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: 811-10501

Name of Fund: BlackRock Municipal 2018 Term Trust (BPK)

Fund Address:  100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Municipal 2018 Term Trust, 55 East 52^nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 12/31/2017

Date of reporting period: 06/30/2017

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Item 1 –

Report to Stockholders

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JUNE 30, 2017

 

SEMI-ANNUAL REPORT (UNAUDITED)

 

BlackRock California Municipal 2018 Term Trust (BJZ)

BlackRock Municipal 2018 Term Trust (BPK)

BlackRock New York Municipal 2018 Term Trust (BLH)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee

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The Markets in Review

 

Dear Shareholder,

In the 12 months ended June 30, 2017, risk assets, such as stocks and high-yield bonds, delivered strong performance. These markets showed great resilience during a period with big surprises, including the aftermath of the U.K.’s vote to leave the European Union and the outcome of the U.S. presidential election, which brought only brief spikes in equity market volatility. However, interest rates rose, which worked against high-quality assets with more interest rate sensitivity. Aside from the shortest-term Treasury bills, most U.S. Treasuries posted negative returns, as rising energy prices, modest wage increases and steady job growth led to expectations of higher inflation and anticipation of interest rate increases by the U.S. Federal Reserve (the “Fed”).

The global reflationary theme — rising nominal growth, wages and inflation — was the dominant driver of asset returns during the period, outweighing significant political upheavals and economic uncertainty. Reflationary expectations accelerated after the U.S. election in November 2016 and continued into the beginning of 2017, stoked by expectations that the new administration’s policies would provide an extra boost to U.S. growth.

The Fed has responded to these positive developments by increasing interest rates three times in the last six months, setting expectations for additional interest rate increases and moving toward normalizing monetary policy. For its part, the European Central Bank also began to signal its intent to wind down asset purchases and begin the long move toward policy normalization, contingent upon further improvement in economic growth.

In recent months, growing skepticism about the near-term likelihood of significant U.S. tax reform and infrastructure spending has tempered enthusiasm around the reflation trade. Similarly, renewed concern about oversupply has weighed on energy prices. Nonetheless, financial markets — and to an extent the Fed — have adopted a “wait-and-see” approach to the economic data and potential fiscal stimulus. Although uncertainty has persisted, benign credit conditions, modest inflation and the outlook for economic growth have kept markets relatively tranquil.

In the fifth edition of our Global Investor Pulse Survey, we heard from 28,000 individuals across 18 countries, including more than 4,000 respondents from the United States. While retirement remains the single most important issue for American investors, only a third of respondents feel confident that they will have enough retirement income, and nearly 40% of respondents have yet to begin saving for retirement. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of June 30, 2017
		6-month				12-month
U.S. large cap equities (S&P 500® Index)			9.34	%			17.90	%
U.S. small cap equities (Russell 2000® Index)			4.99				24.60
International equities (MSCI Europe, Australasia, Far East Index)			13.81				20.27
Emerging market equities (MSCI Emerging Markets Index)			18.43				23.75
3-month Treasury bills (BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)			0.31				0.49
U.S. Treasury securities (BofA Merrill Lynch 10-Year U.S. Treasury Index)			2.08				(5.58	)
U.S. investment grade bonds (Bloomberg Barclays U.S. Aggregate Bond Index)			2.27				(0.31	)
Tax-exempt municipal bonds (S&P Municipal Bond Index)			3.26				(0.28	)
U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)			4.92				12.69
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

2		THIS PAGE NOT PART OF YOUR FUND REPORT

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Table of Contents

 

		Page
The Markets in Review			2
Semi-Annual Report:
Municipal Market Overview			4
The Benefits and Risks of Leveraging			5
Trust Summaries			6
Financial Statements:
Schedules of Investments			12
Statements of Assets and Liabilities			21
Statements of Operations			22
Statements of Changes in Net Assets			23
Financial Highlights			25
Notes to Financial Statements			28
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement			35
Officers and Trustees			39
Additional Information			40

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		3

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Municipal Market Overview

 

For the Reporting Period Ended June 30, 2017

Municipal Market Conditions

Municipal bonds experienced modestly negative performance for the period as a result of vastly rising interest rates spurring from generally stronger economic data, signs of inflation pressures, Federal Reserve (“Fed”) monetary policy normalization, and market expectations for pro-growth fiscal policy. However, ongoing reassurance from the Fed that rates would be increased gradually and would likely remain low overall resulted in continued demand for fixed income investments. More specifically, investors favored the income, attractive relative yield, and stability of municipal bonds amid bouts of interest rate volatility (bond prices rise as rates fall) resulting from geopolitical tensions, the contentious U.S. election, and continued global central bank divergence — i.e., policy easing outside the United States while the Fed slowly engages in policy tightening. During the 12 months ended June 30, 2017, municipal bond funds garnered net inflows of approximately $5 billion (based on data from the Investment Company Institute).

 

For the same 12-month period, total new issuance remained robust from a historical perspective at $414 billion (above the $397 billion issued in the prior 12-month period). A noteworthy portion of new supply during this period was attributable to refinancing activity (roughly 57%) as issuers continued to take advantage of low interest rates and a flat yield curve to reduce their borrowing costs.

 

 

A Closer Look at Yields

 

 

From June 30, 2016 to June 30, 2017, yields on AAA-rated 30-year municipal bonds increased by 77 basis points (“bps”) from 2.02% to 2.79%, while 10-year rates rose by 64 bps from 1.35% to 1.99% and 5-year rates increased 46 bps from 0.89% to 1.35% (as measured by Thomson Municipal Market Data). The municipal yield curve steepened over the 12-month period with the spread between 2- and 30-year maturities steepening by 29 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 the front and intermediate portions of the

yield curve. The relative positive performance of municipal bonds was driven largely by a supply/demand imbalance within the municipal market as investors sought income and incremental yield in an environment where opportunities became increasingly scarce. Municipal bonds came under pressure post the November U.S. presidential election as a result of uncertainty surrounding potential tax-reform, though growing expectation that tax reform is likely to be delayed or watered down quickly eased investor concerns. 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 Florida — have 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, Chicago’s 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 June 30, 2017, 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 & Poor’s Municipal Bond Index, a broad, market value-weighted index, seeks to measure the performance of the U.S. municipal bond market. All bonds in the index are exempt from U.S. federal income taxes or subject to the AMT. 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		SEMI-ANNUAL REPORT		JUNE 30, 2017

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The Benefits and Risks of Leveraging

 

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		5

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Trust Summary as of June 30, 2017				BlackRock California Municipal 2018 Term Trust

 

Trust Overview

BlackRock California Municipal 2018 Term Trust’s (BJZ) (the “Trust”) investment objectives are to seek to provide current income exempt from regular U.S. federal and California income taxes and to return $15 per common share to holders of common shares on or about December 31, 2018. The Trust seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its total assets in municipal bonds that at the time of investment are judged by the investment adviser to be of investment grade quality. There is no assurance that the Trust will achieve its investment objective of returning $15 per common share.

