- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
November 30, 1996
Dear Trust Shareholder:
Interest rate volatility in the domestic fixed income markets was once
again a major factor over the past twelve months. Significant swings in the pace
of U.S. economic growth influenced the bond market's performance, as every
release of economic data led to market participant speculation regarding the
direction of Federal Reserve monetary policy.
Despite strong growth and rising wage pressures, the Fed's decision not to
raise interest rates at their two most recent policy meetings has markedly
increased the stakes in the bond market. The rationale behind the Fed's decision
not to raise interest rates appears to focus on the benign inflation data
released during the third quarter. Should economic growth slow and inflation
remain benign, the Fed will be proven correct in their inaction and the market
would be expected to rally significantly. On the other hand, signs of a stronger
economy could result in weaker bond prices as the likelihood of a Fed tightening
would increase.
BlackRock maintains a positive view on the bond market. On balance, the
outlook for moderate inflation remains intact, suggesting that further declines
in interest rates are likely. In addition to this favorable fundamental
backdrop, foreign demand for U.S. bonds has increased due to the renewed
attractiveness of the U.S. bond market on a global basis.
This annual report is designed to help you stay informed about your
investment and represents our ongoing commitment to improving our communication
with you. We hope you find this report useful now and in the future. We
appreciate your confidence and look forward to helping you reach your long-term
investment goals.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
- ---------------------- -------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
November 30, 1996
Dear Shareholder:
We are pleased to present the annual report for The BlackRock Investment
Quality Municipal Trust Inc. ("the Trust") for the fiscal year ended October 31,
1996. We would like to take this opportunity to review the Trust's stock price
and net asset value (NAV) performance, summarize developments in the fixed
income markets 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 "BKN". The
Trust's investment objective is to provide high current income that is exempt
from regular Federal income tax consistent with the preservation of capital. The
Trust seeks to achieve this objective by investing in investment grade (rated
"AAA" to "BBB" by a major rating agency or of equivalent quality) tax-exempt
general obligation and revenue bonds issued by city, county and state
municipalities throughout the United States and certain territories and
possessions of the United States.
The Trust has exhibited superior performance on a reinvested net asset
value total return basis for the 1- and 2-year periods ended October 31, 1996.
The Trust placed in the top 10% of its Lipper peer group of General & Insured
Leveraged Municipal Closed-End Funds for both periods, finishing #6 of 64 funds
for the 1-year period and #5 of 63 funds for the 2-year period according to
Lipper Analytical Services, Inc. The table below summarizes the changes in the
Trust's stock price and net asset value over the past year:
<TABLE>
<CAPTION>
===================================================================================================================
10/31/96 10/31/95 CHANGE HIGH LOW
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stock Price $12.4375 $12.00 3.65% $13.00 $11.75
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value (NAV) $14.52 $14.18 2.40% $14.88 $13.69
===================================================================================================================
</TABLE>
THE FIXED INCOME MARKETS
Significant swings in the pace of U.S. economic growth influenced the
performance of the fixed income markets over the past year. Throughout the
fourth quarter of 1995 and through the first six weeks of 1996, weak
inflationary data and sluggish retail demand spurred two reductions of short
term interest rates totaling 50 basis points (0.50%) by the Federal Reserve to
5.25%. In response to these reductions, as well as the sharp decline in interest
rates throughout 1995, economic growth began to pick up in mid-February and
accelerated throughout the second quarter of 1996. Economic growth as measured
by Gross Domestic Product (GDP) was measured at an annualized 4.7% for the
second quarter of 1996, which led investors to believe that the Federal Reserve
would be forced to raise interest rates for the first time in over a year to
curb the pace of the economy. However, the pace of economic growth has slowed
during the past few months. Softer economic data and continued moderation in the
broad inflation measures during the third quarter of 1996 allowed the Fed to
leave short term interest rates unchanged at their August and September policy
meetings.
