- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
July 31, 1997
Dear Trust Shareholder:
After experiencing higher interest rates in the face of a resilient stock
market and stronger economic growth for the first few months of 1997, bond
investors were comforted by more moderate economic data released during the
second quarter which allowed the bond market to recapture some of its losses.
Our outlook for the bond market is cautiously optimistic. Over the short
term, we believe that the recent rally may continue, since inflation news has
been positive and U.S. securities appear cheap relative to their global
counterparts. Additionally, Fed Chairman Greenspan appears to be comfortable
allowing the economy to expand in the absence of rising inflationary pressures.
Thus, we do not foresee another tightening in the immediate future in the
absence of a visible inflation shock. However, recent wage increases, the
buoyant stock market and record levels of consumer confidence could lead to
stronger consumer spending and overall economic growth in the third quarter.
Therefore, an uninterrupted decline in yields is by no means a certainty.
This report provides the Trust's portfolio managers an opportunity to
provide you with detailed market commentary and to review the major investment
themes of the portfolio over the past six months. We hope that you find this
report informative and look forward to serving your financial needs in the
future.
Sincerely,
/s/Laurence D. Fink /s/Ralph L. Schlosstein
- ------------------- -----------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 31, 1997
Dear Shareholder:
We are pleased to present the semi-annual report for The BlackRock
Investment Quality Term Trust Inc. ("the Trust") for the six months ended June
30, 1997. We would like to take this opportunity to review the Trust's stock
price and net asset value (NAV) performance, summarize market developments and
discuss recent portfolio management activity.
The Trust is a diversified, actively managed closed-end bond fund whose
shares are traded on the New York Stock Exchange under the symbol "BQT". The
Trust's investment objective is to return $10 per share (its initial offering
price) to shareholders on or about December 31, 2004 while providing high
monthly income. Although there can be no guarantee, BlackRock is confident that
the Trust can achieve its investment objectives. The Trust seeks these
objectives by investing in investment grade fixed income securities, including
corporate debt securities, mortgage-backed securities backed by U.S. Government
agencies (such as Fannie Mae, Freddie Mac or Ginnie Mae), asset-backed
securities and commercial mortgage-backed securities. All of the Trust's assets
must be rated at least "BBB" by Standard & Poor's or "Baa" by Moody's at the
time of purchase or be issued or guaranteed by the U.S. Government or its
agencies.
The table below summarizes the performance of the Trust's stock price and
NAV over the period:
================================================================================
6/30/97 12/31/96 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $7.9375 $7.625 4.10% $8.00 $7.50
- --------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $9.25 $9.09 1.76% $9.30 $8.98
- --------------------------------------------------------------------------------
10-YEAR TREASURY NOTE 6.51% 6.42% +9 bp 6.97% 6.26%
================================================================================
THE FIXED INCOME MARKETS
The strong economic growth witnessed during the fourth quarter of 1996
spilled over into the first quarter of 1997. Although inflationary measures such
as commodity, producer and consumer prices remained relatively stable, labor
markets continued to strengthen. In an effort to subdue this growth, the Federal
Reserve raised the Federal funds rate by 25 basis points at their March 25
policy meeting as a pre-emptive strike against inflation.
After expanding at a blistering pace of 5.9% during the first quarter, the
U.S. economy's growth rate slowed in the second quarter of 1997. Signs of an
economic slowdown were prevalent in a broad range of industrial and consumer
indicators, including lower factory orders, decreased consumer spending, and
higher inventories. In addition, inflationary forces remained benign according
to year-over-year comparisons for the consumer and producer indices. These
indicators allowed the Federal Reserve to maintain interest rate levels at their
May 20 and July 2 policy meetings and wait for more definite signs of inflation
before increasing interest rates.
The market for mortgage-backed securities (MBS) significantly outperformed
the broader investment grade bond market for the six months ended June 30, 1997.
Strong investor demand for higher yielding "spread product", which offers a
yield premium over comparable maturity Treasury securities, boosted prices in
the mortgage sector. For the period, the MBS market as measured by the LEHMAN
BROTHERS MORTGAGE INDEX posted a 3.91% total return versus the 3.11% return of
the LEHMAN BROTHERS AGGREGATE INDEX. In the corporate bond market, strong
fundamentals created by steady economic growth, low inflation, and rising
corporate profits drove the sector to outperform comparable maturity Treasuries.
Corporate yields rose during March and April as interest rates drifted higher
and the stock market faltered. However, a benign inflationary outlook and strong
corporate earnings led to a reversal of performance in May and June.
2
<PAGE>
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market outlook and the Trust's investment objectives. The
following chart compares the Trust's current and December 31, 1996 asset
composition.
================================================================================
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
================================================================================
COMPOSITION JUNE 30, 1997 DECEMBER 31, 1996
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Corporate Bonds 29% 34%
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Mortgage Pass-Throughs 15% 18%
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Agency Multiple Class Mortgage Pass-Throughs 20% 11%
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FHA Project Loans 7% 10%
- --------------------------------------------------------------------------------
Commercial Mortgage BackedSecurities 7% 8%
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Money Market Instrument 5% 5%
- --------------------------------------------------------------------------------
Strip Mortgage Backed Securities 6% 5%
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U.S. Government Securities 4% 4%
- --------------------------------------------------------------------------------
Municipal Bonds 4% 3%
- --------------------------------------------------------------------------------
Asset-Backed Securities 3% 2%
================================================================================
================================================================================
RATING % OF CORPORATES
===================================
CREDIT RATING JUNE 30, 1997 DECEMBER 31, 1996
- --------------------------------------------------------------------------------
AA or equivalent 1% 1%
- --------------------------------------------------------------------------------
A or equivalent 44% 43%
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BBB or equivalent 51% 55%
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BB or equivalent 4% 1%
================================================================================
In seeking the primary investment objective of returning the initial
offering price upon maturity, the Trust continued to emphasize securities
offering both attractive yield spreads over Treasury securities and a maturity
date matching the Trust's termination date of December 31, 2004. To that end,
the Trust remained primarily invested in investment grade corporate bonds and
well-structured mortgage-backed securities (MBS). Over the period, the Trust
took advantage of strong performance of securities which offer yield above
Treasuries and stable cash flows relative to residential mortgages. Of note was
the reduction of corporate bonds and structured mortgage securities
(particularly commercial mortgage-backed securities and FHA Project Loans).
These assets were largely reallocated to the residential mortgage pass-through
market, which provide the Trust an excellent opportunity to enhance its overall
income earning potential.
3
<PAGE>
We look forward to managing the Trust to benefit from the opportunities
available in the fixed income markets and to meet its investment objectives. We
thank you for your investment in the BlackRock Investment Quality Term Trust
Inc. Please feel free to contact our marketing center at (800) 227-7BFM (7236)
if you have specific questions which were not addressed in this report.
Sincerely,
//Robert S. Kapito /s/ Michael P. Lustig
- ------------------ ---------------------
Robert S. Kapito Michael P.Lustig
Vice Chairman and Portfolio Manager Principal and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
================================================================================
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
================================================================================
Symbol on New York Stock Exchange: BQT
- --------------------------------------------------------------------------------
Initial Offering Date: April 21, 1992
- --------------------------------------------------------------------------------
Closing Stock Price as of 6/30/97: $7.938
- --------------------------------------------------------------------------------
Net Asset Value as of 6/30/97: $9.25
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 6/30/97 ($7.938)1: 7.24%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.047917
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.575000
================================================================================
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 The distribution is not constant and is subject to change.
