- - --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- - --------------------------------------------------------------------------------
May 31, 1995
Dear Shareholder:
The fixed income markets experienced both extremely bearish and bullish
sentiment during the semi-annual period between November 1, 1994 and April 30,
1995. Closed-end bond funds responded to the broader markets with similar
volatility and hit all-time low stock prices during the fourth quarter of 1994.
These low levels of stock valuation were further eroded by an unusually high
degree of tax-related selling; however, closed-end bond funds have staged a
resounding rebound during the first five months of 1995. The U.S. economy
appears to have responded to the Fed's vigilance toward inflation with low
absolute levels of inflation and moderate rates of growth. This scenario is
suggestive of a "soft landing" for the economy, which has sparked a significant
Treasury market rally and resulted in overall strength in most fixed income
markets.
BlackRock Financial Management, Inc., your Trust's investment adviser, is
pleased to report that its acquisition by PNC Bank, N.A. ("PNC") was officially
completed on February 28, 1995. PNC is a commercial bank whose principal office
is in Pittsburgh, Pennsylvania and is wholly-owned by PNC Bank Corp., a bank
holding company. The merger was structured to assure continuity of performance
and service through stability of our organization. BlackRock retains its name
and continues to operate out of its New York office. All members of BlackRock's
management team have signed long-term employment contracts and will continue to
be responsible for managing BlackRock's business so that shareholders will
notice no changes in the management of the Trust.
You will note several enhancements to the Trust's semi-annual report
designed to improve the report's usefulness to you. The letter to shareholders
which reviews the markets and Trust's investment strategy over the semi-annual
period is provided by the Trust's portfolio managers. In addition, we have
included an investment summary section which provides a synopsis of the Trust's
investment objectives and guidelines and reviews its investment strategy. We
appreciate your investment in The BlackRock Investment Quality Municipal Trust
Inc. and look forward to continuing to serve your financial needs.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
May 31, 1995
Dear Shareholder:
Characterized by large swings in interest rates across the yield curve, the
semi-annual period between November 1, 1994 and April 30, 1995 provided a
challenging investment environment for fixed income products including The
BlackRock Investment Quality Municipal Trust Inc. ("BKN" or the "Trust"). At the
beginning of the fiscal period, BKN was trading at a stock price of $10.375,
while at the end of this fiscal period (April 30, 1995) the Trust closed at
$11.375. During this same period, the net asset value (NAV) increased from
$12.05 to $13.31. As we write this letter, the Trust's shares are trading at a
price of $12.00 per share, which is a 13.67% discount to its net asset value of
$13.90 per share. The current annual dividend per share is $0.7875, which is
equivalent to a yield of 6.56% on the current stock price. According to Lipper
Analytical Services, Inc., 94% of municipal closed-end bond funds are trading at
a discount to their net asset values. The significant fixed income market rally
of 1995 has resulted in the Trust's NAV increasing more rapidly than its market
price, which is reflected in the current discount. In addition, the Trust was
recently positively highlighted in a "Barron's" article written by Andrew Bary.
BlackRock feels that as investors adapt to the more positive tone in the
marketplace, the discount on BKN should narrow.
A review of the fixed income markets over the past year as well as the
trading activity in the Trust's portfolio that has taken place since our last
annual report appears below. This information should provide you with a greater
understanding of the active management strategies you have hired BlackRock to
provide to the Trust.
The Fixed Income Markets
The fourth quarter of 1994 echoed the underperformance that pervaded the
fixed income markets throughout 1994. The market experienced periods of
illiquidity during November as mutual funds sold securities to meet redemptions
and dealers were reluctant to add to their already large inventories. From a
yield curve perspective, the municipal curve remained rather steep compared to
the taxable curve. However, during the first quarter of 1995, the long end of
the municipal bond market witnessed a dramatic rally which resulted in a
flattening of the municipal yield curve. This rally was a result of a
significant amount of cash which needed to be reinvested in the municipal market
due to approximately $35 billion in cash flow from principal and interest
payments as well as crossover accounts returning to the market aggressively.
Ratios of long-term municipal yields to long-term Treasury yields ended the
quarter at 78.7%, the richest levels we have experienced since August of 1992.
Interestingly, the municipal yield curve flattened as the Treasury yield
curve steepened. The divergent trend between the shape of the municipal yield
curve and the Treasury curve was primarily the delayed response of the municipal
yield curve to the rapid Treasury curve flattening in late 1994. This recent
strong performance is likely to continue to some extent because of favorable
technical conditions. Individual investor demand for municipal bonds is expected
to remain high through the summer as approximately $60 billion in coupon and
redemption payments will flow into municipal investor hands during June and July
and will need to be reinvested. In addition, municipal bond supply, which
declined 46% in the first quarter of 1995 from the same quarter last year, is
expected to continue to diminish. These trends should allow municipal closed-end
bond funds like BKN to perform well in the near term.
Recently proposals for tax simplification, particularly the creation of a
"flat tax" have begun to receive attention. Some versions of this proposal would
eliminate the taxation of all investment income, which would offset the current
tax benefits of municipal bonds. This could result in an underperformance of the
municipal market if the flat tax becomes a pivotal 1996 Presidential campaign
issue. While actual tax reform is still at best two years away, we will continue
to actively follow the situation because investor concerns about tax reform
could cause dislocations in the municipal market, creating possible buying
opportunities for the Trust.
2
<PAGE>
The Closed-End Bond Fund Industry
During the final months of 1994, investor demand for closed-end bond funds
dropped to an all-time low level. Closed-end bond funds fell victim to a lack of
demand stemming from fears of rising inflation coupled with rising interest
rates and historically high levels of year-end tax swapping. As a result, the
prices of most closed-end bond funds, including BKN, dropped to historically low
levels. Investors who endured the market slump and opted to "Hold" or acquire
more shares of the Trust during these tumultuous markets benefitted from a
substantial increase in both net asset value and share price during the first
quarter of 1995 as the market environment for fixed income securities improved
considerably.
