BLACKROCK INVESTMENT QUALITY TERM TRUST INC, N-30D, 1998-03-03

BLACKROCK INVESTMENT QUALITY TERM TRUST INC
N-30D, 1998-03-03

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- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------

January 31, 1998

Dear Trust Shareholder:

U.S. fixed income investors have been rewarded with solid total returns
over the past twelve months ended December 31, 1997, as low inflation despite
strong economic growth drove Treasury yields lower.

The economy has shown some signs of slowing, which BlackRock expects may
persist as recessions in the emerging Asian economies and Japan will moderate
U.S. growth. We do not see immediate signs of inflationary pressure nor do we
anticipate an imminent change in monetary policy by the Federal Reserve. Our
longer-term outlook for the bond market remains optimistic, based on the
fundamentally favorable backdrop of slower economic growth, low inflation and
declining Treasury borrowing.

There are exciting developments occurring at BlackRock that we would like
to share with you. As you may know, BlackRock was acquired by PNC Bank, N.A. in
1995. In early 1998 the five investment management firms that comprise the PNC
Asset Management Group were consolidated under the BlackRock umbrella. This will
result in BlackRock Inc. becoming a $100 billion money management firm ranking
it among the 25 largest in the country. We look forward to using our global
investment management expertise to present exciting investment opportunities to
closed-end fund shareholders in the future.

This report contains detailed market and portfolio strategy commentary by
your Trust's managers in addition to the Trust's audited financial statements
and a detailed portfolio listing. We thank you for your continued investment in
the Trust and wish you a successful new year.

Sincerely,

/s/Laurence D. Fink /s/Ralph L. Schlosstein
- ------------------- -----------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President

1
<PAGE>

January 31, 1998

Dear Shareholder:

We are pleased to present the annual report for The BlackRock Investment
Quality Term Trust Inc. ("the Trust") for the year ended December 31, 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
current 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 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 (the market value of its assets per share) over the period:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
12/31/97 12/31/96 CHANGE HIGH LOW
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK PRICE $8.375 $7.625 9.84% $8.438 $7.50
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $9.43 $9.09 3.74% $9.30 $8.98
- --------------------------------------------------------------------------------------------------------------------------
10-YEAR TREASURY NOTE 5.74% 6.42% -68 bp 6.97% 5.70%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE FIXED INCOME MARKETS

The U.S. economy exhibited strong growth and low inflation during 1997,
pushing bond yields below 6% for the first time since early 1996. Fueled by
increased consumer spending and low unemployment, growth was robust. The primary
inflation indicators, consumer and producer prices, remained dormant throughout
the period and unemployment rate remained low. After increasing the Fed Funds
Rate to 5.50% in March, the Federal Reserve left the rate unchanged for the
remainder of the year, as the combination of slowing domestic growth and the
economic turmoil in Asia threatened to exert deflationary pressures on the U.S.
economy.

The positive momentum has continued into the early days of 1998 based, in
part, on the possibility of early elimination of the budget deficit and on
comments by Fed Chairman Greenspan that deflation was an issue. New home sales
recently hit a new cyclical peak, the employment picture remains very strong and
consumer confidence and spending remain high. Despite the strong growth, current
and future inflation both appear to be controlled.

The market for mortgage-backed securities (MBS) outperformed U.S.
Treasuries for the twelve months ended December 31, 1997. For the period, the
MBS market as measured by the LEHMAN BROTHERS MORTGAGE INDEX posted a 9.48%
total return versus the 9.20% return of the MERRILL LYNCH 5-7 YEAR TREASURY
INDEX. Demand for mortgage securities was largely concentrated in the first half
of 1997, when MBS decisively outperformed Treasuries due to low interest rate
volatility and relatively stable mortgage prepayment activity. However, mortgage
rates fell below the critical 7% threshold toward year-end, causing concerns
that increased refinancing activity would negatively impact the performance of
mortgage securities.

2
<PAGE>

A three-year trend of positive performance for investment grade corporates
ended abruptly in the fourth quarter of 1997 due to the Asian crisis. The
financial turmoil in Asia caused a decline in credit quality ratings and created
selling pressure for Asian Yankee bonds. Domestic corporate bonds fared better,
but the potential for lower corporate earnings and a large influx of new issues
into the market caused yields to rise. As a result, corporates underperformed
Treasuries in 1997 for only the second time in the past decade. With the U.S.
economy remaining firm, domestic corporate bond fundamentals remain fairly
positive. At wider spread levels, we see value in higher rated and improving
domestic credits.

THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY

BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market strategy 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 DECEMBER 31, 1997 DECEMBER 31, 1996
- --------------------------------------------------------------------------------
Corporate Bonds 30% 34%
- --------------------------------------------------------------------------------
Agency Multiple Class
Mortgage Pass-Throughs 12% 11%
-------------------------------------------------------------------------------
U.S. Government Securities 11% 4%
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs 9% 18%
- --------------------------------------------------------------------------------
Commercial Mortgage Backed Securities 7% 8%
- --------------------------------------------------------------------------------
FHA Project Loans 7% 10%
- --------------------------------------------------------------------------------
Strip Mortgage Backed Securities 7% 5%
- --------------------------------------------------------------------------------
Money Market Instrument 5% 5%
- --------------------------------------------------------------------------------
Municipal Bonds 5% 3%
- --------------------------------------------------------------------------------
Inverse Floating Rate Mortgage 4% 0%
- --------------------------------------------------------------------------------
Asset-Backed Securities 3% 2%
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
RATING % OF CORPORATES
---------------------------------------------
CREDIT RATING DECEMBER 31, 1997 DECEMBER 31, 1996
- --------------------------------------------------------------------------------
AA or equivalent 1% 1%
- --------------------------------------------------------------------------------
A or equivalent 45% 43%
- --------------------------------------------------------------------------------
BBB or equivalent 47% 55%
- --------------------------------------------------------------------------------
BB or equivalent 7% 1%
- --------------------------------------------------------------------------------

