|
|
|
18
|
|
2019 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS
|
Statements of Changes in Net Assets (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BKK
|
|
|
|
Year Ended
December 31,
2019
|
|
|
Period from
05/01/18
to 12/31/18
|
|
|
Year Ended
April 30,
2018
|
|
|
|
|
|
INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
7,244,647
|
|
|
$
|
5,494,701
|
|
|
$
|
8,824,400
|
|
Net realized loss
|
|
|
(10,146
|
)
|
|
|
(45,852
|
)
|
|
|
(1,118,558
|
)
|
Net change in unrealized appreciation (depreciation)
|
|
|
(688,724
|
)
|
|
|
(2,237,085
|
)
|
|
|
(5,373,942
|
)
|
Distributions to AMPS Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
(70,385
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
|
|
(348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets applicable to Common Shareholders resulting from operations
|
|
|
6,545,777
|
|
|
|
3,211,764
|
|
|
|
2,261,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS TO COMMON SHAREHOLDERS(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in net assets resulting from distributions to Common Shareholders
|
|
|
(7,358,038
|
)
|
|
|
(5,459,842
|
)
|
|
|
(9,866,024
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS
|
|
|
|
|
|
|
|
|
|
|
|
|
Total decrease in net assets applicable to Common Shareholders
|
|
|
(812,261
|
)
|
|
|
(2,248,078
|
)
|
|
|
(7,604,857
|
)
|
Beginning of year
|
|
|
305,906,489
|
|
|
|
308,154,567
|
|
|
|
315,759,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
305,094,228
|
|
|
$
|
305,906,489
|
|
|
$
|
308,154,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
See notes to financial statements.
Financial Highlights
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
|
Year Ended
December 31,
2019
|
|
|
Period from
08/01/18 to
12/31/2018
|
|
|
|
|
|
Year Ended July 31,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
$
|
14.60
|
|
|
$
|
14.71
|
|
|
|
|
|
|
$
|
15.05
|
|
|
$
|
15.50
|
|
|
$
|
15.37
|
|
|
$
|
15.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(a)
|
|
|
0.31
|
|
|
|
0.11
|
|
|
|
|
|
|
|
0.31
|
|
|
|
0.37
|
|
|
|
0.46
|
|
|
|
0.42
|
|
Net realized and unrealized gain (loss)
|
|
|
(0.06
|
)
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
(0.32
|
)
|
|
|
(0.40
|
)
|
|
|
0.05
|
|
|
|
(0.03
|
)
|
Distributions to AMPS Shareholders from net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) from investment operations
|
|
|
0.25
|
|
|
|
0.02
|
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
(0.03
|
)
|
|
|
0.51
|
|
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders from net investment
income(c)
|
|
|
(0.25
|
)
|
|
|
(0.13
|
)
|
|
|
|
|
|
|
(0.33
|
)
|
|
|
(0.42
|
)
|
|
|
(0.38
|
)
|
|
|
(0.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
14.60
|
|
|
$
|
14.60
|
|
|
|
|
|
|
$
|
14.71
|
|
|
$
|
15.05
|
|
|
$
|
15.50
|
|
|
$
|
15.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of period
|
|
$
|
14.47
|
|
|
$
|
14.04
|
|
|
|
|
|
|
$
|
14.21
|
|
|
$
|
15.05
|
|
|
$
|
15.21
|
|
|
$
|
14.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Applicable to Common
Shareholders(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
1.76
|
%
|
|
|
0.17
|
%(e)
|
|
|
|
|
|
|
(0.02
|
)%
|
|
|
(0.20
|
)%
|
|
|
3.41
|
%
|
|
|
2.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market price
|
|
|
4.88
|
%
|
|
|
(0.29
|
)%(e)
|
|
|
|
|
|
|
(3.42
|
)%
|
|
|
1.70
|
%
|
|
|
5.24
|
%
|
|
|
0.62
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets Applicable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
0.68
|
%
|
|
|
0.63
|
%(f)(g)(h)
|
|
|
|
|
|
|
0.65
|
%(g)
|
|
|
0.64
|
%
|
|
|
0.64
|
%
|
|
|
0.68
|
%(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and paid indirectly
|
|
|
0.18
|
%
|
|
|
0.63
|
%(f)(g)(h)
|
|
|
|
|
|
|
0.65
|
%(g)
|
|
|
0.64
|
%
|
|
|
0.64
|
%
|
|
|
0.68
|
%(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and paid indirectly and excluding interest expense and fees, and