After lagging the performance of their taxable counterparts during the
fourth quarter of 1995, year-to-date municipal bond performance as measured by
the Lehman Municipal Bond Index has outpaced that of taxable bonds (represented
by the Lehman Aggregate Index) returning 2.99% versus 2.84% for taxables. This
strong performance is the result of the relative scarcity of new municipal bond
issuance combined with increased retail demand due to the end of "flat tax"
reform concerns. In particular, the third quarter of 1996 witnessed
approximately $60 billion in cash (in the form of calls, maturities and interest
payments) returned to investors and recycled back into the municipal bond
market. As the quarter progressed, however, retail demand moderated in response
to a strengthening stock market and declining interest rate levels. Within the
municipal market, longer maturity municipals outperformed shorter maturities for
the year ended October 31, as the yield of the 30-year AAA General Obligation
(G.O.) bond fell four basis points (0.04%) to 5.54% while yields of shorter
maturities rose.
2
<PAGE>
Looking ahead to the fourth quarter and into 1997, the potential for
weakening supply and demand technicals has led us to take a cautious stance on
the municipal market. The recent decline in interest rates may spur new
issuance, which historically is heaviest in the fourth quarter as issuers
complete year-end business. Additionally, although the likelihood of radical tax
reform has diminished since the first half of 1996, we continue to monitor the
possibility of tax cuts over the next year and their potential impact on the
municipal bond market. We view any potential fourth quarter weakness as an
opportunity to add at attractive levels.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and security types. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors,
credits and coupons.
Additionally, the Trust employs leverage at about 35% of total assets to
enhance its income by borrowing at short term municipal rates and investing the
proceeds in longer maturity issues which have higher yields. The degree to which
the Trust can benefit from its use of leverage may affect its ability to pay
high monthly income. The Federal Reserve's decision not to increase short
interest rates at their August and September policy meetings has benefited the
Trust, as short term municipal rates (which determine the Trust's borrowing
costs) fell.
The Trust has generally favored callable premium coupon bonds throughout
the past twelve months, as they characteristically outperform par bonds in a
rising interest rate environment. Though interest rates have fallen recently,
the generally upward trend in rates since the beginning of 1996 proved a
favorable environment to hold these defensively structured bonds. The Trust
maintained its focus in the intermediate portion of the municipal yield curve,
with nearly half of the Trust's holdings having an average life between 8 and 12
years. Additionally, the Trust's credit quality bias emphasizes a barbell
strategy, as the majority of the holdings carry either a "AAA" or "BBB" credit
rating. Limited municipal bond supply has resulted in the narrowing of yields
spreads between higher- and lower-quality municipal bonds. Should credit spreads
tighten significantly from current levels, thereby reducing the yield advantage
of owning a lower rated bond, we would seek to reallocate some of the Trust's
"BBB" issues into higher rated bonds at tighter spreads.
The following charts compare the Trust's current and October 31, 1995
asset composition and credit quality allocations:
SECTOR BREAKDOWN
================================================================================
SECTOR OCTOBER 31, 1996 OCTOBER 31, 1995
- --------------------------------------------------------------------------------
Transportation 22% 15%
- --------------------------------------------------------------------------------
Lease Revenue 12% 10%
- --------------------------------------------------------------------------------
Power 12% --
- --------------------------------------------------------------------------------
Hospital 9% 8%
- --------------------------------------------------------------------------------
Industrial 9% 13%
- --------------------------------------------------------------------------------
City, County & State 8% 16%
- --------------------------------------------------------------------------------
University/School 8% 7%
- --------------------------------------------------------------------------------
Pollution Control 7% --
- --------------------------------------------------------------------------------
Housing 6% 5%
- --------------------------------------------------------------------------------
Miscellanous Revenue 4% 10%
- --------------------------------------------------------------------------------
Tax Revenue 1% 1%
- --------------------------------------------------------------------------------
Water & Sewer 1% --
- --------------------------------------------------------------------------------
Resource Recovery 1% 4%
- --------------------------------------------------------------------------------
Utility -- 11%
================================================================================
3
<PAGE>
================================================================================
STANDARD & POOR'S/MOODY'S
CREDIT RATING OCTOBER 31, 1996 OCTOBER 31, 1995
- --------------------------------------------------------------------------------
AAA/Aaa 43% 53%
- --------------------------------------------------------------------------------
AA/Aa 6% 5%
- --------------------------------------------------------------------------------
A/A 21% 11%
- --------------------------------------------------------------------------------
BBB/Baa 30% 31%
================================================================================
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock
Investment Quality Municipal Trust Inc. Please feel free to call our marketing
center at (800) 227-7BFM (7236) if you have any specific questions which were
not addressed in this report.