We continued to focus on securities with final maturity dates (or "bullet"
maturities) that match the Trust's termination date. We believe that the Trust's
stake in bullet maturity securities, particularly corporate bonds, will aid the
Trust in reaching its target termination value of $10.00 per share while
maintaining a relatively stable dividend stream. The Trust has been a net seller
of mortgage-backed securities, whose cash flows and maturity dates can change in
response to interest rate movements. Mortgage bonds tend to prepay when interest
rates fall, which forces the bondholder to reinvest cash flows at lower yields.
Conversely, the average maturities of mortgage bonds can extend when interest
rates rise. We appreciate your

<PAGE>

investment in The BlackRock Investment Quality Term Trust Inc. and look forward
to managing the fund to realize its investment objectives. Please feel free to
contact the mutual fund specialists at BlackRock's marketing center at (800)
227-7BFM (7236) if you have any questions that weren't answered in this report.
Additionally, you can reach us via e-mail at [email protected]

Sincerely,

/s/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.

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>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
RATING* PRINCIPAL
(UNAU- AMOUNT VALUE
DITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--147.9%
MORTGAGE PASS-THROUGHS--23.2%
Federal Home Loan Mortgage
Corporation,
$15,575+ 6.50%, 8/01/25 - 10/01/25 .................. $15,394,800
13,355 7.50%, 7/01/26 - 12/01/26 .................. 13,680,726
Federal Housing Administration,
2,121 Colonial, Series 37,
7.40%, 12/01/22 .......................... 2,198,040
8,506 GMAC, Series 51,
7.43%, 2/01/21 ........................... 8,737,465
1,252 Middlesex, 8.625%, 9/01/34 ................. 1,346,373
2,863 Tuttle Grove, 7.25%, 10/01/35 .............. 2,916,802
USGI,
1,675 Series 99, 7.43%, 10/01/23 ................. 1,732,349
8,177 Series 885, 7.43%, 3/01/22 ................. 8,493,347
9,140 Series 2081, 7.43%, 5/01/23 ................ 9,454,461
Federal National Mortgage
Association, Multi-family
9,583+ 10 year, 6.35%,
1/01/04 .................................. 9,488,803
2,813++ 10 year, 8.26%,
2/01/04 .................................. 3,033,879
2,338++ 10 year, 8.78%,
4/01/04 .................................. 2,392,089
1,563++ 10 year, 8.89%,
4/01/04 .................................. 1,599,599
----------
80,468,733
----------

MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--23.9%
AAA 9,354+ Community Program Loan Trust,
Series 1987-A, Class A-4,
4.50%, 10/01/18 ............................ 8,348,399
Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation
Certificates,
5,000++ Series 1295, Class 1295-JB,
3/15/07 .................................. 4,652,500
23,313 Series 1353, Class 1353-S,
8/15/07 (ARM) ............................ 2,661,167
1,001 Series 1523, Class 1523-A,
6/15/22 .................................. 1,001,231
2,794+ Series 1540, Class 1540-H,
3/15/09 .................................. 2,719,269
4,000+ Series 1587, Class 1587-KA,
7/15/08 .................................. 3,968,464
534 Series 1607, Class 1607-M,
4/15/13 .................................. 519,959
5,441++ Series 1634, Class 1634-SG,
12/15/22 (ARM) ........................... 5,690,099
684 Series 1650, Class 1650-LC,
2/15/22 .................................. 684,676
1,926 Series 1667, Class 1667-C,
1/15/09 .................................. 1,872,987
Federal National Mortgage
Association, REMIC Pass-
Through Certificates,
2,204+ Trust G93-27, Class 27-SE,
8/25/23 (ARM) ............................ 1,278,274
2,841+ Trust 269, Class 269-1,
8/01/22 .................................. 3,034,832
1,646++ Trust 1992-155, Class 155-SB,
12/25/06 (ARM) ........................... 1,910,759
1,490 Trust 1993-22, Class 22-PT,
10/25/18 (I) ............................. 286,636
591 Trust 1993-179, Class 179-SA,
10/25/23 (ARM) ........................... 542,256
1,932++ Trust 1993-192, Class 192-S,
4/25/07 (ARM) ............................ 1,596,018
3,709+ Trust 1993-212, Class 212-SB,
11/25/08 (ARM) ........................... 3,468,132
6,441++ Trust 1993-225C, Class FK,
12/25/23 ................................. 6,347,503
855 Trust 1993-228, Class 228-B,
3/25/23 (P) .............................. 751,810
3,500+ Trust 1994-M1, Class 1-B,
10/25/03 ................................. 3,532,812
471 Trust 1994-17, Class 17-SA,
1/25/09 (ARM) ............................ 458,761
1,093 Trust 1994-36, Class 36-L,
1/25/23 .................................. 1,093,634
2,000++ Trust 1996-M5, Class A2,
1/25/11 .................................. 2,079,062

See Notes to Financial Statements.

