | 26,797 | ||||||||||||
|
|
|||||||||||||||
Total assets |
886,234,196 | 88,551,233 | 2,817,204,077 | 260,049,099 | ||||||||||||
|
|
|||||||||||||||
Accrued Liabilities | ||||||||||||||||
Bank overdraft |
| | 670,028 | | ||||||||||||
Payables: | ||||||||||||||||
Investments purchased |
6,794,286 | 2,223,260 | 86,813,326 | 1,903,217 | ||||||||||||
Income dividends Common Shares |
2,143,175 | 9,486 | 5,640,446 | 738,835 | ||||||||||||
Investment advisory fees |
432,209 | 36,183 | 919,838 | 123,720 | ||||||||||||
Interest expense and fees |
232,229 | | 270,835 | 44,436 | ||||||||||||
Reorganization costs |
| | | 271,350 | ||||||||||||
Officers and Trustees fees |
74,089 | 9,782 | 24,102 | 30,140 | ||||||||||||
Other accrued expenses |
151,398 | 63,090 | 82,043 | 49,390 | ||||||||||||
Variation margin on futures contracts |
80,672 | | | 28,953 | ||||||||||||
|
|
|||||||||||||||
Total accrued liabilities |
9,908,058 | 2,341,801 | 94,420,618 | 3,190,041 | ||||||||||||
|
|
|||||||||||||||
Other Liabilities | ||||||||||||||||
TOB Trust Certificates |
181,645,774 | | 184,114,916 | 47,192,958 | ||||||||||||
Loan for TOB Trust Certificates |
2,045,025 | | | | ||||||||||||
RVMTP Shares, at liquidation value of $5,000,000 per share, net of deferred offering costs3 |
| | 749,548,840 | | ||||||||||||
VMTP Shares, at liquidation value of $100,000 per share3 |
171,300,000 | | | | ||||||||||||
VRDP Shares, at liquidation value of $100,000 per share, net of deferred offering costs3 |
| | | 51,700,672 | ||||||||||||
|
|
|||||||||||||||
Total other liabilities |
354,990,799 | | 933,663,756 | 98,893,630 | ||||||||||||
|
|
|||||||||||||||
Total liabilities |
364,898,857 | 2,341,801 | 1,028,084,374 | 102,083,671 | ||||||||||||
|
|
|||||||||||||||
Net Assets |
$ | 521,335,339 | $ | 86,209,432 | $ | 1,789,119,703 | $ | 157,965,428 | ||||||||
|
|
|||||||||||||||
Net Assets Applicable to Common Shareholders Consist of | ||||||||||||||||
Paid-in capital4 |
$ | 446,816,941 | $ | 80,832,532 | $ | 1,671,220,745 | $ | 141,713,768 | ||||||||
Undistributed net investment income |
1,899,506 | 2,201,242 | 10,411,285 | 1,093,574 | ||||||||||||
Accumulated net realized loss |
(4,064,432 | ) | (1,251,376 | ) | (52,159,257 | ) | (14,279,926 | ) | ||||||||
Net unrealized appreciation (depreciation) |
76,683,324 | 4,427,034 | 159,646,930 | 29,438,012 | ||||||||||||
|
|
|||||||||||||||
Net Assets Applicable to Common Shareholders |
$ | 521,335,339 | $ | 86,209,432 | $ | 1,789,119,703 | $ | 157,965,428 | ||||||||
|
|
|||||||||||||||
Net asset value, per Common Share |
$ | 16.35 | $ | 15.50 | $ | 25.38 | $ | 15.47 | ||||||||
|
|
|||||||||||||||
1 Investments at cost unaffiliated |
$ | 792,327,206 | $ | 81,324,616 | $ | 2,538,288,891 | $ | 226,892,304 | ||||||||
2 Investments at cost affiliated |
$ | 3,771,908 | $ | 1,836,731 | $ | 96,809,834 | $ | 40,725 | ||||||||
3 Preferred Shares outstanding, unlimited number of shares authorized, par value $0.001 per share |
1,713 | | 150 | 520 | ||||||||||||
4 Common Shares outstanding, unlimited number of shares authorized, par value $0.001 per share |
31,892,491 | 5,562,128 | 70,505,571 | 10,208,432 |
See Notes to Financial Statements. | ||||||
52 | ANNUAL REPORT | JULY 31, 2016 |
Statements of Assets and Liabilities |
July 31, 2016 | BlackRock New Jersey Municipal Income Trust (BNJ) |
BlackRock New York Municipal Income Trust (BNY) |
||||||
Assets | ||||||||
Investments at value unaffiliated1 |
$ | 200,102,310 | $ | 329,867,577 | ||||
Investments at value affiliated2 |
1,695,856 | 214,518 | ||||||
Cash |
35,518 | 39,799 | ||||||
Cash pledged for futures contracts |
119,750 | 197,250 | ||||||
Receivables: | ||||||||
Interest |
1,611,607 | 3,518,066 | ||||||
Dividend affiliated |
324 | 155 | ||||||
Prepaid expenses |
28,487 | 29,485 | ||||||
|
|
|||||||
Total assets |
203,593,852 | 333,866,850 | ||||||
|
|
|||||||
Accrued Liabilities | ||||||||
Payables: | ||||||||
Income dividends Common Shares |
533,525 | 776,896 | ||||||
Investment advisory fees |
103,124 | 169,445 | ||||||
Interest expense and fees |
16,080 | 28,330 | ||||||
Officers and Trustees fees |
19,863 | 30,529 | ||||||
Other accrued expenses |
73,754 | 103,002 | ||||||
Variation margin on futures contracts |
39,078 | 63,985 | ||||||
|
|
|||||||
Total accrued liabilities |
785,424 | 1,172,187 | ||||||
|
|
|||||||
Other Liabilities | ||||||||
TOB Trust Certificates |
17,889,909 | 31,345,202 | ||||||
Loan for TOB Trust Certificates |
| 435,000 | ||||||
VMTP Shares, at liquidation value of $100,000 per share3 |
59,100,000 | 94,500,000 | ||||||
|
|
|||||||
Total other liabilities |
76,989,909 | 126,280,202 | ||||||
|
|
|||||||
Total liabilities |
77,775,333 | 127,452,389 | ||||||
|
|
|||||||
Net Assets |
$ | 125,818,519 | $ | 206,414,461 | ||||
|
|
|||||||
Net Assets Applicable to Common Shareholders Consist of | ||||||||
Paid-in capital4 |
$ | 108,861,468 | $ | 183,630,204 | ||||
Undistributed net investment income |
1,035,171 | 2,019,062 | ||||||
Accumulated net realized loss |
(3,233,174 | ) | (12,529,634 | ) | ||||
Net unrealized appreciation (depreciation) |
19,155,054 | 33,294,829 | ||||||
|
|
|||||||
Net Assets Applicable to Common Shareholders |
$ | 125,818,519 | $ | 206,414,461 | ||||
|
|
|||||||
Net asset value per Common Share |
$ | 16.41 | $ | 15.94 | ||||
|
|
|||||||
1 Investments at cost unaffiliated |
$ | 180,848,812 | $ | 296,417,616 | ||||
2 Investments at cost affiliated |
$ | 1,695,856 | $ | 214,518 | ||||
3 Preferred Shares outstanding, unlimited number of shares authorized, par value $0.001 per share |
591 | 945 | ||||||
4 Common Shares outstanding, unlimited number of shares authorized, par value $0.001 per share |
7,665,586 | 12,948,268 |
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 53 |
Statements of Operations |
Year Ended July 31, 2016 | BlackRock California Municipal Income Trust (BFZ) |
BlackRock Florida Municipal 2020 Term Trust (BFO) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
BlackRock Municipal Income Investment Trust (BBF) |
||||||||||||
Investment Income | ||||||||||||||||
Interest unaffiliated |
$ | 35,021,277 | $ | 3,105,785 | $ | 91,002,945 | $ | 8,531,360 | ||||||||
Dividends affiliated |
1,013 | 1,590 | 47,519 | 366 | ||||||||||||
|
|
|||||||||||||||
Total income |
35,022,290 | 3,107,375 | 91,050,464 | 8,531,726 | ||||||||||||
|
|
|||||||||||||||
Expenses | ||||||||||||||||
Investment advisory |
4,938,942 | 427,061 | 10,483,900 | 1,092,056 | ||||||||||||
Professional |
115,753 | 46,880 | 209,112 | 94,143 | ||||||||||||
Officer and Trustees |
57,477 | 9,247 | 175,066 | 17,570 | ||||||||||||
Accounting services |
37,364 | 15,789 | 235,480 | 29,912 | ||||||||||||
Transfer agent |
32,856 | 17,084 | 83,922 | 15,433 | ||||||||||||
Custodian |
32,799 | 5,340 | 98,767 | 10,393 | ||||||||||||
Printing |
12,592 | 6,182 | 27,354 | 7,153 | ||||||||||||
Registration |
10,672 | 8,101 | 24,398 | 8,118 | ||||||||||||
Liquidity fees |
| | | 67,440 | ||||||||||||
Reorganization costs |
| | | 211,142 | ||||||||||||
Remarketing fees on Preferred Shares |
| | | 7,790 | ||||||||||||
Rating agency |
36,854 | | 37,668 | 41,857 | ||||||||||||
Miscellaneous |
41,783 | 10,563 | 124,276 | 37,883 | ||||||||||||
|
|
|||||||||||||||
Total expenses excluding interest expense, fees and amortization of offering costs |
5,317,092 | 546,247 | 11,499,943 | 1,640,890 | ||||||||||||
Interest expense, fees and amortization of offering costs1 |
3,255,274 | 120 | 8,182,843 | 642,315 | ||||||||||||
|
|
|||||||||||||||
Total expenses |
8,572,366 | 546,367 | 19,682,786 | 2,283,205 | ||||||||||||
Less: | ||||||||||||||||
Fees waived by the Manager |
(1,243 | ) | (451 | ) | (1,207,248 | ) | (92 | ) | ||||||||
Fees paid indirectly |
(77 | ) | (5 | ) | (183 | ) | (13 | ) | ||||||||
|
|
|||||||||||||||
Total expenses after fees waived and paid indirectly |
8,571,046 | 545,911 | 18,475,355 | 2,283,100 | ||||||||||||
|
|
|||||||||||||||
Net investment income |
26,451,244 | 2,561,464 | 72,575,109 | 6,248,626 | ||||||||||||
|
|
|||||||||||||||
Realized and Unrealized Gain (Loss) | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments |
9,572,237 | (807,516 | ) | 30,322,482 | 271,672 | |||||||||||
Futures contracts |
(953,509 | ) | | (304,681 | ) | (357,719 | ) | |||||||||
|
|
|||||||||||||||
8,618,728 | (807,516 | ) | 30,017,801 | (86,047 | ) | |||||||||||
|
|
|||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments |
8,340,106 | 1,055,346 | 151,571,655 | 2,752,450 | ||||||||||||
Futures contracts |
(38,759 | ) | | 330,635 | (17,742 | ) | ||||||||||
|
|
|||||||||||||||
8,301,347 | 1,055,346 | 151,902,290 | 2,734,708 | |||||||||||||
|
|
|||||||||||||||
Net realized and unrealized gain |
16,920,075 | 247,830 | 181,920,091 | 2,648,661 | ||||||||||||
|
|
|||||||||||||||
Net Increase in Net Assets Applicable to Common Shareholders Resulting from Operations |
$ | 43,371,319 | $ | 2,809,294 | $ | 254,495,200 | $ | 8,897,287 | ||||||||
|
|
|||||||||||||||
1 Related to TOB Trusts, VMTP Shares, RVMTP Shares and/or VRDP Shares. |
See Notes to Financial Statements. | ||||||
54 | ANNUAL REPORT | JULY 31, 2016 |
Statements of Operations |
Year Ended July 31, 2016 | BlackRock New Jersey Municipal Income Trust (BNJ) |
BlackRock New York Municipal Income Trust (BNY) |
||||||
Investment Income | ||||||||
Interest unaffiliated |
$ | 8,811,564 | $ | 13,206,187 | ||||
Dividends affiliated |
590 | 1,622 | ||||||
|
|
|||||||
Total income |
8,812,154 | 13,207,809 | ||||||
|
|
|||||||
Expenses | ||||||||
Investment advisory |
1,187,107 | 1,943,398 | ||||||
Professional |
54,586 | 68,276 | ||||||
Officer and Trustees |
13,534 | 22,134 | ||||||
Accounting services |
32,868 | 48,049 | ||||||
Transfer agent |
20,761 | 24,166 | ||||||
Custodian |
10,152 | 16,407 | ||||||
Printing |
7,294 | 8,508 | ||||||
Registration |
8,119 | 8,118 | ||||||
Rating agency |
36,697 | 36,746 | ||||||
Miscellaneous |
23,191 | 36,026 | ||||||
|
|
|||||||
Total expenses excluding interest expense, fees and amortization of offering costs |
1,394,309 | 2,211,828 | ||||||
Interest expense, fees and amortization of offering costs1 |
807,989 | 1,271,564 | ||||||
|
|
|||||||
Total expenses |
2,202,298 | 3,483,392 | ||||||
Less: | ||||||||
Fees waived by the Manager |
(250 | ) | (2,574 | ) | ||||
Fees paid indirectly |
(3 | ) | (60 | ) | ||||
|
|
|||||||
Total expenses after fees waived and paid indirectly |
2,202,045 | 3,480,758 | ||||||
|
|
|||||||
Net investment income |
6,610,109 | 9,727,051 | ||||||
|
|
|||||||
Realized and Unrealized Gain (Loss) | ||||||||
Net realized gain (loss) from: | ||||||||
Investments |
(105,969 | ) | 1,546,772 | |||||
Futures contracts |
(484,262 | ) | (787,920 | ) | ||||
|
|
|||||||
(590,231 | ) | 758,852 | ||||||
|
|
|||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments |
7,499,951 | 12,471,891 | ||||||
Futures contracts |
(81,886 | ) | (92,514 | ) | ||||
|
|
|||||||
7,418,065 | 12,379,377 | |||||||
|
|
|||||||
Net realized and unrealized gain |
6,827,834 | 13,138,229 | ||||||
|
|
|||||||
Net Increase in Net Assets Applicable to Common Shareholders Resulting from Operations |
$ | 13,437,943 | $ | 22,865,280 | ||||
|
|
|||||||
1 Related to TOB Trusts, VMTP Shares, RVMTP Shares and/or VRDP Shares. |
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 55 |
Statements of Changes in Net Assets |
BlackRock California Municipal Income Trust (BFZ) |
BlackRock Florida Municipal 2020 Term Trust (BFO) |
|||||||||||||||||||
Year Ended July 31, | Year Ended July 31, | |||||||||||||||||||
Increase (Decrease) in Net Assets Applicable to Common Shareholders: | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Operations | ||||||||||||||||||||
Net investment income |
$ | 26,451,244 | $ | 26,545,088 | $ | 2,561,464 | $ | 2,311,006 | ||||||||||||
Net realized gain (loss) |
8,618,728 | 5,579,813 | (807,516 | ) | 307,666 | |||||||||||||||
Net change in unrealized appreciation (depreciation) |
8,301,347 | (4,073,134 | ) | 1,055,346 | (429,218 | ) | ||||||||||||||
Distributions to AMPS Shareholders from net investment income |
| | | (175 | ) | |||||||||||||||
|
|
|
|
|||||||||||||||||
Net increase in net assets applicable to Common Shareholders resulting from operations |
43,371,319 | 28,051,767 | 2,809,294 | 2,189,279 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Distributions to Common Shareholders1 | ||||||||||||||||||||
From net investment income |
(27,300,889 | ) | (27,615,716 | ) | (2,110,271 | ) | (2,427,313 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Capital Share Transactions | ||||||||||||||||||||
Reinvestment of common distributions |
297,726 | | | | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total increase (decrease) in net assets applicable to Common Shareholders |
16,368,156 | 436,051 | 699,023 | (238,034 | ) | |||||||||||||||
Beginning of year |
504,967,183 | 504,531,132 | 85,510,409 | 85,748,443 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
End of year |
$ | 521,335,339 | $ | 504,967,183 | $ | 86,209,432 | $ | 85,510,409 | ||||||||||||
|
|
|
|
|||||||||||||||||
Undistributed net investment income, end of year |
$ | 1,899,506 | $ | 2,861,564 | $ | 2,201,242 | $ | 1,977,448 | ||||||||||||
|
|
|
|
1 | Distributions for annual periods determined in accordance with federal income tax regulations. |
See Notes to Financial Statements. | ||||||
56 | ANNUAL REPORT | JULY 31, 2016 |
Statements of Changes in Net Assets |
BlackRock Municipal 2030 Target Term Trust (BTT) |
BlackRock Municipal Income Investment Trust (BBF) |
|||||||||||||||||||
Year Ended July 31, | Year Ended July 31, | |||||||||||||||||||
Increase (Decrease) in Net Assets Applicable to Common Shareholders: | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Operations | ||||||||||||||||||||
Net investment income |
$ | 72,575,109 | $ | 77,156,182 | $ | 6,248,626 | $ | 5,823,129 | ||||||||||||
Net realized gain (loss) |
30,017,801 | 4,957,993 | (86,047 | ) | (3,848 | ) | ||||||||||||||
Net change in unrealized appreciation (depreciation) |
151,902,290 | 37,609,616 | 2,734,708 | 349,346 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Net increase in net assets applicable to Common Shareholders resulting from operations |
254,495,200 | 119,723,791 | 8,897,287 | 6,168,627 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Distributions to Common Shareholders1 | ||||||||||||||||||||
From net investment income |
(67,789,555 | ) | (67,685,348 | ) | (6,331,712 | ) | (5,822,882 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Capital Share Transactions | ||||||||||||||||||||
Net proceeds from the issuance of shares due to reorganization |
| | 53,855,412 | | ||||||||||||||||
Reinvestment of common distributions |
| | 35,931 | | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Net increase in net assets derived from capital share transactions |
| | 53,891,343 | | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total increase in net assets applicable to Common Shareholders |
186,705,645 | 52,038,443 | 56,456,918 | 345,745 | ||||||||||||||||
Beginning of year |
1,602,414,058 | 1,550,375,615 | 101,508,510 | 101,162,765 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
End of year |
$ | 1,789,119,703 | $ | 1,602,414,058 | $ | 157,965,428 | $ | 101,508,510 | ||||||||||||
|
|
|
|
|||||||||||||||||
Undistributed net investment income, end of year |
$ | 10,411,285 | $ | 5,945,732 | $ | 1,093,574 | $ | 688,914 | ||||||||||||
|
|
|
|
1 | Distributions for annual periods determined in accordance with federal income tax regulations. |
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 57 |
Statements of Changes in Net Assets |
BlackRock New Jersey Municipal Income Trust (BNJ) |
BlackRock New York Municipal Income Trust (BNY) |
|||||||||||||||||||
Year Ended July 31, | Year Ended July 31, | |||||||||||||||||||
Increase (Decrease) in Net Assets Applicable to Common Shareholders: | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Operations | ||||||||||||||||||||
Net investment income |
$ | 6,610,109 | $ | 6,617,670 | $ | 9,727,051 | $ | 10,214,239 | ||||||||||||
Net realized gain (loss) |
(590,231 | ) | (85,555 | ) | 758,852 | (1,160,623 | ) | |||||||||||||
Net change in unrealized appreciation (depreciation) |
7,418,065 | 49,567 | 12,379,377 | 5,390,669 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Net increase in net assets applicable to Common Shareholders resulting from operations |