amortization of offering costs(j)(k)
|
|
|
0.18
|
%
|
|
|
0.63
|
%(f)(g)(h)
|
|
|
|
|
|
|
0.65
|
%(g)
|
|
|
0.64
|
%
|
|
|
0.64
|
%
|
|
|
0.68
|
%(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
2.11
|
%
|
|
|
1.76
|
%(f)(g)
|
|
|
|
|
|
|
2.10
|
%(g)
|
|
|
2.43
|
%
|
|
|
3.00
|
%
|
|
|
2.69
|
%(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to AMPS Shareholders
|
|
|
|
%
|
|
|
|
%
|
|
|
|
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income to Common Shareholders
|
|
|
2.11
|
%
|
|
|
1.76
|
%(f)(g)
|
|
|
|
|
|
|
2.10
|
%(g)
|
|
|
2.43
|
%
|
|
|
3.00
|
%
|
|
|
2.69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to Common Shareholders, end of period (000)
|
|
$
|
79,905
|
|
|
$
|
81,198
|
|
|
|
|
|
|
$
|
81,809
|
|
|
$
|
83,683
|
|
|
$
|
86,209
|
|
|
$
|
85,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings outstanding, end of period (000)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
20
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
16
|
%
|
|
|
|
%
|
|
|
7
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Based on average Common Shares outstanding.
|
(b)
|
Amount is greater than $(0.005) per share.
|
(c)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
(d)
|
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 at actual reinvestment prices.
|
(e)
|
Aggregate total return.
|
(g)
|
Excludes 0.01% of expenses incurred indirectly as a result of investments in underlying funds.
|
(h)
|
Audit costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total
expenses would have been 0.68%.
|
(i)
|
Does not reflect the effect of distributions to Auction Market Preferred Shares (AMPS) Shareholders.
|
(j)
|
Interest expense and fees related to TOB Trusts. See Note 4 of the Notes to Financial Statements for details.
|
(k)
|
The total expense ratio after fees waived and paid indirectly and excluding interest expense, fees, amortization of
offering costs, liquidity and remarketing fees were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2019
|
|
|
Period from
08/01/18 to
12/31/18
|
|
|
|
|
|
Year Ended July 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
Expense ratios
|
|
|
0.18
|
%
|
|
|
0.63
|
%
|
|
|
|
|
|
|
0.65
|
%
|
|
|
0.64
|
%
|
|
|
0.64
|
%
|
|
|
0.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to financial statements.
|
|
|
20
|
|
2019 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS
|
Financial Highlights (continued)
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BKK
|
|
|
|
Year Ended
December 31,
2019
|
|
|
Period from
05/01/18 to
12/31/18
|
|
|
|
|
|
Year Ended April 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
$
|
15.12
|
|
|
$
|
15.23
|
|
|
|
|
|
|
$
|
15.60
|
|
|
$
|
16.27
|
|
|
$
|
16.30
|
|
|
$
|
16.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(a)
|
|
|
0.36
|
|
|
|
0.27
|
|
|
|
|
|
|
|
0.44
|
|
|
|
0.55
|
|
|
|
0.57
|
|
|
|
0.61
|
|
Net realized and unrealized gain (loss)
|
|
|
(0.04
|
)
|
|
|
(0.11
|
)
|
|
|
|
|
|
|
(0.33
|
)
|
|
|
(0.66
|
)
|
|
|
(0.03
|
)
|
|
|
0.14
|
|
|
|
|
|
|
|
|
|
Distributions to AMPS Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.00
|
)(b)
|
Net realized gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
|
(0.00
|
)(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) from investment operations
|
|
|
0.32
|
|
|
|
0.16
|
|
|
|
|
|
|
|
0.11
|
|
|
|
(0.12
|
)
|
|
|
0.53
|
|
|
|
0.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
(0.36
|
)
|
|
|
(0.27
|
)
|
|
|
|
|
|
|
(0.48
|
)
|
|
|
(0.54
|
)
|
|
|
(0.56
|
)
|
|
|
(0.67
|
)
|
From net realized gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
|
(0.01
|
)
|
|
|
(0.00
|
)(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
|
(0.36
|
)
|
|
|
(0.27
|
)
|
|
|
|
|
|
|
(0.48
|
)
|
|
|
(0.55
|
)
|
|
|
(0.56
|
)
|
|
|
(0.67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
15.08
|
|
|
$
|
15.12
|
|
|
|
|
|
|
$
|
15.23
|
|
|
$
|
15.60
|
|
|
$
|
16.27