5
<PAGE>

- --------------------------------------------------------------------------------
RATING* PRINCIPAL
(UNAU- AMOUNT VALUE
DITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--(CONT'D)
7,000+ Trust 1996-20, Class 20-SB,
10/25/08 (ARM) ........................... 2,616,250
2,108 Trust 1997-28, Class 28-PH,
3/18/22 (I) .............................. 438,675
1,535 Trust 1997-30, Class 30-S,
4/25/22 (P) .............................. 974,916
3,529 Trust 1997-32, Class 32-ML,
2/25/27 (P) .............................. 3,021,760
1,500 Trust 1993-143,
Class 143-SC, 8/25/23 (ARM) .............. 1,361,250
AAA 1,857 GE Capital Mortgage Services
Incorporated, Series 1997-2,
Class 2A, 3/25/12 (I) .................... 391,070
A2 5,000 NYC Mortgage Loan Trust,
Series 1996, Class A-2,
6/25/11 .................................. 5,050,000
AAA 3,525+ Residential Asset Serialization Trust,
Series 1997-A9, Class A1,
7.25% 11/25/27 ........................... 3,566,765
Residential Funding Mortgage Secs I,
AAA 6,520 Series 1993-S15, Class A-16,
4/25/08 (ARM) ............................ 6,520,258
660 Series 1993-S15, Class A-17,
4/25/08 (ARM) ............................ 625,271
-----------
83,065,455
-----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES--10.7%
AAA 2,000 AETNA, Series 1995-C5, Class B,
6.74%, 12/26/30 .......................... 2,020,201
A 5,000 CS First Boston Mortgage
Securities Corporation,
Series 1995-AEW 1, Class C,
7.458%, 11/25/27 ......................... 5,062,500
BBB+ 6,485 FDIC REMIC Trust, Series 1994-C1,
Class 11-F, 8.70%, 9/25/25 ................. 6,886,818
A 1,000 Kidder Peabody Acceptance Corp.,
Series 1994-C3, Class C,
8.80%, 4/01/07 ........................... 1,097,703
LTC Commercial Mortgage Pass-
Through Certificates,
A+ 2,000 Series 1994-1, Class 1-D,
10.00%, 6/15/26 .......................... 2,110,000
AAA 3,180 Series 1996-1, Class 1-A,
7.06%, 4/15/28 ........................... 3,227,014
AAA 18,000 Merrill Lynch Mortgage Investors Inc.,
Mortgage Pass-through Certificate,
Series 1997-C2, Class A1,
1.29%, 12/10/29 (I/O) .................... 1,473,750
Morgan Stanley Capital l Inc.,
AAA 195 Series 1997, Class A1, 6.86%,
5/15/06 .................................. 198,992
AAA 40 Series 1997, Class X, 1.982%,
6/15/17 .................................. 3,847
BBB 2,600 Nomura Asset Capital Corp.,
Series 1993-M1, Class A3,
7.64%, 11/25/03 .......................... 2,655,250
BBB 500 PaineWebber Mortgage Acceptance
Corp., Series 1995-M2, Class D,
7.20%, 12/01/03 .......................... 506,291
AA 1,944 Salomon Brothers Mortgage Securities,
Class 97-TZH, 3/25/25 ...................... 1,997,104
Structured Asset Securities Corporation,
Mortgage Certificates,
A 3,865 Series 1996, Class D, 7.03%,
2/25/28 .................................. 3,890,608
BBB+ 5,970 Series 1996, Class E, 7.75%,
2/25/28 .................................. 6,101,455
----------
37,231,533
----------

CORPORATE BONDS--43.5%
FINANCE & BANKING--12.1%
A3 2,450 Amsouth Bancorp.,
6.75%, 11/01/25 .......................... 2,460,462
A2 2,000 Bank of Hawaii,
6.875%, 6/01/03 .......................... 2,037,980
A1 3,000 Den Danske Bank,
7.25%, 6/15/05 ........................... 3,110,180
A2 1,300 Equitable Life of America,
6.95%, 12/01/05 .......................... 1,323,842
A2 5,000@ Farmers Insurance,
8.50%, 8/01/04 ........................... 5,488,017
A3 4,800 First National Bank of Boston,
8.00%, 9/15/04 ........................... 5,195,664
A3 5,000++ Fleet Financial Group,
8.125%, 7/01/04 .......................... 5,445,250
A+ 4,850 Goldman Sachs Group,
6.25%, 2/01/03 ........................... 4,807,730
Ba1 3,500 Macsaver Financial Services Inc.,
Gtd. Note, 7.875%, 8/01/03 ............... 3,245,328

See Notes to Financial Statements.