Sincerely yours,
/s/ Robert Kapito /s/ Kevin Klingert
- ----------------------- ----------------------
Robert Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
================================================================================
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 10/31/96: $ 12.4375
- ---------------------------------------------------------------------------
Net Asset Value as of 10/31/96: $ 14.52
- ---------------------------------------------------------------------------
Yield on Closing Stock Price as of 10/31/96 ($12.4375)1: 6.33%
- ---------------------------------------------------------------------------
Current Monthly Distribution per Share2: $ 0.06563
- ---------------------------------------------------------------------------
Current Annualized Distribution per Share2: $ 0.7875
================================================================================
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2The Distribution is not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
OPTION
PRINCIPAL CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS -- 149.8%
<S> <C> <C> <C> <C>
ALABAMA -- 2.2%
Baa1 $ 5,000 Courtland Indl. Dev. Brd. Indl. Dev. Rev.,
Champion Intl. Corp., 7.20%, 12/01/13 .............................. 5/02 at 103 $ 5,427,050
-------------
CALIFORNIA -- 9.9%
AAA 15,460 Los Angeles Cnty. Asset Leasing Corp. Rev., 3.80%+, 12/01/07, AMBAC .. No Opt. Call 16,536,634
University of California Rev., Research Facs., Ser. B,
A 2,000 6.10%, 9/01/10 ..................................................... 9/03 at 102 2,058,060
A 3,305 6.20%, 9/01/11 ..................................................... 9/03 at 102 3,412,049
A 2,000 6.25%, 9/01/12 ..................................................... 9/03 at 102 2,054,860
------------
24,061,603
------------
COLORADO -- 18.4%
Arapahoe Cnty. Cap. Impvt. Hwy. Rev., Trust Fund, Ser. E,
Baa 3,100 Zero Coupon, 8/31/04 ............................................... No Opt. Call 1,951,295
Baa 2,000 Zero Coupon, 8/31/07 ...............................................8/05 at 89.239 1,027,140
Baa 2,250 6.90%, 8/31/15 ..................................................... 8/05 at 103 2,427,705
Baa 10,450 7.00%, 8/31/26 ..................................................... 8/05 at 103 11,270,743
Denver City & Cnty. Arpt. Rev.,
Baa 5,000 Ser. B, 7.50%, 11/15/25 ............................................ 11/97 at 102 5,215,550
Baa 1,120 Ser. C, 6.65%, 11/15/05 ............................................ 11/02 at 102 1,187,088
Baa 3,000 Ser. C, 6.50%, 11/15/06 ............................................ 11/02 at 102 3,131,400
Baa 17,790 Ser. D, 7.00%, 11/15/25 ............................................ 11/01 at 100 18,482,743
------------
44,693,664
------------
CONNECTICUT -- 2.1%
Mashantucket Western Pequot Tribe, Spl. Rev. Ser. A,
Baa 2,000 6.40%, 9/01/11 ..................................................... 9/06 at 102 2,038,020
Baa 3,000 6.50%, 9/01/05 ..................................................... No Opt. Call 3,108,330
------------
5,146,350
------------
DISTRICT OF COLUMBIA -- 0.8%
AAA 1,900 District of Columbia, G.O., Ser. E, 6.00%, 6/01/09, CAPMAC ........... 6/03 at 102 1,932,091
------------
FLORIDA -- 3.6%
AAA 1,780 Florida Hsg. Fin. Agcy. Rev., Sngl. Fam. Mtg., Ser. 1994-A,
6.55%, 7/01/14 ..................................................... 1/05 at 102 1,847,640