As municipal short term rates rose, the cost of the preferred stock leverage
for the Trust increased. The preferred stock leverage allows the Trust to borrow
at short-term rates and earn the difference between the cost of borrowing and
the yield on longer-term assets purchased with these borrowings. This increased
leverage cost caused the Trust to experience a decreased level of income which
resulted in a dividend reduction of $0.1125 cents per share annually which was
announced to you on February 28th and became effective on March 31, 1995. The
Trust's investments in "additional interest bonds" or "embedded caps" should act
to minimize any further decreases to the portfolio's income levels that may be
caused by large increases in municipal short term rates. These embedded caps
securities are designed to hedge the exposure of the Trust's income to further
large increases in the short-term sector of the municipal yield curve. These
securities have coupons which increase if short-term tax-exempt yields rise
substantially, largely offsetting the resultant increases in the cost of the
preferred stock.
Reflecting the current strength of the fixed income markets, the majority of
domestic closed-end bond funds registered positive gains for the one year period
ended April 30, 1995 with an average total return* of 6.46%. According to Lipper
Analytical Services, Inc., BKN ranked # 1 out of 65 General and Insured
Leveraged Closed-End Municipal Bond Funds for the one-year period ended April
30, 1995 with a total return* of 9.25% versus its category's average of 7.42%.
The Trust's Portfolio and Investment Strategy
BlackRock continues to actively manage the Trust's portfolio to selectively
modify the Trust's allocation to certain sectors, issuers, revenue sources and
types of bonds. Due to the 1993 change in tax treatment of market discounts on
individual bonds, we have been favoring premiums and discount securities over
those selling near par value since we believe that the market is not fully
valuing the effects of the tax change on par bonds. The following table
illustrates the sector reallocations during the fiscal period:
- - ---------------
*Total return was calculated based on net asset values and assumes the
reinvestment of dividends and distributions.
Sector Breakdown (October 31, 1994 to April 30, 1995)
- - --------------------------------------------------------------------------------
Sector April 30, 1995 October 31, 1994
- - --------------------------------------------------------------------------------
Utility 21% 11%
- - --------------------------------------------------------------------------------
Resource Recovery 19% 20%
- - --------------------------------------------------------------------------------
Transportation 14% 16%
- - --------------------------------------------------------------------------------
Lease Revenue 12% 8%
- - --------------------------------------------------------------------------------
City & State 9% 13%
- - --------------------------------------------------------------------------------
Industrial 8% -
- - --------------------------------------------------------------------------------
Hospital 8% 10%
- - --------------------------------------------------------------------------------
Housing 5% 5%
- - --------------------------------------------------------------------------------
University 3% 9%
- - --------------------------------------------------------------------------------
Tax Revenue 1% 6%
- - --------------------------------------------------------------------------------
Other - 2%
- - --------------------------------------------------------------------------------
The Trust's portfolio consists of investment grade municipal securities
(securities rated at least "BBB") with an average
3
<PAGE>
maturity of 22 years. We continue to closely monitor the credit quality of the
Trust's assets and subject the credits to rigorous credit analysis. Currently,
the breakdown by credit quality is as follows:
- - --------------------------------------------------------------------------------
Standard & Poor's/Moody's
Credit Rating April 30, 1995 October 31, 1994
- - --------------------------------------------------------------------------------
AAA/Aaa 34% 29%
- - --------------------------------------------------------------------------------
AA/Aa 15% 20%
- - --------------------------------------------------------------------------------
A/A 16% 22%
- - --------------------------------------------------------------------------------
BBB/Baa 35% 29%
- - --------------------------------------------------------------------------------
As the chart shows, over the six-month period we implemented a "barbell
strategy" with regard to credit quality, emphasizing both ends of the credit
quality spectrum. The strategy to increase the Trust's allocation to AAA-rated
and BBB-rated bonds was employed to take advantage of particularly wide spreads
in yields on BBB's relative to the AAA-sector, as well as a tightening between
AA/A to AAA. However, we may look to reduce our allocation to BBB-rated
securities in the future as these spreads narrow.
Investment Adviser Update
On February 28, 1995, BlackRock Financial Management, the investment adviser
of the Trust was officially acquired by PNC Bank, N.A. ("PNC"). PNC is a
commercial bank whose principal office is in Pittsburgh, Pennsylvania and is
wholly-owned by PNC Bank Corp., a bank holding company. BlackRock retains its
name and continues to operate out of its New York office. All members of
BlackRock's management team have signed long-term employment contracts and will
continue to be responsible for managing BlackRock's business so that
shareholders will notice no changes in the management of the Trust.
We thank you for your investment in The BlackRock Investment Quality
Municipal Trust Inc. Please feel free to contact us at (800) 227-7BFM (7236) if
you have specific questions which were not addressed in this semi-annual report.
Sincerely,
Robert Kapito Kevin Klingert
Vice Chairman and Senior Portfolio Principal and Municipal Portfolio
Manager Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
4
<PAGE>
- - --------------------------------------------------------------------------------
The BlackRock Investment Quality Municipal Trust Inc.
- - --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BKN
- - --------------------------------------------------------------------------------
Initial Offering Date: February 19, 1993
- - --------------------------------------------------------------------------------
Closing Stock Price as of 4/30/95: $11.375
- - --------------------------------------------------------------------------------
Net Asset Value as of 4/30/95: $13.31
- - --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 4/30/95 ($11.375)1: 6.92%
- - --------------------------------------------------------------------------------
Current Monthly Distribution per Share:2 $0.06563
- - --------------------------------------------------------------------------------
Current Annualized Distribution per Share:2 $0.7875
- - --------------------------------------------------------------------------------
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.
5
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
The BlackRock Investment Quality Municipal Trust Inc.