6
<PAGE>
- --------------------------------------------------------------------------------
RATING* PRINCIPAL
(UNAU- AMOUNT VALUE
DITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
CORPORATE BONDS--(CONT'D)
FINANCE & BANKING--(CONT'D)
A1 $ 1,000 Metropolitan Life Insurance Co.,
6.30%, 11/01/03 ............................ 987,796
PaineWebber Group, Inc.,
Baa2 500 6.90%, 2/09/04 ............................. 504,011
Baa1 2,000 8.875%, 3/15/05 ............................ 2,238,240
A3 3,100 Reliaster Financial Corp.,
6.625%, 9/15/03 ............................ 3,120,708
A2 2,000 Salomon, Inc.,
6.75%, 1/15/06 ............................. 2,017,520
-----------
41,982,728
-----------
INDUSTRIALS--13.3%
A3 400 American Airlines, Inc.,
10.44%, 3/04/07 .......................... 497,536
BBB- 3,600 Anixter Inc.,
8.00%, 9/15/03 ........................... 3,769,249
AA- 2,000 Coca Cola Enterprises, Inc.,
7.875%, 2/01/02 .......................... 2,121,940
Baa2 2,000 Conagra, Inc.,
7.40%, 9/15/04 ........................... 2,094,817
A1 5,500++ Ford Motor Credit Co.,
7.50%, 6/15/04 ........................... 5,820,045
Baa2 7,000 ITT Corp.,
6.75%, 11/15/03 .......................... 6,914,142
Baa3 5,000 Lukens, Inc.,
7.625%, 8/01/04 .......................... 5,252,150
Baa2 5,000 Newmont Mining Corp.,
8.00%, 12/01/04 .......................... 5,447,600
Baa3 3,000 News America Holdings, Inc.,
8.50%, 2/15/05 ........................... 3,286,170
Baa3 5,000 Pulte Corp.,
8.375%, 8/15/04 .......................... 5,377,850
A2 2,000 Ralcorp Holdings, Inc.,
8.75%, 9/15/04 ........................... 2,268,500
BBB- 3,000 Tele-Communications, Inc.,
8.25%, 1/15/03 ........................... 3,207,420
-----------
46,057,419
-----------
SOVEREIGN & PROVINCIAL--10.3%
A- 6,000 Banamex Remittance Master Trust,
Series 1996, 7.57%, 1/01/01 .............. 6,031,875
Baa2 2,000 Canadian Pacific Ltd.,
6.875%, 4/15/03 .......................... 2,047,910
A3 2,000 Corporacion Andina De Fomento,
7.10%, 2/01/03 ........................... 2,013,480
BBB- 5,000 Empresa Electric Guacolda SA,
7.95%, 4/30/03 ........................... 5,123,443
A3 3,500 Israel Electric Corp. Ltd.,
7.25%, 12/15/06 .......................... 3,570,350
Ba1 $ 2,005 Korea Development Bank,
7.375%, 9/17/04 .......................... 1,603,580
A2 5,000 Quebec Province,
8.625%, 1/19/05 .......................... 5,611,750
BBB- 3,000 Telefonica De Argentina S A,
11.875%, 11/01/04 ........................ 3,487,500
Xtra, Inc.,
Baa2 2,000 6.50%, 1/15/04 ........................... 2,017,700
Baa2 2,500 7.22%, 7/31/04 ........................... 2,617,000
Baa1 1,489 YPF Sociedad Anonima,
7.50%, 10/26/02 .......................... 1,542,759
------------
35,667,347
------------
UTILITIES--7.8%
360 Communications Co.,
BBB- 2,000 7.125%, 3/01/03 .......................... 2,048,160
BBB- 2,000 7.50%, 3/01/06 ........................... 2,091,820
Baa3 5,000 Gulf States Utilities Co.,
8.25%, 4/01/04 ........................... 5,376,650
BA35,400 NIAGARA MOHAWK POWER CORP.,
7.375%, 8/01/03 .......................... 5,529,924
Baa3 5,000 NRG Energy, Inc,
7.625%, 2/01/06 .......................... 5,228,471
Baa2 2,000 Ohio Edison,
8.625%, 9/15/03 .......................... 2,178,449
A1 5,000 Telekom Malaysia Berhad,
7.125%, 8/01/05 .......................... 4,623,150
------------
27,076,624
------------
Total Corporate Bonds ......................... 150,784,118
------------
ASSET-BACKED SECURITIES--4.8%
Structured Mortgage Asset Residential
Trust,
A1 3,081 Series 1997-2, Class A1, 7.85%,
9/15/01 .................................. 3,098,827
A1 4,651 Series 1997-2, Class E, 8.24%,
3/15/06 .................................. 4,680,545
A1 4,825 Series 1997-3, Class E, 8.72%,
4/15/06 .................................. 4,908,043
A1 4,000++ Student Loan Marketing Association,
Series 1995-1, Class B,
6.22%, 10/25/09 .......................... 3,988,750
-----------
16,676,165
-----------
STRIPPED MORTGAGE-BACKED
SECURITIES--10.7%
Federal Home Loan Mortgage
Corporation,
16,477+ Series G-25, Class 25-S,
8/25/06 (I/O) ............................ 641,615

See Notes to Financial Statements.