13,437,943 | 6,581,682 | 22,865,280 | 14,444,285 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Distributions to Common Shareholders1 | ||||||||||||||||||||
From net investment income |
(6,858,003 | ) | (6,997,412 | ) | (10,277,182 | ) | (10,693,019 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Capital Share Transactions | ||||||||||||||||||||
Reinvestment of common distributions |
67,518 | 77,990 | 527,186 | | ||||||||||||||||
|
|
|
|
|||||||||||||||||
Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total increase (decrease) in net assets applicable to Common Shareholders |
6,647,458 | (337,740 | ) | 13,115,284 | 3,751,266 | |||||||||||||||
Beginning of year |
119,171,061 | 119,508,801 | 193,299,177 | 189,547,911 | ||||||||||||||||
|
|
|
|
|||||||||||||||||
End of year |
$ | 125,818,519 | $ | 119,171,061 | $ | 206,414,461 | $ | 193,299,177 | ||||||||||||
|
|
|
|
|||||||||||||||||
Undistributed net investment income, end of year |
$ | 1,035,171 | $ | 1,293,868 | $ | 2,019,062 | $ | 2,569,705 | ||||||||||||
|
|
|
|
1 | Distributions for annual periods determined in accordance with federal income tax regulations. |
See Notes to Financial Statements. | ||||||
58 | ANNUAL REPORT | JULY 31, 2016 |
Statements of Cash Flows |
Year Ended July 31, 2016 | BlackRock California Municipal Income Trust (BFZ) |
BlackRock Municipal 2030 Target Term Trust (BTT) |
BlackRock Municipal Income Investment Trust (BBF) |
BlackRock New Jersey Municipal Income Trust (BNJ) |
BlackRock New York Municipal Income Trust (BNY) |
|||||||||||||||
Cash Provided by (Used for) Operating Activities | ||||||||||||||||||||
Net increase in net assets resulting from operations |
$ | 43,371,319 | $ | 254,495,200 | $ | 8,897,287 | $ | 13,437,943 | $ | 22,865,280 | ||||||||||
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used for) operating activities: |
||||||||||||||||||||
Proceeds from sales of long-term investments |
251,056,437 | 1,084,779,123 | 31,309,755 | 1 | 22,708,662 | 44,618,396 | ||||||||||||||
Purchases of long-term investments |
(284,757,610 | ) | (1,082,289,074 | ) | (33,852,888 | )1 | (22,223,479 | ) | (51,940,067 | ) | ||||||||||
Net proceeds from sales (purchases) of short-term securities |
2,608,995 | (16,931,109 | ) | 437,626 | (599,343 | ) | 4,337,610 | |||||||||||||
Amortization of premium and accretion of discount on investments and other fees |
4,491,103 | 6,251,807 | 489,605 | 287,654 | 1,201,222 | |||||||||||||||
Net realized gain (loss) on investments |
(9,633,015 | ) | (30,322,482 | ) | (298,728 | ) | 104,186 | (1,552,548 | ) | |||||||||||
Net unrealized gain (loss) on investments |
(8,340,106 | ) | (151,571,655 | ) | (2,752,450 | ) | (7,499,951 | ) | (12,471,891 | ) | ||||||||||
(Increase) decrease in assets: |
| |||||||||||||||||||
Cash pledged for futures contracts |
(114,000 | ) | 850,502 | 52,950 | 1 | 22,000 | 12,000 | |||||||||||||
Receivables: |
||||||||||||||||||||
Dividends affiliated |
(426 | ) | (11,843 | ) | (49 | ) | (324 | ) | (155 | ) | ||||||||||
Interest unaffiliated |
186,366 | 2,059,278 | 302,175 | 1 | 48,544 | (4,384 | ) | |||||||||||||
Prepaid expenses |
(28,368 | ) | (6,426 | ) | 2,807 | 1 | (2,212 | ) | (2,327 | ) | ||||||||||
Increase (decrease) in liabilities: |
| |||||||||||||||||||
Payables: |
||||||||||||||||||||
Investment advisory fees |
23,716 | 170,494 | (22,120 | )1 | 3,910 | 9,135 | ||||||||||||||
Interest expense and fees |
197,147 | 164,333 | 31,171 | 1 | 11,379 | 21,195 | ||||||||||||||
Officers and Trustees fees |
2,943 | 4,723 | 4,028 | 1 | (367 | ) | (911 | ) | ||||||||||||
Other accrued expenses |
32,656 | (175,579 | ) | (16,915 | )1 | 3,887 | 19,854 | |||||||||||||
Variation margin on futures contracts |
21,297 | (374,063 | ) | (27,117 | )1 | (23,266 | ) | (28,046 | ) | |||||||||||
Reorganization costs |
| | 93,243 | 1 | | | ||||||||||||||
|
|
|||||||||||||||||||
Net cash provided by (used for) operating activities |
(881,546 | ) | 67,093,229 | 4,650,380 | 6,279,223 | 7,084,363 | ||||||||||||||
|
|
|||||||||||||||||||
Cash Provided by (Used for) Financing Activities | ||||||||||||||||||||
Cash dividends paid to Common Shareholders |
(27,161,298 | ) | (67,789,555 | ) | (6,776,696 | )1 | (6,832,332 | ) | (9,864,185 | ) | ||||||||||
Amortization of deferred offering costs |
| 31,356 | 6,128 | 1 | | | ||||||||||||||
Proceeds from TOB Trust Certificates |
41,455,951 | | 1,276,469 | 588,627 | 5,626,929 | |||||||||||||||
Repayments of TOB Trust Certificates |
(15,342,721 | ) | (5,058 | ) | 1,595 | | (3,242,308 | ) | ||||||||||||
Proceeds from Loan for TOB Trust Certificates |
6,692,722 | | | | 3,241,802 | |||||||||||||||
Repayments of Loan for TOB Trust Certificates |
(4,647,697 | ) | | | | (2,806,802 | ) | |||||||||||||
Increase in bank overdraft |
| 670,028 | | | | |||||||||||||||
|
|
|||||||||||||||||||
Net cash provided by (used for) financing activities |
996,957 | (67,093,229 | ) | (5,492,504 | ) | (6,243,705 | ) | (7,044,564 | ) | |||||||||||
|
|
|||||||||||||||||||
Cash | ||||||||||||||||||||
Net increase in cash |
115,411 | | (842,124 | ) | 35,518 | 39,799 | ||||||||||||||
Cash at beginning of year |
| | 905,333 | 2 | | | ||||||||||||||
|
|
|||||||||||||||||||
Cash at end of year |
$ | 115,411 | | $ | 63,209 | $ | 35,518 | $ | 39,799 | |||||||||||
|
|
|||||||||||||||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||||||||||
Cash paid during the year for interest expense |
$ | (197,147 | ) | $ | (195,689 | ) | $ | (37,299 | ) | $ | (11,379 | ) | $ | (21,195 | ) | |||||
|
|
|||||||||||||||||||
Non-cash Financing Activities | ||||||||||||||||||||
Capital shares issued in reinvestment of distributions paid to Common Shareholders |
$ | 297,726 | | $ | 35,931 | $ | 67,518 | $ | 527,186 | |||||||||||
Fair value of investments and derivatives acquired through reorganization |
| | $ | 86,823,654 | | | ||||||||||||||
Common Shares issued in reorganization |
| | $ | 53,855,412 | | | ||||||||||||||
Preferred Shares issued in reorganization |
| | $ | 17,800,000 | | | ||||||||||||||
|
|
|||||||||||||||||||
1 Includes assets and liabilities acquired in reorganization. |
||||||||||||||||||||
2 Includes cash acquired in reorganization of $905,333. |
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 59 |
Financial Highlights | BlackRock California Municipal Income Trust (BFZ) |
Year Ended July 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||
Net asset value, beginning of year |
$ | 15.84 | $ | 15.83 | $ | 14.50 | $ | 16.32 | $ | 13.88 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net investment income1 |
0.83 | 0.83 | 0.87 | 0.89 | 0.95 | |||||||||||||||
Net realized and unrealized gain (loss) |
0.54 | 0.05 | 1.39 | (1.78 | ) | 2.42 | ||||||||||||||
Distributions to AMPS Shareholders from net investment income |
| | | | (0.01 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net increase (decrease) from investment operations |
1.37 | 0.88 | 2.26 | (0.89 | ) | 3.36 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Distributions to Common Shareholders from net investment income2 |
(0.86 | ) | (0.87 | ) | (0.93 | ) | (0.93 | ) | (0.92 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 16.35 | $ | 15.84 | $ | 15.83 | $ | 14.50 | $ | 16.32 | ||||||||||
|
|
|||||||||||||||||||
Market price, end of year |
$ | 16.76 | $ | 14.65 | $ | 14.41 | $ | 13.63 | $ | 16.64 | ||||||||||
|
|
|||||||||||||||||||
Total Return Applicable to Common Shareholders3 | ||||||||||||||||||||
Based on net asset value |
8.92% | 5.96% | 16.48% | (5.81)% | 24.98% | |||||||||||||||
|
|
|||||||||||||||||||
Based on market price |
20.72% | 7.66% | 12.80% | (13.17)% | 34.40% | |||||||||||||||
|
|
|||||||||||||||||||
Ratios to Average Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total expenses |
1.68% | 1.53% | 1.59% | 1.63% | 1.49% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly |
1.68% | 1.53% | 1.59% | 1.63% | 1.46% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs6 |
1.04% | 1.00% | 1.03% | 1.01% | 1.07% | 4,5 | ||||||||||||||
|
|
|||||||||||||||||||
Net investment income |
5.17% | 5.20% | 5.78% | 5.49% | 6.28% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to AMPS Shareholders |
| | | | 0.05% | |||||||||||||||
|
|
|||||||||||||||||||
Net investment income to Common Shareholders |
5.17% | 5.20% | 5.78% | 5.49% | 6.23% | |||||||||||||||
|
|
|||||||||||||||||||
Supplemental Data | ||||||||||||||||||||
Net assets applicable to Common Shareholders, end of period (000) |
$ | 521,335 | $ | 504,967 | $ | 504,531 | $ | 462,273 | $ | 519,578 | ||||||||||
|
|
|||||||||||||||||||
VMTP Shares outstanding at $100,000 liquidation value, end of year (000) |
$ | 171,300 | $ | 171,300 | $ | 171,300 | $ | 171,300 | $ | 171,300 | ||||||||||
|
|
|||||||||||||||||||
Asset coverage per VMTP Shares at $100,000 liquidation value, end of year |
$ | 404,341 | $ | 394,785 | $ | 394,531 | $ | 369,862 | $ | 403,314 | ||||||||||
|
|
|||||||||||||||||||
Borrowings outstanding, end of period (000) |
$ | 183,691 | $ | 155,533 | $ | 106,698 | $ | 158,655 | $ | 162,234 | ||||||||||
|
|
|||||||||||||||||||
Portfolio turnover rate |
30% | 37% | 25% | 22% | 30% | |||||||||||||||
|
|
1 | Based on average Common Shares outstanding. |
2 | Distributions for annual periods determined in accordance with federal income tax regulations. |
3 | Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
4 | Does not reflect the effect of dividends to AMPS Shareholders. |
5 | For the year ended July 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs and remarketing fees was 1.04%. |
6 | Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details. |
See Notes to Financial Statements. | ||||||
60 | ANNUAL REPORT | JULY 31, 2016 |
Financial Highlights | BlackRock Florida Municipal 2020 Term Trust (BFO) |
Year Ended July 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||
Net asset value, beginning of year |
$ | 15.37 | $ | 15.42 | $ | 15.31 | $ | 16.05 | $ | 14.94 | ||||||||||
|
|
|||||||||||||||||||
Net investment income1 |
0.46 | 0.42 | 0.47 | 0.68 | 0.85 | |||||||||||||||
Net realized and unrealized gain (loss) |
0.05 | (0.03 | ) | 0.25 | (0.65 | ) | 0.98 | |||||||||||||
Distributions to AMPS Shareholders from net investment income |
| (0.00 | )2 | (0.00 | )2 | (0.01 | ) | (0.02 | ) | |||||||||||
|
|
|||||||||||||||||||
Net increase from investment operations |
0.51 | 0.39 | 0.72 | 0.02 | 1.81 | |||||||||||||||
|
|
|||||||||||||||||||
Distributions to Common Shareholders from net investment income3 |
(0.38 | ) | (0.44 | ) | (0.61 | ) | (0.76 | ) | (0.70 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of year |
$ | 15.50 | $ | 15.37 | $ | 15.42 | $ | 15.31 | $ | 16.05 | ||||||||||
|
|
|||||||||||||||||||
Market price, end of year |
$ | 15.21 | $ | 14.82 | $ | 15.16 | $ | 15.12 | $ | 15.60 | ||||||||||
|
|
|||||||||||||||||||
Total Return Applicable to Common Shareholders4 | ||||||||||||||||||||
Based on net asset value |
3.41% | 2.59% | 4.84% | 0.12% | 12.44% | |||||||||||||||
|
|
|||||||||||||||||||
Based on market price |
5.24% | 0.62% | 4.36% | 1.73% | 17.38% | |||||||||||||||
|
|
|||||||||||||||||||
Ratios to Average Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total expenses |
0.64% | 0.68% | 0.74% | 0.92% | 1.06% | |||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly5 |
0.64% | 0.68% | 0.74% | 0.92% | 1.06% | |||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs5,6 |
0.64% | 0.68% | 7 | 0.74% | 7 | 0.92% | 7 | 1.06% | 7 | |||||||||||
|
|
|||||||||||||||||||
Net investment income5 |
3.00% | 2.69% | 3.05% | 4.23% | 5.48% | |||||||||||||||
|
|
|||||||||||||||||||
Distributions to AMPS Shareholders |
| 0.00% | 0.01% | 0.09% | 0.12% | |||||||||||||||
|
|
|||||||||||||||||||
Net investment income to Common Shareholders |
3.00% | 2.69% | 3.04% | 4.14% | 5.36% | |||||||||||||||
|
|
|||||||||||||||||||
Supplemental Data | ||||||||||||||||||||
Net assets applicable to Common Shareholders, end of year (000) |
$ | 86,209 | $ | 85,510 | $ | 85,748 | $ | 85,139 | $ | 89,251 | ||||||||||
|
|
|||||||||||||||||||
AMPS outstanding at $25,000 liquidation preference, end of year (000) |
| | $ | 625 | $ | 19,100 | $ | 42,900 | ||||||||||||
|
|
|||||||||||||||||||
Asset coverage per AMPS at $25,000 liquidation preference, end of year (000) |
| | $ | 3,454,938 | $ | 136,438 | $ | 77,011 | ||||||||||||
|
|
|||||||||||||||||||
Borrowings outstanding, end of year (000) |
| $ | 134 | $ | 190 | $ | 280 | $ | 470 | |||||||||||
|
|
|||||||||||||||||||
Portfolio turnover rate |
7% | 14% | 1% | 9% | 32% | |||||||||||||||
|
|
1 | Based on average Common Shares outstanding. |
2 | Amount is greater than $(0.005) per share. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
5 | Does not reflect the effect of dividends to AMPS Shareholders. |
6 | Interest expense and fees relate to TOB Trusts. See Note 4 of the Notes to Financial Statements for details. |
7 | The total expense ratio after fees waived and paid indirectly and excluding interest expense, fees and remarketing fees was as follows: |
Year Ended July 31, | ||||||||||||||||
2015 | 2014 | 2013 | 2012 | |||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees and remarketing fees |
0.67% | 0.73% | 0.87% | 0.97% | ||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 61 |
Financial Highlights | BlackRock Municipal 2030 Target Term Trust (BTT) |
Year Ended July 31, | Period 2013 |
|||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||
Per Share Operating Performance | ||||||||||||||||
Net asset value, beginning of period |
$ | 22.73 | $ | 21.99 | $ | 18.75 | $ | 23.88 | 2 | |||||||
|
|
|||||||||||||||
Net investment income3 |
1.03 | 1.09 | 1.12 | 0.80 | ||||||||||||
Net realized and unrealized gain (loss) |
2.58 | 0.61 | 3.23 | (4.95 | ) | |||||||||||
|
|
|||||||||||||||
Net increase (decrease) from investment operations |
3.61 | 1.70 | 4.35 | (4.15 | ) | |||||||||||
|
|
|||||||||||||||
Distributions to Common Shareholders:4 | ||||||||||||||||
From net investment income |
(0.96 | ) | (0.96 | ) | (1.09 | ) | (0.87 | ) | ||||||||
From return of capital |
| | (0.02 | ) | (0.11 | ) | ||||||||||
|
|
|||||||||||||||
Total distributions to Common Shareholders |
(0.96 | ) | (0.96 | ) | (1.11 | ) | (0.98 | ) | ||||||||
|
|
|||||||||||||||
Net asset value, end of period |
$ | 25.38 | $ | 22.73 | $ | 21.99 | $ | 18.75 | ||||||||
|
|
|||||||||||||||
Market price, end of period |
$ | 24.24 | $ | 20.80 | $ | 19.57 | $ | 18.42 | ||||||||
|
|
|||||||||||||||
Total Return Applicable to Common Shareholders5 | ||||||||||||||||
Based on net asset value |
16.57% | 8.32% | 24.50% | (18.00)% | 6 | |||||||||||
|
|
|||||||||||||||
Based on market price |
21.67% | 11.37% | 12.78% | (23.05)% | 6 | |||||||||||
|
|
|||||||||||||||
Ratios to Average Net Assets Applicable to Common Shareholders | ||||||||||||||||
Total expenses |
1.17% | 1.14% | 1.22% | 0.99% | 7 | |||||||||||
|
|
|||||||||||||||
Total expenses after fees waived and paid indirectly |
1.09% | 1.06% | 1.21% | 0.99% | 7 | |||||||||||
|
|
|||||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs8 |
0.61% | 0.62% | 0.72% | 0.64% | 7 | |||||||||||
|
|
|||||||||||||||
Net investment income to Common Shareholders |
4.30% | 4.77% | 5.61% | 3.78% | 7 | |||||||||||
|
|
|||||||||||||||
Supplemental Data | ||||||||||||||||
Net assets applicable to Common Shareholders, end of period (000) |
$ | 1,789,120 | $ | 1,602,414 | $ | 1,550,376 | $ | 1,321,835 | ||||||||
|
|
|||||||||||||||
RVMTP Shares outstanding at $5,000,000 liquidation value, end of period (000) |
$ | 750,000 | $ | 750,000 | $ | 750,000 | $ | 750,000 | ||||||||
|
|
|||||||||||||||
Asset coverage per RVMTP Shares at $5,000,000 liquidation value, end of period |
$ | 16,927,465 | $ | 15,682,760 | $ | 15,335,837 | $ | 13,812,236 | ||||||||
|
|
|||||||||||||||
Borrowings outstanding, end of period (000) |
$ | 184,115 | $ | 184,120 | $ | 184,120 | $ | 238,705 | ||||||||
|
|
|||||||||||||||
Portfolio turnover rate |
42% | 12% | 6% | 39% | ||||||||||||
|
|
1 | Commencement of operations. |
2 | Net asset value, beginning of period, reflects a deduction of $1.125 per share sales charge from the initial offering price of $25.00 per share. |
3 | Based on average Common Shares outstanding. |
4 | Distributions for annual periods determined in accordance with federal income tax regulations. |
5 | Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
6 | Aggregate total return. |
7 | Annualized. |