Portfolio of Investments
April 30, 1995
(Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Value
Rating* (000) Description (a) (Note 1)
- - ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS-152.8%
Alabama-2.8%
<S> <C> <C> <C>
BBB $ 6,800 Courtland Sld.Wst. Disp., Champion Intl. Corp., Proj. A, 5.90%, 2/01/17 ............................ $ 6,282,996
------------
California-12.0%
AAA 11,400 California St., G.O., 5.90%, 3/01/25, AMBAC ........................................................ 10,951,410
AAA 15,460 Los Angeles Cnty. Asset Leasing Corp. Rev., 3.80%(D), 12/01/07, AMBAC .............................. 15,798,110
------------
26,749,520
------------
Colorado-6.6%
Denver City & Cnty. Arpt. Rev., Ser. C,
Baa 10,510 6.125%, 11/15/25 ................................................................................. 9,502,091
Baa 3,000 6.50%, 11/15/06 .................................................................................. 2,966,340
Baa 1,120 6.65%, 11/15/05 .................................................................................. 1,108,251
Baa 1,000 8.125%, 8/01/95 .................................................................................. 1,002,380
------------
14,579,062
------------
District of Columbia-1.8%
AAA 4,000 District of Columbia, G.O., Ser. E, 6.00%, 6/01/09, CAPMAC ......................................... 3,932,600
------------
Florida-11.5%
AAA 2,500 Florida Hsg. Fin. Agcy., Ser. 1994-A, 6.55%, 7/01/14 ............................................... 2,530,175
BBB 3,500 Florida St. Mid Bay Bridge Auth. Rev., Ser. A, 6.10%, 10/01/22 ..................................... 3,233,615
Lake Cnty. Indl. Dev. Agcy. Res. Rec. Rev., Ser. A,
BBB+ 2,500 5.65%, 10/01/05 .................................................................................. 2,378,850
BBB+ 3,695 5.85%, 10/01/09 .................................................................................. 3,445,920
BBB- 13,275 Martin Cnty. Indl. Dev. Auth., Indiantown Cogeneration Proj., Ser. A, 7.875%, 12/15/25 ............. 14,051,588
------------
25,640,148
------------
Georgia-3.8%
AAA 6,000 Georgia Mun. Pwr. & Elec. Auth., Ser. T, 6.50%, 1/01/25, FGIC ...................................... 6,112,680
AA+ 2,250 Georgia St. Hsg. & Fin. Auth. Rev., Sngl. Fam. Mtg., Ser. C, 7.00%, 12/01/15, FHA .................. 2,349,720
------------
8,462,400
------------
Illinois-2.1%
AAA 5,000 Illinois Edl. Facs. Auth., Loyola Univ., 4.125%(D), 7/01/13, FGIC .................................. 4,744,000
------------
Indiana-6.9%
BBB 14,895 Indianapolis Arpt. Auth. Rev., Spl. Facs. Fed. Express Corp. Proj., 7.10%, 1/15/17 ................. 15,204,220
------------
Kentucky-6.5%
AAA 15,000 Kentucky St. Tpke. Auth., Econ. Dev. Road Rev., 3.95%(D), 7/01/13, AMBAC ........................... 14,393,700
------------
Louisiana-6.1%
AAA 14,400 Louisiana Pub. Facs. Auth. Hosp. Rev., Our Lady of the Lake Regl. Med. Ctr., 4.19%(D), 12/01/22, FSA 13,602,528
------------
Maryland-11.5%
Aa 10,000 Maryland St. Dept. Hsg. & Cmnty. Dev. Admin., Sngl. Fam. Prog., Ser. 2, 6.55%, 4/01/26 ............. 9,901,100
Northeast Waste Disp. Auth. Sld. Wst. Rev., Montgomery Cnty. Res. Rec. Proj., Ser. A,
A 3,690 6.00%, 7/01/08 ................................................................................... 3,640,074
A 12,410 6.30%, 7/01/16 ................................................................................... 12,055,695
------------
25,596,869
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Value
Rating* (000) Description (a) (Note 1)
- - ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts-6.3%
<S> <C> <C> <C>
A+ $10,915 Massachusetts Bay Trans. Auth., Gen. Trans. Sys., Ser. A, 5.75%, 3/01/18 .............................$ 10,242,090
AAA 4,000 University of Lowell Bldg. Auth., Ser. A, 5.625%, 11/01/14, AMBAC .................................... 3,798,040
------------
14,040,130
------------
Nevada-1.7%
AAA 3,750 Washoe Cnty. Arpt. Auth., Arpt. Sys. Impvt. Rev., Ser. B, 5.80%, 7/01/09, MBIA ....................... 3,682,200
------------
New Jersey-1.1%
BBB- 1,400 New Jersey Econ. Dev. Auth., 6.20%, 12/01/10 ......................................................... 1,317,330
BBB 1,200 New Jersey Hlth. Care Facs. Fin. Auth. Rev., Englewood Hosp. & Med. Ctr., 6.70%, 7/01/15 ............. 1,188,060
------------
2,505,390
------------
New York-24.9%
A 2,000 Battery Park City Auth. Rev., Ser. A, 5.70%, 11/01/23 ................................................ 1,798,320
New York City, G.O.,
A- 6,410 Ser. E, 6.00%, 5/15/21 ............................................................................. 5,838,356
A- 7,000 Ser. H, 7.20%, 2/01/13 ............................................................................. 7,218,610
A 11,000 New York City Indl. Dev. Agcy. Spec. Fac. Rev., Term. One Group Assoc. Proj., 6.00%, 1/01/15 ......... 10,428,000