 

Trust Information

 

Symbol on New York Stock Exchange (“NYSE”)		BJZ
Initial Offering Date		October 26, 2001
Termination Date (on or about)		December 31, 2018
Yield on Closing Market Price as of June 30, 2017 ($15.03)1		2.02%
Tax Equivalent Yield2		4.12%
Current Monthly Distribution per Common Share3		$0.0253
Current Annualized Distribution per Common Share3		$0.3036
Economic Leverage as of June 30, 2017		—

 

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 U.S. 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.

 

Performance

Returns for the six months ended June 30, 2017 were as follows:

 

		Returns Based On
		Market Price				NAV
BJZ1, 2			0.97%				1.11%
Lipper California Municipal Debt Funds3			6.58%				4.75%

 

1

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

2

The Trust’s premium to NAV narrowed during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

3

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

•

The U.S. municipal bond market produced a positive return during the period. As optimism for meaningful fiscal reforms waned and economic data failed to experience a significant acceleration, the municipal market rallied off of the lows established immediately after the presidential election.

 

•

California municipal bonds performed slightly better than the national market. The state’s 2017-2018 budget demonstrated spending restraint and higher reserves, and it included a forecast that projects structural balance through 2019. California’s economy has grown at a healthy rate in recent years, with median household income and job gains outpacing U.S. growth rates.

 

•

Since the Trust is scheduled to terminate on or about December 31, 2018, it holds securities that mature close to that date. Short-term bonds — which are the area of the market with the highest sensitivity to changes in monetary policy — lagged longer-term issues as the Fed increased interest rates by a quarter point at both its March and June meetings. The Trust’s short maturity was therefore a headwind to performance. Specifically, the Trust’s positions in bonds with maturities of three years and less hindered results.

 

•

The Trust’s more-seasoned holdings detracted from performance due to the premium amortization that occurred as the bonds approached their call and maturity dates. (When a bond’s price trades at a premium over its face value, the difference is amortized over time. A bond premium occurs when the price of the bond has increased due to a decline in interest rates.)

 

•

Reinvestment was a drag on performance, as bonds were called or matured with yields materially higher than the prevailing market rates at which the proceeds were reinvested.

 

•

Positions in the utilities, transportation and education sectors contributed to performance.

 

•

The Trust maintained a fully invested portfolio, which helped maximize the income component of total return.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

6		SEMI-ANNUAL REPORT		JUNE 30, 2017

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		BlackRock California Municipal 2018 Term Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

		6/30/17				12/31/16				Change				High				Low
Market Price		$	15.03			$	15.04				(0.07)%			$	15.19			$	15.01
Net Asset Value		$	14.95			$	14.94				0.07%			$	14.99			$	14.94

 

Market Price and Net Asset Value History For the Past Five Years

 

 

Overview of the Trust’s Total Investments*

 

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		7

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Trust Summary as of June 30, 2017				BlackRock Municipal 2018 Term Trust

 

Trust Overview

BlackRock Municipal 2018 Term Trust’s (BPK) (the “Trust”) investment objectives are to seek to provide current income exempt from regular U.S. federal income tax and to return $15 per common share (the initial offering price per common share) to holders of common shares on or about December 31, 2018. The Trust seeks to achieve its investment objectives by investing, under normal market conditions, its assets in municipal bonds that pay interest that is exempt from regular U.S. federal income taxes (except that the interest may be subject to the U.S. federal AMT). The Trust invests at least 80% of its assets in municipal bonds that are judged by the investment adviser to be of investment grade quality at the time of investment. There is no assurance that the Trust will achieve its investment objective of returning $15 per common share.

 

Trust Information

 

Symbol on NYSE		BPK
Initial Offering Date		October 26, 2001
Termination Date (on or about)		December 31, 2018
Yield on Closing Market Price as of June 30, 2017 ($15.03)1		1.76%
Tax Equivalent Yield2		3.11%
Current Monthly Distribution per Common Share3		$0.0220
Current Annualized Distribution per Common Share3		$0.2640
Economic Leverage as of June 30, 20174		2%

 

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 U.S. 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 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 six months ended June 30, 2017 were as follows:

 

		Returns Based On
		Market Price				NAV
BPK1,2			1.29%				1.23%
Lipper Intermediate Municipal Debt Funds3			3.93%				4.22%

 

1

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

2

The Trust’s discount to NAV narrowed during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

3

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

 

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

•

The U.S. municipal bond market produced a positive return during the period. As optimism for meaningful fiscal reforms waned and economic data failed to experience a significant acceleration, the municipal market rallied off of the lows established immediately after the presidential election.

 

•

Since the Trust is scheduled to terminate on or about December 31, 2018, it holds securities that mature close to that date. Short-term bonds — which are the area of the market with the highest sensitivity to changes in monetary policy — lagged longer-term issues as the Fed increased interest rates by a quarter point at both its March and June meetings. The Trust’s short maturity was therefore a headwind to performance. Specifically, the Trust’s positions in bonds with maturities of three years and less hindered results.

 

•

The Trust’s more-seasoned holdings detracted from performance due to the premium amortization that occurred as the bonds approached their call and maturity dates. (When a bond’s price trades at a premium over its face value, the difference is amortized over time. A bond premium occurs when the price of the bond has increased due to a decline in interest rates.)

 

•

Reinvestment was a drag on performance, as bonds were called or matured with yields materially higher than the prevailing market rates at which the proceeds were reinvested.

 

•

Positions in the corporate municipal, transportation and healthcare sectors contributed to performance.

 

•

The Trust maintained a fully invested portfolio, which helped maximize the income component of total return.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

8		SEMI-ANNUAL REPORT		JUNE 30, 2017

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		BlackRock Municipal 2018 Term Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

		6/30/17				12/31/16				Change				High				Low
Market Price		$	15.03			$	14.98				0.33	%		$	15.12			$	14.98
Net Asset Value		$	15.08			$	15.04				0.27	%		$	15.11			$	15.04

 

Market Price and Net Asset Value History For the Past Five Years

 

 

Overview of the Trust’s Total Investments*

 

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		9

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Trust Summary as of June 30, 2017				BlackRock New York Municipal 2018 Term Trust

 

Trust Overview

BlackRock New York Municipal 2018 Term Trust’s (BLH) (the “Trust”) investment objectives are to seek to provide current income exempt from regular U.S. federal income tax and New York State and New York City personal income taxes and to return $15 per common share (the initial offering price per common share) to holders of common shares on or about December 31, 2018. The Trust seeks to achieve its investment objectives by investing at least 80% of its total assets in municipal bonds that at the time of investment are judged by the investment adviser to be of investment grade quality. There is no assurance that the Trust will achieve its investment objective of returning $15 per common share.