4
<PAGE>
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THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--146.5%
MORTGAGE PASS-THROUGHS--38.4%
Federal Home Loan Mortgage
Corporation,
$15,707+ 6.50%, 8/01/25 - 10/01/25 ................... $ 15,052,703
13,358 7.50%, 7/01/26 - 12/01/26 ................... 13,411,918
Federal Housing Administration,
2,136 Colonial, Series 37,
7.40%, 12/01/22 ........................... 2,161,161
9,989 GMAC, Series 51,
7.43%, 2/01/21 ............................ 10,104,951
1,255 Middlesex, 8.625%, 9/01/34 .................. 1,326,814
2,870 Tuttle Grove, 7.25%, 10/01/35 ............... 2,796,576
USGI,
1,686 Series 99, 7.43%, 10/01/23 ................ 1,700,621
8,235 Series 885, 7.43%, 3/01/22 ................ 8,341,110
9,209 Series 2081, 7.43%, 5/01/23 ............... 9,307,830
Federal National Mortgage Association,
36,000 7.00%, 1/01/99, 7 year ...................... 36,146,250
9,643+ Multi-family, 6.35%,10 year,
1/01/04 ................................... 9,397,580
2,417++ Multi-family, 7.66%,10 year,
3/01/04 ................................... 2,504,876
2,825+ Multi-family, 8.26%,10 year,
2/01/04 ................................... 2,984,572
2,348++ Multi-family, 8.78%,10 year,
4/01/04 ................................... 2,401,353
1,570++ Multi-family, 8.89%, 10 year,
4/01/04 ................................... 1,605,661
Government National Mortgage
Association,
11,744 7.00%, 4/15/23 - 6/15/24 .................... 11,537,334
-----------
130,781,310
-----------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--23.4%
AAA 9,595+ Community Program Loan Trust,
Series 1987-A, Class A-4, 4.50%
10/01/18 .................................. 8,212,632
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
5,000++ Series 1295, Class 1295-JB,
3/15/07 ................................... 4,454,200
25,621++ Series 1353, Class 1353-S,
8/15/07 (ARM) ............................. 3,014,455
1,001 Series 1523, Class 1523-A,
6/15/22 ................................... 963,900
3,200++ Series 1540, Class 1540-H,
3/15/09 ................................... 3,040,838
613 Series 1607, Class 1607-M,
4/15/13 ................................... 581,806
6,001++ Series 1634, Class 1634-SG,
12/15/22 (ARM) ............................ 5,802,853
815++ Series 1650, Class 1650-LC,
2/15/22 ................................... 805,786
1,926 Series 1667, Class 1667-C,
1/15/09 ................................... 1,820,899
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
2,204+ Trust G93-27, Class 27-SE,
8/25/23 (ARM) ............................. 995,452
3,178++ Trust 269, Class 269-1, 8/01/22 ............. 3,376,926
1,646++ Trust 1992-155, Class 155-SB,
12/25/06 (ARM) ............................ 1,760,232
1,490 Trust 1993-22, Class 22-PT
10/25/18 (I) .............................. 324,663
661 Trust 1993-179, Class 179-SA,
10/25/23 (ARM) ............................ 590,829
1,932++ Trust 1993-192, Class 192-S,
4/25/07 (ARM) ............................. 1,515,293
3,731+ Trust 1993-212, Class 212-SB,
11/25/08 (ARM) ............................ 3,080,294
825 Trust 1993-228, Class 228-B,
3/25/23 (P) ............................... 654,579
3,500+ Trust 1994-M1, Class 1-B,
10/25/03 .................................. 3,448,594
950 Trust 1994-10, Class 10-E,
1/25/24 (ARM) ............................. 749,667
703 Trust 1994-17, Class 17-SA,
1/25/09 (ARM) ............................. 677,535
6,853+ Trust 1994-19, Class 19-C,
1/25/24 ................................... 6,194,060
1,528 Trust 1994-36, Class 36-L,
1/25/23 ................................... 1,522,124
2,000++ Trust 1996-M5, Class A2,
1/25/11 ................................... 2,038,281
7,000+ Trust 1996-20, Class 20-SB,
10/25/08 (ARM) ............................ 2,386,566
2,108 Trust 1997-28, Class 28-PH,
3/18/22 (I) ............................... 512,447
18,628++ Trust 1997-30, Class 30-I,
1/25/23 (I) ............................... 6,124,097
1,535 Trust 1997-30, Class 30-S,
4/25/22 ................................... 1,153,011
4,266++ Trust 1997-32, Class 32-ML,
2/25/27 (P) ............................... 3,602,887
AAA 1,857 GE Capital Mortgage Services
Incorporated, Series 1997-2,
Class 2A, 3/25/12 (I) ..................... 432,846
AAA 5,000 NYC Mortgage Loan Trust,
Series 1996, Class A-2,
6/25/11 ................................... 4,810,938
Residential Funding Mortgage Sec I,
AAA 2,224 Series 1992-S1, Class A-6,
1/25/22 (ARM) ............................. 2,345,597
AAA 660 Series 1993-S15, Class A-17,
4/25/08 (ARM) ............................. 569,591
See Notes to Financial Statements.
5
<PAGE>
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PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--(CONT'D)
$2,000 Salomon Brothers Mortgage
Securities, Class 97-TZH
3/25/25 ................................... $ 2,025,000
-----------
79,588,878
-----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES--10.7%
AAA 2,000 AETNA, Series 1995-C5, Class B,
6.74%, 12/26/30 ............................. 1,963,964
A 5,000 CS First Boston Corp.,
Series 1995-AEW 1, Class C,
7.458%, 11/25/27 ............................ 5,035,156
AA 4,000 Debartolo Capital Partnership,
Class B1, 7.61%, 5/01/04 .................... 4,089,402
BBB+ 6,485 FDIC REMIC Trust, Series 1994-C1,
Class 11-F, 8.70%, 9/25/25 .................. 6,740,752
A 1,000 Kidder Peabody Acceptance Corp.,
Series 1994-C3, Class C,
8.80%, 4/01/07 .............................. 1,071,832
LTC Commercial Mortgage
Pass-Through Certificates,
A+ 2,000 Series 1994-1, Class 1-D,
10.00%, 6/15/26 ........................... 2,204,577
AAA 3,209 Series 1996-1, Class 1-A,
7.06%, 4/15/28 ............................ 3,213,541
BBB 2,600 Nomura Asset Capital Corp.,
Series 1993-M1, Class A3
7.64%, 11/25/03 ............................. 2,636,548
BBB 500 PaineWebber Mortgage
Acceptance Corp.,
Series 1995-M2, Class D,
7.20%, 12/01/03 ............................. 500,709
Structured Asset Securities
Corporation, Mortgage Certificates,
A 3,000 Series 1996, Class D,
7.034%, 2/25/28 ........................... 2,979,473
BBB 5,970 Series 1996, Class E,
7.75%, 2/25/28 ............................ 6,027,621
-----------
36,463,575
-----------
CORPORATE BONDS--41.7%
FINANCE & BANKING--12.0%
A3 2,450 Amsouth Bancorp.,
6.75%, 11/01/25 ............................. 2,399,577
A2 2,000 Bank of Hawaii,
6.875%, 6/01/03 ............................. 1,982,720
A2 3,000 Den Danske Bank,
7.25%, 6/15/05 .............................. 3,003,616
A2 1,300 Equitable Life of America,
6.95%, 12/01/05 ............................. 1,278,113
A2 5,000@ Farmers Insurance,
8.50%, 8/01/04 .............................. 5,240,017
A3 4,800 First National Bank of Boston,
8.00%, 9/15/04 .............................. 5,055,312
A3 5,000++ Fleet Financial Group,
8.125%, 7/01/04 ............................. 5,284,050
A+ 4,850 Goldman Sachs Group,
6.25%, 2/01/03 .............................. 4,690,528
BBB 3,500 Macsaver Financial Services Inc.,
Gtd. Note, 7.875%, 8/01/03 .................. 3,521,210