BBB+ 3,000 New York St. Dorm. Auth. Rev., St. Univ. Edl. Facs., Ser. B, 6.10%, 5/15/09 .......................... 2,955,450
A+ 13,450 New York St. Energy Res. & Dev. Auth. Elec. Facs. Rev., Cons. Edison Co. Proj., Ser. A, 7.75%, 1/01/24 14,235,077
BBB+ 8,300 New York St. Hsg. Fin. Agcy. Rev., Hlth. Facs. of New York City, Ser. A, 8.00%, 11/01/08 ............. 9,176,231
A+ 4,000 Triborough Bridge & Tunnel Auth., G.O., Ser. A, 4.70%, 1/01/07 ....................................... 3,627,040
------------
55,277,084
------------
North Carolina-6.6%
AAA 5,000 North Carolina Eastn. Mun. Pwr. Agcy., Ser. B, 7.00%, 1/01/08, CAPMAC ................................ 5,523,200
A 10,000 North Carolina Mun. Pwr. Elec. Rev., Catawba Proj. No. 1, 5.75%, 1/01/15 ............................. 9,141,700
------------
14,664,900
------------
Pennsylvania-4.2%
AAA 10,100 Lehigh Cnty. Gen. Purpose Auth. Rev., St. Lukes Hosp. Bethlehem Proj., 4.00%, 11/15/13, AMBAC ........ 9,379,668
------------
Rhode Island-3.0%
AAA 3,275 Rhode Island Dep. Econ. Prot. Corp., Ser. B, 5.25%, 8/01/21, MBIA .................................... 2,835,855
AA+ 3,845 Rhode Island Hsg. & Mtg. Fin., Homeownership Oppty., Ser. 15-B, 6.75%, 10/01/17 ...................... 3,913,057
------------
6,748,912
------------
South Carolina-7.1%
A- 3,400 Piedmont Mun. Pwr. Agcy. Elec. Rev., Ser. B, 5.75%, 1/01/24 ......................................... 3,082,168
AAA 15,000 South Carolina St. Pub. Svc. Auth. Rev., Santee Cooper Proj., Ser. C, 5.00%, 1/01/25, FGIC .......... 12,604,950
------------
15,687,118
------------
Tennessee-5.6%
BBB+ 12,860 Maury Cnty. Indl. Dev. Brd. Poll. Ctrl. Rev., Saturn Corp. Proj., 6.50%, 9/01/24 .................... 12,497,862
------------
Texas-1.9%
A 4,000 Brazos River Auth. Rev., Coll-Houston Light & Pwr. Co. Proj., Ser. A, 7.875%, 11/01/18 .............. 4,165,040
------------
Virginia-2.9%
A 3,500 Braxton Cnty. Sld. Wst. Auth., Weyerhaeuser Co. Proj., 6.50%, 4/01/25 ............................... 3,436,370
AA 3,250 Fairfax Cnty. Econ. Dev. Auth. Lease Rev., 5.50%, 5/15/14 ........................................... 3,028,480
------------
6,464,850
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Value
Rating* (000) Description (a) (Note 1)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington-10.4%
AAA $ 4,250 Washington St. Hlth. Care Facs. Auth. Rev., Dominican Hlth. Svcs., 5.75%, 6/01/13, CONNIE LEE ...... $ 3,977,702
Washington St. Pub. Pwr. Supply Sys. Rev., Ser. A,
AAA 7,000 Nuclear Proj. No. 1, MBIA, 6.25%, 7/01/17 ........................................................ 6,916,490
AA 12,520 Nuclear Proj. No. 2, 6.25%, 7/01/12 .............................................................. 12,260,711
------------
23,154,903
------------
Wyoming-5.5%
Sweetwater Cnty. Sld. Wst. Disp. Rev., FMC Corp. Proj.,
BBB 5,975 Ser. B, 6.90%, 9/01/24 ........................................................................... 5,951,877
BBB 6,200 Ser. A, 7.00%, 6/01/24 ........................................................................... 6,232,612
------------
12,184,489
------------
Total Long-Term Investments (cost $335,731,137) .................................................... 339,640,589
------------
SHORT-TERM INVESTMENTS**-7.7%
Louisiana-0.9%
A1+ 1,900 West Feliciana Parish Poll. Ctrl. Rev., FRDD, 5.10%, 5/01/95 ....................................... 1,900,000
------------
New Mexico-2.3%
A1+ 5,200 Farmington Poll. Ctrl. Rev., Arizona Pub. Ser. Co., FRDD, 5.00%, 5/01/95, Ser. B ................... 5,200,000
------------
New York-4.5%
A1+ 4,400 New York City, G.O., FRDD, 5.30%, 5/01/95, Ser. B, FGIC ............................................ 4,400,000
A1+ 700 New York City Mun. Wtr. Fin. Auth. Rev., FRDD, 5.00%, 5/01/95, FGIC ................................ 700,000
NR 5,000 New York St. Energy Res. & Dev. Auth., FRDD, 5.00%, 5/01/95 ........................................ 5,000,000
------------
10,100,000
------------
Total Short-Term Investments (cost $17,200,000) .................................................... 17,200,000
------------
Total Investments-160.5% (cost $352,931,137) ....................................................... 356,840,589
Liabilities in excess of other assets-(2.0)% ....................................................... (4,538,827)
Liquidation value of preferred stock-(58.5)% ....................................................... (130,000,000)
------------
Net Assets Applicable to Common Shareholders-100% .................................................. $222,301,762
============
<FN>
*Rating: Using the higher of Standard & Poor's, Moody's or Fitch's rating.
**For purposes of amortized cost valuation, the maturity date of these
instruments is considered to be the later of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
(D)These bonds contain embedded caps. See glossary for definition.