Baa3 6,000 Martin Cnty Indl. Dev. Auth., Indiantown Cogeneration Proj.,
Ser. A. 7.875%, 12/15/25 ........................................... 12/04 at 10 26,822,840
------------
8,670,480
------------
GEORGIA -- 3.6%
AAA 6,000 Georgia Mun. Pwr. & Elec. Auth., Ser. T, 6.50%, 1/01/99+++, FGIC ..... No Opt. Call 6,274,800
AA+ 2,250 Georgia St. Hsg. & Fin. Auth. Rev., Sngl. Fam. Mtg.,
Ser. C, 7.00%, 12/01/15, FHA ....................................... 12/04 at 102 2,368,958
------------
8,643,758
------------
HAWAII -- 0.8%
Aa 2,050 Hawaii St. Hwy. Rev., 5.25%, 7/01/16 ................................. 7/06 at 102 1,976,610
------------
ILLINOIS -- 10.0%
AAA 5,000 Chicago Brd. of Ed. Chicago Sch. Reform, 6.00%, 12/01/26, MBIA ....... 12/06 at 102 5,068,800
AAA 4,650 Chicago O'Hare Int'l Apt. Spl. Fac. Rev., Lufthansa Airlines Proj.,
7.125%, 5/01/18 .................................................... 5/01 at 102 5,027,533
AAA 5,000 Cook Cnty. G.O., Ser. A, 6.60%, 11/15/22, MBIA ....................... 11/02 at 102 5,341,100
Illinois Edl. Facs. Auth. Rev., Loyola Univ., FGIC,
AAA 5,000 4.125%+, 7/01/13 ................................................... 7/03 at 102 4,894,250
AAA 4,000 5.45%, 7/01/14 ..................................................... 7/03 at 102 3,905,280
------------
24,236,963
------------
INDIANA -- 3.8%
Baa2 8,595 Indianapolis Arpt. Auth. Rev., Spl. Facs.
Fed. Express Corp. Proj., 7.10%, 1/15/17 ........................... 7/04 at 102 9,168,544
------------
KENTUCKY -- 6.0%
AAA 15,000 Kentucky St. Tpke. Auth., Econ. Dev. Road Rev.,
3.95%+, 7/01/13, AMBAC ............................................. 7/03 at 102 14,667,150
------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
OPTION
PRINCIPAL CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA -- 9.2%
<S> <C> <C> <C> <C>
AAA $14,400 Louisiana Pub. Facs. Auth. Hosp. Rev., Our Lady
of the Lake Regl. Med. Ctr., 4.19%+, 12/01/22, FSA ...................... 12/03 at 102 $14,090,688
AAA 7,860 Louisiana Stadium & Expo Dist., Ser. B, 6.375%, 7/01/25, FGIC ............. 7/05 at 102 8,255,908
------------
22,346,596
------------
MARYLAND -- 6.2%
Aa 9,940 Maryland St. Dept. Hsg. & Comn. Dev. Admin., Sngl. Fam. Prog.,
Ser. 2, 6.55%, 4/01/26 .................................................. 4/05 at 102 10,170,509
A- 1,500 Maryland St. Energy Fin.Admin., Bld. Wst. Disp. Rev.,
Wheelabrator Wtr.Proj., 6.45%, 12/01/16 ................................. 12/06 at 102 1,549,635
AAA 3,175 Northeast Waste Disp. Auth. Rev., Sld. Wst.,
Montgomery Cnty. Res. Rec. Proj., Ser. A, 6.30%, 7/01/16, MBIA .......... 7/03 at 102 3,280,124
------------
15,000,268
------------
MICHIGAN -- 7.6%
Baa1 2,840 Dickinson Cnty. Econ. Dev. Corp., Poll. Ctrl. Rev.,
Champion Intl. Corp. Proj., 5.85%, 10/01/18 ............................. 10/03 at 102 2,770,988
AAA 4,000 Holly Area Sch. Dist., Ser. Q, 5.625%, 5/01/25, FGIC ...................... 5/05 at 101 3,964,640
AAA 10,000 Michigan Pub. Pwr. Agcy.Rev., Belle River Proj.,
Ser. A. 5.25%, 1/01/18, MBIA ............................................ 1/03 at 102 9,425,900
AAA 2,200 Wyandotte Elec. Rev., 6.25%, 10/01/17, MBIA ............................... 10/02 at 102 2,332,110
------------
18,493,638
------------
MISSOURI -- 1.0%
NR 2,000 Lake of The Ozarks Comn. Bridge, 6.25%, 12/01/16 .......................... 12/06 at 102 1,948,000
AA 500 Missouri St. Env. Imp. & Energy Res. Auth., Poll. Ctrl.