7
<PAGE>
- --------------------------------------------------------------------------------
RATING* PRINCIPAL
(UNAU- AMOUNT VALUE
DITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
STRIPPED MORTGAGE-BACKED
SECURITIES--(CONT'D)
$ 423 Series 1243, Class 1243-N,
8/15/06 (P/O) ............................ $ 332,977
30,856 Series 1506, Class 1506-SA,
1/15/05 (I/O) ............................ 508,191
5,934+ Series 1751, Class 1751-PL,
10/15/23 (I/O) ........................... 959,491
1,138++ Series 1862, Class 1862-DA,
12/15/22 (P/O) ........................... 971,182
1,328+ Series 1862, Class 1862-DB,
12/15/22 (P/O) ........................... 1,133,047
5,000+ Series 1917, Class 1917-AS,
5/15/08 (I/O) ............................ 1,159,375
5,423+ Series 1946, Class 1946-N,
10/15/08 (P/O) ........................... 3,856,956
5,423 Series 1946, Class 1946-SN,
10/15/08 (I/O) ........................... 1,331,971
50,019 Series 1954, Class 1954-BB,
4/15/21 (I/O) ............................ 672,127
21,085 Series 1954, Class 1954-LL,
5/15/21 (I/O) ............................ 289,921
21,085 Series 1954, Class 1954-LM,
5/15/21 (I/O) ............................ 303,099
7,340++ Series 2009, Class 2009-JH,
11/15/21 (P/O) ........................... 6,507,209
Federal National Mortgage Association,
2,120 Trust 1993-39, Class 39-K,
4/25/04 (I/O) ............................ 416,613
3,605++ Trust 1993-147, Class 147-H,
8/25/23 (P/O) ............................ 3,287,509
3,086 Trust 1994-42, Class 42-SO,
3/25/23 (I/O) ............................ 441,729
4,128+ Trust 1996-24, Class 24-SE,
3/25/09 (I/O) ............................ 848,921
9,857 Trust 1996-24, Class 24-SL,
8/25/23 (I/O) ............................ 1,626,429
6,154++ Trust 1996-32, Class 32-E,
10/25/08 (P/O) ........................... 5,326,683
80,806 Trust 1996-54, Class 54-SH,
8/25/23 (I/O) ............................ 2,133,786
51,837 Trust 1996-54, Class 54-SI,
8/25/23 (I/O) ............................ 307,783
15,402 Trust 1997-44, Class 44-SC,
6/25/08 (I/O) ............................ 1,513,759
6,250+ Trust 1997-50, Class 50-HK,
8/25/27 (I/O) ............................ 2,435,547
-----------
37,005,920
------------
U.S. GOVERNMENT SECURITIES--16.8%
Small Business Administration,
Participation Certificate,
2,974 Series 1995-10-C, 7.35%,
8/01/05 .................................. 3,092,324
1,321 Series 1996-20-F,
7.55%, 6/01/16 ........................... 1,401,182
1,936 Series 1996-20-G,
7.70%, 7/01/16 ........................... 2,064,590
4,793 Series 1996-20-K,
6.95%, 11/01/16 .......................... 4,933,699
U.S. Treasury Bonds,
15,000++ 6.125%, 11/15/27 ........................... 15,414,900
10,500++ 6.375%, 8/15/27 ............................ 11,074,245
U.S. Treasury Notes,
1,700+ 6.125%, 8/15/07 ............................. 1,747,022
2,330+ 6.25%, 6/30/02 .............................. 2,376,227
14,000++ 6.375%, 5/15/00 ............................. 14,210,000
2,000++ 6.25%, 2/15/03 .............................. 2,045,320
-----------
58,359,509
-----------
ZERO COUPON BONDS--7.4%
40,000 Vanguard Prime Money Market Strip,
Zero Coupon, 12/31/04 .................... 25,852,000
-----------

TAXABLE MUNICIPAL BONDS--6.9%
AAA 4,285 California Housing Finance Agency
Revenue, 6.69%, 8/01/03 .................. 4,317,480
AA- 2,000 Fresno California Pension Obligation,
7.15%, 6/01/04 ........................... 2,093,980
AAA 4,000 Los Angeles County California
Pension Obligation
6.77%, 6/30/05 ........................... 4,117,560
AAA 7,000 New Jersey Economic Development
Authority, Zero Coupon,
2/15/04 .................................. 4,846,590
Baa1 5,000 New York City G.O.,
7.50%, 4/15/04 ........................... 5,264,700
Baa1 1,000 New York State Environmental Facilities
Corporation Service Contract
Revenue, 6.95%, 9/15/04 .................. 1,020,930
AAA 2,250 San Francisco California City & Cnty.
Arpts., Commission International
Airport, 6.55%, 5/01/04 .................. 2,281,253
-----------
23,942,493
-----------
Total Long-Term Investments
(cost $499,012,379) .......................... 513,385,926
------------

See Notes to Financial Statements.

8
<PAGE>

- -------------------------------------------------------------------------------
RATING* PRINCIPAL
(UNAU- AMOUNT VALUE
DITED) (000) DESCRIPTION (NOTE 1)
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--0.3%
DISCOUNT NOTE--0.1%
$ 420 Federal Home Loan Mortgage Corp.
6.00%, 1/02/98
(cost $419,930) .......................... $ 419,930
------------
CONTRACTS # PUT OPTIONS PURCHASED--0.2%
-----------
130 U.S. Treasury Note, 6.625% 5/31/07
@ 100 expiring 3/19/98 ................... 36,400
$60,000 Interest Rate Swap
6.70% over 3 month LIBOR
expires 1/29/98 .......................... 11,400
60,000 6.90% over 3 month LIBOR
expires 10/30/98 ......................... 540,000
------------
Total put options purchased
(cost $3,602,444) ........................ 587,800
------------
Total Short-Term-Investments
(cost $4,022,374) ........................ 1,007,730
------------
Total investments before outstanding
call options written and investments
sold short--148.2%
(cost $503,034,753) ...................... 514,393,656
------------
CALL OPTIONS WRITTEN--(0.2%)
Interest Rate Swap
150,000 3 month LIBORover 5.25%
expires 12/01/98 ......................... (546,900)
75,000 3 month LIBORover 5.60%
expires 06/16/98 ......................... (195,000)
------------
Total call options written
(premium received $772,500) .............. (741,900)

