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SIGNATURE HENRY GABBAY
TITLE TREASURER
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E:\MATTHEWS\FUNDS\BLCKRCK\BQTEXH.77C
For the annual period ended December 31, 1997
File number 811-6542
SUB-ITEM 77Q1
Exhibits
(e) Amended Investment Advisory Contract.
For the annual period ended December 31, 1997
File number 811-6542
SUB-ITEM 77C
Submission of Matters to a Vote of Security Holders
An Annual Meeting of Shareholders was held on
April 15, 1997. At such meeting the shareholders
approved the selection of auditors and the election of
directors. Pursuant to Instruction 2 of this Sub-Item,
information as to these matters has not been included
in this Attachment. In addition, the Shareholders
considered and approved a proposal to approve a new
investment advisory agreement with BlackRock Financial
Management, Inc. that eliminates the step-down in the
investment advisory fee schedule. The number of
affirmative votes cast in favor of this proposal were
14,139,631 and the number of negative votes cast in
opposition to this proposal were 5,265,844. The
Shareholders also disapproved a proposal to change the
Fund from a closed-end to an open-end fund. The number
affirmative votes cast in favor of this proposal were
7,385,390 and the number of negative votes cast in
opposition to this proposal were 11,716,084.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated April 15, 1997, between
The BlackRock
Investment Quality Term Trust Inc. ("BQT")
(the "Trust"), a
corporation, and BlackRock Financial
Management, Inc. (the
"Adviser"), a Delaware corporation.
In consideration of the mutual promises and
agreement herein
contained and other good and valuable
consideration, the receipt
of which is hereby acknowledged, it is agreed by
and between the
parties hereto as follows:
1. In General
The Adviser agrees, all as more fully set
forth herein, to
act as investment adviser to the Trust with
respect to the
investment of the Trust's assets and to supervise
and arrange the
purchase of securities for and the sale of
securities held in the
investment portfolio of the Trust.
2. Duties and obligations of the Adviser
with respect to
investments of assets of the Trust
(a) Subject to the succeeding provisions
of this section
and subject to the direction and control of the
Trust's Board of
Directors, the Adviser shall (i) act as
investment adviser for
and supervise and manage the investment and
reinvestment of the
Trust's assets and in connection therewith
have complete
discretion in purchasing and selling securities
and other assets
for the Trust and in voting, exercising consents
and exercising
all other rights appertaining to such securities
and other assets
on behalf of the Trust; (ii) supervise
continuously the
investment program of the Trust and the
composition of its
investment portfolio; and (iii) arrange,
subject to the
provisions of paragraph 3 hereof, for the
purchase and sale of
securities and other assets held in the
investment portfolio of
the Trust.
(b) In the performance of its duties under
this Agreement,
the Adviser shall at all times conform to, and
act in accordance
with, any requirements imposed by (i) the
provisions of the
Investment Company Act of 1940 (the "Act"), and of
any rules or
regulations in force thereunder; (ii) any
other applicable
provision of law; (iii) the provisions of
the Articles of
Incorporation and By-Laws of the Trust, as such
documents are
amended from time to time; (iv) the investment
objective and
policies of the Trust as set forth in its
Registration Statement
on Form N-2; and (v) any policies and
determinations of the Board
of Directors of the Trust.
(c) The Adviser will bear all costs and
expenses of its
partners and employees and any overhead incurred
in connection
with its duties hereunder and shall bear the
costs of any
salaries or directors fees of any officers or
directors of the
Trust who are affiliated persons (as defined in
the Act) of the
Adviser except that the Board of Directors of
the Trust may
approve reimbursement to the Adviser of the pro
rata portion of
the salaries, bonuses, health insurance,
retirement benefits and
all similar employment costs for the time
spent on Trust
operations (other than the provisions of
investment advice) of
all personnel employed by the Adviser who devote
substantial time
to Trust operations or the operations of
other investment
companies advised by the Adviser.
(d) The Adviser shall give the Trust the
benefit of its
best judgment and effort in rendering services
hereunder, but the
Adviser shall not be liable for any act or
omission or for any
loss sustained by the Trust in connection with
the matters to
which this Agreement relates, except a loss
resulting from
willful misfeasance, bad faith or gross
negligence in the
performance of its duties, or by reason of its
reckless disregard
of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall prevent
the Adviser or
any partner, officer, employee or other
affiliate thereof from
acting as investment adviser for any other
person, firm or
corporation, or from engaging in any other lawful
activity, and
shall not in any way limit or restrict the Adviser
or any of its
partners, officers, employees or agents from
buying, selling or
trading any securities for its or their own
accounts or for the
accounts of others for whom it or they may be
acting, provided,
however that the Adviser will undertake no
activities which, in
its judgment, will adversely affect the
performance of its
obligations under this Agreement.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase
and sale of the
Trust's portfolio securities, to employ such
securities dealers
as may, in the judgment of the Adviser, implement
the policy of
the Trust to obtain the best net results taking
into account such
factors as price, including dealer spread, the
size, type and
difficulty of the transaction involved, the
firm's general
execution and operational facilities and the
firm's risk in
positioning the securities involved.