Rev., 5.50%, 12/01/13 ................................................... 12/06 at 101 499,160
------------
2,447,160
------------
NEVADA -- 1.6%
AAA 3,750 Washoe Cnty. Arpt. Auth., Arpt. Sys. Impvt. Rev., Ser. B,
5.80%, 7/01/09, MBIA .................................................... 7/03 at 102 3,845,025
------------
NEW JERSEY -- 6.8%
A3 3,010 New Jersey Econ.Dev. Auth. Wtr. Facs. Rev., Ser. A,
Elizabeth Wtr. Co. Proj., 6.60%, 8/01/21 ................................ 8/01 at 102 3,167,423
Baa 1,200 New Jersey Hlth.Care Facs. Fin. Auth. Rev.,Englewood Hosp. & Med.
Ctr., 6.70%, 7/01/15 .................................................... 7/04 at 102 1,243,500
Aa 12,150 New Jersey St. Trans. Sys. Auth. Trust Fund, Ser. B, 5.25%, 6/15/10 ....... 6/07 at 102 11,959,974
------------
16,370,897
------------
NEW YORK -- 25.0%
New York City, G.O.,
Baa1 4,140 Ser. A, 6.00%, 8/01/05 .................................................. No Opt.Call 4,198,995
Baa1 7,000 Ser. E, 6.50%, 2/15/06 .................................................. No Opt. Call 7,327,950
Baa1 7,000 Ser. H, 7.20%, 2/01/13 ................................................. 2/02 at 101.5 7,518,630
New York City Ind. Dev. Agcy. Spec. Fac. Rev.,
Term. One Group Assoc. Proj.,
A 4,000 6.00%, 1/01/07 .......................................................... 1/04 at 102 4,142,800
A 4,000 6.00%, 1/01/08 .......................................................... 1/04 at 102 4,113,800
A 21,250 6.125%, 1/01/24 ......................................................... 1/04 at 102 21,287,613
New York City Ind. Dev. Agcy. Rev. Japan Arls Co. Ltd.
Proj. Option Dev., FSA,
Aaa 1,500 6.00%, 11/01/15 ......................................................... 11/04 at 102 1,500,000
Baa1 3,000 New York St. Dorm. Auth. Rev., St. Univ. Edl. Facs.,
Ser. B, 6.10%, 5/15/09 .................................................. 5/04 at 102 3,048,810
Baa 1,955 New York St. Hag. Fin. Agcy.Rev., Hlth. Facs. of
New York City, Ser. A, 6.375%, 11/01/04 ................................. No Opt.Call 2,044,050
AAA 5,000 New York St. Med. Care Facs. Rev., New YorkHosp., Ser.A,
6.60%, 2/15/09, AMBAC ................................................... 2/05 at 102 5,521,950
------------
60,704,598
------------
NORTH CAROLINA -- 5.5%
North Carolina Eastn. Mun. Pwr. Agcy., Rev., Ser. B, CAPMAC.
AAA 5,300 6.00%, 1/01/22 .......................................................... No Opt. Call 5,368,847
AAA 5,000 7.00%, 1/01/08 .......................................................... No Opt. Call 5,675,100
A 2,150 North Carolina Mun. Pwr. Agcy. Elec.Rev.,
Catawba No. 1, 7.50%, 1/01/17 ........................................... 1/98 at 102 2,251,759
------------
13,295,706
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
OPTION
PRINCIPAL CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENNSYLVANIA -- 5.6%
AAA $10,100 Lehigh Cnty. Gen. Purpose Auth. Rev., St. Lukes Hosp. Bethlehem Proj.,
4.00%+, 11/15/13, AMBAC .............................................11/03 at 102 $ 9,656,408
AAA 4,000 Pennsylvania Intergovernmental Coop. Auth. Spl. Tax Rev., Philadelphia
Fdg. Prog., 5.50%, 6/15/20, FGIC .................................... 6/06 at 100 3,901,720
------------
13,558,128
------------
RHODE ISLAND -- 1.6%
Aa 3,845 Rhode Island Hsg. & Mtg. Fin., Homeownership Oppty., Ser. 15-B 6.75%,
10/01/17 ............................................................ 4/04 at 102 4,011,950
------------
SOUTH CAROLINA --1.1%
Baa1 2,600 Piedmont Mun. Pwr. Agcy.SouthCarolina Elec.Rev., 6.55%, 1/01/16 ....... 1/98 at 100 2,612,584
------------
TENNESSEE -- 3.7%
A3 8,500 Maury Cnty. Ind. Dev. Brd, Poll. Ctrl. Rev., Saturn Corp.