 

Trust Information

 

Symbol on NYSE		BLH
Initial Offering Date		October 26, 2001
Termination Date (on or about)		December 31, 2018
Yield on Closing Market Price as of June 30, 2017 ($14.94)1		1.33%
Tax Equivalent Yield2		2.69%
Current Monthly Distribution per Common Share3		$0.0166
Current Annualized Distribution per Common Share3		$0.1992
Economic Leverage as of June 30, 2017		—

 

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 U.S. 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.

 

Performance

Returns for the six months ended June 30, 2017 were as follows:

 

		Returns Based On
		Market Price				NAV
BLH1,2			2.12%				1.16%
Lipper New York Municipal Debt Funds3			5.77%				4.69%

 

1

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

2

The Trust’s discount to NAV narrowed during the period, which accounts for the difference between performance based on price and performance based on NAV.

 

3

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

•

The U.S. municipal bond market produced a positive return during the period. As optimism for meaningful fiscal reforms waned and economic data failed to experience a significant acceleration, the municipal market rallied off of the lows established immediately after the presidential election.

 

•

New York municipal bonds performed in line with the national tax-exempt market.

 

•

Since the Trust is scheduled to terminate on or about December 31, 2018, it holds securities that mature close to that date. Short-term bonds — which are highly sensitive to changes in monetary policy — lagged longer-term issues as the Fed increased interest rates by a quarter point at both its March and June meetings. The Trust’s short maturity was therefore a headwind to performance. Specifically, the Trust’s positions in bonds with maturities of three years and less hindered results.

 

•

The Trust’s more-seasoned holdings detracted from performance due to the premium amortization that occurred as the bonds approached their call and maturity dates. (When a bond’s price trades at a premium over its face value, the difference is amortized over time. A bond premium occurs when the price of the bond has increased due to a decline in interest rates).

 

•

Reinvestment was a drag on performance, as bonds were called or matured with yields materially higher than the prevailing market rates at which the proceeds were reinvested.

 

•

Positions in the tax-backed (state), tax-backed (local) and transportation sectors contributed to performance, as did investments in pre-refunded bonds.

 

•

The Trust maintained a fully invested portfolio, which helped maximize the income component of total return.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

10		SEMI-ANNUAL REPORT		JUNE 30, 2017

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		BlackRock New York Municipal 2018 Term Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

		6/30/17				12/31/16				Change				High				Low
Market Price		$	14.94			$	14.73				1.43	%		$	15.00			$	14.73
Net Asset Value		$	14.95			$	14.88				0.47	%		$	14.99			$	14.88

 

Market Price and Net Asset Value History For the Past Five Years

 

 

Overview of the Trust’s Total Investments*

 

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		11

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Schedule of Investments June 30, 2017 (Unaudited)		BlackRock California Municipal 2018 Term Trust (BJZ) (Percentages shown are based on Net Assets)

 

 

Portfolio Abbreviations

 

AGC		Assured Guarantee Corp.		COP		Certificates of Participation		ISD		Independent School District
AGM		Assured Guaranty Municipal Corp.		EDA		Economic Development Authority		LOC		Letter of Credit
AMBAC		American Municipal Bond Assurance Corp.		GAN		Grant Anticipation Notes		LRB		Lease Revenue Bonds
AMT		Alternative Minimum Tax (subject to)		GO		General Obligation Bonds		NPFGC		National Public Finance Guarantee Corp.
ARB		Airport Revenue Bonds		GTD		Guaranteed		PSF		Permanent School Fund
BAM		Build America Mutual Assurance Co.		HFA		Housing Finance Agency		RB		Revenue Bonds
CAB		Capital Appreciation Bonds		IDA		Industrial Development Authority		S/F		Single-Family

 

See Notes to Financial Statements.

 

12		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Schedule of Investments (continued)		BlackRock California Municipal 2018 Term Trust (BJZ)

 

Notes to Schedule of Investments

 

(a)

Variable rate security. Rate as of period end.

 

(b)

When-issued security.

 

(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)

Security is collateralized by municipal bonds or U.S. Treasury obligations.

 

(f)

During the six months ended June 30, 2017, investments in issuers considered to be an affiliate 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 December 31, 2016				Net Activity				Shares Held at June 30, 2017				Value at June 30, 2017				Income				Net Realized Gain				Change in Unrealized Appreciation
BlackRock Liquidity Funds, MuniCash, Institutional Class			1,957,903				9,512,909				11,470,812			$	11,474,253			$	12,783			$	171			$	1,187

 

(g)

Current yield as of period end.

 

 

See Notes to Financial Statements.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		13

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Schedule of Investments (concluded)		BlackRock California Municipal 2018 Term Trust (BJZ)

 

For Trust compliance purposes, the Trust’s sector classifications refer to 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 adviser. 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 Trust’s policy regarding valuation of investments, refer to the Notes to Financial Statements.

The following table summarizes the Trust’s investments categorized in the disclosure hierarchy:

 

		Level 1				Level 2				Level 3				Total
Assets:
Investments:
Long Term Investments1			—			$	91,370,259				—			$	91,370,259
Short-Term Securities		$	11,474,253				—				—				11,474,253
Total		$	11,474,253			$	91,370,259				—			$	102,844,512
1    See above Schedule of Investments for values in each sector.

During the six months ended June 30, 2017, there were no transfers between levels.

 

See Notes to Financial Statements.

 

14		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Schedule of Investments June 30, 2017 (Unaudited)		BlackRock Municipal 2018 Term Trust (BPK) (Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		15

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Schedule of Investments (continued)		BlackRock Municipal 2018 Term Trust (BPK)

 

 

See Notes to Financial Statements.

 

16		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Schedule of Investments (continued)		BlackRock Municipal 2018 Term Trust (BPK)

 

 

See Notes to Financial Statements.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		17

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Schedule of Investments (concluded)		BlackRock Municipal 2018 Term Trust (BPK)

 

 

Notes to Schedule of investments

 

(a)

Variable rate security. Rate as of period end.

 

(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.

 

(c)

Issuer filed for bankruptcy and/or is in default.

 

(d)

Security is collateralized by municipal bonds or U.S. Treasury obligations.

 

(e)

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.

 

(f)

Zero-coupon bond.

 

(g)

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.