Consistent with this
policy, the Adviser is authorized to direct the
execution of the
Trust's portfolio transactions to dealers and
brokers furnishing
statistical information or research deemed by the
Adviser to the
useful or valuable to the performance of its
investment advisory
functions for the Trust.
4. Compensation of the Adviser
(a) The Trust agrees to pay to the Adviser
and the Adviser
agrees to accept as full compensation for all
services rendered
by the Adviser as such, a fee computed and
payable monthly in an
amount equal to .60% of the Trust's average
weekly net asset
value on an annualized basis until termination
of the Trust
pursuant to its Articles of Incorporation. For
any period less
than a month during which this Agreement is in
effect, the fee
shall be prorated according to the proportion
which such period
bears to a full month of 28, 29, 30 or 31 days,
as the case may
be.
(b) For purposes of this Agreement, the net
assets of the
Trust shall be calculated pursuant to the
procedures adopted by
resolutions of the Directors of the Trust for
calculating the net
asset value of the Trust's shares or delegating
such calculations
to third parties.
5. Indemnity
(a) The Trust hereby agrees to indemnify
the Adviser and
each of the Adviser's partners, officers,
employees, agents,
associates and controlling persons and the
partners, officers,
employees and agents thereof (including any
individual who serves
at the Advisers request as director, officer,
partner, trustee or
the like of another corporation) (each such
person being an
"indemnitee") against any liabilities and
expenses, including
amounts paid in satisfaction of judgments, in
compromise or as
fines and penalties, and counsel fees (all
as provided in
accordance with applicable corporate law)
reasonably incurred by
such indemnitee in connection with the defense or
disposition of
any action, suit or other proceeding, whether
civil or criminal,
before any court or administrative or
investigative body in which
he may be or may have been involved as a party
or otherwise or
with which he may be or may have been threatened,
while acting in
any capacity set forth above in this Section 5 or
thereafter by
reason of his having acted in any such
capacity, except with
respect to any matter as to which he shall have
been adjudicated
not to have acted in good faith in the reasonable
belief that his
action was in the best interest of the Trust and
furthermore, in
the case of any criminal proceeding, so long
as he had no
reasonable cause to believe that the conduct
was unlawful,
provided, however, that (1) no indemnitee shall
be indemnified
hereunder against any liability to the Trust or
its shareholders
or any expense of such indemnitee arising by
reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross
negligence or
(iv) reckless disregard of the duties involved in
the conduct of
his position (the conduct referred to in such
clauses (i) through
(iv) being sometimes referred to herein as
"disabling conduct"),
(2) as to any matter disposed of by settlement
or a compromise
payment by such indemnitee, pursuant to a
consent decree or
otherwise, no indemnification either for said
payment or for any
other expenses shall be provided unless
there has been a
determination that such settlement or compromise
is in the best
interests of the Trust and that such indemnitee
appears to have
acted in good faith in the reasonable belief that
his action was
in the best interest of the Trust and did not
involve disabling
conduct by such indemnitee and (3) with respect
to any action,
suit or other proceeding voluntarily prosecuted by
any indemnitee
as plaintiff, indemnification shall be mandatory
only if the
prosecution of such action, suit or other
proceeding by such
indemnitee was authorized by a majority of the
full Board of the
Trust.
(b) The Trust shall make advance payments
in connection
with the expenses of defending any action with
respect to which
indemnification might be sought hereunder if the
Trust receives a
written affirmation of the indemnitee's good
faith belief that
the standard of conduct necessary for
indemnification has been
met and a written undertaking to reimburse the
Trust unless it is
subsequently determined that he is
entitled to such
indemnification and if the directors of the Trust
determine that
the facts then known to them would not preclude
indemnification.