|
|
|
$
|
16.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of period
|
|
$
|
14.89
|
|
|
$
|
14.76
|
|
|
|
|
|
|
$
|
15.16
|
|
|
$
|
15.73
|
|
|
$
|
16.14
|
|
|
$
|
16.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return Applicable to Common
Shareholders(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
2.17
|
%
|
|
|
1.08
|
%(e)
|
|
|
|
|
|
|
0.76
|
%
|
|
|
(0.78
|
)%
|
|
|
3.39
|
%
|
|
|
4.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on market price
|
|
|
3.34
|
%
|
|
|
(0.87
|
)%(e)
|
|
|
|
|
|
|
(0.54
|
)%
|
|
|
0.85
|
%
|
|
|
2.87
|
%
|
|
|
1.90
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets Applicable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
0.58
|
%
|
|
|
0.59
|
%(f)(g)
|
|
|
|
|
|
|
0.62
|
%(g)
|
|
|
0.67
|
%(h)
|
|
|
0.69
|
%(h)
|
|
|
0.72
|
%(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or reimbursed and paid indirectly
|
|
|
0.57
|
%
|
|
|
0.59
|
%(f)(g)
|
|
|
|
|
|
|
0.62
|
%(g)
|
|
|
0.67
|
%(h)
|
|
|
0.69
|
%(h)
|
|
|
0.72
|
%(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense and
fees, and amortization of offering costs(i)(j)
|
|
|
0.57
|
%
|
|
|
0.59
|
%(f)(g)
|
|
|
|
|
|
|
0.60
|
%(g)
|
|
|
0.65
|
%(h)
|
|
|
0.68
|
%(h)
|
|
|
0.71
|
%(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
2.37
|
%
|
|
|
2.66
|
%(f)
|
|
|
|
|
|
|
2.81
|
%(g)
|
|
|
3.43
|
%(h)
|
|
|
3.54
|
%(h)
|
|
|
3.75
|
%(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to AMPS Shareholders
|
|
|
|
%
|
|
|
|
%
|
|
|
|
|
|
|
0.02
|
%
|
|
|
0.08
|
%
|
|
|
0.03
|
%
|
|
|
0.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income to Common Shareholders
|
|
|
2.37
|
%
|
|
|
2.66
|
%(f)
|
|
|
|
|
|
|
2.79
|
%
|
|
|
3.35
|
%
|
|
|
3.51
|
%
|
|
|
3.73
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to Common Shareholders, end of period (000)
|
|
$
|
305,094
|
|
|
$
|
305,906
|
|
|
|
|
|
|
$
|
308,155
|
|
|
$
|
315,759
|
|
|
$
|
329,241
|
|
|
$
|
329,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Shares outstanding at $25,000 liquidation preference, end of period (000)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
11,328
|
|
|
$
|
34,578
|
|
|
$
|
53,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset coverage per Preferred Share at $25,000 liquidation preference, end of period (000)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
721,856
|
|
|
$
|
263,065
|
|
|
$
|
178,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings outstanding, end of period (000)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
3,750
|
|
|
$
|
3,750
|
|
|
$
|
3,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
6
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
4
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Based on average Common Shares outstanding.
|
(b)
|
Amount is greater than $(0.005) per share.
|
(c)
|
Distributions for annual periods determined in accordance with U.S. federal income tax regulations.
|
(d)
|
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 at actual reinvestment prices.
|
(e)
|
Aggregate total return.
|
(g)
|
Audit costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total
expenses would have been 0.60%.
|
(h)
|
Does not reflect the effect of distributions to AMPS Shareholders.
|
(i)
|
Interest expense and fees relate to TOB Trusts. See Note 4 of the Notes to Financial Statements for details.
|
(j)
|
The total expense ratio after fees waived and/or reimbursed and paid indirectly and excluding interest expense, fees,
amortization of offering costs, liquidity and remarketing fees were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2019
|
|
|
Period from
05/01/18
to 12/31/18
|
|
|
|
|
|
Year Ended April 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
Expense ratios
|
|
|
0.57
|
%
|
|
|
0.59
|
%
|
|
|
|
|
|
|
0.62
|
%
|
|
|
0.64
|
%
|
|
|
0.66
|
%
|
|
|
0.69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to financial statements.