8 | Interest expense, fees and amortization of offering costs related to TOB Trusts and/or RVMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details. |
See Notes to Financial Statements. | ||||||
62 | ANNUAL REPORT | JULY 31, 2016 |
Financial Highlights | BlackRock Municipal Income Investment Trust (BBF) |
Year Ended July 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||
Net asset value, beginning of year |
$ | 15.14 | $ | 15.09 | $ | 13.89 | $ | 15.91 | $ | 13.40 | ||||||||||
|
|
|||||||||||||||||||
Net investment income1 |
0.84 | 0.87 | 0.87 | 0.85 | 0.86 | |||||||||||||||
Net realized and unrealized gain (loss) |
0.36 | 0.05 | 1.20 | (2.00 | ) | 2.55 | ||||||||||||||
Distributions to AMPS Shareholders from net investment income |
| | | | (0.00 | )2 | ||||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) from investment operations |
1.20 | 0.92 | 2.07 | (1.15 | ) | 3.41 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to Common Shareholders from net investment income3 |
(0.87 | ) | (0.87 | ) | (0.87 | ) | (0.87 | ) | (0.90 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of year |
$ | 15.47 | $ | 15.14 | $ | 15.09 | $ | 13.89 | $ | 15.91 | ||||||||||
|
|
|||||||||||||||||||
Market price, end of year |
$ | 16.00 | $ | 13.44 | $ | 13.48 | $ | 12.47 | $ | 16.25 | ||||||||||
|
|
|||||||||||||||||||
Total Return Applicable to Common Shareholders4 | ||||||||||||||||||||
Based on net asset value |
8.40% | 6.76% | 16.06% | (7.56 | )% | 26.21% | ||||||||||||||
|
|
|||||||||||||||||||
Based on market price |
26.29% | 6.09% | 15.49% | (18.75 | )% | 35.59% | ||||||||||||||
|
|
|||||||||||||||||||
Ratios to Average Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total expenses |
2.01% | 5 | 1.76% | 1.85% | 1.83% | 1.99% | 6 | |||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly |
2.01% | 5 | 1.76% | 1.85% | 1.83% | 1.99% | 6 | |||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees, and amortization of offering costs7,8 |
1.45% | 5 | 1.50% | 1.56% | 1.49% | 1.61% | 6 | |||||||||||||
|
|
|||||||||||||||||||
Net investment income |
5.50% | 5.65% | 6.09% | 5.41% | 5.89% | 6 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to AMPS Shareholders |
| | | | 0.02% | |||||||||||||||
|
|
|||||||||||||||||||
Net investment income to Common Shareholders |
5.50% | 5.65% | 6.09% | 5.41% | 5.87% | |||||||||||||||
|
|
|||||||||||||||||||
Supplemental Data | ||||||||||||||||||||
Net assets applicable to Common Shareholders, end of year (000) |
$ | 157,965 | $ | 101,509 | $ | 101,163 | $ | 93,145 | $ | 106,627 | ||||||||||
|
|
|||||||||||||||||||
VRDP Shares outstanding at $100,000 liquidation value, end of year (000) |
$ | 52,000 | $ | 34,200 | $ | 34,200 | $ | 34,200 | $ | 34,200 | ||||||||||
|
|
|||||||||||||||||||
Asset coverage per VRDP Shares at $100,000 liquidation value, end of year |
$ | 403,780 | $ | 396,809 | $ | 395,798 | $ | 372,353 | $ | 411,775 | ||||||||||
|
|
|||||||||||||||||||
Borrowings outstanding, end of year (000) |
$ | 47,193 | $ | 29,682 | $ | 29,682 | $ | 34,096 | $ | 33,466 | ||||||||||
|
|
|||||||||||||||||||
Portfolio turnover rate |
17% | 11% | 22% | 33% | 39% | |||||||||||||||
|
|
1 | Based on average Common Shares outstanding. |
2 | Amount is greater than $(0.005) per share. |
3 | Distributions for annual periods determined in accordance with federal income tax regulations. |
4 | Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
5 | Includes reorganization costs associated with the Trusts reorganization. Without these costs, total expenses, total expenses after fees waived and/or reimbursed and total expenses after fees waived and/or reimbursed and excluding interest expense would have been 1.83%, 1.83% and 1.26%, respectively, for the year ended July 31, 2016. |
6 | Does not reflect the effect of dividends to AMPS Shareholders. |
7 | Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VRDP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details. |
8 | The total expense ratio after fees waived and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was as follows: |
Year Ended July 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Total expenses after fees waived and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees |
1.38% | 1.17% | 1.19% | 1.17% | 1.31% | |||||||||||||||
|
|
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 63 |
Financial Highlights | BlackRock New Jersey Municipal Income Trust (BNJ) |
Year Ended July 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||
Net asset value, beginning of year |
$ | 15.55 | $ | 15.61 | $ | 14.36 | $ | 16.17 | $ | 14.07 | ||||||||||
|
|
|||||||||||||||||||
Net investment income1 |
0.86 | 0.86 | 0.88 | 0.88 | 0.95 | |||||||||||||||
Net realized and unrealized gain (loss) |
0.90 | (0.01 | ) | 1.27 | (1.75 | ) | 2.11 | |||||||||||||
Distributions to AMPS Shareholders from net investment income |
| | | | (0.01 | ) | ||||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) from investment operations |
1.76 | 0.85 | 2.15 | (0.87 | ) | 3.05 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to Common Shareholders from net investment income2 |
(0.90 | ) | (0.91 | ) | (0.90 | ) | (0.94 | ) | (0.95 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of year |
$ | 16.41 | $ | 15.55 | $ | 15.61 | $ | 14.36 | $ | 16.17 | ||||||||||
|
|
|||||||||||||||||||
Market price, end of year |
$ | 16.79 | $ | 14.61 | $ | 14.68 | $ | 13.67 | $ | 17.67 | ||||||||||
|
|
|||||||||||||||||||
Total Return Applicable to Common Shareholders3 | ||||||||||||||||||||
Based on net asset value |
11.81% | 5.79% | 16.01% | (5.82)% | 22.25% | |||||||||||||||
|
|
|||||||||||||||||||
Based on market price |
21.76% | 5.69% | 14.60% | (17.95)% | 33.30% | |||||||||||||||
|
|
|||||||||||||||||||
Ratios to Average Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total expenses |
1.81% | 1.80% | 1.89% | 1.81% | 1.47% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly |
1.81% | 1.79% | 1.89% | 1.81% | 1.46% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs5 |
1.15% | 1.15% | 1.18% | 1.13% | 1.18% | 4,6 | ||||||||||||||
|
|
|||||||||||||||||||
Net investment income |
5.45% | 5.43% | 5.96% | 5.51% | 6.28% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to AMPS Shareholders |
| | | | 0.08% | |||||||||||||||
|
|
|||||||||||||||||||
Net investment income to Common Shareholders |
5.45% | 5.43% | 5.96% | 5.51% | 6.20% | |||||||||||||||
|
|
|||||||||||||||||||
Supplemental Data | ||||||||||||||||||||
Net assets applicable to Common Shareholders, end of year (000) |
$ | 125,819 | $ | 119,171 | $ | 119,509 | $ | 109,950 | $ | 123,497 | ||||||||||
|
|
|||||||||||||||||||
VMTP Shares outstanding at $100,000 liquidation value, end of year (000) |
$ | 59,100 | $ | 59,100 | $ | 59,100 | $ | 59,100 | $ | 59,100 | ||||||||||
|
|
|||||||||||||||||||
Asset coverage per VMTP Shares at $100,000 liquidation value, end of year |
$ | 312,891 | $ | 301,643 | $ | 302,215 | $ | 286,040 | $ | 308,962 | ||||||||||
|
|
|||||||||||||||||||
Borrowings outstanding, end of year (000) |
$ | 17,890 | $ | 17,301 | $ | 17,301 | $ | 17,302 | $ | 10,634 | ||||||||||
|
|
|||||||||||||||||||
Portfolio turnover rate |
11% | 12% | 20% | 9% | 20% | |||||||||||||||
|
|
1 | Based on average Common Shares outstanding. |
2 | Distributions for annual periods determined in accordance with federal income tax regulations. |
3 | Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
4 | Does not reflect the effect of dividends to AMPS Shareholders. |
5 | Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details. |
6 | For the year ended July 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was 1.14%. |
See Notes to Financial Statements. | ||||||
64 | ANNUAL REPORT | JULY 31, 2016 |
Financial Highlights | BlackRock New York Municipal Income Trust (BNY) |
Year Ended July 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||
Net asset value, beginning of year |
$ | 14.97 | $ | 14.68 | $ | 13.47 | $ | 15.53 | $ | 13.87 | ||||||||||
|
|
|||||||||||||||||||
Net investment income1 |
0.75 | 0.79 | 0.81 | 0.87 | 0.93 | |||||||||||||||
Net realized and unrealized gain (loss) |
1.02 | 0.33 | 1.23 | (2.06 | ) | 1.73 | ||||||||||||||
Distributions to AMPS Shareholders from net investment income |
| | | | (0.01 | ) | ||||||||||||||
|
|
|||||||||||||||||||
Net increase (decrease) from investment operations |
1.77 | 1.12 | 2.04 | (1.19 | ) | 2.65 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to Common Shareholders from net investment income2 |
(0.80 | ) | (0.83 | ) | (0.83 | ) | (0.87 | ) | (0.99 | ) | ||||||||||
|
|
|||||||||||||||||||
Net asset value, end of year |
$ | 15.94 | $ | 14.97 | $ | 14.68 | $ | 13.47 | $ | 15.53 | ||||||||||
|
|
|||||||||||||||||||
Market price, end of year |
$ | 16.71 | $ | 14.54 | $ | 13.79 | $ | 13.16 | $ | 16.73 | ||||||||||
|
|
|||||||||||||||||||
Total Return Applicable to Common Shareholders3 | ||||||||||||||||||||
Based on net asset value |
12.13% | 8.00% | 15.98% | (8.18)% | 19.62% | |||||||||||||||
|
|
|||||||||||||||||||
Based on market price |
21.02% | 11.67% | 11.51% | (16.73)% | 25.87% | |||||||||||||||
|
|
|||||||||||||||||||
Ratios to Average Net Assets Applicable to Common Shareholders | ||||||||||||||||||||
Total expenses |
1.75% | 1.73% | 1.82% | 1.85% | 1.49% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly |
1.75% | 1.73% | 1.82% | 1.84% | 1.49% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Total expenses after fees waived and paid indirectly and excluding interest expense, fees and amortization of offering costs5 |
1.11% | 1.12% | 1.13% | 1.14% | 1.18% | 4,6 | ||||||||||||||
|
|
|||||||||||||||||||
Net investment income |
4.89% | 5.24% | 5.89% | 5.71% | 6.34% | 4 | ||||||||||||||
|
|
|||||||||||||||||||
Distributions to AMPS Shareholders |
| | | | 0.08% | |||||||||||||||
|
|
|||||||||||||||||||
Net investment income to Common Shareholders |
4.89% | 5.24% | 5.89% | 5.71% | 6.26% | |||||||||||||||
|
|
|||||||||||||||||||
Supplemental Data | ||||||||||||||||||||
Net assets applicable to Common Shareholders, end of period (000) |
$ | 206,414 | $ | 193,299 | $ | 189,548 | $ | 173,976 | $ | 200,020 | ||||||||||
|
|
|||||||||||||||||||
VMTP Shares outstanding at $100,000 liquidation value, end of year (000) |
$ | 94,500 | $ | 94,500 | $ | 94,500 | $ | 94,500 | $ | 94,500 | ||||||||||
|
|
|||||||||||||||||||
Asset coverage per VMTP Shares at $100,000 liquidation value, end of year |
$ | 318,428 | $ | 304,549 | $ | 300,580 | $ | 284,102 | $ | 311,661 | ||||||||||
|
|
|||||||||||||||||||
Borrowings outstanding, end of period (000) |
$ | 31,780 | $ | 28,961 | $ | 28,461 | $ | 31,620 | $ | 32,847 | ||||||||||
|
|
|||||||||||||||||||
Portfolio turnover rate |
14% | 11% | 26% | 23% | 24% | |||||||||||||||
|
|
1 | Based on average Common Shares outstanding. |
2 | Distributions for annual periods determined in accordance with federal income tax regulations. |
3 | Total returns based on market price, which can be significantly greater or less than the net asset value, may result in substantially different returns. Where applicable, excludes the effects of any sales charges and assumes the reinvestment of distributions. |
4 | Does not reflect the effect of dividends to AMPS Shareholders. |
5 | Interest expense, fees and amortization of offering costs related to TOB Trusts and/or VMTP Shares. See Note 4 and Note 10 of the Notes to Financial Statements for details. |
6 | For the year ended July 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of offering costs, liquidity and remarketing fees was 1.13%. |
See Notes to Financial Statements. | ||||||
ANNUAL REPORT | JULY 31, 2016 | 65 |
Notes to Financial Statements |
1. Organization:
The following are registered under the Investment Company Act of 1940, as amended (the 1940 Act), as closed-end management investment companies. BlackRock California Municipal Income Trust, BlackRock Municipal 2030 Target Term Trust (formerly known as BlackRock Municipal Target Term Trust), BlackRock Municipal Income Investment Trust, BlackRock New, Jersey Municipal Income Trust, BlackRock New York Municipal Income Trust (collectively, the Income Trusts) and together with BlackRock Florida Municipal 2020 Term Trust are referred to herein collectively as the Trusts, or individually, a Trust:
Fund Name | Herein Referred To As |
Organized | Diversification Classification |
|||||||||
BlackRock California Municipal Income Trust |
BFZ | Delaware | Non-diversified | |||||||||
BlackRock Florida Municipal 2020 Term Trust |
BFO | Delaware | Non-diversified | |||||||||
BlackRock Municipal 2030 Target Term Trust |
BTT | Delaware | Non-diversified | |||||||||
BlackRock Municipal Income Investment Trust |
BBF | Delaware | Non-diversified | |||||||||
BlackRock New Jersey Municipal Income Trust |
BNJ | Delaware | Non-diversified | |||||||||
BlackRock New York Municipal Income Trust |
BNY | Delaware | Non-diversified |
The Boards of Trustees of the Trusts are collectively referred to throughout this report as the Board of Trustees or the Board, and the trustees thereof are collectively referred to throughout this report as Trustees. The Trusts determine and make available for publication the NAVs of their Common Shares on a daily basis.
The Trusts, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the Manager) or its affiliates, are included in a complex of closed-end funds referred to as the Closed-End Complex.
Reorganization: The Board and shareholders of BBF and Board and shareholders of BlackRock Municipal Bond Investment Trust (BIE) approved the reorganization of the BIE into BBF. As a result, BBF acquired substantially all of the assets and assumed substantially all of the liabilities of BIE in exchange for an equal aggregate value of newly-issued Common Shares and Preferred Shares of BBF. The purpose of the transaction was to combine two funds managed by the Manager with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. The reorganization was a tax-free event and was effective on May 16, 2016.
Each BIE Common Shareholder of received Common Shares of BBF in an amount equal to the aggregate net asset value of such Common Shares, as determined at the close of business on May 13, 2016, less the cost of BIEs of reorganization. Cash was distributed for any fractional Common shares.
Each BIE VRDP Shareholder received on a one-for-one basis one newly issued VRDP Share of BBF, par value $0.001 per share and with a liquidation preference of $100,000 per share, in exchange for each BIE VRDP Share held by such BIE VRDP Shareholder.
The reorganization was accomplished by a tax-free exchange of Common Shares and VRDP Shares of BBF in the following amounts and at the following conversion ratios:
Target Fund | Shares Prior to Reorganization |
Conversion Ratio |
Shares of BBF |
|||||||||
BIE Common Shares |
3,338,684 | 1.04878969 | 3,501,574 | |||||||||
BIE VRDP Shares |
178 | 1 | 178 |
BIEs common net assets and composition of common net assets on May 13, 2016, the valuation date of the reorganization, was as follows:
BIE | ||||
Net assets Applicable to Common Shares |
$ | 53,855,412 | ||
Paid-in-capital |
$ | 46,862,621 | ||
Undistributed net investment income |
$ | 270,481 | ||
Accumulated net realized loss |
$ | (3,094,350 | ) | |
Net unrealized appreciation (depreciation) |
$ | 9,816,660 |
For financial reporting purposes, assets received and shares issued by BBF were recorded at fair value. However, the cost basis of the investments being received from BIE were carried forward to align ongoing reporting of BBFs realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
The net assets applicable to Common Shareholders of BBF before the acquisition were $103,135,598. The aggregate net assets of BBF immediately after the acquisition amounted to $156,991,010. BIEs fair value and cost of investments prior to the reorganization were as follows:
Target Fund | Fair Value
of Financial Instruments |
Cost of Investments |
TOB Trust Certificates |
Preferred Shares Value |
||||||||||||
BIE |
$ | 86,823,654 | $ | 77,006,994 | $ | 16,235,808 | $ | 17,800,000 |
66 | ANNUAL REPORT | JULY 31, 2016 |
Notes to Financial Statements (continued) |
In connection with the reorganizations, BBF investment advisory fee was reduced by 3 basis points, from 0.60% of BBFs average weekly managed assets to 0.57% of BBFs average weekly net assets as defined in Note 6.