 

(h)

During the six months ended June 30, 2017, investments in issuers considered to be an affiliate 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 December 31, 2016				Net Activity				Shares Held at June 30, 2017				Value at June 30, 2017				Income				Net Realized Gain				Change in Unrealized Appreciation
BlackRock Liquidity Funds, MuniCash, Institutional Class			784,632				8,871,154				9,655,786			$	9,658,682			$	17,736			$	543			$	1,667

 

(i)

Current yield as of period end.

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments. For information about the Trust’s policy regarding valuation of investments, refer to the Notes to Financial Statements.

The following table summarizes the Trust’s investments categorized in the disclosure hierarchy:

 

		Level 1				Level 2				Level 3				Total
Assets:
Investments:
Long-Term Investments1			—			$	231,711,973				—			$	231,711,973
Short-Term Securities		$	9,658,682				—				—				9,658,682
Total		$	9,658,682			$	231,711,973				—			$	241,370,655
1    See above Schedule of Investments for values in each state or political subdivision.

The Trust may hold liabilities in which the fair value approximates the carrying amount for financial reporting purposes. As of period end, TOB Trust Certificates of $3,750,000 are categorized as Level 2 within the disclosure hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

 

See Notes to Financial Statements.

 

18		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Schedule of Investments June 30, 2017 (Unaudited)		BlackRock New York Municipal 2018 Term Trust (BLH) (Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		19

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Schedule of Investments (concluded)		BlackRock New York Municipal 2018 Term Trust (BLH)

 

Notes to Schedule of Investments

 

(a)

Security is collateralized by municipal bonds or U.S. Treasury obligations.

 

(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.

 

(c)

Variable rate security. Rate as of period end.

 

(d)

During the six months ended June 30, 2017, investments in issuers considered to be an affiliate 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 December 31, 2016				Net Activity				Shares Held at June 30, 2017				Value at June 30, 2017				Income				Net Realized Gain				Change in Unrealized Appreciation
BlackRock Liquidity Funds, MuniCash, Institutional Class			703,225				627,027				1,330,252			$	1,330,651			$	1,844			$	62			$	177

 

(e)

Current yield as of period end.

For Trust compliance purposes, the Trust’s sector classifications refer to 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 adviser. 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 Trust’s policy regarding valuation of investments, refer to the Notes to Financial Statements.

The following table summarizes the Trust’s investments categorized in the disclosure hierarchy:

 

		Level 1				Level 2				Level 3				Total
Assets:
Investments:
Long Term Investments1			—			$	52,494,235				—			$	52,494,235
Short-Term Securities		$	1,330,651				—				—				1,330,651
Total		$	1,330,651			$	52,494,235				—			$	53,824,886
1    See above Schedule of Investments for values in each sector.

During the six months ended June 30, 2017, there were no transfers between levels.

 

See Notes to Financial Statements.

 

20		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Statements of Assets and Liabilities

 

June 30, 2017 (Unaudited)		BlackRock California Municipal 2018 Term Trust (BJZ)				BlackRock Municipal 2018 Term Trust (BPK)				BlackRock New York Municipal 2018 Term Trust (BLH)
Assets
Investments at value — unaffiliated1		$	91,370,259			$	231,711,973			$	52,494,235
Investments at value — affiliated2			11,474,253				9,658,682				1,330,651
Receivables:
Investments sold			5,079,752				—				100,000
Interest — unaffiliated			893,386				2,730,279				523,338
Dividends — affiliated			6,154				5,285				678
Investment adviser			844				723				88
Prepaid expenses			5,592				6,844				5,238
Total assets			108,830,240				244,113,786				54,454,228
Accrued Liabilities
Payables:
Investments purchased			12,448,205				—				—
Income dividends			162,756				349,977				60,308
Professional fees			27,006				34,029				26,753
Custody fees			16,103				34,239				10,293
Officer’s and Trustees’ fees			12,920				45,115				9,232
Printing fees			9,558				11,071				9,182
Interest expense and fees			—				6,248				—
Other accrued expenses			11,524				22,992				9,056
Total accrued liabilities			12,688,072				503,671				124,824
Other Liabilities
TOB Trust Certificates			—				3,750,000				—
Total liabilities			12,688,072				4,253,671				124,824
Net Assets		$	96,142,168			$	239,860,115			$	54,329,404
Net Assets Consist of
Paid-in capital3		$	92,945,843			$	234,699,356			$	52,955,382
Undistributed net investment income			2,094,198				4,717,332				829,682
Accumulated net realized loss			(106,155	)			(1,719,423	)			(287,614	)
Net unrealized appreciation (depreciation)			1,208,282				2,162,850				831,954
Net Assets		$	96,142,168			$	239,860,115			$	54,329,404
Net asset value		$	14.95			$	15.08			$	14.95
1    Investments at cost — unaffiliated		$	90,163,146			$	229,550,790			$	51,662,458
2    Investments at cost — affiliated		$	11,473,084			$	9,657,015			$	1,330,474
3    Shares outstanding, unlimited number of shares authorized, par value $0.001 per share			6,433,028				15,908,028				3,633,028

 

See Notes to Financial Statements.
		SEMI-ANNUAL REPORT		JUNE 30, 2017		21

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Statements of Operations

 

Six Months Ended June 30, 2017 (Unaudited)		BlackRock California Municipal 2018 Term Trust (BJZ)				BlackRock Municipal 2018 Term Trust (BPK)				BlackRock New York Municipal 2018 Term Trust (BLH)
Investment Income
Interest — unaffiliated		$	1,258,068			$	2,877,490			$	555,456
Dividends — affiliated			12,783				17,736				1,844
Total investment income			1,270,851				2,895,226				557,300
Expenses
Investment advisory			190,960				483,083				107,765
Professional			24,229				30,957				20,125
Transfer agent			8,884				13,057				8,123
Accounting services			8,729				18,620				5,595
Officer and Trustees			5,627				14,459				3,241
Registration			4,609				4,610				4,609
Printing			4,014				5,428				3,647
Custodian			2,586				6,154				1,600
Miscellaneous			2,773				5,006				3,654
Total expenses excluding interest expense and fees			252,411				581,374				158,359
Interest expense and fees1			—				33,319				—
Total expenses			252,411				614,693				158,359
Less fees waived by the Manager			(190,960	)			(483,083	)			(107,765	)
Total expenses after fees waived			61,451				131,610				50,594
Net investment income			1,209,400				2,763,616				506,706
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated			500				(1,640,222	)			—
Investments — affiliated			171				543				62
			671				(1,639,679	)			62
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated			(181,344	)			1,829,027				133,278
Investments — affiliated			1,187				1,667				177
			(180,157	)			1,830,694				133,455
Net realized and unrealized gain (loss)			(179,486	)			191,015				133,517
Net Increase in Net Assets Resulting from Operations		$	1,029,914			$	2,954,631			$	640,223
1   Related to TOB Trusts.