Notes to Financial Statements
The following are registered under the Investment Company Act of 1940, as amended (the 1940 Act), as closed-end management investment companies and are
referred to herein collectively as the Trusts, or individually as a Trust:
|
|
|
|
|
|
|
Trust Name
|
|
Herein Referred To As
|
|
Organized
|
|
Diversification
Classification
|
BlackRock Florida Municipal 2020 Term Trust
|
|
BFO
|
|
Delaware
|
|
Non-diversified
|
BlackRock Municipal 2020 Term Trust
|
|
BKK
|
|
Delaware
|
|
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 net asset values (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 non-index fixed-income mutual funds and all BlackRock-advised closed-end funds referred to as the BlackRock Fixed-Income Complex.
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:
Investment Transactions and Income Recognition: For
financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the
ex-dividend date. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an 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 U.S. federal income tax regulations, which may differ from U.S. GAAP.
Deferred Compensation Plan: Under the Deferred Compensation Plan (the Plan) approved by each Trusts Board, the trustees who are not
interested persons of the Trusts, as defined in the 1940 Act (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 funds in the BlackRock Fixed-Income Complex 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 funds in the BlackRock Fixed-Income Complex.
The Plan is not funded and obligations thereunder represent general unsecured
claims against the general assets of each Trust, as applicable. Deferred compensation liabilities are included in the Trustees and Officers 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 Standards: The Trusts have adopted Financial Accounting Standards
Board Accounting Standards Update 2017-08 to amend the amortization period for certain purchased callable debt securities held at a premium. Under the new standard, the Trusts have changed the amortization period for the premium on certain purchased
callable debt securities with non-contingent call features to the earliest call date. In accordance with the transition provisions of the standard, the Trusts applied the amendments on a modified retrospective basis beginning with the fiscal period
ended December 31, 2019. The adjusted cost basis of securities at December 31, 2018 for BKK is $299,852,469. This change in accounting policy has been made to comply with the newly issued accounting standard and had no impact on
accumulated earnings (loss) or the NAV of BKK.
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.
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). 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. 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.
|
|
|
22
|
|
2019 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS
|
Notes to Financial Statements (continued)
Fair Value Inputs and Methodologies:
The following methods and inputs are used to establish the fair value of each Trusts assets and liabilities:
|
|
|
Fixed-income securities for which market quotations are readily available are generally valued using the last available bid
prices or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party
pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower
prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), credit
quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash
flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect
to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.
|
|
|
|
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.
|
If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, 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). The fair valuation approaches that may be used by the Global Valuation Committee will include
market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. 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 and 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.
For investments in equity or debt issued by privately held
companies or funds (Private Company or collectively, the Private Companies) and other Fair Valued Investments, the fair valuation approaches that are used by the Global Valuation Committee and third party pricing services
utilize one or a combination of, but not limited to, the following inputs.
|
|
|
|
|
Standard Inputs Generally Considered By Third Party Pricing Services
|
Market approach
|
|
(i) recent market transactions, including subsequent
rounds of financing, in the underlying investment or comparable issuers;
(ii) recapitalizations and other transactions
across the capital structure; and
(iii) market multiples of comparable issuers.
|
Income approach
|
|
(i) future cash flows discounted to present and
adjusted as appropriate for liquidity, credit, and/or market risks;
(ii) quoted prices for similar investments or
assets in active markets; and
(iii) other risk factors, such as interest rates, yield curves,
volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.
|
Cost approach
|
|
(i) audited or unaudited financial statements, investor
communications and financial or operational metrics issued by the Private Company;
(ii) changes in the valuation of
relevant indices or publicly traded companies comparable to the Private Company;
(iii) relevant news and
other public sources; and
(iv) known secondary market transactions in the Private Companys
interests and merger or acquisition activity in companies comparable to the Private Company.
|
Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the
enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (OPM), a
probability weighted expected return model (PWERM) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a
determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.