Assuming the acquisition had been completed on August 1, 2015, the beginning of the fiscal reporting period of BBF, the pro forma results of operations for the year ended July 31, 2016, are as follows:
| Net investment income: $8,410,064 |
| Net realized and change in unrealized gain (loss) on investments: $3,935,649 |
| Net increase in net assets resulting from operations: $12,345,713 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of BBF that have been included in BBFs Statement of Operations since May 16, 2016.
Reorganization costs incurred in connection with the reorganization were expensed by BBF.
2. Significant Accounting Policies:
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Trust is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:
Segregation and Collateralization: In cases where a Trust enters into certain investments (e.g., futures contracts), or certain borrowings (e.g., TOB Trust transactions) that would be treated as senior securities for 1940 Act purposes, a Trust may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a senior security. Furthermore, if required by an exchange or counterparty agreement, the Trusts may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.
Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.
Distributions: Distributions from net investment income are declared monthly and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Distributions to Preferred Shareholders are accrued and determined as described in Note 10.
Deferred Compensation Plan: Under the Deferred Compensation Plan (the Plan) approved by each Trusts Board, the independent Trustees (Independent Trustees) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Trustees. This has the same economic effect for the Independent Trustees as if the Independent Trustees had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.
The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of each Trust, if applicable. Deferred compensation liabilities are included in officers and trustees fees payable in the Statements of Assets and Liabilities and will remain as a liability of the Trusts until such amounts are distributed in accordance with the Plan.
Recent Accounting Standard: The Trusts have adopted the Financial Accounting Standards Board Accounting Standards Update, Simplifying the Presentation of Debt Issuance Costs. Under the new standard, a Trust is required to present such costs in the Statements of Assets and Liabilities as a direct deduction from the carrying value of the related debt liability. This change in accounting policy had no impact on the net assets of the Trusts.
The deferred offering costs that are now presented as a deduction from the VRDP and RVMTP Shares at liquidation value in the Statements of Assets and Liabilities and amortization included in interest expense, fees and amortization of offering costs in the Statement of Operations were as follows:
BFZ | BTT | BBF | BNJ | BNY | ||||||||||||||||
Deferred offering costs |
| $ | 451,160 | $ | 299,328 | | | |||||||||||||
Amortization of deferred offering costs |
$ | 51,796 | $ | 46,796 | $ | 13,486 | $ | 31,948 | $ | 37,770 |
ANNUAL REPORT | JULY 31, 2016 | 67 |
Notes to Financial Statements (continued) |
Indemnifications: In the normal course of business, a Trust enters into contracts that contain a variety of representations that provide general indemnification. A Trusts maximum exposure under these arrangements is unknown because it involves future potential claims against a Trust, which cannot be predicted with any certainty.
Other: Expenses directly related to a Trust are charged to that Trust. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.
Through May 31, 2016, the Trusts had an arrangement with their custodian whereby credits were earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. Credits previously earned may be utilized until December 31, 2016. Under current arrangements effective June 1, 2016, the Trusts no longer earn credits on uninvested cash, and may incur charges on uninvested cash balances and overdrafts, subject to certain conditions.
3. Investment Valuation and Fair Value Measurements:
Investment Valuation Policies: The Trusts investments are valued at fair value (also referred to as market value within the financial statements) as of the close of trading on the New York Stock Exchange (NYSE) (generally 4:00 p.m., Eastern time) (or if the reporting date falls on a day the NYSE is closed, investments are valued at fair value as of the report date). U.S. GAAP defines fair value as the price the Trusts would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trusts determine the fair values of their financial instruments using various independent dealers or pricing services under policies approved by the Board of Trustees of each Trust (the Board). The BlackRock Global Valuation Methodologies Committee (the Global Valuation Committee) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.
Fair Value Inputs and Methodologies: The following methods (or techniques) and inputs are used to establish the fair value of each Trusts assets and liabilities:
| Municipal investments (including commitments to purchase such investments on a when-issued basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments. |
| Investments in open-end U.S. mutual funds are valued at NAV each business day. |
| Futures contracts traded on exchanges are valued at their last sale price. |
If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such instruments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (Fair Valued Investments). When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that each Trust might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arms-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.
Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:
| Level 1 unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Trust has the ability to access |
| Level 2 other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other marketcorroborated inputs) |
| Level 3 unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including each Trusts own assumptions used in determining the fair value of investments and derivative financial instruments) |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments are typically
68 | ANNUAL REPORT | JULY 31, 2016 |
Notes to Financial Statements (continued) |
categorized as Level 3. The fair value hierarchy for each Trusts investments and derivative financial instruments has been included in the Schedules of Investments.
Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with each Trusts policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.
4. Securities and Other Investments:
Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.
Forward Commitments and When-Issued Delayed Delivery Securities: Certain Trusts may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. A Trust may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, a Trust may be required to pay more at settlement than the security is worth. In addition, a Trust is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, a Trust assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, a Trusts maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.
Municipal Bonds Transferred to TOB Trusts: Certain Trusts leverage their assets through the use of TOB Trust transactions. The Trusts transfer municipal bonds into a special purpose trust (a TOB Trust). A TOB Trust generally issues two classes of beneficial interests: short-term floating rate interests (TOB Trust Certificates), which are sold to third party investors, and residual inverse floating rate interests (TOB Residuals), which are generally issued to the participating funds that contributed the municipal bonds to the TOB Trust. The TOB Trust Certificates have interest rates that generally reset weekly and their holders have the option to tender such certificates to the TOB Trust for redemption at par and any accrued interest at each reset date. The TOB Residuals held by a Trust generally provide the Trust with the right to cause the holders of a proportional share of the TOB Trust Certificates to tender their certificates to the TOB Trust at par plus accrued interest. The Trusts may withdraw a corresponding share of the municipal bonds from the TOB Trust. Other funds managed by the investment adviser may also contribute municipal bonds to a TOB Trust into which each Trust has contributed bonds. If multiple BlackRock advised funds participate in the same TOB Trust, the economic rights and obligations under the TOB Residuals will be shared among the funds ratably in proportion to their participation in the TOB Trust.
TOB Trusts are generally supported by a liquidity facility provided by a third party bank or other financial institution (the Liquidity Provider) that allows the holders of the TOB Trust Certificates to tender their certificates in exchange for payment of par plus accrued interest on any business day. The tendered TOB Trust Certificates may be purchased by the Liquidity Provider and are usually remarketed by a Remarketing Agent, which is typically an affiliated entity of the Liquidity Provider. The Remarketing Agent may also purchase the tendered TOB Trust Certificates for its own account in the event of a failed remarketing.
The TOB Trust may be collapsed without the consent of a Trust, upon the occurrence of tender option termination events (TOTEs) or mandatory termination events (MTEs), as defined in the TOB Trust agreements. TOTEs include the bankruptcy or default of the issuer of the municipal bonds held in the TOB Trust, a substantial downgrade in the credit quality of the issuer of the municipal bonds held in the TOB Trust, failure of any scheduled payment of principal or interest on the municipal bonds, and/or a judgment or ruling that interest on the municipal bond is subject to federal income taxation. MTEs may include, among other things, a failed remarketing of the TOB Trust Certificates, the inability of the TOB Trust to obtain renewal of the liquidity support agreement and a substantial decline in the market value of the municipal bonds held in the TOB Trust. Upon the occurrence of a TOTE or an MTE, the TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the Remarketing Agent and the Liquidity Provider. In the case of an MTE, after the payment of fees, the TOB Trust Certificates holders would be paid before the TOB Residuals holders (i.e., the Trusts). In contrast, in the case of a TOTE, after payment of fees, the TOB Trust Certificates holders and the TOB Residuals holders would be paid pro rata in proportion to the respective face values of their certificates. During the year ended July 31, 2016, no TOB Trusts in which a Trust participated were terminated without the consent of a Trust.
While a Trusts investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they generally restrict the ability of a Trust to borrow money for purposes of making investments. Each Trusts transfer of the municipal bonds to a TOB Trust is considered a secured borrowing for financial reporting purposes. The cash received by the TOB Trust from the sale of the TOB Trust Certificates, less certain transaction expenses, is paid to a Trust. A Trust typically invests the cash received in additional municipal bonds. The municipal bonds deposited into a TOB Trust are presented in a Trusts Schedules of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust pursuant to the liquidity facility to purchase tendered TOB Trust Certificates would be shown as Loan for TOB Trust Certificates.
ANNUAL REPORT | JULY 31, 2016 | 69 |
Notes to Financial Statements (continued) |
Volcker Rule Impact: On December 10, 2013, regulators published final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Volcker Rule), which precludes banking entities and their affiliates from sponsoring and investing in TOB Trusts. Banking entities subject to the Volcker Rule were required to fully comply by July 21, 2015, with respect to investments in and relationships with TOB Trusts established after December 31, 2013 (Non-Legacy TOB Trusts), and by July 21, 2017, with respect to investments in and relationships with TOB Trusts established prior to December 31, 2013 (Legacy TOB Trusts).
As a result, a new structure for TOB Trusts has been designed in which no banking entity would sponsor the TOB Trust. Specifically, a Trust establishes, structures and sponsors the TOB Trusts in which it holds TOB Residuals. In such a structure, certain responsibilities that previously belonged to a third party bank are performed by, or on behalf of, the Trust. The Trusts have restructured any Non-Legacy TOB Trusts and are in the process of restructuring Legacy TOB Trusts in conformity with regulatory guidelines. Until all restructurings are completed, a Trust may, for a period of time, hold TOB Residuals in both Legacy TOB Trusts and new or restructured non-bank sponsored TOB Trusts.
Under the new TOB Trust structure, the Liquidity Provider or Remarketing Agent will no longer purchase the tendered TOB Trust Certificates even in the event of failed remarketing. This may increase the likelihood that a TOB Trust will need to be collapsed and liquidated in order to purchase the tendered TOB Trust Certificates. The TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB Trust Certificates. Any loans made by the Liquidity Provider will be secured by the purchased TOB Trust Certificates held by the TOB Trust and will be subject to an increased interest rate based on the number of days the loan is outstanding.
Accounting for TOB Trusts: The municipal bonds deposited into a TOB Trust are presented in a Trusts Schedule of Investments and the TOB Trust Certificates are shown in Other Liabilities in the Statements of Assets and Liabilities. Any loans drawn by the TOB Trust to purchase tendered TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a Trusts payable to the holder of the TOB Trust Certificates, as reported in the Statements of Assets and Liabilities as TOB Trust Certificates or Loan for TOB Trust Certificates, approximates its fair value.
Interest income, including amortization and accretion of premiums and discounts, from the underlying municipal bonds is recorded by a Trust on an accrual basis. Interest expense incurred on the TOB Trust transaction and other expenses related to remarketing, administration, trustee, liquidity and other services to a TOB Trust are shown as interest expense, fees and amortization of offering costs in the Statements of Operations. Fees paid upon creation of the TOB Trust are recorded as debt issuance costs and are amortized to interest expense, fees and amortization of offering costs in the Statements of Operations to the expected maturity of the TOB Trust. In connection with the restructurings of the TOB Trusts to comply with the Volcker Rule, a Trust incurred non-recurring, legal and restructuring fees, which are recorded as interest expense, fees and amortization of deferred offering costs in the Statements of Operations.
For the year ended July 31, 2016, the following table is a summary of each Trusts TOB Trusts:
Underlying Bonds Transferred to TOB Trusts1 |
Liability
for TOB Trust Certificates2 |
Range
of Interest Rates |
Average TOB Trust Certificates Outstanding |
Daily
Weighted Average Rate of Interest and Other Expenses on TOB Trusts |
||||||||||||||||
BFZ |
$ | 409,782,942 | $ | 181,645,774 | 0.46% - 0.64% | $ | 169,316,355 | 0.79% | ||||||||||||
BFO |
| | | $ | 10,384 | 0.64% | ||||||||||||||
BTT |
$ | 405,912,310 | $ | 184,114,916 | 0.46% - 0.50% | $ | 184,118,131 | 1.12% | ||||||||||||
BBF |
$ | 89,775,672 | $ | 47,192,958 | 0.46% - 0.69% | $ | 33,849,608 | 0.79% | ||||||||||||
BNJ |
$ | 32,038,666 | $ | 17,889,909 | 0.47% - 0.69% | $ | 17,435,975 | 0.92% | ||||||||||||
BNY |
$ | 61,198,821 | $ | 31,345,202 | 0.44% - 0.59% | $ | 30,323,004 | 0.79% |
1 | The municipal bonds transferred to a TOB Trust are generally high grade municipal bonds. In certain cases, when municipal bonds transferred are lower grade municipal bonds, the TOB Trust transaction may include a credit enhancement feature that provides for the timely payment of principal and interest on the bonds to the TOB Trust by a credit enhancement provider in the event of default of the municipal bond. The TOB Trust would be responsible for the payment of the credit enhancement fee and the Trusts, as TOB Residual holders, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider. The municipal bonds transferred to TOB Trusts with a credit enhancement are identified in the Schedules of Investments including the maximum potential amounts owed by the Trusts. |
2 | The Trusts may invest in TOB Trusts that are structured on a non-recourse or recourse basis. When a Fund invests in TOB Trusts on a non-recourse basis, the Liquidity Provider may be required to make a payment under the liquidity facility. In such an event, the Liquidity Provider will typically either (i) fund the full amount owed under the liquidity facility and be subsequently reimbursed from only the proceeds of the liquidation of all or a portion of the municipal bonds held in the TOB Trust or the remarketing of the TOB Trust Certificates, or (ii) liquidate all or a portion of the municipal bonds held in the TOB Trust and then fund the balance, if any, of the amount owed under the liquidity facility over the liquidation proceeds (the Liquidation Shortfall). If a Trust invests in a TOB Trust on a recourse basis, a Trust will usually enter into a reimbursement agreement with the Liquidity Provider where a Trust is required to reimburse the Liquidity Provider the amount of any Liquidation Shortfall. As a result, if a Trust invests in a recourse TOB Trust, a Trust will bear the risk of loss with respect to any Liquidation Shortfall. If multiple funds participate in any such TOB Trust, these losses will be shared ratably, including the maximum potential amounts owed by a Trust at July 31, 2016, in proportion to their participation in the TOB Trust. The recourse TOB Trusts are identified in the Schedules of Investments including the maximum potential amounts owed by a Trust at July 31, 2016. |
70 | ANNUAL REPORT | JULY 31, 2016 |
Notes to Financial Statements (continued) |
For the year ended July 30, 2016, the following table is a summary of each Trusts Loan for TOB Trust Certificates:
Loan |
Interest Rates on Loan at period end |
Average Loan Outstanding |
Daily Weighted Average Rate of Interest and Other Expenses on Loan |
|||||||||||||
BFZ |
$ | 2,045,025 | 0.25% | $ | 455,116 | 0.79% | ||||||||||
BNY |
$ | 435,000 | 0.25% | $ | 171,516 | 0.78% |
5. Derivative Financial Instruments:
The Trusts engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Trusts and/or to manage their exposure to certain risks such as interest rate risk. Derivative financial instruments categorized by risk exposure are included in the Schedules of Investments. These contracts may be transacted on an exchange over-the-counter (OTC).
Futures Contracts: Certain Trusts invest in long and/or short positions in futures and options on futures contracts to gain exposure to, or manage exposure to changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).
Futures contracts are agreements between the Trusts and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Trusts are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contracts size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.
Securities deposited as initial margin are designated in the Schedules of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Trusts agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (variation margin). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.
6. Investment Advisory Agreement and Other Transactions with Affiliates:
The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (BlackRock) for 1940 Act purposes.
Investment Advisory
Each Trust entered into an Investment Advisory Agreement with the Manager, the Trusts investment adviser, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Trusts portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Trust.
For such services, each Trust, except BTT, pays the Manager a monthly fee, which is determined by calculating a percentage of each Trusts average weekly managed assets, based on the following annual rates:
BFZ | BFO | BBF | BNJ | BNY | ||||||||||||||||
Investment advisory fee |
0.58% | 0.50% | 0.57% | 0.60% | 0.60% |
BTT pays the Manager a monthly fee based on a percentage of BTTs average daily managed assets at an annual rate of 0.40%.
Managed assets and net assets each mean the total assets of the Trust minus the sum of its accrued liabilities (other than the aggregate indebtedness constituting financial leverage).
Waivers
The Manager, voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Trust pays to the Manager indirectly through its investment in affiliated money market funds. These amounts are included in fees waived by the Manager in the Statements of Operations. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Trusts investments in other affiliated investment companies, if any. For the year ended July 31, 2016, the amounts waived were as follows:
BFZ | BFO | BTT | BBF | BNJ | BNY | |||||||||||||||||||
Amounts waived |
$ | 1,243 | $ | 451 | $ | 12,291 | $ | 92 | $ | 250 | $ | 2,574 |
ANNUAL REPORT | JULY 31, 2016 | 71 |
Notes to Financial Statements (continued) |
Prior to July 1, 2016, the Manager voluntarily agreed to waive a portion of its investment advisory fees equal to the annual rate of 0.05% of BTTs average daily managed assets. This amount is included in fees waived by the Manager in the Statements of Operations. During the year ended July 31, 2016, the Manager waived $1,194,957 pursuant to this agreement.
Officers and Trustees
Certain officers and/or trustees of the Trusts are officers and/or trustees of BlackRock or its affiliates. The Trusts reimburse the Manager for a portion of the compensation paid to the Trusts Chief Compliance Officer, which is included in Officer and Trustees in the Statements of Operations.
Other Transactions
The Trusts may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common trustees. For the year ended July 31, 2016, the purchase and sale transactions which resulted in net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:
Purchases | Sales | Net Realized Gain | ||||||||||
BNY |
$ | 1,462,356 | | |
7. Purchases and Sales:
For the year ended July 31, 2016, purchases and sales of investments, excluding short-term securities, were as follows:
BFZ | BFO | BTT | BBF | BNJ | BNY | |||||||||||||||||||
Purchases |
$ | 285,798,786 | $ | 7,810,406 | $ | 1,168,502,400 | $ | 35,279,131 | $ | 22,223,479 | $ | 48,270,067 | ||||||||||||
Sales |
$ | 252,211,384 | $ | 5,809,404 | $ | 1,083,068,111 | $ | 31,673,260 | $ | 22,708,662 | $ | 44,471,831 |
8. Income Tax Information:
It is the Trusts policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of their taxable income to their shareholders. Therefore, no federal income tax provision is required.
Each Trust files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on each Trusts U.S. federal tax returns generally remains open for each of the four years ended July 31, 2016. The statutes of limitations on each Trusts state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has analyzed tax laws and regulations and their application to the Trusts as of July 31, 2016, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Trusts financial statements.
US GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. As of period end, the following permanent differences attributable to the amortization methods on fixed income securities, distributions received from a regulated investment company, non-deductible expenses, the sale of bonds received from tender option bond trusts and the retention of tax-exempt income were reclassified to the following accounts:
BFZ | BFO | BTT | BBF | BNJ | BNY | |||||||||||||||||||
Paid-in capital |
| $ | 228,000 | $ | (31,355 | ) | $ | (217,271 | ) | | | |||||||||||||
Undistributed net investment income |
$ | (112,413 | ) | $ | (227,399 | ) | $ | (320,001 | ) | $ | 217,265 | $ | (10,803 | ) | $ | (512 | ) | |||||||
Accumulated net realized loss |
$ | 112,413 | $ | (601 | ) | $ | 351,356 | $ | 6 | $ | 10,803 | $ | 512 |
The tax character of distributions paid was as follows:
BFZ | BFO | BTT | BBF | BNJ | BNY | |||||||||||||||||||||||
Tax-exempt income1 |
7/31/16 | $ | 29,134,487 | $ | 2,110,271 | $ | 73,709,829 | $ | 6,679,688 | $ | 7,454,253 | $ | 11,289,934 | |||||||||||||||
7/31/15 | $ | 29,359,946 | $ | 2,427,463 | $ | 72,897,438 | $ | 5,869,296 | $ | 7,503,893 | $ | 11,653,202 | ||||||||||||||||
Ordinary income2 |
7/31/16 | $ | 6,483 | | $ | 112,218 | | $ | 40,113 | $ | 2,355 | |||||||||||||||||
7/31/15 | $ | 73 | $ | 25 | $ | 513 | $ | 3 | $ | 103,925 | $ | 2,087 | ||||||||||||||||
|
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|
|
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|
|
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|
|
|
|
|
|
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Total |
7/31/16 | $ | 29,140,970 | $ | 2,110,271 | $ | 73,822,047 | $ | 6,679,688 | $ | 7,494,366 | $ | 11,292,289 | |||||||||||||||
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|
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7/31/15 | $ | 29,360,019 | $ | 2,427,488 | $ | 72,897,951 | $ | 5,869,299 | $ | 7,607,818 | $ | 11,655,289 | ||||||||||||||||
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|
1 | The Trusts designate these amounts paid during the fiscal year ended July 31, 2016, as exempt-interest dividends. |
2 | Ordinary income consists primarily of taxable income recognized from market discount. Additionally, all ordinary income distributions are comprised of interest related dividends for non-U.S. residents and are eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations. |
72 | ANNUAL REPORT | JULY 31, 2016 |
Notes to Financial Statements (continued) |
As of period end, the tax components of accumulated net earnings were as follows:
BFZ | BFO | BTT | BBF | BNJ | BNY | |||||||||||||||||||
Undistributed tax-exempt Income |
$ | 1,139,567 | $ | 2,228,374 | $ | 6,397,170 | $ | 345,992 | $ | 779,802 | $ | 1,659,366 | ||||||||||||
Undistributed ordinary income |
| | 8,726 | | 23,183 | 1,642 | ||||||||||||||||||
Capital loss carryforwards |
(3,104,212 | ) | (1,258,581 | ) | (40,292,789 | ) | (12,993,926 | ) | (2,921,210 | ) | (11,774,065 | ) | ||||||||||||
Net unrealized gains1 |
76,483,043 | 4,407,107 | 151,785,851 | 28,899,594 | 19,075,276 | 32,897,314 | ||||||||||||||||||
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|
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Total |
$ | 74,518,398 | $ | 5,376,900 | $ | 117,898,958 | $ | 16,251,660 | $ | 16,957,051 | $ | 22,784,257 | ||||||||||||
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1 | The differences between book-basis and tax-basis net unrealized gains were attributable primarily to the tax deferral of losses on wash sales, amortization and accretion methods of premiums and discounts on fixed income securities, the accrual of income on securities in default, the treatment of residual interests in tender option bond trusts and the deferral of compensation to Trustees. |
As of July 31, 2016, the Trusts had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:
Expires July 31, | BFZ | BFO | BTT | BBF | BNJ | BNY | ||||||||||||||||||
No expiration date1 |
| $ | 807,377 | $ | 40,292,789 | $ | 5,264,870 | $ | 2,051,379 | $ | 5,902,450 | |||||||||||||
2017 |
| 389,104 | | 150,549 | | 2,408,109 | ||||||||||||||||||
2018 |
$ | 3,104,212 | 62,100 | | 6,927,043 | 842,367 | 1,480,575 | |||||||||||||||||
2019 |
| | | 651,464 | 27,464 | 1,982,931 | ||||||||||||||||||
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Total |
$ | 3,104,212 | $ | 1,258,581 | $ | 40,292,789 | $ | 12,993,926 | $ | 2,921,210 | $ | 11,774,065 | ||||||||||||
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1 | Must be utilized prior to losses subject to expiration. |
During the year ended July 31, 2016, the Trusts listed below utilized the following amounts of their respective capital loss carryforward:
BFZ |
$ | 8,606,298 | ||
BTT |
$ | 29,581,075 | ||
BNY |
$ | 695,650 |
As of July 31, 2016, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
BFZ | BFO | BTT | BBF | BNJ | BNY | |||||||||||||||||||||||||||
Tax cost |
$ | 612,624,030 | $ | 83,160,504 | $ | 2,458,844,888 | $ | 180,279,719 | $ | 164,814,961 | $ | 265,377,126 | ||||||||||||||||||||
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Gross unrealized appreciation |
$ | 76,813,335 | $ | 5,159,825 | $ | 162,663,152 | $ | 29,475,592 | $ | 21,002,606 | $ | 33,678,860 | ||||||||||||||||||||
Gross unrealized depreciation |
(263,853 | ) | (731,948 | ) | (10,877,301 | ) | (544,407 | ) | (1,909,310 | ) | (754,093 | ) | ||||||||||||||||||||
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Net unrealized appreciation |
$ | 76,549,482 | $ | 4,427,877 | $ | 151,785,851 | $ | 28,931,185 | $ | 19,093,296 | $ | 32,924,767 | ||||||||||||||||||||
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9. Principal Risks:
Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.
Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease a Trusts ability to buy or sell bonds. As a result, a Trust may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If a Trust needed to sell large blocks of bonds, those sales could further reduce the bonds prices and impact performance.
In the normal course of business, certain Trusts invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Trusts may decline in response to certain events, including those directly involving the issuers of securities owned by the Trusts. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities value.
Each Trust may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force each Trust to reinvest in lower yielding securities. Each Trust may also be exposed to reinvestment risk, which is the risk that income from each Trusts portfolio will decline if each Trust invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below each Trust portfolios current earnings rate.
The Trusts may hold a significant amount of bonds subject to calls by the issuers at defined dates and prices. When bonds are called by issuers and the Trusts reinvest the proceeds received, such investments may be in securities with lower yields than the bonds originally held, and correspondingly, could adversely impact the yield and total return performance of a Trust.
There is no assurance that BFO will achieve its investment objective and BFO may return less than $15.00 per share. As BFO approaches its scheduled termination date, it is expected that the maturity of BFOs portfolio securities will shorten, which is likely to reduce BFOs income and distributions to shareholders.
ANNUAL REPORT | JULY 31, 2016 | 73 |
Notes to Financial Statements (continued) |
It is possible that regulators could take positions that could limit the market for non-bank sponsored TOB Trust transactions or the Trusts ability to hold TOB Residuals. Under the new TOB Trust structure, the Trusts will have certain additional duties and responsibilities, which may give rise to certain additional risks including, but not limited to, compliance, securities law and operational risks.
There can be no assurance that the Trusts can successfully enter into restructured TOB Trust transactions in order to refinance their existing TOB Residuals holdings prior to the compliance date for the Volcker Rule, which may require that the Trusts unwind existing TOB Trusts. There can be no assurance that alternative forms of leverage will be available to the Trusts and any alternative forms of leverage may be more or less advantageous to the Trusts than existing TOB leverage.
Should short-term interest rates rise, the Trusts investments in TOB Trust transactions may adversely affect the Trusts net investment income and dividends to Common Shareholders. Also, fluctuations in the market value of municipal bonds deposited into the TOB Trust may adversely affect the Trusts NAVs per share.
The SEC and various federal banking and housing agencies have adopted credit risk retention rules for securitizations (the Risk Retention Rules), which take effect in December 2016. The Risk Retention Rules would require the sponsor of a TOB Trust to retain at least 5% of the credit risk of the underlying assets supporting the TOB Trusts municipal bonds. The Risk Retention Rules may adversely affect the Trusts ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.
TOB Trust transactions constitute an important component of the municipal bond market. Accordingly, implementation of the Volcker Rule and Risk Retention Rules may adversely impact the municipal market, including through reduced demand for and liquidity of municipal bonds and increased financing costs for municipal issuers. Any such developments could adversely affect the Trusts. The ultimate impact of these rules on the TOB Trust market and the overall municipal market is not yet certain.
Counterparty Credit Risk: Similar to issuer credit risk, the Trusts may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Trusts manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Trusts to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Trusts exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Trusts.
A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.
With exchange-traded futures, there is less counterparty credit risk to the Trusts since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Trust does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing brokers customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing brokers customers, potentially resulting in losses to the Trusts.
Concentration Risk: BFZ, BFO and BNJ invest a substantial amount of their assets in issuers located in a single state or limited number of states. This may subject each Trust to the risk that economic, political or social issues impacting a particular state or group of states could have an adverse and disproportionate impact on the income from, or the value or liquidity of, the Trusts respective portfolios. Investment percentages in specific states or U.S. territories are presented in the Schedules of Investments.
As of period end, BFZ and BFO invested a significant portion of their assets in securities in the county, city, special district and school district sector. BNJ invested a significant portion of its assets in securities in the transportation sector. Changes in economic conditions affecting such sectors would have a greater impact on the Trusts and could affect the value, income and/or liquidity of positions in such securities.
The Trusts invest a significant portion of their assets in fixed-income securities and/or use derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Trusts may be subject to a greater risk of rising interest rates due to the current period of historically low rates.
10. Capital Share Transactions:
Each Trust is authorized to issue an unlimited number of shares, all of which were initially classified as Common Shares. The par value for the Trusts Common Shares is $0.001. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.
74 | ANNUAL REPORT | JULY 31, 2016 |
Notes to Financial Statements (continued) |
Common Shares
For the years shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:
Year Ended July 31, | BFZ | BBF | BNJ | BNY | ||||||||||||
2016 |
18,396 | 2,331 | 4,172 | 33,994 | ||||||||||||
2015 |
| | 4,837 | |
Preferred Shares
Each Trusts Preferred Shares rank prior to the Trusts Common Shares as to the payment of dividends by the Trust and distribution of assets upon dissolution or liquidation of a Trust. The 1940 Act prohibits the declaration of any dividend on a Trusts Common Shares or the repurchase of a Trusts Common Shares if a Trust fails to maintain the asset coverage of at least 200% of the liquidation preference of the outstanding Preferred Shares. In addition, pursuant to the Preferred Shares governing instruments, a Trust is restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the Preferred Shares or repurchasing such shares if a Trust fails to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares governing instruments or comply with the basic maintenance amount requirement of the agencies rating the Preferred Shares.
The holders of Preferred Shares have voting rights equal to the voting rights of the holders of Common Shares (one vote per share) and will vote together with holders of Common Shares (one vote per share) as a single class on certain matters. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Trustees to the Board of each Trust. The holders of Preferred Shares are also entitled to elect the full Board of Directors if dividends on the Preferred Shares are not paid for a period of two years. The holders of Preferred Shares are also generally entitled to a separate class vote to amend the Preferred Share governing documents. In addition, the 1940 Act requires the approval of the holders of a majority of any outstanding Preferred Shares, voting as a separate class, to (a) adopt any plan of reorganization that would adversely affect the Preferred Shares, (b) change a Trusts sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.
VRDP Shares
BBF has issued Series W-7 VRDP Shares, $100,000 liquidation preference per share, in a privately negotiated offering. The VRDP Shares were offered to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933, as amended, (the Securities Act). The VRDP Shares include a liquidity feature and are currently in a special rate period, each as described below.
As of the period end, the VRDP Shares outstanding of BBF were as follows:
Issue Date | Shares Issued | Aggregate Principal | Maturity Date | |||||||||||||
BBF |
9/15/11 | 342 | $ | 34,200,000 | 10/01/41 | |||||||||||
5/16/16 | 178 | $ | 17,800,000 | 10/01/41 |
Redemption Terms: BBF is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to the maturity date, BBF is required to begin to segregate liquid assets with the Trusts custodian to fund the redemption. In addition, BBF is required to redeem certain of its outstanding VRDP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.
Subject to certain conditions, the VRDP Shares may also be redeemed, in whole or in part, at any time at the option of BBF. The redemption price per VRDP Share is equal to the liquidation value per share plus any outstanding unpaid dividends.
Liquidity Feature: BBF entered into a fee agreement with the liquidity provider that requires a per annum liquidity fee payable to the liquidity provider. These fees, if applicable, are shown as liquidity fees in the Statements of Operations.
The fee agreement between BBF and the liquidity provider is scheduled to expire on December 4, 2015. BBF renewed the fee agreement which is scheduled to expire on October 22, 2018 unless renewed or terminated in advance.
In the event the fee agreement is not renewed or is terminated in advance, and BBF does not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. In the event of such mandatory purchase, BBF is required to redeem the VRDP Shares six months after the purchase date. Immediately after such mandatory purchase, BBF is required to begin to segregate liquid assets with its custodian to fund the redemption. There is no assurance BBF will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.
Remarketing: BBF may incur remarketing fees of 0.10% on the aggregate principal amount of all the Trusts VRDP Shares, which, if any, are included in remarketing fees on Preferred Shares in the Statements of Operations. During any special rate period (as described below), BBF may incurr no remarketing fees.
ANNUAL REPORT | JULY 31, 2016 | 75 |
Notes to Financial Statements (continued) |
Dividends: Dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. At the date of issuance, the VRDP Shares were assigned long-term ratings of Aaa from Moodys and AAA from Fitch. Subsequent to the issuance of the VRDP Shares, Moodys completed a review of its methodology for rating securities issued by registered closed-end funds. As of period end, the VRDP Shares were assigned a long-term rating of Aa1 from Moodys under its new ratings methodology. The VRDP Shares continue to be assigned a long-term rating of AAA from Fitch.
For the year ended July 31, 2016, the annualized dividend rate for BBFs VRDP Shares was 0.92%.
Ratings: The short-term ratings on the VRDP Shares are directly related to the short-term ratings of the liquidity provider for such VRDP Shares. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares as rated by Moodys, Fitch and/or S&P. A change in the short-term credit rating of the liquidity provider or the VRDP Shares may adversely affect the dividend rate paid on such shares, although the dividend rate paid on the VRDP Shares is not directly based upon either short-term rating.
Special Rate Period: On October 22, 2015, BBF commenced a three-year term ending April 18, 2018 (the special rate period), with respect to the VRDP Shares. The implementation of the special rate period resulted in a mandatory tender of the VRDP Shares prior to the commencement of the special rate period. The mandatory tender event was not the result of a failed remarketing. The short-term ratings on the VRDP Shares for BBF were withdrawn by Moodys, Fitch and/or S&P at the commencement of the special rate period. Prior to April 18, 2018, the holder of the VRDP Shares and BBF may mutually agree to extend the special rate period. If the special rate period is not extended, the VRDP Shares will revert back to remarketable securities and will be remarketed and available for purchase by qualified institutional investors.
During the special rate period, the liquidity and fee agreements remain in effect and the VRDP Shares remain subject to mandatory redemption by BBF on the maturity date. The VRDP Shares will not be remarketed or subject to optional or mandatory tender events during the special rate period. During the special rate period, BBF is required to comply with the same asset coverage, basic maintenance amount and leverage requirements for the VRDP Shares as is required when the VRDP Shares are not in a special rate period. BBF will not pay any fees to the liquidity provider and remarketing agent during the special rate period. BBF will also pay dividends monthly based on the sum of the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index rate and a percentage per annum based on the long-term ratings assigned to the VRDP Shares.
If BBF redeems the VRDP Shares on a date that is one year or more before the end of the special rate period and the VRDP Shares are rated above A1/A by Moodys and Fitch, respectively, then such redemption is subject to a redemption premium payable to the holder of the VRDP Shares based on the time remaining in the special rate period, subject to certain exceptions for redemptions that are required to maintain minimum asset coverage requirements.
For the year ended July 31, 2016, VRDP Shares issued and outstanding of BBF remained constant.
VMTP Shares
BFZ, BNJ and BNY define collectively, the VMTP Trusts, have issued Series W-7 VMTP Shares, $100,000 liquidation value per share, in a privately negotiated offering and sale of VMTP Shares exempt from registration under the Securities Act. The VMTP Shares are subject to certain restrictions on transfer, and VMTP Trusts may also be required to register the VMTP Shares for sale under the Securities Act under certain circumstances. In addition, amendments to the VMTP governing documents generally require the consent of the holders of VMTP Shares.
As of period end, the VMTP Shares outstanding of each Trust were as follows:
Issue Date | Shares Issued | Aggregate Principal | Term Date | |||||||||||||
BFZ |
3/22/12 | 1,713 | $ | 171,300,000 | 3/30/19 | |||||||||||
BNJ |
3/22/12 | 591 | $ | 59,100,000 | 3/30/19 | |||||||||||
BNY |
3/22/12 | 945 | $ | 94,500,000 | 3/30/19 |
Redemption Terms: Each VMTP Trust is required to redeem its VMTP Shares on the term redemption date, unless earlier redeemed or repurchased or unless extended. There is no assurance that the term of a Trusts VMTP Shares will be extended further or that a Trusts VMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the VMTP Shares. Six months prior to the term redemption date, each VMTP Trust is required to begin to segregate liquid assets with the Trusts custodian to fund the redemption. In addition, each VMTP Trust is required to redeem certain of its outstanding VMTP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.
Subject to certain conditions, a Trusts VMTP Shares may be redeemed, in whole or in part, at any time at the option of the Trust. The redemption price per VMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends and applicable redemption premium. If the Trusts redeem the VMTP Shares prior to the term redemption date and the VMTP Shares have long-term ratings above A1/A+ or its equivalent by the ratings agencies then rating the VMTP Shares, then such redemption may be subject to a prescribed redemption premium (up to 3% of the liquidation preference) payable to the holder of the VMTP Shares based on the time remaining until the term redemption date, subject to certain exceptions for redemptions that are required to comply with minimum asset coverage requirements.