 

 

See Notes to Financial Statements.
22		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Statements of Changes in Net Assets

 

		BlackRock California Municipal 2018 Term Trust (BJZ)												BlackRock Municipal 2018 Term Trust (BPK)
Increase (Decrease) in Net Assets:		Six Months Ended June 30, 2017 (Unaudited)				Year Ended December 31, 2016								Six Months Ended June 30, 2017 (Unaudited)				Year Ended December 31, 2016
Operations
Net investment income		$	1,209,400			$	2,204,669							$	2,763,616			$	5,666,982
Net realized gain (loss)			671				535,106								(1,639,679	)			131,854
Net change in unrealized appreciation (depreciation)			(180,157	)			(1,916,618	)							1,830,694				(4,665,638	)
Net increase in net assets resulting from operations			1,029,914				823,157								2,954,631				1,133,198
Distributions to Shareholders1
From net investment income:			(1,007,412	)			(2,138,338	)							(2,284,393	)			(5,917,786	)
From net realized gain:			—				—								—				(34,425	)
Decrease in net assets resulting from distributions to shareholders			(1,007,412	)			(2,138,338	)							(2,284,393	)			(5,952,211	)
Net Assets
Total increase (decrease) in net assets			22,502				(1,315,181	)							670,238				(4,819,013	)
Beginning of period			96,119,666				97,434,847								239,189,877				244,008,890
End of period		$	96,142,168			$	96,119,666							$	239,860,115			$	239,189,877
Undistributed net investment income, end of period		$	2,094,198			$	1,892,210							$	4,717,332			$	4,238,109
1    Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

 

See Notes to Financial Statements.
		SEMI-ANNUAL REPORT		JUNE 30, 2017		23

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Statements of Changes in Net Assets

 

		BlackRock New York Municipal 2018 Term Trust (BLH)
Increase (Decrease) in Net Assets:		Six Months Ended June 30, 2017 (Unaudited)				Year Ended December 31, 2016
Operations
Net investment income		$	506,706			$	842,178
Net realized gain			62				1,161
Net change in unrealized appreciation (depreciation)			133,455				(736,377	)
Net increase in net assets resulting from operations			640,223				106,962
Distributions to Shareholders1
From net investment income:			(369,842	)			(829,057	)
Net Assets
Total increase (decrease) in net assets			270,381				(722,095	)
Beginning of period			54,059,023				54,781,118
End of period		$	54,329,404			$	54,059,023
Undistributed net investment income, end of period		$	829,682			$	692,818
1   Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

 

 

See Notes to Financial Statements.
24		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Financial Highlights		BlackRock California Municipal 2018 Term Trust (BJZ)

 

		Six Months Ended June 30, 2017 (Unaudited)				Year Ended December 31,
						2016				2015				2014				2013				2012
Per Share Operating Performance
Net asset value, beginning of period		$	14.94			$	15.15			$	15.30			$	15.36			$	15.81			$	15.60
Net investment income1			0.19				0.34				0.36				0.40				0.61				0.71
Net realized and unrealized gain (loss)			(0.02	)			(0.22	)			(0.13	)			0.08				(0.42	)			0.28
Distributions to AMPS Shareholders from net investment income			—				—				—				(0.00	)2			(0.01	)			(0.02	)
Net increase from investment operations			0.17				0.12				0.23				0.48				0.18				0.97
Distributions to Common Shareholders from net investment income3			(0.16	)			(0.33	)			(0.38	)			(0.54	)			(0.63	)			(0.76	)
Net asset value, end of period		$	14.95			$	14.94			$	15.15			$	15.30			$	15.36			$	15.81
Market price, end of period		$	15.03			$	15.04			$	15.05			$	15.24			$	15.77			$	16.21
Total Return Applicable to Common Shareholders4
Based on net asset value			1.11%	5			0.80%				1.52%				3.09%				1.07%				6.16%
Based on market price			0.97%	5			2.14%				1.24%				0.01%				1.21%				3.92%
Ratios to Average Net Assets Applicable to Common Shareholders
Total expenses			0.53%	6,7			0.53%				0.54%				0.57%	8			0.82%	8			0.93%	8
Total expenses after fees waived			0.13%	6,7			0.53%				0.54%				0.57%	8,9			0.82%	8,9			0.92%	8
Net investment income			2.53%	6,7			2.27%				2.39%				2.57%	8			3.92%	8			4.51%	8
Distributions to AMPS Shareholders			—				—				—				0.00%	10			0.07%				0.14%
Net investment income to Common Shareholders			2.53%	6,7			2.27%				2.39%				2.57%				3.85%				4.37%
Supplemental Data
Net assets applicable to Common Shareholders, end of period (000)		$	96,142			$	96,120			$	97,435			$	98,439			$	98,842			$	101,729
AMPS outstanding at $25,000 liquidation preference, end of period (000)			—				—				—				—			$	26,850			$	55,525
Asset coverage per AMPS at $25,000 liquidation preference, end of period			—				—				—				—			$	117,032			$	70,803
Portfolio turnover rate			16%				13%				6%				12%				—				15%

 

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 U.S. 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 at actual reinvestment prices.

 

5

Aggregate total return.

 

6

Annualized.

 

7

Excludes 0.01% of expenses incurred indirectly as a result of investments in underlying funds.

 

8

Does not reflect the effect of distributions to AMPS Shareholders.

 

9

For the years ended December 31, 2014 and December 31, 2013, the total expense ratio after fees waived and excluding remarketing fees was 0.57% and 0.75%, respectively.

 

10

Amount is less than 0.005%.

 

See Notes to Financial Statements.
		SEMI-ANNUAL REPORT		JUNE 30, 2017		25

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Financial Highlights		BlackRock Municipal 2018 Term Trust (BPK)

 