A1 1,000 Metropolitan Life Insurance Co.,
6.30%, 11/01/03 ............................. 960,800
PaineWebber Group, Inc.,
Baa2 500 6.90%, 2/09/04 .............................. 485,448
Baa1 2,000 8.875%, 3/15/05 ............................. 2,175,500
A3 3,100 Reliaster Financial Corp.,
6.625%, 9/15/03 ............................. 3,019,493
Baa1 2,000 Salomon, Inc.,
6.75%, 1/15/06 .............................. 1,912,180
-----------
41,008,564
-----------
CORPORATE BONDS--(CONT'D)
INDUSTRIALS--13.1%
A3 400 American Airlines, Inc.,
10.44%, 3/04/07 ............................. 477,512
BBB- 3,600 Anixter Inc.,
8.00%, 9/15/03 .............................. 3,670,289
AA- 2,000 Coca Cola Enterprises, Inc.,
7.875%, 2/01/02 ............................. 2,086,260
Baa2 2,000 Conagra, Inc.,
7.40%, 9/15/04 .............................. 2,030,612
A1 5,500++ Ford Motor Credit Co.,
7.50%, 6/15/04 .............................. 5,639,700
Baa1 7,000++ ITT Corp.,
6.75%, 11/15/03 ............................. 6,749,275
Baa2 5,000 Lukens, Inc.,
7.625%, 8/01/04 ............................. 5,102,250
Baa2 5,000 Newmont Mining Corp.,
8.00%, 12/01/04 ............................. 5,216,350
Baa3 3,000 News America Holdings, Inc.,
8.50%, 2/15/05 .............................. 3,195,240
Baa3 5,000 Pulte Corp.,
8.375%, 8/15/04 ............................. 5,186,600
A2 2,000 Ralcorp Holdings, Inc.,
8.75%, 9/15/04 .............................. 2,199,400
BBB- 3,000 Tele-Communications, Inc.,
8.25%, 1/15/03 .............................. 3,102,090
-----------
44,655,578
-----------
CORPORATE BONDS--(CONT'D)
SOVEREIGN & PROVINCIAL--8.8%
A- 6,000 Banamex Remittance Master Trust,
Series 1996, 7.57%, 1/01/01 ................. 5,943,600
Baa2 2,000 Canadian Pacific Ltd.,
6.875%, 4/15/03 ............................. 1,989,005
A3 2,000 Corporacion Andina De Fomento,
7.10%, 2/01/03 .............................. 2,009,640
BBB- 5,000 Empresa Electric Guacolda Sa,
7.95%, 4/30/03 .............................. 5,097,103
A3 3,500 Israel Electric Corp. Ltd.,
7.25%, 12/15/06 ............................. 3,471,895
See Notes to Financial Statements.
6
<PAGE>
================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
A2 $ 5,000 Quebec Province,
8.625%, 1/19/05 ............................. $ 5,461,950
Xtra, Inc.
Baa2 2,000 6.50%, 1/15/04 .............................. 1,936,620
Baa2 2,500 7.22%, 7/31/04 .............................. 2,511,925
Baa1 1,614 YPF Sociedad Anonima,
7.50%, 10/26/02 ............................. 1,660,695
-----------
30,082,433
-----------
CORPORATE BONDS--(CONT'D)
UTILITIES--7.8%
360 Communications Co.,
BBB- 2,000 7.125%, 3/01/03 ............................. 1,985,320
BBB- 2,000 7.50%, 3/01/06 .............................. 1,996,680
Baa3 5,000 Gulf States Utilities Co.,
8.25%, 4/01/04 .............................. 5,253,800
Ba3 5,400+ Niagara Mohawk Power Corp.,
7.38%, 8/01/03 .............................. 5,249,622
Baa3 5,000 NRG Energy, Inc.,
7.625%, 2/01/06 ............................. 5,010,698
Baa2 2,000 Ohio Edison,
8.625%, 9/15/03 ............................. 2,135,580
A1 5,000 Telekom Malaysia Berhad,
7.125%, 8/01/05 ............................. 4,992,450
-----------
26,624,150
-----------
ASSET-BACKED SECURITIES--4.1%
Student Loan Marketing Associates,
A1 4,000 Series 1995-1, Class B,
6.22%, 10/25/09 ........................... 4,000,000
A1 4,878 Series 1997, Class E,
8.24%, 3/15/06 ............................ 4,853,411
A1 4,962 Series 1997, Class E,
8.724%, 4/15/06 ........................... 4,986,388
-----------
13,839,799
-----------
STRIPPED MORTGAGE-BACKED SECURITIES--9.0%
Federal Home Loan Mortgage
Corporation,
18,905+ Series G-25, Class 25-S,
8/25/06 (I/O) ............................. 761,891
39,284 Series 1506, Class 1506-SA,
1/15/05 (I/O) ............................. 690,212
6,923+ Series 1751, Class 1751-PL,
10/15/23 (I/O) ............................ 1,125,270
1,346++ Series 1862, Class 1862-DA,
12/15/22 (P/O) ............................ 1,010,889
1,570++ Series 1862, Class 1862-DB,
12/15/22 (P/O) ............................ 1,179,371
5,000 Series 1917, Class 1917-AS,
5/15/08 (I/O) ............................. 1,271,875
5,423+ Series 1946, Class 1946-SN
10/15/08 (P/O) ............................ 3,409,576
57,281 Series 1954, Class 1954-BB,
4/15/21 (I/O) ............................. 805,508
5,423 Series 1946,Class 1946-SN
10/15/08 (I/O) ............................ 1,456,526
47,872 Series 1954 Class 1954-LL
5/15/21 (I/O) ............................. 710,606
Federal National Mortgage Association,
4,097++ Trust 1993-147, Class 147-H,
8/25/23 (P/O) ............................. 3,372,602
$ 3,292 Trust 1994-42, Class 42-SO,
3/25/23 (I/O) ............................. 477,337
4,128 Trust 1996-24, Class 24-SE,
3/25/09 (I/O) ............................. 745,064
9,857 Trust 1996-24, Class 24-SL,
8/25/23 (I/O) ............................. 1,352,277
6,827+ Trust 1996-32, Class 32-E,
10/25/08 (P/O) ............................ 5,316,376
86,090 Trust 1996-54, Class 54-SH,
8/25/23 (I/O) ............................. 2,690,318
55,227 Trust 1996-54, Class 54-SI
8/25/23 (I/O) ............................. 431,460
22,787++ Trust 1997-30, Class 30-SM,
1/18/21 (I/O) ............................. 1,107,290
15,402 Trust 1997-44, Class 44-SC,
6/25/08 (I/O) ............................. 1,684,628
19,938 Government National Mortgage
Association, Series 1997-7,
Class 7-SC, 7/16/12 (I/O) .................. 1,040,496
-----------
30,639,572
-----------
U.S GOVERNMENT SECURITIES--5.4%
Small Business Administration,
Participation Certificate,
2,982++ Series 1995-10-C,
7.35%, 8/01/05 ............................ 3,006,763
2,000++ Series 1996-10-C,
7.35%, 8/01/06 ............................ 2,022,501
1,346++ Series 1996-20-F,
7.55%, 6/01/16 ............................ 1,380,003
1,972++ Series 1996-20-G,
7.70%, 7/01/16 ............................ 2,036,703
4,879++ Series 1996-20-K,
6.95%, 11/01/16 ........................... 4,835,393
5,000++ U.S. Treasury Notes,
6.25%, 2/15/03 ............................ 4,960,950
-----------
18,242,313
-----------
MONEY MARKET INSTRUMENT--7.0%
40,000 AIM Prime Portfolio
Principal Money Market Strip,
Zero coupon, 12/31/04 ....................... 23,948,000
-----------
MUNICIPAL BONDS--6.8%
AAA 4,285 California Housing Finance Agency
Revenue, Taxable Home Mortgage
Series, 6.69%, 8/01/03 ...................... 4,239,408
AA- 2,000 Fresno California Pension Obligation,
7.15%, 6/01/04 .............................. 2,025,520
AAA 4,000 Los Angeles County California
Pension, Taxable Series D,
6.77%, 6/30/05 .............................. 3,953,760
AAA 7,000 New Jersey Economic Development
Authority, Series B,
Zero Coupon, 2/15/04 ........................ 4,468,310
Baa1 5,000 New York, New York, Taxable Series I,
7.50%, 4/15/04 .............................. 5,101,800
Baa1 1,000 New York State Environmental
Facilities Corporation St, Service
Contract Revenue,
6.95%, 9/15/04 .............................. 986,390
See Notes to Financial Statements.