</FN>
</TABLE>
- - --------------------------------------------------------------------------------
(a)THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
AMBAC -American Municipal Bond Assurance Corporation
CAPMAC -Capital Markets Assurance Corporation
CONNIE LEE-College Construction Loan Insurance Association
FGIC -Financial Guaranty Insurance Company
FHA -Federal Housing Administraton
FRDD -Floating Rate Daily Demand
FSA -Financial Security Assurance
G.O. -General Obligation Bond
MBIA -Municipal Bond Insurance Association
- - --------------------------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE>
(Left Column)
- - --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Statement of Assets and Liabilities
April 30, 1995
(Unaudited)
- - --------------------------------------------------------------------------------
Assets
Investments, at value
(cost $352,931,137) (Note 1) .................................. $356,840,589
Cash ............................................................ 75,238
Interest receivable ............................................. 6,791,741
Deferred organization expenses and other
assets ........................................................ 78,595
------------
363,786,163
------------
Liabilities
Payable for investments purchased ............................... 10,524,635
Dividends payable-common stock .................................. 351,869
Dividends payable-preferred stock ............................... 227,449
Advisory fee payable (Note 2) ................................... 102,583
Administration fee payable (Note 2) ............................. 43,964
Other accrued expenses .......................................... 233,901
------------
11,484,401
------------
Net Investment Assets ........................................... $352,301,762
============
Net investment assets were comprised of:
Common stock:
Par value (Note 4) ............................................ $ 167,071
Paid-in capital in excess of par .............................. 232,077,765
Preferred stock (Note 4) ...................................... 130,000,000
------------
362,244,836
Undistributed net investment income ........................... 186,436
Accumulated net realized loss ................................. (14,038,962)
Net unrealized appreciation ................................... 3,909,452
------------
Net investment assets, April 30, 1995 ......................... $352,301,762
============
Net assets applicable to common
shareholders ................................................ $222,301,762
============
Net asset value per common share:
($222,301,762 / 16,707,093 shares of
common stock issued and outstanding) .......................... $13.31
======
(Right Column)
- - --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Statement of Operations
Six Months Ended April 30, 1995
(Unaudited)
- - --------------------------------------------------------------------------------
Net Investment Income
Income
Interest and discount earned ................................... $10,423,673
-----------
Expenses
Investment advisory ............................................ 589,384
Administration ................................................. 252,593
Auction agent .................................................. 161,000
Reports to shareholders ........................................ 40,000
Custodian ...................................................... 35,000
Directors ...................................................... 28,000
Audit .......................................................... 24,000
Transfer agent ................................................. 15,000
Legal .......................................................... 7,500
Miscellaneous .................................................. 109,254
-----------
Total expenses ................................................. 1,261,731
-----------
Net investment income ............................................ 9,161,942
-----------
Realized and Unrealized Gain (Loss) on
Investments (Note 3)
Net realized loss on investments ................................. (4,885,785)
Net change in unrealized appreciation on
investments .................................................... 26,453,958
-----------
Net gain on investments .......................................... 21,568,173
-----------
Net Increase in Net Investment Assets
Resulting from Operations ...................................... $30,730,115
===========
See Notes to Financial Statements.
9
<PAGE>
- - --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Statements of Changes in
Net Investment Assets
(Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Investment Assets 1995 1994
---------- -----------
<S> <C> <C>
Operations:
Net investment income ....................................................... $ 9,161,942 $ 17,698,817
Net realized loss on investments ............................................ (4,885,785) (9,098,428)
Net unrealized appreciation (depreciation) on investments ................... 26,453,958 (35,066,536)
------------ ------------
Net increase (decrease) in net investment assets resulting from operations .. 30,730,115 (26,466,147)
Dividends:
To common shareholders from net investment income ........................... (7,204,847) (15,036,268)
To preferred shareholders from net investment income ........................ (2,565,780) (3,527,278)
Capital stock transactions:
Additional capital charge with respect to initial public offering of shares . (782) (258,225)
------------ ------------
Total increase (decrease) ............................................... 20,958,706 (45,287,918)
Net Investment Assets
Beginning of period ........................................................... 331,343,056 376,630,974
------------ ------------
End of period ................................................................. $352,301,762 $331,343,056
============ ============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
The BlackRock Investment
Quality Municipal Trust Inc.
Financial Highlights
(Unaudited)
<TABLE>
For the Period
Ended
Six Months Year February 26,
Ended Ended 1993*
April 30, October 31, to October 31,
PER COMMON SHARE OPERATING PERFORMANCE: 1995 1994 1993
-------- ----------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................... $ 12.05 $ 14.76 $ 14.10
-------- -------- --------
Net investment income .......................................... 0.55 1.06 0.66
Net realized and unrealized gain (loss) on investments ......... 1.29 (2.64) 0.74
-------- -------- --------
Net increase (decrease) from investment operations ................. 1.84 (1.58) 1.40
-------- -------- --------
Dividends from net investment income to
Common shareholders ............................................ (0.43) (0.90) (0.45)
Preferred shareholders ......................................... (0.15) (0.21) (0.11)
Total dividends .......................................... (0.58) (1.11) (0.56)
-------- -------- --------
Capital charge with respect to issuance of shares .............. 0.00 (0.02) (0.18)
-------- -------- --------
Net asset value, end of period** ................................... $ 13.31 $ 12.05 $ 14.76#
======== ======== ========
Per share market value, end of period** ............................ $ 11.375 $ 10.375 $ 14.125
======== ======== ========
TOTAL INVESTMENT RETURN(D) ......................................... 13.84% (20.98%) 3.36%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:(D)(D)(D)
Expenses ........................................................... 1.22%(D)(D) 1.14% 1.04%(D)(D)
Net investment income .............................................. 8.83%(D)(D) 7.80% 6.86%(D)(D)
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) ........... $209,189 $226,935 $236,810
Portfolio turnover ................................................. 84% 210% 110%
Net assets of common shareholders, end of period (in thousands) .... $222,302 $201,343 $246,631
Preferred stock outstanding (in thousands) ......................... $130,000 $130,000 $130,000
Asset coverage per share of preferred stock, end of period ......... $135,501 $127,440 $144,858
<FN>
- - -----------
*Commencement of investment operations.
**Net asset value and market value are published in The Wall Street
Journal each Monday.
#Net asset value immediately after the closing of the first public
offering was $14.05.
(D)Total investment return is calculated assuming a purchase of common
stock at the current market value on the first day and a sale at the
current market value on the last day of the period. Dividends and
distributions, if any, are assumed for purposes of this calculation, to
be reinvested at prices obtained under the Trust's dividend
reinvestment plan. Total investment return does not reflect brokerage
commissions.
(D)(D)Annualized.
(D)(D)(D)Ratios calculated on the basis of income and expenses applicable to
both the common and preferred stock relative to the average net assets
of common shareholders. Ratios do not reflect the effect of dividend
payments to preferred shareholders.