		Six Months Ended June 30, 2017 (Unaudited)				Year Ended December 31,
						2016				2015				2014				2013				2012
Per Share Operating Performance
Net asset value, beginning of period		$	15.04			$	15.34			$	15.76			$	15.57			$	16.07			$	15.66
Net investment income1			0.17				0.36				0.41				0.61				0.72				0.87
Net realized and unrealized gain (loss)			0.01				(0.29	)			(0.23	)			0.26				(0.44	)			0.50
Distributions to AMPS Shareholders from net investment income			—				—				—				(0.00	)2			(0.01	)			(0.02	)
Net increase from investment operations			0.18				0.07				0.18				0.87				0.27				1.35
Distributions:
From net investment income3			(0.14	)			(0.37	)			(0.60	)			(0.68	)			(0.77	)			(0.94	)
From net realized gain			—				(0.00	)2			—				—				—				—
Total distributions to Common Shareholders			(0.14	)			(0.37	)			(0.60	)			(0.68	)			(0.77	)			(0.94	)
Net asset value, end of period		$	15.08			$	15.04			$	15.34			$	15.76			$	15.57			$	16.07
Market price, end of period		$	15.03			$	14.98			$	15.50			$	16.13			$	15.94			$	16.56
Total Return Applicable to Common Shareholders4
Based on net asset value			1.23%	5			0.46%				1.11%				5.53%				1.55%				8.42%
Based on market price			1.29%	5			(0.97)%				(0.18)%				5.50%				0.88%				5.46%
Ratios to Average Net Assets Applicable to Common Shareholders
Total expenses			0.52%	6			0.51%				0.51%				0.64%	7			0.73%	7			0.86%	7
Total expenses after fees waived			0.11%	6			0.51%				0.51%				0.64%	7,8			0.73%	7,8			0.86%	7
Total expenses after fees waived and excluding interest expense and fees			0.08%	6			0.49%				0.50%				0.63%	7			0.72%	7			0.85%	7
Net investment income			2.32%	6			2.33%				2.61%				3.89%				4.56%				5.51%
Distributions to AMPS Shareholders			—				—				—				0.02%				0.06%				0.14%
Net investment income to Common Shareholders			2.32%	6			2.33%				2.61%				3.87%				4.50%				5.37%
Supplemental Data
Net assets applicable to Common Shareholders, end of period (000)		$	239,860			$	239,190			$	244,009			$	250,751			$	247,679			$	255,711
AMPS outstanding at $25,000 liquidation preference, end of period (000)			—				—				—				—			$	69,250			$	133,850
Asset coverage per AMPS at $25,000 liquidation preference, end of period			—				—				—				—			$	114,415			$	72,761
Borrowings outstanding, end of period (000)		$	3,750			$	3,750			$	3,750			$	3,750			$	3,750			$	3,750
Portfolio turnover rate			3%				16%				18%				14%				3%				23%

 

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 U.S. 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 at actual reinvestment prices.

 

5

Aggregate total return.

 

6

Annualized.

 

7

Does not reflect the effect of distributions to AMPS Shareholders.

 

8

For the years ended December 31, 2014 and December 31, 2013, the total expense ratio after fees waived and excluding remarketing fees was 0.60% and 0.67%, respectively.

 

 

See Notes to Financial Statements.
26		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Financial Highlights		BlackRock New York Municipal 2018 Term Trust  (BLH)

 

		Six Months Ended June 30, 2017 (Unaudited)				Year Ended December 31,
						2016				2015				2014				2013				2012
Per Share Operating Performance
Net asset value, beginning of period		$	14.88			$	15.08			$	15.21			$	15.05			$	15.67			$	15.64
Net investment income1			0.14				0.23				0.25				0.35				0.44				0.65
Net realized and unrealized gain (loss)			0.03				(0.20	)			(0.05	)			0.18				(0.48	)			0.23
Distributions to AMPS Shareholders from net investment income			—				—				(0.00	)2			(0.00	)2			(0.01	)			(0.02	)
Net increase (decrease) from investment operations			0.17				0.03				0.20				0.53				(0.05	)			0.86
Distributions to Common Shareholders from net investment income3			(0.10	)			(0.23	)			(0.33	)			(0.37	)			(0.57	)			(0.83	)
Net asset value, end of period		$	14.95			$	14.88			$	15.08			$	15.21			$	15.05			$	15.67
Market price, end of period		$	14.94			$	14.73			$	14.94			$	14.95			$	15.23			$	16.05
Total Return Applicable to Common Shareholders4
Based on net asset value			1.16%	5			0.18%				1.29%				3.58%				(0.36)%				5.34%
Based on market price			2.12%	5			0.10%				2.16%				0.61%				(1.55)%				0.99%
Ratios to Average Net Assets Applicable to Common Shareholders
Total expenses			0.59%	6			0.59%				0.64%	7			0.79%	7			0.89%	7			0.96%	7
Total expenses after fees waived			0.19%	6			0.59%				0.64%	7,8			0.79%	7,8			0.89%	7,8			0.95%	7
Net investment income			1.88%	6			1.54%				1.64%	7			2.29%	7			2.89%	7			4.11%	7
Distributions to AMPS Shareholders			—				—				0.00%	9			0.03%				0.07%				0.14%
Net investment income to Common Shareholders			1.88%	6			1.54%				1.64%				2.26%				2.82%				3.97%
Supplemental Data
Net assets applicable to Common Shareholders, end of period (000)		$	54,329			$	54,059			$	54,781			$	55,275			$	54,667			$	56,921
AMPS outstanding at $25,000 liquidation preference, end of period (000)			—				—				—			$	12,050			$	16,425			$	31,400
Asset coverage per AMPS at $25,000 liquidation preference, end of period			—				—				—			$	139,678			$	108,207			$	70,319
Portfolio turnover rate			1%				5%				14%				4%				7%				48%

 

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 U.S. 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 at actual reinvestment prices.

 

5

Aggregate total return.

 

6

Annualized.

 

7

Does not reflect the effect of distributions to AMPS Shareholders.

 

8

For the years ended December 31, 2015, December 31, 2014 and December 31, 2013, the total expense ratio after fees waived and excluding remarketing fees was 0.63%, 0.75% and 0.83%, respectively.

 

9

Amount is less than 0.005%.

 

See Notes to Financial Statements.
		SEMI-ANNUAL REPORT		JUNE 30, 2017		27

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Notes to Financial Statements (Unaudited)

 

1. Organization:

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, a “Trust”:

 

Trust Name		Herein Referred To As		Organized		Diversification Classification
BlackRock California Municipal 2018 Term Trust		BJZ		Delaware		Non-diversified
BlackRock Municipal 2018 Term Trust		BPK		Delaware		Diversified
BlackRock New York Municipal 2018 Term Trust		BLH		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.

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 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 an accrual basis.

Segregation and Collateralization: In cases where a Trust enters into 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 borrowings. Doing so allows the 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.

Distributions: Distributions from net investment income are declared 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 Trust’s 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 the officer’s 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 Standards: In November 2016, the Financial Accounting Standards Board issued Accounting Standards Update “Restricted Cash” which will require entities to include the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the beginning and ending cash balances in the Statements of Cash Flows. The guidance will be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Management is evaluating the impact, if any, of this guidance on the Trusts’ presentation in the Statements of Cash Flows.

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Trusts.

 

28		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Notes to Financial Statements (continued)

 

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

Indemnifications: In the normal course of business, a Trust enters into contracts that contain a variety of representations that provide general indemnification. A Trust’s 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 have been 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). 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.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Trust’s 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.

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 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 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 arm’s-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.