76 | ANNUAL REPORT | JULY 31, 2016 |
Notes to Financial Statements (continued) |
Dividends: Dividends on the VMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index. The fixed spread is determined based on the long-term preferred share rating assigned to the VMTP Shares by the ratings agencies then rating the VMTP Shares. At the date of issuance, the VMTP Shares were assigned long-term ratings of Aaa from Moodys and AAA from Fitch. Subsequent to the issuance of the VMTP Shares, Moodys completed a review of its methodology for rating securities issued by registered closed-end funds. As of period end, the VMTP Shares were assigned a long-term rating of Aa2 from Moodys under its new rating methodology. The VMTP Shares continue to be assigned a long-term rating of AAA from Fitch. The dividend rate on the VMTP Shares is subject to a step-up spread if the Trusts fail to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.
For the year ended July 31, 2016 the average annualized dividend rates for the VMTP Shares were as follows:
BFZ | BNJ | BNY | ||
1.07% | 1.08% | 1.07% |
For the year end July 31, 2016, VMTP Shares issued and outstanding of BFZ, BNJ and BNY remained constant.
RVMTP Shares
BTT has issued Series W-7 RVMTP Shares, $5,000,000 liquidation preference per share, in a privately negotiated offering and sale of RVMTP Shares exempt from registration under the Securities Act. The RVMTP Shares are subject to certain restrictions on transfer outside of a remarketing. Amendments to the RVMTP governing documents generally require the consent of the holders of RVMTP Shares.
As of period end, the RVMTP Shares outstanding were as follows:
Issue Date | Shares Issued | Aggregate Principal | Term Date | |||||||||||||
BTT |
1/10/2013 | 50 | $ | 250,000,000 | 12/31/2030 | |||||||||||
1/30/2013 | 50 | $ | 250,000,000 | 12/31/2030 | ||||||||||||
2/20/2013 | 50 | $ | 250,000,000 | 12/31/2030 |
Redemption Terms: BTT is required to redeem its RVMTP Shares on the term redemption date or within six months of an unsuccessful remarketing, unless earlier redeemed or repurchased. There is no assurance that BTTs RVMTP Shares will be replaced with any other preferred shares or other form of leverage upon the redemption or repurchase of the RVMTP Shares. In addition, BTT is required to redeem certain of its outstanding RVMTP Shares if it fails to comply with certain asset coverage, basic maintenance amount or leverage requirements.
Subject to certain conditions, BTTs RVMTP Shares may be redeemed, in whole or in part, at any time at the option of BTT. The redemption price per RVMTP Share is equal to the liquidation preference per share plus any outstanding unpaid dividends. The RVMTP Shares are subject to certain restrictions on transfer outside of a remarketing. The RVMTP Shares are subject to remarketing upon 90 days notice by holders of the RVMTP Shares and 30 days notice by BTT. Each remarketing must be at least six months apart from the last remarketing. A holder of RVMTP Shares may submit notice of remarketing only if such holder requests a remarketing of at least the lesser of (i) $100,000,000 of RVMTP Shares or (ii) all of the RVMTP Shares held by such holder.
Dividends: Dividends on the RVMTP Shares are declared daily and payable monthly at a variable rate set weekly at a fixed rate spread to the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index. The initial fixed rate spread was agreed upon by the initial purchaser and BTT on the initial date of issuance for the RVMTP Shares. The initial fixed rate spread may be adjusted at each remarketing or upon the agreement of BTT and all of the holders of the RVMTP Shares. In the event that all of the RVMTP Shares submitted for remarketing are not successfully remarketed, a failed remarketing would occur, and all holders would retain their RVMTP Shares. In the event of a failed remarketing, the fixed rate spread would be set at the fixed rate spread applicable to such failed remarketing. BTT has the right to reject any fixed spread determined at a remarketing, and such rejection would result in a failed remarketing and the fixed rate spread would be set at the fixed rate spread applicable to such failed remarketing. The fixed rate spread applicable due to a failed remarketing depends on whether the remarketing was pursuant to a mandatory or non-mandatory tender. In the case of a failed remarketing following a mandatory tender, the failed remarketing spread would be the sum of the last applicable spread in effect immediately prior to the failed remarketing date for such failed remarketing plus 0.75%. In the case of a failed remarketing not associated with a mandatory tender, the failed remarketing spread would be the sum of the last applicable spread in effect immediately prior to the failed remarketing date for such failed remarketing plus 0.25%.
For the year ended July 31, 2016, the average annualized dividend rate for BTTs RVMTP Shares was 0.80%.
Remarketing: In the event of a failed remarketing that is not subsequently cured, BTT will be required to redeem the RVMTP Shares subject to such failed remarketing on a date that is approximately six months from the remarketing date for such failed remarketing, provided that no redemption of any RVMTP Share may occur within one year of the date of issuance of such RVMTP Share. At the date of issuance and as of period end, the RVMTP Shares were assigned long-term ratings of Aa1 from Moodys and AAA from Fitch. The dividend rate on the RVMTP Shares is subject to a step-up spread if BTT fails to comply with certain provisions, including, among other things, the timely payment of dividends, redemptions or gross-up payments, and complying with certain asset coverage and leverage requirements.
ANNUAL REPORT | JULY 31, 2016 | 77 |
Notes to Financial Statements (concluded) |
During the year ended July 31, 2016, no RVMTP Shares were tendered for remarketing.
For the year ended July 31, 2016, RVMTP Shares issued and outstanding of BTT remained constant.
Offering Costs: The Trusts incurred costs in connection with the issuance of VRDP, VMTP and RVMTP Shares, which were recorded as a direct deduction from the carrying value of the related debt liability and will be amortized over the life of the VRDP, VMTP and RVMTP Shares with the exception of upfront fees paid to the liquidity provider which were amortized over the life of the liquidity agreement. Amortization of these costs is included in interest expense, fees and amortization of offering costs in the Statements of Operations.
Financial Reporting: The VRDP, VMTP and RVMTP Shares are considered debt of the issuer; therefore the liquidation value, which approximates fair value of the VRDP, VMTP and RVMTP Shares, is recorded as a liability in the Statements of Assets and Liabilities. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends accrued and paid on the VRDP, VMTP and RVMTP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. The VRDP, VMTP and RVMTP Shares are treated as equity for tax purposes. Dividends paid to holders of the VRDP, VMTP and RVMTP Shares are generally classified as tax-exempt income for tax-reporting purposes.
11. Subsequent Events:
Managements evaluation of the impact of all subsequent events on the Funds financial statements was completed through the date the financial statements were issued and the following items were noted:
Common Dividend Per Share | Preferred Shares3 | |||||||||||||||||||||
Paid1 | Declared2 | Shares | Series | Declared | ||||||||||||||||||
BFZ |
$ | 0.067200 | $ | 0.067200 | VMTP | W-7 | $ | 203,547 | ||||||||||||||
BFO |
$ | 0.031000 | $ | 0.031000 | N/A | N/A | N/A | |||||||||||||||
BTT |
$ | 0.080000 | $ | 0.080000 | RVMTP | W-7 | $ | 719,672 | ||||||||||||||
BBF |
$ | 0.072375 | $ | 0.072375 | VRDP | W-7 | $ | 60,908 | ||||||||||||||
BNJ |
$ | 0.069600 | $ | 0.069600 | VMTP | W-7 | $ | 70,226 | ||||||||||||||
BNY |
$ | 0.060000 | $ | 0.060000 | VMTP | W-7 | $ | 112,290 |
1 | Net investment income dividend paid on September 1, 2016 to Common Shareholders of record on August 15, 2016. |
2 | Net investment income dividend declared on September 1, 2016, payable to Common Shareholders of record on September 15, 2016. |
3 | Dividends declared for period August 1, 2016 to August 31, 2016. |
78 | ANNUAL REPORT | JULY 31, 2016 |
Report of Independent Registered Public Accounting Firm |
To the Shareholders and Board of Trustees of BlackRock California Municipal Income Trust, BlackRock Florida Municipal 2020 Term Trust, BlackRock 2030 Municipal Target Term Trust (formerly BlackRock Municipal Target Term Trust), BlackRock Municipal Income Investment Trust, BlackRock New Jersey Municipal Income Trust, and BlackRock New York Municipal Income Trust:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of BlackRock California Municipal Income Trust, BlackRock Municipal 2030 Target Term Trust (formerly BlackRock Municipal Target Term Trust), BlackRock Municipal Income Investment Trust, BlackRock New Jersey Municipal Income Trust, and BlackRock New York Municipal Income Trust (each a Trust) as of July 31, 2016, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. We have also audited the accompanying statement of assets and liabilities, including the schedule of investments, of BlackRock Florida Municipal 2020 Term Trust (collectively with each Trust, the Trusts) as of July 31, 2016, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Trusts management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trusts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trusts internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2016, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of BlackRock California Municipal Income Trust, BlackRock Municipal 2030 Target Term Trust, BlackRock Municipal Income Investment Trust, BlackRock New Jersey Municipal Income Trust, and BlackRock New York Municipal Income Trust, as of July 31, 2016, and the results of their operations and cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock Florida Municipal 2020 Term Trust as of July 31, 2016, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
September 26, 2016
Important Tax Information (Unaudited) |
BlackRock Municipal Bond Investment Trust (BIE) designated all distributions paid with respect to the fiscal period ended May 16, 2016 as tax-exempt interest dividends.
ANNUAL REPORT | JULY 31, 2016 | 79 |
Disclosure of Investment Advisory Agreements |
The Board of Trustees (the Board, the members of which are referred to as Board Members) of BlackRock California Municipal Income Trust (BFZ), BlackRock Florida Municipal 2020 Term Trust (BFO), BlackRock Municipal Income Investment Trust (BBF), BlackRock New Jersey Municipal Income Trust (BNJ), BlackRock New York Municipal Income Trust (BNY) and BlackRock Municipal 2030 Target Term Trust (BTT and together with BFZ, BFO, BBF, BNJ and BNY, each a Trust, and, collectively, the Trusts) met in person on April 28, 2016 (the April Meeting) and June 9-10, 2016 (the June Meeting) to consider the approval of each Trusts investment advisory agreement (each an Agreement, and, collectively, the Agreements) with BlackRock Advisors, LLC (the Manager), each Trusts investment advisor. The Manager is also referred to herein as BlackRock.
Activities and Composition of the Board
On the date of the June Meeting, the Board of each Trust consisted of eleven individuals, nine of whom were not interested persons of the Trust as defined in the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Board Members). The Board Members are responsible for the oversight of the operations of its Trust and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of each Board is an Independent Board Member. Each Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee, and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Executive Committee, which also has one interested Board Member).
The Agreements
Pursuant to the 1940 Act, each Board is required to consider the continuation of the Agreement for its Trust on an annual basis. Each Board has four quarterly meetings per year, each extending over two days, a fifth one-day meeting to consider specific information surrounding the consideration of renewing the Agreement for its Trust and additional in-person and telephonic meetings as needed. In connection with this year-long deliberative process, each Board assessed, among other things, the nature, extent and quality of the services provided to its Trust by BlackRock, BlackRocks personnel and affiliates, including, as applicable; investment management, administrative, and shareholder services; the oversight of fund service providers; marketing; risk oversight; compliance; and ability to meet applicable legal and regulatory requirements.
Each Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreement for its Trust, including the services and support provided by BlackRock to the Trust and its shareholders. BlackRock also furnished additional information to each Board in response to specific questions from the Board. This additional information is discussed further below in the section titled Board Considerations in Approving the Agreements. Among the matters each Board considered were: (a) investment performance for one-year, three-year, five-year, ten-year, and/or since inception periods, as applicable, against peer funds, applicable benchmarks, and performance metrics, as applicable, as well as senior managements and portfolio managers analysis of the reasons for any over-performance or underperformance relative to its peers, benchmarks, and other performance metrics, as applicable; (b) fees, including advisory, administration, if applicable, paid to BlackRock and its affiliates by the Trust for services; (c) Trust operating expenses and how BlackRock allocates expenses to the Trust; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Trusts investment objective(s), policies and restrictions, and meeting regulatory requirements; (e) the Trusts compliance with its compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRocks and other service providers internal controls and risk and compliance oversight mechanisms; (h) BlackRocks implementation of the proxy voting policies approved by the Board; (i) execution quality of portfolio transactions; (j) BlackRocks implementation of the Trusts valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment mandates across the open-end fund, closed-end fund and institutional account product channels, as applicable, and the similarities and differences between these products and the services provided as compared to the Trust; (l) BlackRocks compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals investments in the fund(s) they manage; and (m) periodic updates on BlackRocks business.
The Board of each of BFZ, BFO, BBF, BNJ, and BNY considered BlackRocks efforts during the past several years with regard to the redemption of outstanding auction rate preferred securities (AMPS). As of the date of this report, each of BFZ, BFO, BBF, BNJ, and BNY has redeemed all of its outstanding AMPS.
Board Considerations in Approving the Agreements
The Approval Process: Prior to the April Meeting, each Board requested and received materials specifically relating to the Agreement for its Trust. Each Board is continuously engaged in a process with its independent legal counsel and BlackRock to review the nature and scope of the information provided to better assist its deliberations. The materials provided to the Board of each Trust in connection with the April Meeting included (a) information independently compiled and prepared by Broadridge Financial Solutions, Inc. (Broadridge) on Trust fees and expenses as compared with a peer group of funds as determined by Broadridge (Expense Peers) and the investment performance of the Trust as compared with a peer group of funds as determined by Broadridge1 and a customized peer group selected by BlackRock (Customized Peer Group) for BFZ, BBF, BNJ and BNY, as well as the performance of
1 | Trusts are ranked by Broadridge in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. |
80 | ANNUAL REPORT | JULY 31, 2016 |
Disclosure of Investment Advisory Agreements (continued) |
BTT as compared with its custom benchmark; (b) information on the profits realized by BlackRock and its affiliates pursuant to the Trusts Agreement and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees charged to other clients, such as institutional clients, sub-advised mutual funds, and open-end funds, under similar investment mandates, as applicable; (d) review of non-management fees; (e) the existence, impact and sharing of potential economies of scale; and (f) a summary of aggregate amounts paid by the Trust to BlackRock.
At the April Meeting, each Board reviewed materials relating to its consideration of the Agreement for its Trust. As a result of the discussions that occurred during the April Meeting, and as a culmination of each Boards year-long deliberative process, each Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the June Meeting.
At the June Meeting, each Board, including the Independent Board Members, unanimously approved the continuation of the Agreement between the Manager and its Trust for a one-year term ending June 30, 2017. In approving the continuation of the Agreement for its Trust, each Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Trust; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Trust; (d) the Trusts costs to investors compared to the costs of Expense Peers and performance compared to the relevant performance metrics as previously discussed; (e) the sharing of potential economies of scale; (f) fall-out benefits to BlackRock and its affiliates as a result of its relationship with the Trust; and (g) other factors deemed relevant by the Board Members.
Each Board also considered other matters it deemed important to the approval process, such as other payments made to BlackRock or its affiliates relating to securities lending and cash management, services related to the valuation and pricing of Trust portfolio holdings, and advice from independent legal counsel with respect to the review process and materials submitted for the Boards review. Each Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. Each Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.
A. Nature, Extent and Quality of the Services Provided by BlackRock: Each Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of its Trust. Throughout the year, each Board compared its Trusts performance to the performance of a comparable group of closed-end funds, relevant benchmark, and performance metrics, as applicable. Each Board met with BlackRocks senior management personnel responsible for investment activities, including the senior investment officers. Each Board also reviewed the materials provided by its Trusts portfolio management team discussing the Trusts performance and the Trusts investment objective(s), strategies and outlook.
Each Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and its Trusts portfolio management team; BlackRocks research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. Each Board engaged in a review of BlackRocks compensation structure with respect to the Trusts portfolio management team and BlackRocks ability to attract and retain high-quality talent and create performance incentives.
In addition to investment advisory services, each Board considered the quality of the administrative and other non-investment advisory services provided to its Trust. BlackRock and its affiliates provide each Trust with certain administrative, shareholder, and other services (in addition to any such services provided to the Trust by third parties) and officers and other personnel as are necessary for the operations of the Trust. In particular, BlackRock and its affiliates provide each Trust with administrative services including, among others: (i) preparing disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Trust; (iii) oversight of daily accounting and pricing; (iv) preparing periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; (viii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certain closed-end funds; and (ix) performing other administrative functions necessary for the operation of the Trust, such as tax reporting, fulfilling regulatory filing requirements and call center services. Each Board reviewed the structure and duties of BlackRocks fund administration, shareholder services, and legal & compliance departments and considered BlackRocks policies and procedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of the Trusts and BlackRock: Each Board, including the Independent Board Members, also reviewed and considered the performance history of its Trust. In preparation for the April Meeting, the Board of each Trust was provided with reports independently prepared by Broadridge, which included a comprehensive analysis of the Trusts performance. Each Board also reviewed a narrative and statistical analysis of the Broadridge data that was prepared by BlackRock. In connection with its review, the Board of each Trust received and reviewed information regarding the investment performance, based on net asset value (NAV), of the Trust as compared to other funds in its applicable Broadridge category and a Customized Peer Group for BFZ, BBF, BNJ and BNY and the performance of BTT as compared with its custom benchmark. Each Board was provided with a description
ANNUAL REPORT | JULY 31, 2016 | 81 |
Disclosure of Investment Advisory Agreements (continued) |
of the methodology used by Broadridge to select peer funds and periodically meets with Broadridge representatives to review its methodology. Each Board was provided with information on the composition of the Broadridge performance universes and expense universes. Each Board and its Performance Oversight Committee regularly review, and meet with Trust management to discuss, the performance of its Trust throughout the year.
In evaluating performance, each Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. Further, each Board recognized that it is possible that long-term performance can be adversely affected by even one period of significant underperformance so that a single investment decision or theme has the ability to affect long-term performance disproportionately.
The Board of BNJ noted that for each of the one-, three- and five-year periods reported, BNJ ranked first out of three funds against its Customized Peer Group Composite. BlackRock believes that the Customized Peer Group Composite is an appropriate performance metric for BNJ. The Composite measures a blend of total return and yield.
The Board of BFO noted that for each of the one-, three- and five-year periods reported, BFO ranked in the fourth quartile against its Performance Universe Composite. BlackRock believes that the Composite is an appropriate performance metric for BFO. The Composite measures a blend of total return and yield. The Board of BFO and BlackRock reviewed and discussed the reasons for BFOs performance during these periods. The Board of BFO was informed that, among other things, BFO has a targeted maturity, and as such is managed to achieve the specific maturity goal. The peer funds within the Performance Universe generally do not have a similar specific maturity goal.