</FN>
</TABLE>
Contained above is unaudited operating performance for a share of common stock
outstanding, total investment return, ratios to average net assets and other
supplemental data for the periods indicated. This information has been
determined based upon financial information provided in the financial statements
and market value data for the Trust's shares.
See Notes to Financial Statements.
11
<PAGE>
(Left Column)
- - --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Notes to Financial Statements
(Unaudited)
- - --------------------------------------------------------------------------------
Note 1. Accounting
Policies
The BlackRock Investment Quality Municipal Trust Inc. (the "Trust") was
organized in Maryland on November 19, 1992 as a diversified, closed-end
management investment company. The Trust had no transactions until February 16,
1993 when it sold 7,093 shares of common stock for $100,012 to BlackRock
Financial Management, Inc. (the "Adviser"). Investment operations commenced on
February 26, 1993.
The Trust's investment objective is to manage a diversified portfolio of
investment-grade securities to achieve high current income exempt from regular
Federal income tax consistent with the preservation of capital. 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: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. 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 more than 60 days are valued at current
market quotations. 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, or by amortizing their value on the 61st day prior to maturity, if
their original term to maturity from date of purchase exceeded 60 days.
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
(Right Column)
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.
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.
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.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential 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
12
<PAGE>
(Left Column)
termination of a short sale if the market price is greater or less than the
proceeds originally received.
Securities Transactions and Investment Income: Securities transactions
are recorded on the trade date. Realized gains and losses are calculated on the
identified cost basis. Interest income is recorded on the accrual basis and the
Trust amortizes premium and accretes discount on securities purchased using the
interest method.
Federal Income 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 sufficient net income to shareholders. Therefore, no
Federal income tax provision is required.
Dividends and Distributions: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Net long-term
capital gains, if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
Deferred Organization Expenses: A total of $65,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a period of sixty months from the date the Trust
commenced investment operations.
Note 2. Agreements
The Trust has an Investment Advisory Agreement with the Adviser and an
Administration Agreement with Middlesex Administrators L.P. (the
"Administrator"), an indirect wholly owned subsidiary of Merrill Lynch & Co.,
Inc.
The investment fee paid to the Adviser is computed weekly and payable monthly
at an annual rate of 0.35% of the Trust's average weekly net investment assets.
The administration fee paid to the Administrator is also computed weekly and
payable monthly at an annual rate of 0.15% of the Trust's average weekly net
investment assets.
Pursuant to the agreements, the Adviser provides continuous supervision of the
investment portfolio and pays the compensation of officers of the Trust who are
affiliated persons of the Adviser. The Administrator pays occupancy and certain
clerical and accounting costs of the Trust. The Trust bears all other costs and
expenses.
On February 28, 1995, the Adviser was acquired by PNC Bank, N.A. Following
acquisition, the Adviser has become a
(Left Column)
wholly-owned corporate subsidiary of PNC Asset Management Group, Inc., the
holding company for PNC's asset management businesses.
Note 3. Portfolio
Securities
Purchases and sales of investment securities, other than short-term investments
for the period ended April 30, 1995, aggregated $278,705,412 and $278,666,121,
respectively.
The federal income tax basis of the Trust's investments at April 30, 1995 was
substantially the same as the basis for financial reporting, and accordingly,
net unrealized appreciation was $3,909,452 (gross unrealized
appreciation-$7,488,795, gross unrealized depreciation-$3,579,343).
For federal income tax purposes, the Trust had a capital loss carryforward at
October 31, 1994 of approximately $9,155,000 of which $55,000 will expire in
2001 and $9,100,000 will expire in 2002. Accordingly, no capital gains
distribution is expected to be paid to shareholders until net gains have been
realized in excess of such amount.
Note 4. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
16,707,093 common shares outstanding at April 30, 1995, the Adviser owned 7,093
shares.
Offering costs ($1,046,346) incurred in connection with the Trust's
underwriting of common stock have been charged to paid-in capital in excess of
par of the common stock.
The Trust may classify or reclassify any unissued shares of common stock into
one or more series of preferred stock. On April 1, 1993, the Trust reclassified
2,600 shares of common stock and issued 2 series of Auction Market Preferred
Stock ("Preferred Stock") as follows: Series T7-1,300 shares, Series T28-1,300
shares. The Preferred Stock has a liquidation value of $50,000 per share plus
any accumulated but unpaid dividends.
The underwriting discount ($1,950,000) and offering costs ($328,828) incurred
in connection with the Preferred Stock offering have been charged to paid-in
capital in excess of par of the common stock.
Dividends on Series T7 are cumulative at a rate which is reset every 7 days
based on the results of an auction.
13
<PAGE>
(Left Column)
Dividends on Series T28 are also cumulative at a rate which is reset every 28
days based on the results of an auction. Dividend rates ranged from 3.27% to
6.15% during the six months ended April 30, 1995.
The Trust may not declare dividends or make otherdistributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution, or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at $50,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Trust as set forth in the
Articles of Incorporation are not satisfied.
The holders of Preferred Stock have voting rights equal to the holders of
common stock (one vote per share) and will vote together with holders of shares
of common stock as a single class. However, holders of Preferred Stock are also
entitled to elect two of the Trust's directors. In addition, the Investment
Company Act of 1940 requires that, along with
(Right Column)
approval by stockholders that might otherwise be required, the approval of the
holders of a majority of any outstanding preferred shares, voting separately as
a class would be required to (a) adopt any plan of reorganization that would
adversely affect the preferred shares, and (b) take any action requiring a vote
of security holders, including, among other things, changes in the Trust's
subclassification as a closed-end investment company or changes in its
fundamental investment restrictions.
On May 16, 1995 shareholders approved a proposal to split each share of the
Trust's Auction Rate Municipal Preferred Stock into two shares and
simultaneously reduce each share's liquidation preference from $50,000 to
$25,000.
Note 5. Dividends
and Distributions
Subsequent to April 30, 1995, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.0656 per common share payable May 31,
1995 to shareholders of record on May 16, 1995.