INVESTMENTS SOLD SHORT--(3.2%)
$10,250 United States Treasury Bonds,
6.625%, 2/15/27
(Proceeds $10,293,242) ..................... $(11,127,605)
------------
Total investments, net of
outstanding call options
written and investments
sold short--144.8%
(cost $491,969,011) ........................ 502,524,151
Liabilities in excess of other
assets--(44.8%) ............................ (155,526,252)
------------
NET ASSETS--100% ............................. $346,997,899
============

- -------------
* Using the higher of Standard & Poor's or Moody's rating.
# One Contract equals 100,000 Face Value.
+ In aggregate $56,675,872 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 a collateral for
financial futures transactions.

----------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM -- Adjustable Rate Mortgage.
CMO -- Collateralized Mortgage Obligation.
GO -- General Obligation.
I -- Denotes a CMO with interest only characteristics.
I/O -- Interest only.
P -- Denotes a CMO with principal only characteristics.
P/O -- Principal only.
REMIC -- Real Estate Mortgage Investment Conduit.
-----------------------------------------------------------------------

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------

ASSETS
Investments, at value (cost $503,034,753)
(Note 1) ................................... $ 514,393,656
Cash ......................................... 89,928
Deposit with brokers as collateral
for investments sold short (Note 1) ........ 11,797,430
Interest receivable .......................... 5,899,895
Interest rate cap, at value
(amortized cost $1,066,427) (Note 1 & 3) ... 677,110
Receivable for investments sold .............. 9,901
Other assets ................................. 49,740
-------------
532,917,660
-------------
LIABILITIES
Reverse repurchase agreements (Note 4) ....... 142,947,750
Payable for investments purchased ............ 27,494,562
Investment sold short, at value
(proceeds $10,293,242)(Note 1) ............. 11,127,605
Dividends payable ............................ 1,687,153
Interest payable ............................. 1,245,193
Swap options written, at value
(premium received $772,500) (Note 1) ....... 741,900
Advisory fee payable (Note 2) ................ 178,067
Due to broker-variation margin ............... 89,859
Administration fee payable (Note 2) .......... 35,613
Unrealized depreciation on interest rate swaps
(Note 1 & 3) ............................... 20,912
Other accrued expenses ....................... 351,147
-------------
185,919,761
-------------

NET ASSETS ................................... $ 346,997,899
=============
Net assets were comprised of:
Common stock, at par (Note 5) .............. $ 368,106
Paid-in capital in excess of par ........... 344,443,944
-------------
344,812,050
Undistributed net investment income ........ 2,751,355
Accumulated net realized loss .............. (10,475,051)
Net unrealized appreciation ................ 9,909,545
-------------
Net assets, December 31, 1997 .............. $ 346,997,899
=============
Net asset value per share:
($346,997,899 / 36,810,639 shares of
common stock issued and outstanding) ...... $9.43
=====

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest earned (net of premium amortization
of $3,862,229 and interest expense of
$7,709,548) .............................. $ 26,851,447
------------
Operating Expenses
Investment advisory ........................ 2,052,375
Administration ............................. 495,987
Reports to shareholders .................... 178,000
Custodian .................................. 96,000
Directors .................................. 68,000
Audit ...................................... 34,000
Legal ........................................ 30,000
Transfer agent ............................. 18,000
Miscellaneous .............................. 56,631
------------
Total operating expenses ................. 3,028,993
------------

Net investment income before excise tax .... 23,822,454
Excise tax ................................. 30,000
------------
Net investment income ...................... 23,792,454
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ................................ 2,067,663
Written options ............................ 3,689,368
Short sales ................................ (141,420)
Futures .................................... (4,935,175)
------------
680,436
------------
Net change in unrealized appreciation
(depreciation) on:
Investments ................................. 11,245,783
Short sales ................................. (85,935)
Interest rate caps .......................... (389,317)
Options written ............................. 103,650
Futures ..................................... (275,001)
------------
10,599,180
------------
Net gain on investments ..................... 11,279,616
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $ 35,072,070
============

See Notes to Financial Statements.

10
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH
Cash flows used for operating activities:
Interest received ............................. $ 38,292,734
Operating expenses and excise taxes paid ...... (2,805,333)
Interest expense paid ......................... (8,315,867)
Proceeds from disposition of short-term
portfolio investments, net ................. (859,874)
Purchase of long-term portfolio investments ... (803,416,908)
Proceeds from disposition of long-term
portfolio investments ...................... 757,099,944
Variation margin on futures ................... (5,095,012)
Other assets .................................. (45,106)
-------------
Net cash flows used for operating
activities ................................. (25,145,422)
-------------

Cash flows provided by financing activities:
Increase in reverse repurchase agreements ..... 46,101,375
Cash dividends paid ........................... (21,342,980)
-------------
Net cash flows provided by financing activities 24,758,395
-------------
Net decrease in cash ............................. (387,027)
Cash at beginning of year ........................ 476,955
-------------
Cash at end of year .............................. $ 89,928
=============
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 .................................... $ 35,072,070
-------------
Increase in investments .......................... (11,568,570)
Net realized gain ................................ (680,436)
Decrease in unrealized depreciation .............. (10,578,268)
Increase in interest receivable .................. (130,490)
Decrease in receivable for investments sold ...... 26,025
Decrease in deposits with brokers ................ 37,082,570
Increase in other assets ......................... (45,106)
Decrease in investments sold short ............... (36,224,895)
Decrease in swap option written .................. (598,650)
Increase in interest rate cap .................... (677,110)