In addition, at least one of the following
conditions must be
met: (A) the indemnitee shall provide a
security for his
undertaking, (B) the Trust shall be insured
against losses
arising by reason of any lawful advances, or (C)
a majority of a
quorum consisting of directors of the Trust
who are neither
"interested persons" of the Trust (as
defined in Section
2(a)(19) of the Act) nor parties to
the proceeding
("Disinterested Non-Party Directors") or an
independent legal
counsel in a written opinion, shall determine,
based on a review
of readily available facts (as opposed to a
full trial-type
inquiry), that there is reason to believe that
the indemnitee
ultimately will be found entitled to
indemnification.
(c) All determinations with respect to
indemnification
hereunder shall be made (1) by a final decision on
the merits by
a court or other body before whom the proceeding
was brought that
such indemnitee is not liable by reason of
disabling conduct or,
(2) in the absence of such a decision, by (i) a
majority vote of
a quorum of the Disinterested Non-party Directors
of the Trust,
or (ii) if such a quorum is not obtainable
or even, if
obtainable, if a majority vote of such
quorum so directs,
independent legal counsel in a written
opinion. All
determinations that advance payments in
connection with the
expense of defending any proceeding shall be
authorized shall be
made in accordance with the immediately
preceding clause (2)
above.
The rights accruing to any indemnitee under
these provisions
shall not exclude any other right to which he
may be lawfully
entitled.
6. Duration and Termination
This Agreement shall become effective on
the date it is
approved by the stockholder of the Trust and
shall continue in
effect for a period of two years and thereafter
from year to
year, but only so long as such continuation
is specifically
approved at least annually in accordance with the
requirements of
the Act.
This Agreement may be terminated by the
Adviser at any time
without penalty upon giving the Trust sixty days
written notice
(which notice may be waived by the Trust) and may
be terminated
by the Trust at any time without penalty upon
giving the Adviser
sixty days notice (which notice may be waived by
the Adviser),
provided that such termination by the Trust shall
be directed or
approved by the vote of a majority of the
Directors of the Trust
in office at the time or by the vote of the
holders of a
"majority" (as defined in the Act) of the voting
securities of
the Trust at the time outstanding and entitled
to vote. This
Agreement shall terminate automatically in the
event of its
assignment (as "assignment" is defined in the
Act).
7. Notices
Any notice under this Agreement shall be in
writing to the
other party at such address as the other party may
designate from
time to time for the receipt of such notice and
shall be deemed
to be received on the earlier of the date actually
received or on
the fourth day after the postmark if such notice
is mailed first
class postage pre-paid.
8. Governing Law
This Agreement shall be construed in
accordance with the
laws of the State of New York for contracts to
be performed
entirely therein without reference to choice of
law principles
thereof and in accordance with the applicable
provisions of the
Act.
IN WITNESS WHEREOF, the parties hereto
have caused the
foregoing instrument to be executed by their
duly authorized
officers, all as of the day and the year first
above written.
THE BLACKROCK TRUSTS
By_______________________________________
Ralph L. Schlosstein,
President
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By_______________________________________
Laurence D. Fink,
Chairman & Chief
Executive Officer
- 2 -
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
The BlackRock Investment Quality Term Trust, Inc.:
In planning and performing our audit of the financial
statements of The BlackRock Investment Quality Term
Trust, Inc. (the "Trust") for the year ended December
31, 1997 (on which we have issued our report dated
February 13, 1998), we considered its internal control,
including control activities for safeguarding
securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on
the financial statements and to comply with the
requirements of Form N-SAR, and not to provide
assurance on the Trust's internal control.
The management of the Trust is responsible for
establishing and maintaining internal control. In
fulfilling this responsibility, estimates and judgments
by management are required to assess the expected
benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements
for external purposes that are fairly presented in
conformity with generally accepted accounting
principles. Those controls include the safeguarding of
assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in any internal
control, errors or fraud may occur and not be detected.
Also, projection of any evaluation of internal control
to future periods is subject to the risk that it may
become inadequate because of changes in conditions or
that the effectiveness of the design and operation may
deteriorate.
Our consideration of the Trust's internal control would
not necessarily disclose all matters in internal
control that might be material weaknesses under
standards established by the American Institute of
Certified Public Accountants. A material weakness is a
condition in which the design or operation of one or
more of the internal control components does not reduce
to a relatively low level the risk that errors or fraud
in amounts that would be material in relation to the
financial statements being audited may occur and not be
detected within a timely period by employees in the
normal course of performing their assigned functions.
However, we noted no matters involving the Trust's
internal control and its operation, including controls
for safeguarding securities, that we consider to be
material weaknesses as defined above as of December 31,
1997.
This report is intended solely for the information and
use of the Trust's management and Board of Directors,
and the Securities and Exchange Commission.
Boston, Massachusetts
February 13, 1998