For the period May 1, 1995 through May 31, 1995, dividends declared on
Preferred Stock totalled $464,256 in aggregate for the two outstanding Preferred
Stock series.
Note 6. Quarterly Data
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Net realized and Net increase (decrease)
unrealized in net investment
Net investment gains (losses) on assets resulting Dividends and distributions
income investments from operations Common shares Preferred shares**
Per Per Per Per Per Share price of Period and
Quarterly Total common common common common common Common stock net asset
period income Amount share Amount share Amount share Amount share Amount share High Low value
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
February
26, 1993* to
April 30,
1993 $2,274,259 $1,924,830 $.12 $(1,226,844) $(.07) $ 697,986 $.04 - - $247,185 $.01 $15.125 $14.375 $13.94
May 1,
1993 to
July 31,
1993 5,123,655 4,471,681 .27 3,650,148 .22 8,121,829 .49 $3,759,096 $0.23 793,170 .05 14.625 13.625 14.16
August
1, 1993 to
October
31, 1993 5,306,298 4,636,053 .27 10,043,977 .59 14,680,030 .87 3,759,096 0.22 814,167 .05 14.625 13.875 14.76
November
1, 1993 to
January
31, 1994 5,029,133 4,393,508 .26 3,889,764 .23 8,283,272 .49 3,759,096 0.23 776,163 .05 14.50 13.00 14.99
February
1, 1994 to
April 30,
1994 5,158,071 4,551,640 .27 (32,246,232) (1.92)(27,694,592)(1.65)3,759,096 0.23 754,441 .04 14.00 11.625 13.04
May 1,
1994 to
July 31,
1994 4,963,953 4,280,193 .26 4,049,327 0.24 8,329,520 0.50 3,759,025 0.22 957,960 .06 12.50 11.750 13.26
August 1,
1994 to
October
31, 1994 5,128,692 4,473,476 .27 (19,857,823) (1.19)(15,384,347)(0.92)3,759,051 0.22 1,038,714 .06 12.00 10.125 12.05
November
1, 1994 to
January
31, 1995 5,167,141 4,505,179 .27 10,324,567 .62 14,829,746 .89 3,759,096 0.22 1,289,763 .08 11.50 9.750 12.64
February
1, 1995 to
April 30,
1995 5,256,532 4,656,763 .28 11,243,606 .67 15,900,369 .95 3,445,751 0.21 1,276,017 .07 12.25 11.250 13.31
- - ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*Commencement of Investment Operations.
**For the six months ended April 30, 1995 the average annualized rate paid to
preferred shareholders was 3.98%.
</FN>
</TABLE>
14
<PAGE>
- - --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
- - --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders will automatically have all distributions of dividends and capital
gains reinvested by State Street Bank & Trust Company (the "Plan Agent") in
Trust shares. 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 transfer agent, 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 for the participants' accounts. The Trust will not issue shares
under 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 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 address is 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. There have been no
changes in the Trust's charter or by-laws. There have been no changes 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.
At a Special Meeting of Trust Shareholders held on February 15, 1995 to
approve the Trusts' advisory agreement with BlackRock Financial Management, Inc.
Shareholders approved the agreement. The result of the voting is as follows:
Votes For 10,406,783 Votes Against 296,219 Votes Withheld 465,326.
The Annual Meeting of Trust Shareholders was held May 16, 1995 to vote on
the following matters:
(1) To elect two Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
Ralph L. Schlosstein.... II 3 years 1998
Kent Dixon.............. III 1 year 1996
and to elect two Directors to represent the interests of the preferred
shareholders as follows:
Director Class Term Expiring
-------- ----- ---- --------
Frank J. Fabozzi....... II 3 years 1998
Richard E. Cavanagh.... I 2 years 1997
Directors whose term of office continues beyond this meeting are Andrew
F. Brimmer, James Grosfeld, James Clayburn La Force, Jr. and Laurence D.
Fink.
(2) To consider and act on a proposal to split each share of the Trust's
Auction Rate Preferred Stock (Preferred) into two shares and
simultaneously reduce each share's liquidation preference, as provided
in the Trust's Articles Supplementary, from $50,000 to $25,000.
(3) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 1995.
Shareholders elected the four Directors, approved the proposal to split each
Preferred share into two shares and ratified the selection of Deloitte & Touche
LLP. The results of the voting was as follows:
Votes* For Votes* Against Votes* Withheld
---------- -------------- ---------------
Ralph L. Schlosstein 11,760,170 - 363,275
Kent Dixon 11,771,501 - 351,944
Frank J. Fabozzi 1,326 - 7
Richard E. Cavanagh 1,326 - 7
Preferred share split 1,328 - 5
Deloitte & Touche LLP 11,736,990 76,350 310,095
*The votes represent common and preferred shareholders voting as a single class
except for the election of Richard E. Cavanagh and Frank J. Fabozzi, and the
approval of the preferred share split which represents the votes of only the
preferred shareholders.
15
<PAGE>
- - --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
INVESTMENT SUMMARY
- - --------------------------------------------------------------------------------
The Trust's Investment Objective
The BlackRock Investment Quality Municipal Trust's investment objective is to
provide high current income exempt from regular Federal income tax consistent
with the preservation of capital.
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 over $27
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, several open-end funds and over 75 separate
accounts for various clients in the U.S. and overseas. BlackRock is a subsidiary
of PNC Asset Management Group which is a division of PNC Bank, N.A., the
nation's twelfth largest banking organization.
What Can the Trust Invest In?
Under normal conditions, the Trust expects to continue to manage its assets so
that at least 80% of its investments are rated investment grade ("BBB" by
Standard & Poor's and "Baa" by Moody's Investor Services) and up to 20% of its
assets may instead be deemed to be of equivalent credit quality by the Adviser.
Examples of the types of securities that the Trust may invest in include general
obligation bonds, which are backed by the full taxing power of the municipality
(states, counties and cities), and revenue bonds, which are backed by a revenue
source associated with the issuing municipality or by a special tax. Revenue
bonds include those that are backed by revenues generated by universities,
hospitals, housing developments, utilities, public facilities, toll roads,
airports, etc.