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

 

•

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 market–corroborated inputs)

 

•

Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including each Trust’s own 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

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		29

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Notes to Financial Statements (continued)

 

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 privately-held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with each Trust’s 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 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 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 Trust’s 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 U.S. 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 six months ended June 30, 2017, no TOB Trusts in which a Trust participated were terminated without the consent of a Trust.

While a Trust’s 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 Trust’s 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 Trust’s 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 pursuant to the liquidity facility to purchase tendered TOB Trust Certificates would be shown as Loan for TOB Trust Certificates.

 

30		SEMI-ANNUAL REPORT		JUNE 30, 2017

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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 Trusts. 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 Trust’s 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 pursuant to the liquidity facility to purchase tendered TOB Trust Certificates are shown as Loan for TOB Trust Certificates. The carrying amount of a Trust’s 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.

For the six months ended June 30, 2017, the following table is a summary of each Trust’s TOB Trusts:

 

		Underlying Municipal Bonds Transferred to TOB Trusts1				Liability for TOB Trust Certificates2				Interest Rate on TOB Trust Certificates at Period End				Average TOB Trust Certificates Outstanding				Daily Weighted Average Rate of Interest and  Other Expenses on TOB Trusts
BPK		$	5,241,850			$	3,750,000				1.09%			$	3,750,000				1.58%

 

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 Residuals holders, would be responsible for reimbursement of any payments of principal and interest made by the credit enhancement provider. The maximum potential amounts owed by the Trusts, for such reimbursements, as applicable, are included in the maximum potential amounts disclosed for recourse TOB Trusts.

 

2

The Trusts may invest in TOB Trusts that are structured on a non-recourse or recourse basis. When a Trust 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 June 30, 2017, in proportion to its 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 June 30, 2017.

5. 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 Trust’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Trust.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		31

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Notes to Financial Statements (continued)

 

For such services, each Trust pays the Manager a monthly fee at an annual rate equal to 0.40% of the average weekly value of each Trust’s managed assets.

For purposes of calculating this fee, “managed assets” mean the total assets of the Trust minus the sum of its accrued liabilities (other than the aggregate indebtedness constituting financial leverage).

Waivers: With respect to each Trust, effective January 1, 2017, the Manager voluntarily agreed to waive its investment advisory fees equal to the annual rate of 0.40% of the average weekly value of each Trust’s managed assets. These voluntary waivers may be reduced or discontinued at any time without notice. For the six months ended June 30, 2017, the amounts waived in investment advisory fees pursuant to these arrangements were as follows:

 

		BJZ				BPK				BLH
Amounts waived		$	190,960			$	483,083			$	107,765

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”). For the six months ended June 30, 2017, there were no fees waived by the Manager.

The Manager contractually agreed to waive its investment advisory fee with respect to any portion of each Trust’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2018. 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 six months ended June 30, 2017, there were no fees waived by the Manager.

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.

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were as follows:

 

		BJZ				BPK				BLH
Purchases		$	14,803,431			$	8,010,056			$	509,280
Sales		$	15,909,400			$	13,451,563			$	515,000

7. Income Tax Information:

It is each Trust’s 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 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 Trust’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on each Trust’s 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 June 30, 2017, 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.

As of December 31, 2016, the Trusts had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:

 

Expires December 31,		BJZ				BLH
2017		$	106,801				—
2018			—			$	287,675
Total		$	106,801			$	287,675

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

 

		BJZ				BPK				BLH
Tax cost		$	101,636,255			$	235,472,329			$	52,992,932
Gross unrealized appreciation			1,227,131				2,848,048				837,000
Gross unrealized depreciation			(18,874	)			(699,722	)			(5,046	)
Net unrealized appreciation (depreciation)		$	1,208,257			$	2,148,326			$	831,954

 

32		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Notes to Financial Statements (continued)

 

8. 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 Trust’s 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 Trust’s 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 portfolio’s 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 the Trusts will achieve their investment objective and the Trusts may return less than $15.00 per share. As the Trusts approach their scheduled termination date, it is expected that the maturity of the Trusts’ portfolio securities will shorten, which is likely to reduce the Trusts’ income and distributions to shareholders.

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 U.S. federal banking and housing agencies have adopted credit risk retention rules for securitizations (the “Risk Retention Rules”), which took 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 Trust’s 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.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		33

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Notes to Financial Statements (concluded)

 

Concentration Risk: BJZ and BLH 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, BJZ invested a significant portion of its assets in securities in the utilities and county, city, special district, school district sectors. As of period end, BLH invested a significant portion of its assets in the county, city, special district, school district sectors. 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.

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 of each Trust’s Common Shares is $0.001. The Board is authorized, however, to reclassify any unissued Common Shares to Preferred Shares without approval of Common Shareholders.

Common Shares

For the six months ended June 30, 2017 and the year ended December 31, 2016, shares issued and outstanding remained constant for all Trusts.

10. Subsequent Events:

Management’s 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
		Paid1				Declared2
BJZ		$	0.0253			$	0.0253
BPK		$	0.0220			$	0.0220
BLH		$	0.0166			$	0.0166

 

1

Net investment income dividend paid on August 1, 2017 to Common Shareholders of record on July 14, 2017.

 

2

Net investment income dividend declared on August 1, 2017 payable to Common Shareholders of record on August 15, 2017.

 

34		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement

 

The Board of Trustees (the “Board,” the members of which are referred to as “Board Members”) of BlackRock California Municipal 2018 Term Trust (“BJZ”), BlackRock Municipal 2018 Term Trust (“BPK”) and BlackRock New York Municipal 2018 Term Trust (“BLH” and together with BJZ and BPK, each a “Trust,” and, collectively, the “Trusts”) met in person on April 27, 2017 (the “April Meeting”) and June 7-8, 2017 (the “June Meeting”) to consider the approval of each Trust’s investment advisory agreement (each an “Agreement, and collectively, the “Agreements”) with BlackRock Advisors, LLC (the “Manager”), each Trust’s 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, BlackRock’s 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 management’s 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 Trust’s investment objective(s), policies and restrictions, and meeting regulatory requirements; (e) the Trust’s adherence to its compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Trust’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment mandates across the open-end fund, closed-end fund, sub-advised mutual fund, collective investment trust, and institutional separate account product channels, as applicable, and the similarities and differences between these products and the services provided as compared to the Trust; (l) BlackRock’s 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 BlackRock’s business.

Each Board considered BlackRock’s 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 Trust 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 Broadridge;¹ (b) information on the profits realized by BlackRock and its affiliates pursuant to the Trust’s 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.