The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by a Trust. Typically, the most recently
available information by a Private Company is as of a date that is earlier than the date a Trust is calculating its NAV. This factor may result in a difference between the value of the investment and the price a Trust could receive upon the sale of
the investment.
Fair Value Hierarchy: Various inputs are used in determining the fair value of investments. 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
|
|
|
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
|
23
|
|
Notes to Financial Statements (continued)
|
|
|
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 the Global Valuation Committees assumptions used in determining the fair value of investments)
|
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. Investments classified within Level 3 have significant unobservable inputs used by the Global
Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. The
categorization of a value determined for investments is based on the pricing transparency of the investments 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, When-Issued and 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 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 issued to the participating trusts that contributed the municipal bonds to the TOB Trust. The TOB
Trust Certificates have interest rates that 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 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 trusts managed by the investment adviser may also contribute municipal bonds to a TOB Trust into which a 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 trusts ratably in proportion to their participation in the TOB Trust.
TOB Trusts are 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 are remarketed by a Remarketing Agent. In the event of a failed remarketing, 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 number of days the loan is outstanding.
The TOB Trust may be collapsed without the consent of a trust, upon the occurrence of a termination event as defined in the TOB Trust agreement. Upon the occurrence of a
termination event, a 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. Upon certain termination events, TOB Trust Certificates
holders will be paid before the TOB Residuals holders (i.e., the Trusts) whereas in other termination events, TOB Trust Certificates holders and TOB Residuals holders will be paid pro rata.
While a trusts investment policies and restrictions expressly permit investments in inverse floating rate securities, such as TOB Residuals, they 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.
Accounting for TOB Trusts: 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 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, 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 non-bank sponsored TOB Trusts, 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.
|
|
|
24
|
|
2019 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS
|
Notes to Financial Statements (continued)
For the year ended December 31, 2019,
the Trusts did not hold TOB Trusts.
5.
|
INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
|
Investment Advisory: Each Trust entered into an Investment Advisory Agreement with the Manager, the Trusts investment adviser and an indirect, wholly-owned
subsidiary of BlackRock, Inc. (BlackRock), to provide investment advisory and administrative 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 pays the Manager a monthly fee at an annual rate equal to 0.50% of
the average weekly value of each Trusts managed assets.
For purposes of calculating these fees, managed assets are determined as total assets of
the Trust (including any assets attributable to money borrowed for investment purposes) less the sum of its accrued liabilities (other than money borrowed for investment purposes).
Expense Waivers: With respect to BFO, effective January 1, 2019, the Manager voluntarily agreed to waive the entirety of its investment advisory fees. This
voluntary waiver may be reduced or discontinued at any time without notice. For the year ended December 31, 2019, the Manager waived $404,741 in investment advisory fees pursuant to this arrangement, which is included in fees waived and/or
reimbursed by the Manager in the Statements of Operations.
With respect to each Trust, 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 (the affiliated money market fund waiver). Effective December 1, 2019, with respect to BKK and BFO, this
waiver and/or reimbursement became contractual through June 30, 2021. These amounts are included in fees waived and/or reimbursed by the Manager in the Statements of Operations. For the year ended December 31, 2019 the amounts waived were
as follows:
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
BKK
|
|
Amounts waived
|
|
$
|
769
|
|
|
$
|
9,575
|
|
The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each Trusts assets invested in
affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2021. The agreement can be renewed for annual periods thereafter, and may be terminated on
90 days notice, each subject to approval by a majority of the Trusts Independent Trustees. For the year ended December 31, 2019, there were no fees waived by the Manager pursuant to these arrangements.
Trustees and Officers: Certain trustees and/or officers of the Trusts are directors and/or officers 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 Trustees and Officer in the Statements of Operations.