7
<PAGE>
================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--(CONT'D)
AAA $2,250 San Francisco California City &
Cnty. Arpts., Commission
International Airport,
6.55%, 5/01/04 .............................. $ 2,205,787
------------
22,980,975
------------
Total Investments--146.5%
(cost $497,225,537) ........................... 498,855,147
Liabilities in excess of other assets--
(46.5%) ....................................... (158,437,750)
------------
NET ASSETS--100% ................................. $340,417,397
============
- -----------------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
+ In aggregate, $55,827,534 of principal amount pledged as collateral for
reverse repurchase agreements. ++ Entire principal amount pledged as
collateral for reverse repurchase agreements.
@ In aggregate, $2,250,000 of principal amount pledged as collateral for
futures transactions.
================================================================================
KEY TO ABBREVIATIONS
ARM-- Adjustable Rate Mortgage.
CMO-- Collateralized Mortgage Obligation.
I-- Denotes a CMO with interest only characteristics.
I/O-- Interest Only.
P/O-- Principal Only
P-- Denotes a CMO with principal only characteristics.
REMIC-- Real Estate Mortgage Investment Conduit.
================================================================================
See Notes to Financial Statements.
8
<PAGE>
================================================================================
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
================================================================================
ASSETS
Investments, at value (cost $497,225,537)
(Note 1) ..................................................... $498,855,147
Cash ........................................................... 33,009
Receivable for investments sold ................................ 11,831,282
Interest receivable ............................................ 6,234,578
Due from broker-variation margin ............................... 162,493
Unrealized appreciation on interest rate cap
(Note 1 and 3) ............................................... 45,064
------------
517,161,573
------------
LIABILITIES
Reverse repurchase agreements (Note 4) ......................... 114,219,875
Payable for investments purchased .............................. 61,685,459
Interest payable ............................................... 282,085
Advisory fee payable (Note 2) .................................. 168,008
Dividends payable .............................................. 153,977
Administration fee payable (Note 2) ............................ 33,602
Other accrued expenses ......................................... 201,170
------------
176,744,176
------------
NET ASSETS ..................................................... $340,417,397
============
Net assets were comprised of:
Common stock, at par (Note 5) ................................ $ 368,106
Paid-in capital in excess of par ............................. 344,473,944
------------
................................................................ 344,842,050
Undistributed net investment income .......................... 3,440,940
Accumulated net realized losses .............................. (9,719,970)
Net unrealized appreciation .................................. 1,854,377
------------
Net assets, June 30, 1997 .................................... $340,417,397
============
Net asset value per share:
($340,417,397 / 36,810,639 shares of
common stock issued and outstanding) ......................... $9.25
=====
================================================================================
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
================================================================================
NET INVESTMENT INCOME
Income
Interest earned (net of premium amortization
of $1,310,591 and interest expense of
$3,622,813) ................................................ $ 13,739,321
------------
Operating Expenses
Investment advisory .......................................... 1,000,975
Administration ............................................... 200,194
Reports to shareholders ...................................... 122,000
Directors .................................................... 39,000
Custodian .................................................... 32,000
Audit ........................................................ 17,000
Legal ........................................................ 15,000
Transfer agent ............................................... 11,000
Miscellaneous ................................................ 60,259
------------
Total operating expenses ................................... 1,497,428
------------
Net investment income ........................................ 12,241,893
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Net realized gain (loss)
Investments .................................................. 4,439,594
Short sales .................................................. 532,535
Futures ...................................................... (3,536,612)
------------
1,435,517
------------
Net change in unrealized
appreciation (depreciation)
Investments .................................................. 1,582,466
Short sales .................................................. 748,428
Options ...................................................... 73,050
Futures ...................................................... 140,068
------------
2,544,012
------------
Net gain on investments ...................................... 3,979,529
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $ 16,221,422
===========
See Notes to Financial Statements.
9
<PAGE>
================================================================================
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
================================================================================
INCREASE (DECREASE) IN CASH
Cash flows used for operating activities:
Interest received ......................................... $ 18,207,552
Operating expenses and excise taxes paid .................. (1,401,180)
Interest expense paid ..................................... (5,192,240)
Proceeds from disposition of short-term
portfolio investments, net ............................. (3,162,500)
Purchase of long-term portfolio investments ............... (413,118,545)
Proceeds from disposition of long-term
portfolio investments .................................. 400,826,716
Variation margin on futures ............................... (3,371,239)
------------
Net cash flows used for operating
activities ............................................. (7,211,436)
------------
Cash flows provided by financing activities:
Increase in reverse repurchase agreements ................. 17,373,500
Cash dividends paid ....................................... (10,606,010)
------------
Net cash flows provided by financing activities ........... 6,767,490
------------
Net decrease in cash ......................................... (443,946)
Cash at beginning of period .................................. 476,955
------------
Cash at end of period ........................................ $ 33,009
============
RECONCILIATION OF NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS TO
NET CASH FLOWS USED FOR OPERATING ACTIVITIES
Net increase in net assets resulting from
operations ................................................ $ 16,221,422
------------
Increase in investments ...................................... (3,330,148)
Net realized gain ............................................ (1,435,517)
Decrease in unrealized appreciation .......................... (2,544,012)
Increase in appreciation on interest rate swap ............... (45,064)
Increase in interest receivable .............................. (465,173)
Increase in receivable for investments sold .................. (11,795,356)
Decrease in deposits with brokers ............................ 48,880,000
Decrease in investments sold short ........................... (47,352,500)
Decrease in swap option written .............................. (1,340,550)
Decrease in other assets ..................................... 4,634
Decrease in payable for investments purchased ................ (2,394,170)
Increase in due from broker-variation margin ................. (137,188)
Decrease in interest payable ................................. (1,569,427)
Increase in other accrued expenses ........................... 91,613
------------
Total adjustments ......................................... (23,432,858)
------------
Net cash flows used for operating activities ................. $ (7,211,436)
------------
================================================================================
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENTS OF CHANGES
IN NET ASSETS (UNAUDITED)
================================================================================
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1997 1996
--------- -----------
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income ........................ $ 12,241,893 $ 23,408,176
Net realized gain on
investments, short sales
and futures ............................... 1,435,517 3,142,096
Net change in unrealized
appreciation
(depreciation) on
investments, short sales,
options and futures ....................... 2,544,012 (20,006,911)
----------- -----------
Net increase in net assets
resulting from
operations ................................ 16,221,422 6,543,361
Dividends from net
investment income ......................... (10,583,010) (21,626,119)
----------- -----------
Total increase (decrease) .................... 5,638,412 (15,082,758)
NET ASSETS
Beginning of period ............................. 334,778,985 349,861,743
----------- -----------
End of period ................................... $340,417,397 $334,778,985
============ ============
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
APRIL 29,
1992*
SIX MONTHS THROUGH
ENDED YEAR ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, ----------------------------------------- ------------
1997 1996 1995 1994 1993 1992
----- ----- ----- ----- ----- -----
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.09 $ 9.50 $ 8.21 $ 9.47 $ 9.57 $ 9.40
-------- ------- ------- ------- ------- ------
Net investment income (net of interest expense of
$.10, $.17, $.23, $.17, $.15 and $.08, respectively) .33 .64 .60 .62 .80 .54
Net realized and unrealized gain (loss) on investments .12 (.46) 1.31 (1.16) (.16) .19
-------- ------- ------- ------- ------- ------
Net increase (decrease) from investment operations .45 .18 1.91 (.54) .64 .73
-------- ------- ------- ------- ------- ------
Dividends from net investment income (.29) (.59) (.60) (.68) (.74) (.54)
Distributions in excess of net investment income -- -- (.02) (.04) -- --
-------- ------- ------- ------- ------- ------
Total dividends and distributions (.29) (.59) (.62) (.72) (.74) (.54)
-------- ------- ------- ------- ------- ------
Capital charge with respect to issuance of shares -- -- -- -- -- (.02)
-------- ------- ------- ------- ------- ------
Net asset value, end of period** $ 9.25 $ 9.09 $ 9.50 $ 8.21 $ 9.47 $ 9.57#
-------- ------- ------- ------- ------- ------
Market value, end of period** $ 7.938 $ 7.625 $ 7.875 $ 7.00 $ 9.375 $ 9.375
======== ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN+ 7.97% 4.58% 21.91% (18.10%) 7.96% 5.24%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses## 0.90%++ 0.91% 0.92% 0.93% 0.89% 0.91%++
Net investment income 7.36%++ 7.03% 6.76% 7.10% 8.19% 8.45%++
SUPPLEMENTALDATA:
Average net assets (in thousands) $335,585 $332,778 $328,950 $320,366 $358,623 $348,471
Portfolio turnover 77% 221% 160% 111% 77% 26%
Net assets, end of period (in thousands) $340,417 $334,779 $349,862 $302,147 $348,528 $352,417
Reverse repurchase agreements outstanding, end of period
(in thousands) $114,220 $ 96,846 $112,007 $149,800 $156,558 $172,195
Asset coverage+++ $ 3,980 $ 4,457 $ 4,124 $ 3,017 $ 3,226 $ 3,047
</TABLE>
- -----------
* Commencement of investment operations.