 

1

Funds 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.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		35

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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

 

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 Board’s 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. Topics covered included: (a) fund repositionings and portfolio management changes, including additional information about the portfolio managers, research teams, organization and methods and historical track records of the teams, and the potential impact of such changes on fund performance and the costs of such changes; (b) scientific active equity management; (c) BlackRock’s option overwrite policy; (d) differences in services between closed-end funds and mutual funds; (d) market discount; and (e) adviser profitability.

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, 2018. 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 Trust’s 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 Board’s 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 Trust’s performance to the performance of a comparable group of closed-end funds, relevant benchmark, and performance metrics, as applicable. Each Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. Each Board also reviewed the materials provided by its Trust’s portfolio management team discussing the Trust’s performance and the Trust’s 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 Trust’s portfolio management team; BlackRock’s 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 BlackRock’s compensation structure with respect to the Trust’s portfolio management team and BlackRock’s 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 BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s 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, each Board was provided with reports independently prepared by Broadridge, which included a comprehensive analysis of its Trust’s performance. Each Board also reviewed a narrative and statistical analysis of the Broadridge data that was prepared by BlackRock. In connection with its review, each Board received and reviewed information regarding the investment performance, based on net asset value (NAV), of its Trust as compared to other funds in its applicable Broadridge category. Each Board was provided with a description 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.

 

36		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

 

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 each of BJZ and BPK noted that for the one-, three- and five-year periods reported, its Trust ranked in the second, fourth and fourth quartiles, respectively, against its respective Performance Universe Composite. The Board of BLH noted that for each of the one-, three- and five year periods reported, the Trust ranked in the fourth quartile against its Performance Universe Composite. BlackRock believes that the Composite is an appropriate performance metric for each Trust. The Composite measures a blend of total return and yield. Each Board noted that its Trust has a targeted maturity, and as such, has managed to achieve the specific maturity goal. The peer funds within the Performance Universe generally do not have a similar specific maturity goal.

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 Trust’s 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 Trust’s 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 fund’s 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).

Each Board received and reviewed statements relating to BlackRock’s financial condition. Each Board reviewed BlackRock’s 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 BlackRock’s profitability with respect to its Trust and other funds the Board currently oversees for the year ended December 31, 2016 compared to available aggregate profitability data provided for the prior two years. Each Board reviewed BlackRock’s profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates. Each Board reviewed BlackRock’s 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 levels is difficult.

Each Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. Each Board reviewed BlackRock’s 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, BlackRock’s expense management, and the relative product mix.

In addition, each Board considered the cost of the services provided to its Trust by BlackRock, and BlackRock’s 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 BlackRock’s 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 Agreement for its Trust 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 BlackRock’s 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, closed-end fund, sub-advised mutual fund, collective investment trust, and institutional separate account product channels, as applicable.

Each Board noted that its Trust’s 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. Each Board also noted that BlackRock proposed, and the Board agreed to, a voluntary advisory fee waiver. This waiver was implemented on January 1, 2017. This waiver may be discontinued at any time without notice.

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 Trust’s asset levels and whether the current fee was appropriate.

Based on each Board’s 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 fund’s inception.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		37

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Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (concluded)

 

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 BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Trust, including for administrative, securities lending and cash management services. Each Board also considered BlackRock’s 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.

In connection with its consideration of the Agreement for its Trust, each Board also received information regarding BlackRock’s 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 Trust’s 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 the Trusts; 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 BlackRock’s 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. BlackRock’s 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, 2018. 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 the 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 Trust’s 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.

 

38		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Officers and Trustees

 

Richard E. Cavanagh, Chair of the Board and Trustee

Karen P. Robards, Vice Chair of the Board and Trustee

Michael J. Castellano, Trustee

Cynthia L. Egan, Trustee

Frank J. Fabozzi, Trustee

Jerrold B. Harris, Trustee

R. Glenn Hubbard, Trustee

W. Carl Kester, Trustee

Catherine A. Lynch, Trustee

Barbara G. Novick, Trustee

John M. Perlowski, Trustee, President and Chief Executive Officer

Jonathan Diorio, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Charles Park, Chief Compliance Officer

Janey Ahn, Secretary

 

Investment Adviser BlackRock Advisors, LLC Wilmington, DE 19809		Transfer Agent Computershare Trust Company, N.A. Canton, MA 02021		Independent Registered Public Accounting Firm Deloitte & Touche LLP Boston, MA 02116
Accounting Agent and Custodian State Street Bank and Trust Company Boston, MA 02111		Legal Counsel Skadden, Arps, Slate, Meagher & Flom LLP Boston, MA 02116		Address of the Trusts 100 Bellevue Parkway Wilmington, DE 19809

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		39

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Additional Information

 

Trust Certification

The Trusts are listed for trading on the NYSE and have filed with the NYSE their annual chief executive officer certification regarding compliance with the NYSE’s listing standards. The Trusts filed with the Securities and Exchange Commission (“SEC”) the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

 

Dividend Policy

Each Trust’s 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 distributions, the Trusts may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, 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 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 Trust’s offerings and the information contained in each Trust’s 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. 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, BlackRock implemented a new methodology for calculating “effective duration” for BlackRock’s municipal bond portfolios. The new methodology replaces the model previously used by BlackRock to evaluate municipal bond duration and is a common indicator of an investment’s sensitivity to interest rate movements. The new methodology will be applied to each Trust’s duration reported for periods after September 26, 2016.

Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Trusts, may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. Any reference to BlackRock’s 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 BlackRock’s 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 BlackRock’s 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.

 

40		SEMI-ANNUAL REPORT		JUNE 30, 2017

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Additional Information (concluded)

 

 

General Information (concluded)

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 SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room or how to access documents on the SEC’s 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.

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 SEC’s 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 SEC’s 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 BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended to, incorporate BlackRock’s 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.

 

		SEMI-ANNUAL REPORT		JUNE 30, 2017		41

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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. Certain 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-BK3-6/17-SAR

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Item 2 –

Code of Ethics – Not Applicable to this semi-annual report

 

Item 3 –

Audit Committee Financial Expert – Not Applicable to this semi-annual report

 

Item 4 –

Principal Accountant Fees and Services – Not Applicable to this semi-annual report

 

Item 5 –

Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

 

Item 6 –

Investments

(a) The registrant’s 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.

 

Item 7 –

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable to this semi-annual report

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies

(a) Not Applicable to this semi-annual report

(b) As of the date of this filing, there have been no changes in any of the portfolio managers identified in the most recent annual report on Form N-CSR.

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable

 

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 registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.

 

Item 12 –

Exhibits attached hereto

 

(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

 

(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 Municipal 2018 Term Trust
By:		/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Municipal 2018 Term Trust
Date: September 5, 2017

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 Municipal 2018 Term Trust
Date: September 5, 2017
By:		/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Municipal 2018 Term Trust
Date: September 5, 2017

 

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