The Board of BFZ noted that for the one-, three- and five-year periods reported, BFZ ranked in the fourth, third and fourth quartiles, respectively, against its Customized Peer Group Composite. BlackRock believes that the Customized Peer Group Composite is an appropriate performance metric for BFZ. The Composite measures a blend of total return and yield. The Board of BFZ and BlackRock reviewed and discussed the reasons for BFZs underperformance during these periods. The Board of BFZ was informed that, among other things, the primary detractors from performance during these periods were a below market dividend distribution rate, the portfolio management teams higher quality bias during an environment of significant tightening in quality spreads, and a below benchmark duration posture.
The Board of BBF noted that for the one-, three- and five-year periods reported, BBF ranked in fourth, fourth, and second quartiles, respectively, against its Customized Peer Group Composite. BlackRock believes that the Customized Peer Group Composite is an appropriate performance metric for BBF. The Composite measures a blend of total return and yield. The Board of BBF and BlackRock reviewed and discussed the reasons for BBFs underperformance during the one- and three-year periods. The Board of BBF was informed that, among other things, BBFs longer duration posture and greater use of leverage during a rising rate environment were the primary detractors from performance.
The Board of BNY noted that for the one-, three- and five-year periods reported, BNY ranked in the second, fourth and fourth quartiles, respectively, against its Customized Peer Group Composite. BlackRock believes that the Customized Peer Group Composite is an appropriate performance metric for BNY. The Composite measures a blend of total return and yield. The Board of BNY also noted BNYs improved performance during the one-year period. The Board of BNY and BlackRock reviewed and discussed the reasons for BNYs underperformance during three- and five-year periods. The Board of BNY was informed that, among other things, prolonged low interest rates, and resulting low replacement yields, and the portfolio management teams decision to reduce leverage and avoid the Tobacco and Puerto Rico sectors detracted from BNYs performance over the three- and five-year periods.
The Board of BTT noted that for each of the one-year, three-year and since-inception periods reported, BTT underperformed its customized benchmark. BlackRock believes that performance relative to the customized benchmark is an appropriate performance metric for BTT. The Board of BTT and BlackRock reviewed and discussed the reasons for BTTs underperformance during these periods. The Board of BTT was informed that, among other things, BTTs overweight duration positioning was the primary detractor from performance during these periods. BTTs overweight positions in the healthcare, corporate and transportation sectors coupled with underweight positions in state and local tax-based sectors also detracted from performance.
The Boards of BFZ, BBF, BNY and BTT and BlackRock discussed BlackRocks strategy for improving the investment performance of these Trusts. Discussions covered topics such as: investment risks undertaken by these Trusts; performance attribution; the investment personnel of these Trusts; and the resources appropriate to support the investment processes of these Trusts.
C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Trusts: Each Board, including the Independent Board Members, reviewed its Trusts contractual management fee rate compared with the other funds in its Broadridge category. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. Each Board also compared its Trusts total expense ratio, as well as its actual management fee rate as a percentage of total assets, to those of other funds in its Broadridge category. The total expense ratio represents a funds total net operating expenses, excluding any investment related expenses. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. Each Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts and sub-advised mutual funds (including mutual funds sponsored by third parties).
82 | ANNUAL REPORT | JULY 31, 2016 |
Disclosure of Investment Advisory Agreements (continued) |
Each Board received and reviewed statements relating to BlackRocks financial condition. Each Board reviewed BlackRocks profitability methodology and was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to its Trust. Each Board reviewed BlackRocks profitability with respect to its Trust and other funds the Board currently oversees for the year ended December 31, 2015 compared to available aggregate profitability data provided for the prior two years. Each Board reviewed BlackRocks profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates. Each Board reviewed BlackRocks assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. Each Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund level is difficult.
Each Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. Each Board reviewed BlackRocks overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. Each Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRocks expense management, and the relative product mix.
In addition, each Board considered the cost of the services provided to its Trust by BlackRock, and BlackRocks and its affiliates profits relating to the management of its Trust and the other funds advised by BlackRock and its affiliates. As part of its analysis, each Board reviewed BlackRocks methodology in allocating its costs of managing its Trust, to the Trust. Each Board may receive and review information from independent third parties as part of its annual evaluation. Each Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Trusts Agreement and to continue to provide the high quality of services that is expected by the Board. Each Board further considered factors including but not limited to BlackRocks commitment of time, assumption of risk, and liability profile in servicing its Trust in contrast to what is required of BlackRock with respect to other products with similar investment mandates across the open-end fund, ETF, closed-end fund, sub-advised mutual fund and institutional account product channels, as applicable.
The Boards of BFZ and BBF noted that each Trusts contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile relative to the Expense Peers.
The Board of BFO noted that BFOs contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the second and first quartiles, respectively, relative to the Expense Peers.
The Board of BNJ noted that BNJs contractual management fee rate ranked in the third quartile, and that the actual management fee rate and total expense ratio each ranked in the third quartile, relative to the Expense Peers.
The Board of BNY noted that BNYs contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to the Expense Peers.
The Board of BTT noted that BTTs contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Expense Peers. The Board of BTT also noted that BlackRock had voluntarily agreed to waive a portion of the advisory fee payable by BTT. The waiver was implemented on June 9, 2014. After discussions between the Board of BTT, including the Independent Board Members, and BlackRock, the Board of BTT and BlackRock agreed to remove the voluntary advisory fee waiver. This adjustment was implemented on July 1, 2016.
D. Economies of Scale: Each Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its Trust increase. Each Board also considered the extent to which its Trust benefits from such economies in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Trust to more fully participate in these economies of scale. The Board considered the Trusts asset levels and whether the current fee was appropriate.
Based on each Boards review and consideration of the issue, each Board concluded that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. They are typically priced at scale at a funds inception.
E. Other Factors Deemed Relevant by the Board Members: Each Board, including the Independent Board Members, also took into account other ancillary or fall-out benefits that BlackRock or its affiliates may derive from their respective relationships with its Trust, both tangible and intangible, such as BlackRocks ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRocks profile in the investment advisory community, and the engagement of BlackRocks affiliates as service providers to the Trust, including for administrative, securities lending and cash management services. Each Board also considered BlackRocks overall operations and its efforts to expand the scale of, and improve the quality of, its operations. Each Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. Each Board further noted that it had considered the investment by BlackRocks funds in affiliated exchange traded funds (i.e., ETFs) without any offset against the management fees payable by the funds to BlackRock.
ANNUAL REPORT | JULY 31, 2016 | 83 |
Disclosure of Investment Advisory Agreements (concluded) |
In connection with its consideration of the Agreement for its Trust, each Board also received information regarding BlackRocks brokerage and soft dollar practices. Each Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.
Each Board noted the competitive nature of the closed-end fund marketplace, and that shareholders are able to sell their Trust shares in the secondary market if they believe that the Trusts fees and expenses are too high or if they are dissatisfied with the performance of the Trust.
Each Board also considered the various notable initiatives and projects BlackRock performed in connection with its closed-end fund product line. These initiatives included the redemption of AMPS for the BlackRock closed-end funds with AMPS outstanding, including the completion of the redemption of AMPS for BFO; developing equity shelf programs; efforts to eliminate product overlap with fund mergers; ongoing services to manage leverage that has become increasingly complex; periodic evaluation of share repurchases and other support initiatives for certain BlackRock funds; and continued communications efforts with shareholders, fund analysts and financial advisers. With respect to the latter, the Independent Board Members noted BlackRocks continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive secondary market communication program designed to raise investor and analyst awareness and understanding of closed-end funds. BlackRocks support services included, among other things: continuing communications concerning the redemption efforts related to AMPS; sponsoring and participating in conferences; communicating with closed-end fund analysts covering the BlackRock funds throughout the year; providing marketing and product updates for the closed-end funds; and maintaining and enhancing its closed-end fund website.
Conclusion
Each Board, including the Independent Board Members, unanimously approved the continuation of the Agreement between the Manager and its Trust for a one-year term ending June 30, 2017. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, each Board, including the Independent Board Members, was satisfied that the terms of Agreement for its Trust were fair and reasonable and in the best interest of the Trust and its shareholders. In arriving at its decision to approve the Agreement for its Trust, each Board did not identify any single factor or group of factors as, all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for each Trust reflect the results of several years of review by the Trusts Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members conclusions may be based in part on their consideration of these arrangements in prior years.
84 | ANNUAL REPORT | JULY 31, 2016 |
Automatic Dividend Reinvestment Plans |
Pursuant to each Trusts Dividend Reinvestment Plan (the Reinvestment Plan), Common Shareholders are automatically enrolled to have all distributions of dividends and capital gains and other distributions reinvested by Computershare Trust Company, N.A. (the Reinvestment Plan Agent) in the respective Trusts Common shares pursuant to the Reinvestment Plan. Shareholders who do not participate in the Reinvestment 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 name or other nominee name, then to the nominee) by the Reinvestment Plan Agent, which serves as agent for the shareholders in administering the Reinvestment Plan.
After BFZ, BBF, BNJ and BNY declare a dividend or determine to make a capital gain or other distribution, the Reinvestment Plan Agent will acquire shares for the participants accounts, depending upon the following circumstances, either (i) through receipt of unissued but authorized shares from the Trusts (newly issued shares) or (ii) by purchase of outstanding shares on the open market or on the Trusts primary exchange (open-market purchases). If, on the dividend payment date, the net asset value per share (NAV) is equal to or less than the market price per share plus estimated brokerage commissions (such condition often referred to as a market premium), the Reinvestment Plan Agent will invest the dividend amount in newly issued shares acquired on behalf of the participants. The number of newly issued shares to be credited to each participants account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the dividend payment date, the dollar amount of the dividend will be divided by 95% of the market price on the dividend payment date. If, on the dividend payment date, the NAV is greater than the market price per share plus estimated brokerage commissions (such condition often referred to as a market discount), the Reinvestment Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open-market purchases. If the Reinvestment Plan Agent is unable to invest the full dividend amount in open-market purchases, or if the market discount shifts to a market premium during the purchase period, the Reinvestment Plan Agent will invest any un-invested portion in newly issued shares. Investments in newly issued shares made in this manner would be made pursuant to the same process described above and the date of issue for such newly issued shares will substitute for the dividend payment date.
After BFO and BTT declare a dividend or determine to make a capital gain or other distribution, the Reinvestment Plan Agent will acquire shares for the participants accounts by the purchase of outstanding shares on the open market or on BFOs or BTTs primary exchange (open-market purchases). BFO and BTT will not issue any new shares under the Reinvestment Plan.
You may elect not to participate in the Reinvestment Plan and to receive all dividends in cash by contacting the Reinvestment Plan Agent, at the address set forth below.
Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution.
The Reinvestment Plan Agents fees for the handling of the reinvestment of distributions will be paid by each Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Reinvestment Plan Agents open market purchases in connection with the reinvestment of all distributions. The automatic reinvestment of all distributions will not relieve participants of any federal, state or local income tax that may be payable on such dividends or distributions.
Each Trust reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants in the Reinvestment Plan; however, each Trust reserves the right to amend the Reinvestment Plan to include a service charge payable by the participants. Participants that request a sale of shares are subject to a $2.50 sales fee and a $0.15 per share fee. Per share fees include any applicable brokerage commissions the Reinvestment Plan Agent is required to pay. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at http://www.computershare.com/blackrock, or in writing to Computershare, P.O. Box 30170, College Station, TX 77842-3170, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Reinvestment Plan Agent at Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845.
ANNUAL REPORT | JULY 31, 2016 | 85 |
Officers and Trustees |
Name, Address1 and Year of Birth |
Position(s) Held with the Trust |
Length of Time Served3 |
Principal Occupation(s) During Past Five Years | Number of BlackRock- Advised Registered Investment Companies (RICs) Consisting of Investment Portfolios (Portfolios) Overseen4 |
Public Company and Other Investment Company Directorships During Past Five Years | |||||
Independent Trustees2 | ||||||||||
Richard E. Cavanagh
1946 |
Chair of the Board and Trustee | Since 2007 |
Trustee, Aircraft Finance Trust from 1999 to 2009; Director, The Guardian Life Insurance Company of America since 1998; Director, Arch Chemical (chemical and allied products) from 1999 to 2011; Trustee, Educational Testing Service from 1997 to 2009 and Chairman thereof from 2005 to 2009; Senior Advisor, The Fremont Group since 2008 and Director thereof since 1996; Faculty Member/Adjunct Lecturer, Harvard University since 2007; President and Chief Executive Officer, The Conference Board, Inc. (global business research organization) from 1995 to 2007. | 74 RICs consisting of 74 Portfolios |
None | |||||
Karen P. Robards
1950 |
Vice Chair of the Board and Trustee | Since 2007 |
Principal of Robards & Company, LLC (consulting and private investing firm) since 1987; Co-founder and Director of the Cooke Center for Learning and Development (a not-for-profit organization) since 1987; Investment Banker at Morgan Stanley from 1976 to 1987. | 74 RICs consisting of 74 Portfolios |
AtriCure, Inc. (medical devices); Greenhill & Co., Inc. | |||||
Michael J. Castellano
1946 |
Trustee | Since 2011 |
Chief Financial Officer of Lazard Group LLC from 2001 to 2011; Chief Financial Officer of Lazard Ltd from 2004 to 2011; Director, Support Our Aging Religious (non-profit) from 2009 to June 2015; Director, National Advisory Board of Church Management at Villanova University since 2010; Trustee, Domestic Church Media Foundation since 2012; Director, CircleBlack Inc. (financial technology company) since 2015. | 74 RICs consisting of 74 Portfolios |
None | |||||
Cynthia L. Egan
1955 |
Trustee | Since 2016 |
Advisor, U.S. Department of the Treasury from 2014 to 2015; a President at T. Rowe Price Group, Inc. from 2007 to 2012. | 74 RICs consisting of 74 Portfolios | Unum (insurance); The Hanover Insurance Group (insurance); Envestnet (investment platform) from 2013 until 2016 | |||||
Frank J. Fabozzi
1948 |
Trustee | Since 2007 |
Editor of and Consultant for The Journal of Portfolio Management since 2006; Professor of Finance, EDHEC Business School since 2011; Visiting Professor, Princeton University from 2013 to 2014; Professor in the Practice of Finance and Becton Fellow, Yale University School of Management from 2006 to 2011. | 74 RICs consisting of 74 Portfolios |
None | |||||
Jerrold B. Harris
1942 |
Trustee | Since 2007 |
Trustee, Ursinus College from 2000 to 2012; Director, Ducks Unlimited Canada (conservation) since 2015; Director, Waterfowl Chesapeake (conservation) since 2014; Director, Ducks Unlimited, Inc. since 2013; Director, Troemner LLC (scientific equipment) since 2000; Director of Delta Waterfowl Foundation from 2010 to 2012; President and Chief Executive Officer, VWR Scientific Products Corporation from 1990 to 1999. | 74 RICs consisting of 74 Portfolios |
BlackRock Capital Investment Corp. (business development company) | |||||
R. Glenn Hubbard
1958 |
Trustee | Since 2007 |
Dean, Columbia Business School since 2004; Faculty member, Columbia Business School since 1988. | 74 RICs consisting of 74 Portfolios |
ADP (data and information services); Metropolitan Life Insurance Company (insurance) |
86 | ANNUAL REPORT | JULY 31, 2016 |
Officers and Trustees (continued) |
Name, Address1 and Year of Birth |
Position(s) Held
with |
Length of Time Served3 |
Principal Occupation(s) During Past Five Years | Number of BlackRock- Advised Registered Investment Companies (RICs) Consisting of Investment Portfolios (Portfolios) Overseen4 |
Public Company and Other Investment Company Directorships During Past Five Years | |||||
Independent Trustees2 | ||||||||||
W. Carl Kester
1951 |
Trustee | Since 2007 |
George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008, Deputy Dean for Academic Affairs from 2006 to 2010, Chairman of the Finance Unit, from 2005 to 2006, Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981. | 74 RICs consisting of 74 Portfolios |
None | |||||
Catherine A. Lynch
1961 |
Trustee | Since 2016 |
Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999. | 74 RICs consisting of 74 Portfolios | None | |||||
Interested Trustees5 | ||||||||||
Barbara G. Novick
1960 |
Trustee | Since 2014 |
Vice Chairman of BlackRock, Inc. since 2006; Chair of BlackRocks Government Relations Steering Committee since 2009; Head of the Global Client Group of BlackRock, Inc. from 1988 to 2008. | 100 RICs consisting of 218 Portfolios | None | |||||
John M. Perlowski
1964 |
Trustee, President and Chief Executive Officer | Since 2014 (Trustee); Since 2011 (President and Chief Executive Officer) | Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Fund and Accounting Services since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009. | 128 RICs consisting of 316 Portfolios | None | |||||
1 The address of each Trustee is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055. | ||||||||||
2 Each Independent Trustee will serve until his or her successor is elected and qualifies, or until his or her earlier death, resignation, retirement or removal, or until December 31 of the year in which he or she turns 75. The maximum age limitation may be waived as to any Trustee by action of a majority of the Trustees upon a finding of good cause therefor. | ||||||||||
3 Following the combination of Merrill Lynch Investment Managers, L.P. (MLIM) and BlackRock, Inc. (BlackRock) in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Independent [Directors/Trustees] as joining the Board in 2007, each [Director/Trustee] first became a member of the boards of other legacy MLIM or legacy BlackRock funds as follows: Richard E. Cavanagh, 1994; Frank J. Fabozzi, 1988; Jerrold B. Harris, 1999; R. Glenn Hubbard, 2004; W. Carl Kester, 1995; and Karen P. Robards, 1998. | ||||||||||
4 For purposes of this chart, RICs refers to investment companies registered under the 1940 Act and Portfolios refers to the investment programs of the BlackRock-advised funds. The Closed-End Complex is comprised of 74 RICs. Mr. Perlowski and Ms. Novick are also board members of certain complexes of BlackRock registered open-end funds. Mr. Perlowski is also a board member of the BlackRock Equity-Bond Complex and the BlackRock Equity-Liquidity Complex, and Ms. Novick is also a board member of the BlackRock Equity-Liquidity Complex. | ||||||||||
5 Mr. Perlowski and Ms. Novick are both interested persons, as defined in the 1940 Act, of the Trusts based on their positions with BlackRock and its affiliate. Mr. Perlowski and Ms. Novick are also board members of certain complexes of BlackRock registered open-end funds. Mr. Perlowski is also a board member of the BlackRock Equity-Bond Complex and the BlackRock Equity-Liquidity Complex, and Ms. Novick is a board member of the BlackRock Equity-Liquidity Complex. Interested Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The maximum age limitation may be waived as to any Trustee by action of a majority of the Trustees upon a finding of good cause therefor. |
ANNUAL REPORT | JULY 31, 2016 | 87 |
Officers and Trustees (concluded) |
Name, Address1 and Year of Birth |
Position(s) Held with the Trust |
Length of Time Served as an Officer |
Principal Occupation(s) During Past Five Years | |||
Officers Who Are Not Trustees2 | ||||||
Jonathan Diorio
1980 |
Vice President | Since 2015 |
Managing Director of BlackRock, Inc. since 2015; Director of BlackRock, Inc. from 2011 to 2015; Director of Deutsche Asset & Wealth Management from 2009 to 2011. | |||
Neal J. Andrews
1966 |
Chief Financial Officer | Since 2007 |
Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006. | |||
Jay M. Fife
1970 |
Treasurer | Since 2007 |
Managing Director of BlackRock, Inc. since 2007; Director of BlackRock, Inc. in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006. | |||
Charles Park
1967 |
Chief Compliance Officer | Since 2014 |
Anti-Money Laundering Compliance Officer for the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and the Closed-End Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (BFA) since 2006; Chief Compliance Officer for the BFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012. | |||
Janey Ahn
1975 |
Secretary | Since 2012 |
Director of BlackRock, Inc. since 2009; Vice President of BlackRock, Inc. from 2008 to 2009; Assistant Secretary of the funds in the Closed-End Complex 2008 to 2012. | |||
1 The address of each Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055. | ||||||
2 Officers of the Trusts serve at the pleasure of the Board. |
Effective April 1, 2016, Cynthia L. Egan was appointed to serve as a Trustee of the Trusts.