** NAV and market value are published in THE WALL STREET JOURNAL each Monday.
# Net asset value immediately after the closing of the first public offering
was $9.38.
## The ratios of operating expenses, including interest expense, to average
net assets were 3.08%++, 2.83%, 3.44%, 2.84%, 2.38% and 2.29%++ for the
periods indicated above, respectively. The ratios of operating expenses,
including interest expense and excise tax, to average net assets were
3.08%++, 2.83%, 3.44%, 2.85%, 2.41% and 2.35%++ for the periods indicated
above, respectively.
+ Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of the period reported. Dividends are assumed,
for purposes of this calculation, to be reinvested at prices obtained under
the Trust's dividend reinvestment plan. This calculation does not reflect
brokerage commissions. Total investment returns for periods of less than
one full year are not annualized.
++ Annualized.
+++ Per $1,000 of reverse repurchase agreements outstanding.
The information above represents the unaudited operating performance data
for a share of common stock outstanding, total investment return, ratios to
average net assets and other supplemental data, for each of the periods
indicated. This information has been determined based upon financial
information provided in the financial statements and market value data for
the Trust's shares.
See Notes to Financial Statements.
11
<PAGE>
================================================================================
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
NOTE 1. ACCOUNTING POLICIES
The BlackRock Investment Quality Term Trust Inc. (the "Trust"), a Maryland
corporation, is a diversified, closed-end management investment company. The
Trust's investment objective is to manage a portfolio of fixed income securities
that will return $10 per share to investors on or about December 31, 2004 while
providing high monthly income. The ability of issuers of debt securities held by
the Trust to meet their obligations may be affected by economic developments in
a specific industry or region. No assurance can be given that the Trust's
investment objective will be achieved.
The following is a summary of significant accounting policies followed by the
Trust.
SECURITIES VALUATION: The Trust values mortgage-backed, asset-backed and other
debt securities on the basis of current market quotations provided by dealers or
pricing services approved by the Trust's Board of Directors. In determining the
value of a particular security, pricing services may use certain information
with respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities, various relationships observed in the
market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange-traded
options are valued at their last sales price as of the close of options trading
on the applicable exchanges. In the absence of a last sale, options are valued
at the average of the quoted bid and asked prices as of the close of business. A
futures contract is valued at the last sale price as of the close of the
commodities exchange on which it trades unless the Trust's Board of Directors
determines that such price does not reflect its fair value, in which case it
will be valued at its fair value as determined by the Trust's Board of
Directors. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in 60 days or less are valued at amortized
cost, if their term to maturity from date of purchase is 60 days or less.
Short-term securities with a term to maturity greater than 60 days from the date
of purchase are valued at current market quotations until maturity.
In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
OPTION SELLING/PURCHASING: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
Options, when used by the Trust, help in maintaining a targeted duration.
Duration is a measure of the price sensitivity of a security or a portfolio to
relative changes in interest rates. For instance, a duration of "one" means that
a portfolio's or a security's price would be expected to change by approximately
one percent with a one percent change in interest rates, while a duration of
five would imply that the price would move approximately five percent in
relation to a one percent change in interest rates.
Option selling and purchasing is used by the Trust to effectively "hedge"
positions so that changes in interest rates do not change the duration of the
portfolio unexpectedly. In general, the Trust uses options to hedge a long or
short position or an overall portfolio that is longer or shorter than the
benchmark security. A call option gives the purchaser of the option the right
(but not obligation) to buy, and obligates the seller to sell (when the option
is exercised), the underlying position at the exercise price at any time or at a
specified time during the option period. A put option gives the holder the right
to sell and obligates the writer to buy the underlying position at the exercise
price at any time or at a specified time during the option period. Put options
can be purchased to effectively hedge a position or a portfolio against price
12
<PAGE>
declines if a portfolio is long. In the same sense, call options can be
purchased to hedge a portfolio that is shorter than its benchmark against price
changes. The Trust can also sell (or write) covered call options and put options
to hedge portfolio positions.
The main risk that is associated with purchasing options is that the option
expires without being exercised. In this case, the option expires worthless and
the premium paid for the option is considered the loss. The risk associated with
writing call options is that the Trust may forego the opportunity for a profit
if the market value of the underlying position increases and the option is
exercised. The risk in writing put options is that the Trust may incur a loss if
the market value of the underlying position decreases and the option is
exercised. In addition, as with futures contracts, the Trust risks not being
able to enter into a closing transaction for the written option as the result of
an illiquid market.
INTEREST RATE SWAPS: In an interest rate swap, one investor pays a floating rate
of interest on a notional principal amount and receives a fixed rate of interest
on the same notional principal amount for a specified period of time.
Alternatively, an investor may pay a fixed rate and receive a floating rate.
Rate swaps were conceived as asset/liability management tools. In more complex
swaps, the notional principal amount may decline (or amortize) over
time.
During the term of the swap, changes in the value of the swap are recognized
as unrealized gains or losses by "marking-to-market" to reflect the market value
of the swap. When the swap is terminated, the Trust will record a realized gain
or loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Trust's basis in the contract, if any.
The Trust is exposed to credit loss in the event of non-performance by the
other party to the swap. However, the Trust does not anticipate non-performance
by any counterparty.
SWAP OPTIONS: Swap options are similar to options on securities except that
instead of selling or purchasing the right to buy or sell a security, the writer
or purchaser of the swap option is granting or buying the right to enter into a
previously agreed upon interest rate swap agreement at any time before the
expiration of the option. Premiums received or paid from writing or purchasing
options are recorded as liabilities or assets and are subsequently adjusted to
the current market value of the option written or purchased. Premiums received
or paid from writing or purchasing options which expire unexercised are treated
by the Trust on the expiration date as realized gains or losses. The difference
between the premium and the amount paid or received on effecting a closing
purchase or sale transaction, including brokerage commission, is also treated as
a realized gain or loss. If an option is exercised, the premium paid or received
is added to the proceeds from the sale or cost of the purchase in determining
whether the Trust has realized a gain or loss on investment transactions.