DECREASE IN PAYABLE FOR INVESTMENTS PURCHASED .... (36,585,067
Increase in due to broker-variation margin ....... 115,164
Decrease in interest payable ..................... (606,319)
Increase in other accrued expenses ............... 253,660
-------------
Total adjustments ............................. (60,217,492)
-------------
Net cash flows used for operating activities ..... $ (25,145,422)
=============

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY TERM TRUST INC.
STATEMENTS OF CHANGES
IN NET ASSETS
- --------------------------------------------------------------------------------

YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
--------- ---------
INCREASE (DECREASE) IN
NET ASSETS

Operations:

Net investment income ...... $ 23,792,454 $ 23,408,176

Net realized gain on
investments, short sales
and futures ............. 680,436 3,142,096

Net change in unrealized
appreciation
(depreciation) on
investments, short sales,
options written, futures
and interest rate caps .. 10,599,180 (20,006,911)
------------- -------------

Net increase in net assets
resulting from
operations .............. 35,072,070 6,543,361
Dividends from net
investment income ....... (22,853,156) (21,626,119)
------------- -------------
Total increase (decrease) .. 12,218,914 (15,082,758)

NET ASSETS

Beginning of year ............. 334,778,985 349,861,743
------------- -------------
End of year ................... $ 346,997,899 $ 334,778,985
============= =============

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year ......................... $ 9.09 $ 9.50 $ 8.21 $ 9.47 $ 9.57
------- -------- -------- -------- --------
Net investment income (net of interest expense of
$.21, $.17, $.23, $.17, and $.15, respectively) ........ .65 .64 .60 .62 .80
Net realized and unrealized gain (loss) on investments ... .31 (.46) 1.31 (1.16) (.16)
------- -------- -------- -------- --------
Net increase (decrease) from investment operations ......... .96 .18 1.91 (.54) .64
------- -------- -------- -------- --------
Dividends from net investment income ....................... (.62) (.59) (.60) (.68) (.74)
Distributions in excess of net investment income ........... -- -- (.02) (.04) --
------- -------- -------- -------- --------
Total dividends and distributions .......................... (.62) (.59) (.62) (.72) (.74)
------- -------- -------- -------- --------
Net asset value, end of year* .............................. $ 9.43 $ 9.09 $ 9.50 $ 8.21 $ 9.47
------- -------- -------- -------- --------
Market value, end of year* ................................. $ 8.375 $ 7.625 $ 7.875 $ 7.00 $ 9.375
======= ======== ======== ======== ========
TOTAL INVESTMENT RETURN+ ................................... 18.58% 4.58% 21.91% (18.10%) 7.96%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses# ........................................ 0.89% 0.91% 0.92% 0.93% 0.89%
Net investment income ...................................... 6.98% 7.03% 6.76% 7.10% 8.19%

SUPPLEMENTALDATA:
Average net assets (in thousands) .......................... $341,067 $332,778 $328,950 $320,366 $358,623
Portfolio turnover ......................................... 135% 221% 160% 111% 77%
Net assets, end of year (in thousands) ..................... $346,998 $334,779 $349,862 $302,147 $348,528
Reverse repurchase agreements outstanding, end of year
(in thousands) ........................................... $142,948 $ 96,846 $112,007 $149,800 $156,558
Asset coverage++ ........................................... $ 3,427 $ 4,457 $ 4,124 $ 3,017 $ 3,226
</TABLE>

- ----------
* NAV and market value are published in THE WALL STREET JOURNAL each Monday.
# The ratios of operating expenses, including interest expense, to average
net assets were 3.15%, 2.83%, 3.44%, 2.84% and 2.38% for the years
indicated above, respectively. The ratios of operating expenses, including
interest expense and excise tax, to average net assets were 3.15%, 2.83%,
3.44%, 2.85% and 2.41% for the years 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.
++ Per $1,000 of reverse repurchase agreements outstanding.

The information above represents the audited 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 years
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.

12
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

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 between securities
observed in the market, 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 from
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 commence 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

13
<PAGE>

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 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.

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 expiraton 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. 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 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. 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" more volatile 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.

14
<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.

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.

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.

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.

RECLASSIFICATION OF CAPITAL ACCOUNTS: The Trust accounts for and reports
distributions to shareholders in accordance with the A.I.C.P.A's Statements of
Position 93-2: Determination, Disclosure, and Return of Capital Distributions by
Investment Companies. The effect caused by applying this statement was to
decrease paid-in capital and increase undistributed net investment income by
$30,000 due to certain expenses not being deductible for tax purposes. Net
investment income, net realized gains and net assets were not affected by this
change.

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.

15
<PAGE>

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 until December 31, 1998, 0.50% from January 1, 1999 to December 31, 2002
and 0.40% from January 1, 2003 to the termination or liquidation of the Trust.
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 year ended December 31, 1997 aggregated $766,831,841
and $674,415,375, respectively.