For the year ended December 31, 2019, purchases and sales of investments, excluding short-term securities, were as follows:
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
BKK
|
|
Purchases
|
|
$
|
15,531,226
|
|
|
$
|
17,147,200
|
|
Sales
|
|
|
24,289,711
|
|
|
|
53,361,070
|
|
7.
|
INCOME TAX INFORMATION
|
It is each 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 its taxable income to its shareholders. Therefore, no U.S. 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 the year ended April 30, 2017 for BKK, the two years
ended July 31, 2017 for BFO, the period ended December 31, 2018 and the year ended December 31, 2019. 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 December 31, 2019, inclusive of the open tax
return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Trusts financial statements.
|
|
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
|
25
|
|
Notes to Financial Statements (continued)
The tax character of distributions paid was
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
BKK
|
|
Tax-exempt income(a)
|
|
|
12/31/2019
|
|
|
$
|
1,396,465
|
|
|
$
|
7,358,038
|
|
|
|
|
12/31/2018
|
|
|
|
722,804
|
|
|
|
5,459,492
|
|
|
|
|
7/31/2018
|
|
|
|
1,846,627
|
|
|
|
|
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
9,876,404
|
|
Ordinary income(b)
|
|
|
12/31/2018
|
|
|
|
273
|
|
|
|
350
|
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
23
|
|
Long-term capital gains(c)
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
60,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12/31/2019
|
|
|
$
|
1,396,465
|
|
|
$
|
7,358,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
|
|
$
|
723,077
|
|
|
$
|
5,459,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2018
|
|
|
$
|
1,846,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
$
|
9,936,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The Trusts designate these amounts paid during the fiscal period ended December 31, 2019 as exempt-interest dividends.
|
|
|
(b)
|
Ordinary income consists primarily of taxable income recognized from market discount. Additionally, all ordinary income
distributions are comprised of interest related dividends and are eligible for exemption from US withholding tax for nonresident aliens and foreign corporations.
|
|
|
(c)
|
The Trusts designate these amounts paid during the fiscal period ended December 31, 2019 as capital gain dividends.
|
|
As of period end, the tax components of accumulated earnings were as follows:
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
BKK
|
|
Undistributed tax-exempt income
|
|
$
|
1,638,232
|
|
|
$
|
6,974,252
|
|
Non-expiring capital loss carryforwards(a)
|
|
|
(489,914
|
)
|
|
|
(1,061,541
|
)
|
Net unrealized gains (losses)(b)
|
|
|
(723,403
|
)
|
|
|
2,279,941
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
424,915
|
|
|
$
|
8,192,652
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts available to offset future realized capital gains.
|
|
|
(b)
|
The differences between book-basis and tax-basis net unrealized gains (losses) were attributable primarily to the tax
deferral of losses on wash sales and the deferral of compensation to Trustees.
|
|
During the year ended December 31, 2019, the Trusts listed below utilized the following amounts of their respective capital loss
carryforwards:
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
BKK
|
|
|
|
$
|
240,228
|
|
|
$
|
107,466
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2019, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes
were as follows:
|
|
|
|
|
|
|
|
|
|
|
BFO
|
|
|
BKK
|
|
Tax cost
|
|
$
|
79,865,478
|
|
|
$
|
299,674,545
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
514,337
|
|
|
$
|
3,836,614
|
|
Gross unrealized depreciation
|
|
|
(1,226,035
|
)
|
|
|
(1,503,316
|
)
|
|
|
|
|
|
|
|
|
|
Net unrealized appreciation (depreciation)
|
|
$
|
(711,698
|
)
|
|
$
|
2,333,298
|
|
|
|
|
|
|
|
|
|
|
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 or other instruments and may
enter into certain transactions, and such activities subject each Trust to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other
instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation
or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations.
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.
|
|
|
26
|
|
2019 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS
|
Notes to Financial Statements (continued)
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 each Trust will achieve its investment
objectives, including its investment objective of returning $15.00 per share. As each Trust approaches its scheduled termination date, it is expected that the maturity of each Trusts portfolio securities will shorten, which is likely to reduce
each Trusts income and distributions to shareholders.
Each Trust may invest without limitation in illiquid or less liquid investments or investments in which
no secondary market is readily available or which are otherwise illiquid, including private placement securities. A Trust may not be able to readily dispose of such investments at prices that approximate those at which a Trust could sell such
investments if they were more widely traded and, as a result of such illiquidity, a Trust may have to sell other investments or engage in borrowing transactions if necessary to raise funds to meet its obligations. Limited liquidity can also affect
the market price of investments, thereby adversely affecting a Trusts net asset value and ability to make dividend distributions. Privately issued debt securities are often of below investment grade quality, frequently are unrated and present
many of the same risks as investing in below investment grade public debt securities.
Counterparty 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.