The main risk that is associated with purchasing swap options is that the
swap option expires without being exercised. In this case, the option expires
worthless and the premium paid for the swap option is considered the loss. The
main risk that is associated with the writing of a swap option is the market
risk of an unfavorable change in the value of the interest rate swap underlying
the written swap option.
Swap options may be used by the Trust to manage the duration of the Trust's
portfolio or as part of an income producing strategy reflecting the view of the
Trust's management in the direction of interest rates. FINANCIAL FUTURES
CONTRACTS: A futures contract is an agreement between two parties to buy and
sell a financial instrument for a set price on a future date. Initial margin
deposits are made upon entering into futures contracts and can be either cash or
securities. During the period the futures contract is open, changes in the value
of the contract are recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the contract
at the end of each day's trading. Variation margin payments are made or
received, depending upon whether unrealized gains or losses are incurred. When
the contract is closed, the Trust records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Trust's basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Futures contracts can be sold to effectively shorten an
otherwise longer duration portfolio. In the same sense, futures contracts can be
purchased to lengthen a portfolio that is shorter than its duration target.
Thus, by buying or selling futures contracts, the Trust can effectively "hedge"
positions so that changes in interest rates do not change the duration of the
portfolio unexpectedly.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets. The Trust is also at risk of not being able to
enter into a closing transaction for the futures contract because of an illiquid
secondary market. In addition, since futures are used to shorten or lengthen a
portfolio's duration, there is a risk that the portfolio may have temporarily
performed better without the hedge or that the Trust may lose the opportunity to
realize appreciation in the market price of the underlying positions.
13
<PAGE>
SHORT SALES: The Trust may make short sales of securities as a method of hedging
potential price declines in similar securities owned. When the Trust makes a
short sale, it may borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any payments received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as to
dollar amount will be recognized upon the termination of a short sale if the
market price is less or greater than the proceeds originally received.
SECURITIES LENDING: The Trust may lend its portfolio securities to qualified
institutions. The loans are secured by collateral at least equal, at all times,
to the market value of the securities loaned. The Trust may bear the risk of
delay in recovery of, or even loss of rights in, the securities loaned should
the borrower of the securities fail financially. The Trust receives compensation
for lending its securities in the form of interest on the loan. The Trust also
continues to receive interest on the securities loaned, and any gain or loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Trust. The Trust did not engage in
securities lending during the six months ended June 30, 1997.
SECURITIES TRANSACTIONS AND NET INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis, and the Trust accretes discount and amortizes premium on
securities purchased using the interest method. Expenses are recorded on the
accrual basis which may require the use of certain estimates by management.
TAXES: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no federal income tax provision is required. As part of a tax planning strategy,
the Trust intends to retain a portion of its taxable income and pay an excise
tax on the undistributed amounts.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions monthly, first from net invest-ment income, then from realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards are distributed at least
annually. Dividends and distributions are recorded on the ex-dividend date.
DEFERRED ORGANIZATION EXPENSES: A total of $70,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a period of sixty months from the date the Trust
commenced investment operations.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management Inc. (the "Adviser"), a wholly-owned corporate subsidiary of PNC
Asset Management Group, Inc., the holding company for PNC's asset management
business, and an Administration Agreement with Prudential Investments Fund
Management LLC ("PIFM"), an indirect, wholly-owned subsidiary of The Prudential
Insurance Co. of America.
The investment advisory fee paid to the Adviser is computed weekly and
payable monthly at an annual rate of 0.60% of the Trust's average weekly net
assets. The administration fee paid to PIFM is also computed weekly and payable
monthly at an annual rate of 0.12% of the Trust's average weekly net assets
until December 31, 1998, 0.10% from January 1, 1999 to December 31, 2002, and
0.08% from January 1, 2003 to the termination or liquidation of the Trust.
Pursuant to the agreements, the Adviser provides continuous supervision of the
investment portfolio and pays the compensation of officers of the Trust. PIFM
pays occupancy and certain clerical and accounting costs of the Trust. The Trust
bears all other costs and expenses.
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the six months ended June 30, 1997 aggregated $410,724,375
and $380,392,783, respectively.
14
<PAGE>
The Trust may invest up to 30% of its total assets in securities which are
not readily marketable, including those which are restricted as to disposition
under securities law ("restricted securities"). At June 30, 1997, the Trust did
not hold any securities restricted as to resale.
The Trust may from time to time purchase in the secondary market certain
mortgage pass-through securities packaged or master serviced by PNC Mortgage
Securities Corp. (or Sears Mortgage if PNC Mortgage Securities Corp. succeeded
to rights and duties of Sears) or mortgage related securities containing loans
or mortgages originated by PNC Bank or its affiliates. It is possible under
certain circumstances, PNC Mortgage Securities Corp. or its affiliates could
have interests that are in conflict with the holders of these mortgage backed
securities, and such holders could have rights against PNC Mortgage Securities
Corp. or its affiliates.
The federal income tax basis of the Trust's investments at June 30, 1997 was
substantially the same as for financial reporting purposes and, accordingly, net
unrealized appreciation for federal income tax purposes was $1,629,610 (gross
unrealized appreciation-$6,834,707; gross unrealized depreciation-$5,205,097).
For federal income tax purposes, the Trust has a capital loss carryforward at
December 31, 1996 of approximately $13,694,100, of which $7,412,800 expires in
2001, $2,436,800 expires in 2002 and $3,844,500 expires in 2003. Accordingly, no
capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of such amounts.
During the six months ended June 30, 1997, the Trust entered into financial
futures contracts. Details of open contracts at June 30, 1997 are as follows:
VALUE AT VALUE AT UNREALIZED
NUMBER OF EXPIRATION TRADE JUNE 30, APPRECIATION
CONTRACTS TYPE DATE DATE 1997 (DEPRECIATION)
- -------- ---- -------- --------- ---------- --------------
Long
position:
20 5 yr. U.S. T-Note Sep. '97 $ 2,101,340 $ 2,117,813 $ 16,473
Short
positions:
160 10 yr. U.S. T-Note Sep. '97 17,154,280 17,260,000 (105,720)
200 30 yr. U.S. T-Bond Sep. '97 22,481,450 22,212,500 268,950
--------
$179,703
========
The trust entered into an interest rate cap agreement which settled on
February 19, 1997. Under the agreement, the Trust paid $1,289,600 and will
receive from the counterparty an amount of interest calculated as the excess of
the 3 month LIBOR over 6.0% ("Protected Rate") based on the notional amount of
$40 million. Where the 3 month LIBOR is equal to or less than the Protected Rate
no amount is receivable by the Trust. The agreement terminates onFebruary 19,
2002. At June 30, 1997, the unrealized appreciation was $45,064.
NOTE 4. BORROWINGS
REVERSE REPURCHASE AGREEMENTS: The Trust may enter into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and under
the direction of the Trust's Board of Directors. Interest on the value of
reverse repurchase agreements issued and outstanding will be based upon
competitive market rates at the time of issuance. At the time the Trust enters
into a reverse repurchase agreement, it will establish and maintain a segregated
account with the lender, the value of which at least equals the principal amount
of the reverse repurchase transactions including accrued interest.
The average daily balance of reverse repurchase agreements outstanding during
the six months ended June 30, 1997 was approximately $126,870,685 at a weighted
average interest rate of approximately 5.66%. The maximum amount of reverse
repurchase agreements outstanding at any month-end during the period was
$127,578,088 as of April 30, 1997 which was 20.8% of total assets.
DOLLAR ROLLS: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date.