What is the Adviser's Investment Strategy?
The Adviser will manage the assets of the Trust in accordance with the Trust's
investment objective and policies to seek to achieve its objective by investing
in municipal debt securities that are diversified both geographically and
according to revenue source. As such, the Adviser actively manages the assets in
relation to market conditions and interest rate changes. In seeking the
investment objective, the Trust does not expect to invest more than 25% of its
total assets in municipals that are issued by the same state. Depending on yield
and portfolio allocation considerations, the Adviser may choose to invest a
portion of the Trust's assets in securities which pay interest that is subject
to AMT (alternative minimum tax). It is expected that no more than 20% of the
assets of the Trust will be invested in municipals subject to such a tax.
Under current market conditions the use of leverage increases the income earned
by the Trust. The Trust employs leverage primarily through the issuance of
preferred stock. Preferred stockholders will receive dividends based on
short-term rates in exchange for allowing the Trust to borrow additional assets.
These assets will be invested in longer-term assets which typically offer higher
interest rates and the difference between the cost of the dividends paid to
preferred stockholders and the interest earned on the longer-term securities
will provide higher income levels for common stockholders in most interest rate
environments. The Trust issued preferred stock to leverage the portfolio at
approximately 35% of total assets. To protect the common stockholders from
increases in the cost of the preferred stock dividends, the Trust invests in
securities called "additional interest bonds" or "embedded caps", which can help
to limit the risk of increasing costs of leverage in a rising interest rate or
flattening yield curve environment. These bonds pay additional interest when
short-term municipal interest rates rise above a predetermined rate, or "cap".
These securities are used, when available in the marketplace, to attempt to
offset increases in the interest paid to preferred stockholders and may allow
the Trust to maintain dividend levels to common stockholders in interest rate
environments where the yield curve is either flat or inverted. See "Leverage
Considerations in the Trust" below.
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 advisor. 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, Boston
Financial Data Services. Investors who wish to hold shares in a brokerage
account should check with their financial advisor to determine whether their
brokerage firm offers dividend reinvestment services.
16
<PAGE>
Leverage Considerations in the Trust
Leverage increases the duration (or price sensitivity of the net assets with
respect to changes in interest rates) of the Trust, which can improve the
performance of the fund in a declining rate environment, but can cause net
assets to decline faster in a rapidly rising interest rate environment. The
Trust may reduce, or unwind, the amount of leverage employed should BlackRock
consider that reduction to be in the best interests of the Trust. BlackRock's
portfolio managers continuously monitor and regularly review the Trust's use of
leverage and maintain the ability to unwind the leverage if that course is
chosen. As mentioned above, the Trust will attempt to maintain a percentage of
its investments in additional interest bonds which may help protect the Trust's
income from increases in the cost of leverage.
Special Considerations and Risk Factors Relevant to the Trust
The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
Investment Objective. Although the objective of the Trust is to provide high
current income exempt from regular Federal income tax consistent with the
preservation of capital, there can be no assurance that this objective will be
achieved.
Dividend Considerations. The income and dividends paid by the Trust are likely
to vary over time as fixed income market conditions change. Future dividends may
be higher or lower than the dividend the Trust is currently paying.
Leverage. The Trust utilizes leverage through preferred stock, 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 (NYSE symbol: BKN) 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.
Investment Grade Municipal Obligations. The value of municipal debt securities
generally varies inversely with changes in prevailing market interest rates.
Depending on the amount of call protection that the securities in the Trust
have, the Trust may be subject to certain reinvestment risks in environments of
declining interest rates.
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.
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.
17
<PAGE>
- - --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
GLOSSARY
- - --------------------------------------------------------------------------------
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.
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:
Income generated by securities in a portfolio and distributed to shareholders
after the deduction of expenses. This Trust declares and pays dividends to
common shareholders on a monthly basis.
Dividend Reinvestment:
Shareholders may have all dividends and distributions of capital gains
automatically reinvested into additional shares of the Trust.
Embedded Cap Bonds:
Also known as additional interest municipal bonds. These securities are intended
to protect the income that a fund earns through leverage from significant
increases in short-term rates. The coupon on these bonds will increase if short
term rates rise significantly.
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.
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 New
York Times or The Wall Street Journal each Monday.
Premium:
When a fund's stock price is greater than its net asset value, the fund is said
to be trading at a premium.
18
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
BlackRock Financial Management, Inc.
Summary of Closed-End Funds
- - --------------------------------------------------------------------------------------------
Taxable Trusts
- - --------------------------------------------------------------------------------------------
Maturity
Perpetual Trusts Stock Symbol Date
------------ --------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
Term Trusts
The BlackRock 1998 Term Trust Inc. BBT 12/98
The BlackRock 1999 Term Trust Inc. BNN 12/99
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BLK 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
Tax-Exempt Trusts
- - --------------------------------------------------------------------------------------------
Maturity
Perpetual Trusts Stock Symbol Date
------------ --------
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
Term Trusts
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
If you would like further information
please call BlackRock at (800) 227-7BFM
or consult with your financial advisor.
19
<PAGE>
(Left Column)
BlackRock
Directors
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Ralph L. Schlosstein
Officers
Ralph L. Schlosstein, President
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Kevin Klingert, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Karen H. Sabath, Secretary
Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
Administrator
Middlesex Administrators L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
(800) 688-0928
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
Auction Agent
Bankers Trust Company
4 Albany Street
New York, NY 10006
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of April 30,
1995 were not audited and accordingly, no opinion is
expressed on them.
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of any securities.
The BlackRock Investment Quality Municipal Trust Inc.
c/o Middlesex Administrators L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
(800) 227-7BFM
09247D-105
09247D-204
09247D-303
(Right Column)
The BlackRock
Investment Quality
Municipal Trust Inc.
- - -------------------------------------
Semi-Annual Report
April 30, 1995