As of the date of this report:
| The portfolio managers of BBF are Ted Jaeckel, Michael Perilli and Walter OConnor. |
| The portfolio managers of BNJ are Ted Jaeckel, Walter OConnor and Timothy Browse. |
| The portfolio managers of BFO are Phillip Soccio and Ted Jaeckel. |
| The portfolio managers of BBF are Ted Jaeckel and Michael Perilli. |
| The portfolio managers of BNJ are Walter OConnor and Timothy Browse. |
| The portfolio managers of BNY are Timothy Browse and Walter OConnor. |
| The portfolio managers of BTT are Phillip Soccio and Ted Jaeckel. |
Investment Adviser BlackRock Advisors, LLC Wilmington, DE 19809 | Transfer Agent Common Shares: Computershare Trust Company, N.A. Canton, MA 02021 |
VRDP Liquidity Provider Barclays Bank PLC New York, NY 10019 |
Independent Registered Public Accounting Firm Deloitte & Touche LLP Boston, MA 02116 | |||
Custodian and Accounting Agent State Street Bank and Trust Company Boston, MA 02110 |
VRDP Tender and Paying Agent, RVMTP Tender and Paying Agent and VMTP Redemption and Paying Agent The Bank of New York Mellon New York, NY 10289 |
VRDP Remarketing Agent Barclays Capital, Inc. New York, NY 10019
|
Legal Counsel Skadden, Arps, Slate, Meagher & Flom LLP Boston, MA 02116
Address of the Trusts 100 Bellevue Parkway Wilmington, DE 19809 |
88 | ANNUAL REPORT | JULY 31, 2016 |
Additional Information |
Proxy Results |
The Annual Meeting of Shareholders was held on July 26, 2016 for shareholders of record on May 31, 2016, to elect trustee nominees for each Trust. There were no broker non-votes with regard to any of the Trusts.
Approved the Trustees as follows:
Catherine A. Lynch1 |
Richard E. Cavanagh2 |
Cynthia L. Egan2 | ||||||||||||||||
Votes For | Votes Withheld |
Abstain | Votes For | Votes Withheld |
Abstain | Votes For | Votes Withheld |
Abstain | ||||||||||
BFZ |
28,890,844 | 686,459 | 0 | 28,890,407 | 686,896 | 0 | 28,893,959 | 683,344 | 0 | |||||||||
BFO |
4,627,394 | 434,320 | 0 | 4,631,252 | 430,462 | 0 | 4,627,394 | 434,320 | 0 | |||||||||
BBF |
9,254,028 | 182,223 | 0 | 9,265,795 | 170,456 | 0 | 9,246,374 | 189,877 | 0 | |||||||||
BTT |
64,194,152 | 998,713 | 0 | 64,143,473 | 1,049,392 | 0 | 64,151,614 | 1,041,251 | 0 | |||||||||
BNJ |
6,661,511 | 201,628 | 0 | 6,641,210 | 221,929 | 0 | 6,669,806 | 193,333 | 0 | |||||||||
BNY |
10,862,846 | 460,875 | 0 | 10,834,383 | 489,338 | 0 | 10,866,390 | 457,331 | 0 | |||||||||
Jerrold B. Harris2 |
Barbara G. Novick2 |
|||||||||||||||||
Votes For | Votes Withheld |
Abstain | Votes For | Votes Withheld |
Abstain | |||||||||||||
BFZ |
28,878,782 | 698,521 | 0 | 28,872,188 | 705,115 | 0 | ||||||||||||
BFO |
4,631,252 | 430,462 | 0 | 4,627,394 | 434,320 | 0 | ||||||||||||
BBF |
9,274,695 | 161,556 | 0 | 9,260,628 | 175,623 | 0 | ||||||||||||
BTT |
64,065,380 | 1,127,485 | 0 | 64,150,173 | 1,042,692 | 0 | ||||||||||||
BNJ |
6,605,222 | 257,917 | 0 | 6,658,788 | 204,351 | 0 | ||||||||||||
BNY |
10,846,768 | 476,953 | 0 | 10,875,231 | 448,490 | 0 |
For the Trusts listed above, Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are Michael J. Castellano, Frank J. Fabozzi, R. Glenn Hubbard, W. Carl Kester, John M. Perlowski, and Karen P. Robards.
1 | Class II. |
2 | Class III. |
At a joint special meeting of shareholders of BlackRock Municipal Income Investment Trust (the Trust) held on Monday, March 21, 2016, Trust shareholders were asked to vote on the following proposals:
Preferred Shareholders
Proposal 1(C). The preferred shareholders of the Trust were asked to vote as a separate class to approve an Agreement and Plan of Reorganization between BlackRock Municipal Bond Investment Trust and the Trust and the transactions contemplated therein, including the issuance of additional VRDP shares.
With respect to this Proposal, the shares of the Trust were voted as follows:
For | Against | Abstain | ||
342 |
| |
Common and Preferred Shareholders
Proposal 2. The common and preferred shareholders of the Trust were asked to vote as a single class to approve the issuance of additional shares of common stock of the Trust in connection with the Agreement and Plan of Reorganization between BlackRock Municipal Bond Investment Trust and the Trust.
With respect to this Proposal, the shares of the Trust were voted as follows:
For | Against | Abstain | ||
3,442,319 |
255,912 | 85,869 |
ANNUAL REPORT | JULY 31, 2016 | 89 |
Additional Information (continued) |
Dividend Policy |
Each Trusts dividend policy is to distribute all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of dividend distributions, the distributions paid by the Trusts for any particular month may be more or less than the amount of net investment income earned by the Trusts during such month. The portion of distributions that exceeds a Trusts current and accumulated earnings and profits, which are measured on a tax basis, will constitute a nontaxable return of capital. Distributions in excess of a Trusts taxable income and net capital gains, but not in excess of a Trusts earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a nontaxable return of capital. The Trusts current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.
General Information |
The Trusts do not make available copies of their Statements of Additional Information because the Trusts shares are not continuously offered, which means that the Statement of Additional Information of each Trust has not been updated after completion of the respective Trusts offerings and the information contained in each Trusts Statement of Additional Information may have become outdated.
During the period, there were no material changes in the Trusts investment objectives or policies or to the Trusts charters or by-laws that would delay or prevent a change of control of the Trusts that were not approved by the shareholders or in the principal risk factors associated with investment in the Trusts. Except as described on page 88, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts portfolios.
Effective September 26, 2016 onwards, BlackRock implemented a new methodology for calculating effective duration for BlackRock municipal bond portfolios. The new methodology replaces the model previously used by BlackRock to evaluate municipal bond duration, a common indicator of an investments sensitivity to interest rate movements. The new methodology will be applied to the Trusts duration reported for any periods after September 26, 2016.
Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Trusts, including each Trusts effective duration and additional information about the new methodology, may be found on BlackRocks website, which can be accessed at http://www.blackrock.com. Any reference to BlackRocks website in this report is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRocks website in this report.
Electronic Delivery
Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports by enrolling in the electronic delivery program. Electronic copies of shareholder reports are available on BlackRocks website.
To enroll in electronic delivery:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment advisers, banks or brokerages may offer this service.
Householding
The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called householding and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Trusts at (800) 882-0052.
Availability of Quarterly Schedule of Investments
The Trusts file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trusts Forms N-Q are available on the SECs website at http://www.sec.gov and may also be reviewed and copied at the SECs Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room or how to access documents on the SECs website without charge may be obtained by calling (800) SEC-0330. The Trusts Forms N-Q may also be obtained upon request and without charge by calling (800) 882-0052.
90 | ANNUAL REPORT | JULY 31, 2016 |
Additional Information (concluded) |
General Information (concluded) |
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Trusts use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 882-0052; (2) at http://www.blackrock.com; and (3) on the SECs website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Trusts voted proxies relating to securities held in the Trusts portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com; or by calling (800) 882-0052; and (2) on the SECs website at http://www.sec.gov.
Availability of Trust Updates
BlackRock will update performance and certain other data for the Trusts on a monthly basis on its website in the Closed-end Funds section of http://www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Trusts. This reference to BlackRocks website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRocks website in this report.
BlackRock Privacy Principles |
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, Clients) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
ANNUAL REPORT | JULY 31, 2016 | 91 |
This report is intended for current holders. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Trusts have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares yield. Statements and other information herein are as dated and are subject to change.
CEF-BK6-7/16-AR |
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Item 2 | Code of Ethics The registrant (or the Fund) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to update certain information and to make other non-material changes. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, by calling 1-800-882-0052, option 4. |
Item 3 | Audit Committee Financial Expert The registrants board of directors (the board of directors), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent: |
Michael Castellano
Frank J. Fabozzi
James T. Flynn
W. Carl Kester
Karen P. Robards
The registrants board of directors has determined that W. Carl Kester and Karen P. Robards qualify as financial experts pursuant to Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Prof. Kester has been involved in providing valuation and other financial consulting services to corporate clients since 1978. Prof. Kesters financial consulting services present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrants financial statements.
Ms. Robards has a thorough understanding of generally accepted accounting principles, financial statements and internal control over financial reporting as well as audit committee functions. Ms. Robards has been President of Robards & Company, a financial advisory firm, since 1987. Ms. Robards was formerly an investment banker for more than 10 years where she was responsible for evaluating and assessing the performance of companies based on their financial results. Ms. Robards has over 30 years of experience analyzing financial statements. She also is a member of the audit committee of one publicly held company and a non-profit organization.
Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an expert for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.
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Item 4 | Principal Accountant Fees and Services |
The following table presents fees billed by Deloitte & Touche LLP (D&T) in each of the last two fiscal years for the services rendered to the Fund:
(a) Audit Fees | (b) Audit-Related Fees1 | (c) Tax Fees2 | (d) All Other Fees3 | |||||||||||||||||||||||||||||
Entity Name |
Current Fiscal Year End |
Previous Fiscal Year End |
Current Fiscal Year End |
Previous Fiscal Year End |
Current Fiscal Year End |
Previous Fiscal Year End |
Current Fiscal Year End |
Previous Fiscal Year End |
||||||||||||||||||||||||
BlackRock Florida Municipal 2020 Term Trust |
$ | 30,163 | $ | 30,163 | $ | 0 | $ | 0 | $ | 8,976 | $ | 8,976 | $ | 0 | $ | 0 |
The following table presents fees billed by D&T that were required to be approved by the registrants audit committee (the Committee) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (Investment Adviser or BlackRock) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (Fund Service Providers):
Current Fiscal Year End | Previous Fiscal Year End | |||||||
(b) Audit-Related Fees1 |
$ | 0 | $ | 0 | ||||
(c) Tax Fees2 |
$ | 0 | $ | 0 | ||||
(d) All Other Fees3 |
$ | 2,129,000 | $ | 2,391,000 |
1 | The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees. |
2 | The nature of the services includes tax compliance, tax advice and tax planning. |
3 | Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock. |
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SECs auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (general pre-approval). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.
Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g.,
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unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:
Entity Name |
Current Fiscal Year End |
Previous Fiscal Year End |
||||||
BlackRock Florida Municipal 2020 Term Trust |
$ | 8,976 | $ | 8,976 |
Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,129,000 and $2,391,000, respectively, were billed by D&T to the Investment Adviser.
(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountants independence.
Item 5 | Audit Committee of Listed Registrants |
(a) | The following individuals are members of the registrants separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)): |
Michael Castellano
Frank J. Fabozzi
James T. Flynn
W. Carl Kester
Karen P. Robards
(b) | Not Applicable |
Item 6 | Investments |
(a) The registrants Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.
(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.
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Item 7 | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies The board of directors has delegated the voting of proxies for the Funds portfolio securities to the Investment Adviser pursuant to the Investment Advisers proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Funds stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Advisers Equity Investment Policy Oversight Committee, or a sub-committee thereof (the Oversight Committee) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Advisers clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Advisers Portfolio Management Group and/or the Investment Advisers Legal and Compliance Department and concluding that the vote cast is in its clients best interest notwithstanding the conflict. A copy of the Funds Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SECs website at http://www.sec.gov. |
Item 8 | Portfolio Managers of Closed-End Management Investment Companies as of July 31, 2016. |
(a)(1) | The registrant is managed by a team of investment professionals comprised of Phillip Soccio, CFA, Director at BlackRock, and Theodore R. Jaeckel, Jr., CFA, Managing Director at BlackRock. Each is a member of BlackRocks municipal tax-exempt management group. Each is jointly responsible for the day-to-day management of the registrants portfolio, which includes setting the registrants overall investment strategy, overseeing the management of the registrant and/or selection of its investments. Messrs. Soccio and Jaeckel have been members of the registrants portfolio management team since 2011 and 2006, respectively. |
Portfolio Manager |
Biography | |
Phillip Soccio, CFA | Director of BlackRock since 2009; Vice President of BlackRock from 2005 to 2008. | |
Theodore R. Jaeckel, Jr., CFA | Managing Director of BlackRock since 2006; Managing Director of Merrill Lynch Investment Managers, L.P. (MLIM) from 2005 to 2006; Director of MLIM from 1997 to 2005. |
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(a)(2) | As of July 31, 2016: |
(ii) Number of Other Accounts Managed and Assets by Account Type |
(iii) Number of Other Accounts and Assets for Which Advisory Fee is Performance-Based |
|||||||||||||||||||||
(i) Name of Portfolio Manager |
Other Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
Other Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
||||||||||||||||
Phillip Soccio, CFA |
13 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
$5.16 Billion | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Theodore R. Jaeckel, Jr., CFA |
33 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
$26.01 Billion | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
(iv) | Portfolio Manager Potential Material Conflicts of Interest |
BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc., or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.s (or its affiliates or significant shareholders) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that a portfolio manager may be managing hedge fund and/or long only accounts, or may be part of a team managing hedge fund and/or long only accounts, subject to incentive fees. Such portfolio managers may therefore be entitled to receive a portion of any incentive fees earned on such accounts. Currently, the portfolio managers of this fund are not entitled to receive a portion of incentive fees of other accounts.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to
6
ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.
(a)(3) | As of July 31, 2016: |
Portfolio Manager Compensation Overview
The discussion below describes the portfolio managers compensation as of July 31, 2016.
BlackRocks financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.
Base compensation. Generally, portfolio managers receive base compensation based on their position with the firm.
Discretionary Incentive Compensation. Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio managers group within BlackRock, the investment performance, including risk-adjusted returns, of the firms assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individuals performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRocks Chief Investment Officers make a subjective determination with respect to each portfolio managers compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed income funds is measured on a pre-tax and/or after-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are: a combination of market-based indices (e.g., Standard & Poors Municipal Bond Index), certain customized indices and certain fund industry peer groups.
Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. For some portfolio managers, discretionary incentive compensation is also distributed in deferred cash awards that notionally track the returns of select BlackRock investment products they manage and that vest ratably over a number of years. The BlackRock, Inc. restricted stock units, upon vesting, will be settled in BlackRock, Inc. common stock. Typically, the cash portion of the discretionary incentive compensation, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of discretionary incentive compensation in BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year at risk based on BlackRocks ability to sustain and improve its performance over future periods. Providing a portion of discretionary incentive compensation in deferred cash awards that notionally track the BlackRock investment products they manage provides direct alignment with investment product results.
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Long-Term Incentive Plan Awards From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance. Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock, Inc. common stock. The portfolio managers of this Fund have unvested long-term incentive awards.
Deferred Compensation Program A portion of the compensation paid to eligible United States-based BlackRock employees may be voluntarily deferred at their election for defined periods of time into an account that tracks the performance of certain of the firms investment products. Any portfolio manager who is either a managing director or director at BlackRock with compensation above a specified threshold is eligible to participate in the deferred compensation program.
Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:
Incentive Savings Plans BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($265,000 for 2016). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.
(a)(4) | Beneficial Ownership of Securities As of July 31, 2016. |
Portfolio Manager |
Dollar Range of Equity Securities of the Fund Beneficially Owned | |
Phillip Soccio, CFA |
None | |
Theodore R. Jaeckel, Jr., CFA |
None |
(b) Not Applicable
Item 9 | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers Not Applicable due to no such purchases during the period covered by this report. |
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Item 10 | Submission of Matters to a Vote of Security Holders There have been no material changes to these procedures. |
Item 11 | Controls and Procedures |
(a) The registrants principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the 1940 Act)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.
(b) There were no changes in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 12 | Exhibits attached hereto |
(a)(1) Code of Ethics See Item 2
(a)(2) Certifications Attached hereto
(a)(3) Not Applicable
(b) Certifications Attached hereto
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Florida Municipal 2020 Term Trust | ||||
By: | /s/ John M. Perlowski | |||
John M. Perlowski | ||||
Chief Executive Officer (principal executive officer) of BlackRock Florida Municipal 2020 Term Trust | ||||
Date: October 3, 2016 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ John M. Perlowski | |||
John M. Perlowski | ||||
Chief Executive Officer (principal executive officer) of BlackRock Florida Municipal 2020 Term Trust | ||||
Date: October 3, 2016 | ||||
By: | /s/ Neal J. Andrews | |||
Neal J. Andrews | ||||
Chief Financial Officer (principal financial officer) of BlackRock Florida Municipal 2020 Term Trust | ||||
Date: October 3, 2016 |
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