The average monthly balance of dollar rolls outstanding during the six months
ended June 30, 1997 was approximately $51,637,355. The maximum amount of dollar
rolls outstanding at any month-end during the year was $71,474,688 as of
February 28, 1997, which was 11.9% of total assets. NOTE 5. CAPITAL There are
200 million shares of $.01 par value common stock authorized. Of the 36,810,639
shares outstanding at June 30, 1997, the Adviser owned 10,639 shares.
NOTE 6. DIVIDENDS
Subsequent to June 30, 1997, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.047917 per share payable July 31,
1997 to shareholders of record on July 15, 1997.
15
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THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), shareholders
may elect to have all distributions of dividends and capital gains automatically
reinvested by State Street Bank & Trust Company (the "Plan Agent") in Trust
shares pursuant to the Plan. Shareholders who do not participate in the Plan
will receive all distributions in cash paid by check in United States dollars
mailed directly to the shareholders of record (or if the shares are held in
street or other nominee name, then to the nominee) by the custodian, as dividend
disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income taxes that
may be payable on such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days' written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Plan Agent at (800) 699-1BFM. The addresses are on the front of
this report.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders, or to its charter or
by-laws, or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
The Annual Meeting of Trust Shareholders was held April 15, 1997 to vote on
the following matters:
(1) To elect three Directors to serve as follows:
DIRECTOR CLASS TERM EXPIRING
-------- ----- ---- --------
Frank J. Fabozzi II 3 years 2000
Ralph L. Schlosstein II 3 years 2000
Walter F. Mondale II 3 years 2000
Directors whose term of office continues beyond this meeting are Richard E.
Cavanagh, James Grosfeld, James Clayburn LaForce Jr., Laurence D. Fink,
Andrew F. Brimmer, and Kent Dixon.
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 1997.
(3) To approve a new investment advisory agreement with BlackRock Financial
Management, Inc.
(4) Shareholder proposal to convert the Trust from closed-end to open-end.
Shareholders elected the three Directors, ratified the selection of Deloitte
& Touche LLP, and ratified the new investment advisory agreement. The
shareholders did not ratify the conversion of the Trust from closed-end to
open-end.The results of the voting was as follows:
VOTES FOR VOTES AGAINST ABSTENTIONS
--------- ------------- -----------
Frank J. Fabozzi 18,923,626 0 1,250,171
Ralph L. Schlosstein 18,941,299 0 1,232,498
Walter F. Mondale 18,901,309 0 1,272,488
Ratification of Deloitte
& Touche LLP 19,476,429 197,651 499,717
Ratification of new
investment advisory
agreement 14,139,631 5,265,844 768,322
Proposal to convert Trust
to open-end 7,385,390 11,716,084 1,072,323
16
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THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The Trust's investment objective is to manage a portfolio of investment grade
fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or about December 31, 2004 while
providing high monthly income.
WHO MANAGES THE TRUST?
BlackRock Financial Management, Inc. ("BlackRock") is the investment adviser for
the Trust. BlackRock is a registered investment adviser specializing in fixed
income securities. Currently, BlackRock manages approximately $50 billion of
assets across the government, mortgage, corporate and municipal sectors. These
assets are managed on behalf of institutional and individual investors in 21
closed-end funds which trade on either the New York Stock or American Stock
Exchanges, several open-end funds and separate accounts for more than 125
clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset
Management Group, Inc. which is a division of PNC Bank, one of the nation's
largest banking organizations.
WHAT CAN THE TRUST INVEST IN?
The Trust may invest in all fixed income securities rated investment grade or
higher ("AAA", "AA", "A" or "BBB"). Examples of securities in which the Trust
may invest include U.S. government and government agency securities, zero coupon
securities, mortgage-backed securities, corporate debt securities, asset-backed
securities, U.S. dollar-denominated foreign debt securities and municipal
securities. Under current market conditions, BlackRock expects that the primary
investments of the Trust will be U.S. government securities, securities backed
by government agencies (such as mortgage-backed securities) and corporate debt
securities.
WHAT IS THE ADVISER'S INVESTMENT STRATEGY?
The Adviser will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($10 per share)
at maturity. The Trust will implement a conservative strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment at the end of 2004. At the Trust's termination,
BlackRock expects that the value of the securities which have matured, combined
with the value of the securities that are sold will be sufficient to return the
initial offering price to investors. On a continuous basis, the Trust will seek
its objective by actively managing its assets in relation to market conditions,
interest rate changes and, importantly, the remaining term to maturity of the
Trust.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide high monthly income to investors. The portfolio managers
will attempt to achieve this objective by investing in securities that provide
competitive income. In addition, leverage will be used (in an amount up to
331/3% of the total assets) to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Adviser will attempt to purchase securities with call
protection or maturities as close to the Trust's maturity date as possible.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates. Since the Trust's primary goal is to return the initial offering price at
maturity, any cash that the Trust receives prior to its maturity date (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) will be reinvested in securities with maturities which coincide with
the remaining term of the Trust. Since shorter-term securities typically yield
less than longer-term securities, this strategy will likely result in a decline
in the Trust's income over time. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the yield curve (i.e. if the Trust has three years left until its maturity,
the Adviser will attempt to maintain a yield at a spread over a 3-year
Treasury). It is important to note that the Trust will be managed so as to
preserve the integrity of the return of the initial offering price.
17
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HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial adviser. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, State Street
Bank & Trust Company. Investors who wish to hold shares in a brokerage account
should check with their financial adviser to determine whether their brokerage
firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN A TERM TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. Leverage permits the Trust to borrow
money at short-term rates and reinvest that money in longer-term assets which
typically offer higher interest rates. The difference between the cost of the
borrowed funds and the income earned on the proceeds that are invested in longer
term assets is the benefit to the Trust from leverage. In general, the portfolio
is typically leveraged at approximately 331/3% of total assets.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rising environment. BlackRock's portfolio managers continuously monitor and
regularly review the Trust's use of leverage and the Trust may reduce, or
unwind, the amount of leverage employed should BlackRock consider that reduction
to be in the best interests of the shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
RETURN OF INITIAL INVESTMENT. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.
LEVERAGE. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, which involves special risks. The Trust's net asset value and
market value may be more volatile due to its use of leverage.
MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange and as such are subject to supply
and demand influences. As a result, shares may trade at a discount or a premium
to their net asset value.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The cash flow and yield
characteristics of these securities differ from traditional debt securities. The
major differences typically include more frequent payments and the possibility
of prepayments which will change the yield to maturity of the security.
CORPORATE DEBT SECURITIES. The value of corporate debt securities generally
varies inversely with changes in prevailing market interest rates. The Trust may
be subject to certain reinvestment risks in environments of declining interest
rates.
ZERO COUPON SECURITIES. Such securities receive no cash flows prior to maturity,
therefore interim price movements on these securities are generally more
sensitive to interest rate movements than securities that make periodic coupon
payments. These securities appreciate in value over time and can play an
important role in helping the Trust achieve its primary objective.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
NON-U.S SECURITIES. The Trust may invest less than 10% of its assets in non-U.S.
dollar-denominated securities which involve special risks such as currency,
political and economic risks, although under current market conditions does not
do so.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
18
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THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE-
BACKED SECURITIES (ARMS): Mortgage instruments with interest rates that
adjust at periodic intervals at a fixed amount
over the market levels of interest rates as
reflected in specified indexes. ARMS are backed
by mortgage loans secured by real property.
ASSET-BACKED SECURITIES: Securities backed by various types of
receivables such as automobile and credit card
receivables.
CLOSED-END FUND: Investment vehicle which initially offers a
fixed number of shares and trades on a stock
exchange. The fund invests in a portfolio of
securities in accordance with its stated
investment objectives and policies.
COLLATERALIZED
MORTGAGE OBLIGATIONS (CMOS): Mortgage-backed securities which separate
mortgage pools into short-, medium-, and
long-term securities with different priorities
for receipt of principal and interest. Each
class is paid a fixed or floating rate of
interest at regular intervals. Also known as
multiple-class mortgage pass-throughs.