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 December 31, 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 December 31,
1997 was substantially the same as for financial reporting purposes and,
accordingly, net unrealized appreciation for federal income tax purposes was
$11,358,903 (gross unrealized appreciation-$16,774,893; gross unrealized
depreciation-$5,415,990).

For federal income tax purposes, the Trust has a capital loss carryforward
at December 31, 1997 of approximately $13,252,000, of which $6,970,700 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 year ended December 31, 1997, the Trust entered into financial
futures contracts. Details of open contracts at December 31, 1997 are as
follows:

VALUE AT VALUE AT UNREALIZED
NUMBER OF EXPIRATION TRADE DECEMBER 31, APPRECIATION
CONTRACTS TYPE DATE DATE 1997 (DEPRECIATION)
- -------- ---- -------- ------- ---------- ------------
Long
position: March
20 5 yr. U.S. T-Note 1998 $ 2,166,653 $ 2,172,500 $ 5,847
Short
positions: March
160 10 yr. U.S. T-Note 1998 17,814,280 17,945,000 (130,720)
March
75 30 yr. U.S. T-Bond 1998 8,924,663 9,035,156 (110,493)
---------
$(235,366)
=========

The Trust entered into one interest rate cap. Under the agreement the Trust
receives the excess, if any, of a floating rate over a fixed rate. The Trust
paid a transaction fee for the agreement. Details of the cap is as follows:

NOTIONAL VALUE AT
AMOUNT FLOATING FIXED TERMINATION AMORTIZED DECEMBER 31, UNREALIZED
(000) RATE RATE DATE COST 1997 DEPRECIATION
----- ----- ---- ---- ----- ---- ------------
$40,000 3 month LIBOR 6.00% 2/19/02 $1,066,427 $677,110 $(389,317)

Details of open interest rate swaps at December 31, 1997 are as follows:

CURRENT
NOTIONAL UNREALIZED
AMOUNT FIXED FLOATING TERMINATION APPRECIATION
(000) TYPE RATE DATE DATE (DEPRECIATION)
----- ----- ---- ---- ----- ------------
$145,500 Interest Rate 6.37% 3 month LIBOR 7/27/00 $839,128
(100,000) Interest Rate 6.42% 3 month LIBOR 7/27/01 (860,040)
--------
$(20,912)
========

Details of open swap option ("swaption") agreements at December 31, 1997 are
as follows:

NOTIONAL VALUE AT UNREALIZED
AMOUNT FIXED FLOATING TERMINATION COST/ DECEMBER 31, APPRECIATION
(000) RATE RATE DATE PREMIUM 1997 (DEPRECIATION)
----- ---- ---- ----------- ------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchased Put:
$60,000 6.70% 3 month LIBOR 1/29/98 $ 510,000 $ 11,400 $(498,600)
60,000 6.90% 3 month LIBOR 10/30/98 1,152,600 540,000 (612,600)
Written Call:
(150,000) 5.25% 3 month LIBOR 12/3/08 (487,500) (546,900) (59,400)
(75,000 5.60% 3 month LIBOR 6/18/08 (285,000) (195,000) 90,000
----------
$(1,080,600)
==========

</TABLE>

16
<PAGE>

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 year ended December 31, 1997 was approximately $118,791,875 at a
weighted average interest rate of approximately 5.66%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the year was
$147,036,000 as of October 31, 1997 which was 24.8% 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 year
ended December 31, 1997 was approximately $37,664,964. The maximum amount of
dollar rolls outstanding at any month-end during the year was $63,054,375 as of
February 28, 1997, which was 10.6% 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 December 31, 1997, the Adviser owned 10,639
shares.

17
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

The Shareholders and Board of Directors of The BlackRock Investment Quality Term
Trust Inc.:

We have audited the accompanying statement of assets and liabilities of The
BlackRock Investment Quality Term Trust Inc., including the portfolio of
investments, as of December 31, 1997, and the related statements of operations
and of cash flows for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable asurance about whether the financial statements and financial
highlights are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1997, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock
Investment Quality Term Trust Inc. as of December 31, 1997, and the results of
its operations, its cash flows, the changes in its net assets and the financial
highlights for the respective stated periods, in conformity with generally
accepted accounting principles.

/s/DELOITTE & TOUCHE LLP
- ------------------------
DELOITTE & TOUCHE LLP

New York, New York
February 13, 1998

18
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------

We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during the fiscal year ended December 31, 1997.

During the fiscal year ended December 31, 1997, the Trust paid dividends
of $0.62 per share from net investment income. For federal income tax purposes,
the aggregate of any dividends and short-term capital gains distributions you
received are reportable in your 1997 federal income tax returns as ordinary
income. Further, we wish to advise you that your income dividends do not qualify
for the dividends received deduction.

For the purpose of preparing your 1997 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form 1099
DIV which was mailed to you in January 1998.

- --------------------------------------------------------------------------------
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.

- --------------------------------------------------------------------------------
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.

19
<PAGE>

- --------------------------------------------------------------------------------
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 or the adviser") is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages
approximately $55 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 N.A., 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.

20
<PAGE>

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.

21
<PAGE>

- --------------------------------------------------------------------------------
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).

22
<PAGE>

INVERSE-FLOATINGRATE MORTGAGES:

Mortgage instruments with coupons that adjust at periodic intervals according to
a formula which sets inversely with a market level interest rate index.

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.

23
<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
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, 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

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.
==================
ANNUAL REPORT
DECEMBER 31, 1997