Concentration Risk: BFO invests a substantial amount of its
assets in issuers located in a single state or limited number of states. This may subject the 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 portfolio. Investment percentages in specific states or U.S. territories are presented in the Schedules of Investments.
Certain 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.
9.
|
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 each Trusts Common
Shares is $0.001.
On April 29, 2019, the Board of Trustees authorized BFO to participate in an open market share repurchase program (the Repurchase
Program). Under the Repurchase Program, BFO may repurchase up to 20% of its outstanding common shares, based on common shares outstanding on March 31, 2019, in open market transactions through the earlier of (i) November 30,
2020 or (ii) BFOs adoption of a plan of termination, subject to certain conditions. There is no assurance that BFO will purchase shares in any particular amounts.
The total cost of the shares repurchased is reflected in BFOs Statements of Changes in Net Assets. For the period shown, shares repurchased and cost, including
transaction costs were as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
December 31, 2019
|
|
|
89,443
|
|
|
$
|
1,295,031
|
|
For the year ended December 31, 2019, shares issued and outstanding remained constant for BKK. For the fiscal year ended 2018, shares
issued and outstanding remained constant for BKK and BFO.
Managements evaluation of the impact of all subsequent events on the Trusts financial statements was completed through the date the financial statements were
issued and the following items were noted:
|
|
|
|
|
|
|
|
|
|
|
Common Dividend
Per Share
|
|
|
|
Paid (a)
|
|
|
Declared (b)
|
|
BFO
|
|
$
|
0.0025
|
|
|
$
|
0.0025
|
|
BKK
|
|
|
0.0100
|
|
|
|
0.0100
|
|
|
(a)
|
Net investment income dividend paid on February 3, 2020 to Common Shareholders of record on January 15, 2020.
|
|
|
(b)
|
Net investment income dividend declared on February 3, 2020, payable to Common Shareholders of record on February 14,
2020.
|
|
|
|
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
|
27
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
To the Shareholders and Board of Trustees of BlackRock Florida
Municipal 2020 Term Trust and BlackRock Municipal 2020 Term Trust:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities of BlackRock Florida Municipal 2020 Term Trust and BlackRock Municipal 2020 Term Trust (the
Funds), including the schedules of investments, as of December 31, 2019, the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for the periods
indicated in the table below, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of December 31, 2019, and the results of
their operations for the year then ended, and the changes in their net assets and the financial highlights for the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.
|
|
|
|
|
Fund
|
|
Statements of Changes in Net Assets
|
|
Financial Highlights
|
BlackRock Florida Municipal 2020 Term Trust
|
|
For the year ended December 31, 2019, for the period from August 1, 2018 through December 31,
2018 and for the year ended July 31, 2018
|
|
For the year ended December 31, 2019, for the period from August 1, 2018 through December 31,
2018 and for each of the four years in the period ended July 31, 2018
|
BlackRock Municipal 2020 Term Trust
|
|
For the year ended December 31, 2019, for the period from May 1, 2018 through December 31, 2018 and for the year ended April 30, 2018
|
|
For the year ended December 31, 2019, for the period from May 1, 2018 through December 31, 2018 and for each of the four years in the period ended April 30,
2018
|
Basis for Opinion
These financial statements
and financial highlights are the responsibility of the Funds management. Our responsibility is to express an opinion on the Funds financial statements and financial highlights based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an
audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Funds internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing
procedures. We believe that our audits provide a reasonable basis for our opinion.
Deloitte &Touche LLP
Boston, Massachusetts
February 25, 2020
We have served as the auditor of one or more BlackRock investment companies since 1992.
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2019 BLACKROCK ANNUAL REPORT TO SHAREHOLDERS
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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 the Trusts declare a dividend or determine to make a capital gain distribution 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 the Trusts primary exchange (open-market purchases). The Trusts 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 U.S. 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 sold brokerage commission fee. All correspondence concerning the Reinvestment Plan should be directed to Computershare Trust Company, N.A. through the internet at
computershare.com/blackrock, or in writing to Computershare, P.O. Box 505000, Louisville, KY 40233, Telephone: (800) 699-1236. Overnight correspondence should be directed to the Reinvestment Plan Agent at
Computershare, 462 South 4th Street, Suite 1600, Louisville, KY 40202.
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AUTOMATIC DIVIDEND REINVESTMENT PLANS
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