DISCOUNT: When a fund's net asset value is greater than
its stock price the fund is said to be trading
at a discount.
DIVIDEND: This is income generated by securities in a
portfolio and distributed to shareholders after
the deduction of expenses. This Trust declares
and pays dividends on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all
distributions of dividends and capital gains
automatically reinvested into additional shares
of the Trust.
FHA: Federal Housing Administration, a government
agency that facilitates a secondary mortgage
market by providing an agency that guarantees
timely payment of interest and principal on
mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a
publicly owned, federally chartered corporation
that facilitates a secondary mortgage market by
purchasing mortgages from lenders such as
savings institutions and reselling them to
investors by means of mortgage-backed
securities. Obligations of FHLMC are not
guaranteed by the U.S. government, however;
they are backed by FHLMC's authority to borrow
from the U.S. government. Also known as Freddie
Mac.
FNMA: Federal National Mortgage Association, a
publicly owned, federally chartered corporation
that facilitates a secondary mortgage market by
purchasing mortgages from lenders such as
savings institutions and reselling them to
investors by means of mortgage-backed
securities. Obligations of FNMA are not
guaranteed by the U.S. government, however;
they are backed by FNMA's authority to borrow
from the U.S. government. Also known asFannie
Mae.
GNMA: Government National Mortgage Association, a
government agency that facilitates a secondary
mortgage market by providing an agency that
guarantees timely payment of interest and
principal on mortgages. GNMA's obligations are
supported by the full faith and credit of the
U.S. Treasury. Also known as Ginnie Mae.
GOVERNMENT SECURITIES: Securities issued or guaranteed by the U.S.
government, or one of its agencies or
instrumentalities, such as GNMA (Government
National Mortgage Association), FNMA (Federal
National Mortgage Association) and FHLMC
(Federal Home Loan Mortgage Corporation).
19
<PAGE>
INTEREST-ONLY SECURITIES (I/O): Mortgage securities that receive only the
interest cash flows from an underlying pool of
mortgage loans or underlying pass-through
securities. Also known as a STRIP.
MARKET PRICE: Price per share of a security trading in the
secondary market. For a closed-end fund, this
is the price at which one share of the fund
trades on the stock exchange. If you were to
buy or sell shares, you would pay or receive
the market price.
MORTGAGE DOLLAR ROLLS:
A mortgage dollar roll is a transaction in
which the Trust sells mortgage-backed
securities for delivery in the current month
and simultaneously contracts to repurchase
substantially similar (although not the same)
securities on a specified future date. During
the "roll" period, the Trust does not receive
principal and interest payments on the
securities, but is compensated for giving up
these payments by the difference in the current
sales price (for which the security is sold)
and lower price that the Trust pays for the
similar security at the end date as well as the
interest earned on the cash proceeds of the
initial sale.
MORTGAGE PASS-THROUGHS: Mortgage-backed securities issued by Fannie
Mae, Freddie Mac or Ginnie Mae.
MULTIPLE-CLASS PASS-THROUGHS: Collateralized Mortgage Obligations.
NET ASSET VALUE (NAV): Net asset value is the total market value of
all securities and other assets held by the
Trust, plus income accrued on its investments,
minus any liabilities including accrued
expenses, divided by the total number of
outstanding shares. It is the underlying value
of a single share on a given day. Net asset
value for the Trust is calculated weekly and
published in BARRON'S on Saturday and THE WALL
STREET JOURNAL on Monday.
PRINCIPAL-ONLY SECURITIES (P/O): Mortgage securities that receive only the
principal cash flows from an underlying pool of
mortgage loans or underlying pass-through
securities. Also known as STRIPS.
PROJECT LOANS: Mortgages for multi-family, low- to
middle-income housing.
PREMIUM: When a fund's stock price is greater than its
net asset value, the fund is said to be trading
at a premium.
REMIC: A real estate mortgage investment conduit is a
multiple-class security backed by
mortgage-backed securities or whole mortgage
loans and formed as a trust, corporation,
partnership, or segregated pool of assets that
elects to be treated as a REMIC for federal tax
purposes. Generally, Fannie Mae REMICs are
formed as trusts and are backed by
mortgage-backed securities.
RESIDUALS: Securities issued in connection with
collateralized mortgage obligations that
generally represent the excess cash flow from
the mortgage assets underlying the CMO after
payment of principal and interest on the other
CMO securities and related administrative
expenses.
REVERSE REPURCHASE
AGREEMENTS: In a reverse repurchase agreement, the Trust
sells securities and agrees to repurchase them
at a mutually agreed date and price. During
this time, the Trust continues to receive the
principal and interest payments from that
security. At the end of the term, the Trust
receives the same securities that were sold for
the same initial dollar amount plus interest on
the cash proceeds of the initial sale.
STRIPPED MORTGAGE-BACKED
SECURITIES: Arrangements in which a pool of assets is
separated into two classes that receive
different proportions of the interest and
principal distributions from underlying
mortgage-backed securities. IO's and PO's are
examples of strips.
20
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BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- --------------------------------------------------------------------------------
TAXABLE TRUSTS
- --------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ --------
The BlackRock Income Trust Inc. ................................ BKT N/A
The BlackRock North American Government Income Trust Inc. ...... BNA N/A
TERM TRUSTS
The BlackRock 1998 Term Trust Inc. ............................. BBT 12/98
The BlackRock 1999 Term Trust Inc. ............................. BNN 12/99
The BlackRock Target Term Trust Inc. ........................... BTT 12/00
The BlackRock 2001 Term Trust Inc. ............................. BLK 06/01
The BlackRock Strategic Term Trust Inc. ........................ BGT 12/02
The BlackRock Investment Quality Term Trust Inc. ............... BQT 12/04
The BlackRock Advantage Term Trust Inc. ........................ BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. ...... BCT 12/09
TAX-EXEMPT TRUSTS
- --------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ --------
The BlackRock Investment Quality Municipal Trust Inc. ......... BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust ...... RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. . RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. ................. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. ........... BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust ........ BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. .. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. ................ BMT 12/10
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE CALL BLACKROCK AT
(800) 227-7BFM (7236) OR CONSULT WITH YOUR FINANCIAL ADVISOR.
21
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BLACKROCK FINANCIAL MANAGMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------
BlackRock Financial Management Inc. (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages approximately $50 billion of
assets across the government, mortgage, corporate and municipal sectors. These
assets are managed on behalf of institutional and individual investors in 21
closed-end funds traded either on the New York Stock Exchange or the American
Stock Exchange, several open-end funds and over 125 institutional clients in the
United States and overseas.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individuals and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities market, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of propriety analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's propriety analytical tools are used for
evaluating, investing in and designing investment strategies and portfolio of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors' needs
and has been responsible for several major innovations in closed-end funds.
BlackRock introduced the first closed-end mortgage fund, the first taxable and
tax-exempt closed-end funds to offer a finite term, the first closed-end fund to
achieve a AAAf rating by Standard & Poor's, and the first closed-end fund to
invest primarily in North American Government securities. BlackRock's closed-end
funds currently have dividend reinvestment plans which are designed to provide
an ongoing source of demand for the stock in the secondary market. BlackRock
manages a ladder of alternative investment vehicles, with each fund having
specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all our
shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
22
<PAGE>
BlackRock
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Kevin Klingert, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
Frank Smith, ASSISTANT TREASURER
Karen H. Sabath, SECRETARY
INVESTMENT ADVISER
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
ADMINISTRATOR
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of June 30, 1997 were not audited
and accordingly, no opinion is expressed on them.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of any securities.
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
c/o Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM
[LOGO] Printed on recycled paper 09247E-103
The BlackRock
Investment Quality
Term Trust Inc.
================================================================================
Semi-Annual Report
June 30, 1997
[GRAPHIC]