Proj., 6.50%, 9/01/24 ................................................ 9/04 at 102 8,905,620
------------
TEXAS -- 6.4%
Baa2 3,700 Alliance Arpt.Auth. Inc.Texas Spl. Facs. Rev., Fed.Express Corp.
Proj., 6.375%, 4/01/21 .............................................. 4/06 at 102 3,697,891
A2 4,000 Brazos River Auth. Rev., Coll-Houston Light & Pwr. Co. Proj.,
Ser. A, 7.875%, 11/01/18 ............................................11/96 at 102 4,141,960
AAA 1,335 Laredo, G.O., 5.25%, 2/15/13, FGIC .................................... 2/06 at 100 1,298,755
A2 3,625 Matagorda Cnty. Nav. Dist. No. 1 Rev., Coll-Houston Light
& Pwr. Ser. B. 7.70%, 2/01/19 ....................................... 2/98 at 102 3,813,427
A2 2,500 Port of BayCityAuth. Matagorda Cnty. Rev., Hoechst
Celanese Corp. Proj., 6.50%, 5/01/26 ................................ 5/06 at 102 2,600,625
------------
15,552,658
------------
UTAH -- 0.7%
Aa 1,800 IntermountainPwr. Agcy. Rev. Pwr. Supply, Ser. B, 5.00%, 7/01/16 ......12/96 at 100 1,639,872
------------
WASHINGTON -- 3.8%
Washington St.Pub. Pwr.Supply Sys.Rev.,
AAA 2,000 Nuclear Proj. No. 2, 5.55%, 7/01/10,FGIC ............................No Opt. Call 1,950,480
AAA 7,000 Nuclear Proj. No. 1, Ser. A, 6.25%, 7/01/17, MBIA ................... 7/02 at 102 7,174,370
------------
9,124,850
------------
WEST VIRGINIA -- 1.5%
A 3,500 Braxton Cnty. Sld. Wat. Auth., Weyerhaeuser Co. Proj.,
6.50%, 4/01/25 ...................................................... 4/05 at 102 3,614,030
------------
WYOMING -- 1.3%
Baa2 3,005 Sweetwater Cnty. Sld. Wst. Disp. Rev., FMC Corp.
Proj., Ser. A, 7.00%, 6/01/24 ....................................... 6/04 at 102 3,177,788
------------
Total Long-Term Investments (cost $353,929,107) ....................... 363,325,631
------------
SHORT-TERM INVESTMENTS** -- 0.7%
VIRGINIA -- 0.4%
Aa2 1,000 Peninsula Port Auth. Rev., Port Fac. Shell Oil Co.,
3.60%, 11/01/96, FRDD ............................................... 1,000,000
------------
WYOMING -- 0.3%
P1 700 Uinta Cnty. Poll. Ctrl. Rev., ChevronInc.Proj.,
3.55%, 11/01/96, FRDD ............................................... 700,000
------------
Total Short-Term Investments (cost $1,700,000) ........................ 1,700,000
------------
TOTAL INVESTMENTS-- 150.5% (cost $355,629,107) ....................... 365,025,631
Other assets in excess of liabilities-- 3.1% .......................... 7,521,729
Liquidation value of preferred stock-- (53.6)% ........................ (130,000,000)
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS-- 100% ................... $ 242,547,360
=============
</TABLE>
- ----------
* 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 earlier 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.
+ These bonds contain embedded caps. See glossary for definition.
++ Option call provisions: date (month/year) and prices of the earliest call
or redemption. There may be other call provisions at varying prices at
later dates.
+++ This bond is prerefunded. See Glossary for definition.
THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
<TABLE>
<CAPTION>
===========================================================================================================================
<S> <C> <C> <C>
AMBAC -- American Municipal Bond Assurance Corporation FSA -- Financial Security Assurance
CAPMAC -- Capital Markets Assurance Corporation FRDD -- Floating Rate Daily Demand**
FHA -- Federal Housing Administration G.O. -- General Obligation Bond
FGIC -- Financial Guaranty Insurance Company MBIA -- Municipal Bond Insurance Association
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments, at value
(cost $355,629,107) (Note 1) ............................ $365,025,631
Cash ...................................................... 36,199
Receivable for investments sold ........................... 2,991,637
Interest receivable ....................................... 6,703,162
Deferred organization expenses and other
assets .................................................. 33,237
------------
374,789,866
------------
LIABILITIES
Payable for investments purchased ......................... 1,500,750
Dividends payable--common stock ........................... 219,521
Dividends payable--preferred stock ........................ 110,847
Advisory fee payable (Note 2) ............................. 110,693
Administration fee payable (Note 2) ....................... 47,440
Other accrued expenses .................................... 253,255
------------
2,242,506
------------
NET INVESTMENT ASSETS ..................................... $372,547,360
============
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 ..................... 549,902
Accumulated net realized gain ........................... 356,098
Net unrealized appreciation ............................. 9,396,524
------------
Net investment assets, October 31, 1996 ................. $372,547,360
============
Net assets applicable to common
shareholders .......................................... $242,547,360
============
Net asset value per common share:
($242,547,360 / 16,707,093 shares of
common stock issued and outstanding) .................. $14.52
======
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned ............................ $20,746,432
-----------
Expenses
Investment advisory ..................................... 1,296,653
Administration .......................................... 555,708
Auction agent ........................................... 340,923
Reports to shareholders ................................. 108,000
Custodian ............................................... 88,000
Directors ............................................... 48,000
Audit ................................................... 37,000
Transfer agent .......................................... 24,000
Legal ................................................... 9,000
Miscellaneous ........................................... 171,775
-----------
Total expenses .......................................... 2,679,059
-----------
Net investment income ..................................... 18,067,373
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 3)
Net realized gain on investments .......................... 5,454,251
Net change in unrealized appreciation
on investments .......................................... 140,869
-----------
Net gain on investments ................................... 5,595,120
-----------
NET INCREASE IN NET INVESTMENT ASSETS
RESULTING FROM OPERATIONS ............................... $23,662,493
===========
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENTS OF CHANGES IN
NET INVESTMENT ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------
INCREASE (DECREASE) IN NET INVESTMENT ASSETS 1996 1995
--------- ---------
Operations:
<S> <C> <C>
Net investment income .......................................... $ 18,067,373 $ 18,339,846
Net realized gain on investments ............................... 5,454,251 4,428,547
Net change in unrealized appreciation on investments ........... 140,869 31,800,161
------------- -------------
Net increase in net investment assets resulting from operations 23,662,493 54,568,554
DIVIDENDS AND DISTRIBUTIONS:
To common shareholders from net investment income .............. (13,156,544) (13,783,161)
To preferred shareholders from net investment income ........... (4,619,604) (5,137,617)
To common shareholders from net realized gain on investments ... (239,692) --
To preferred shareholders from net realized gain on investments (89,343) --
------------- -------------
Total dividends and distributions .......................... (18,105,183) (18,920,778)
CAPITAL STOCK TRANSACTIONS:
Additional capital charge with respect to the issuance of shares -- (782)
------------- -------------
Total increase ............................................. 5,557,310 35,646,994
NET INVESTMENT ASSETS
Beginning of year ................................................. 366,990,050 331,343,056
------------- -------------
End of year ....................................................... $ 372,547,360 $ 366,990,050
============= =============
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 26,
YEAR ENDED OCTOBER 31, 1993*
------------------------------- TO OCTOBER 31,
PER SHARE OPERATING PERFORMANCE: 1996 1995 1994 1993
----- ---- ---- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................................. $ 14.18 $ 12.05 $ 14.76 $ 14.10
------- ------- ------- -------
Net investment income ............................................. 1.09 1.10 1.06 0.66
Net realized and unrealized gain (loss) on investments ............ 0.34 2.16 (2.64) 0.74
------- ------- ------- -------
Net increase (decrease) from investment operations ................... 1.43 3.26 (1.58) 1.40
------- ------- ------- -------
Dividends and Distributions:
Dividends from net investment income to:
Common shareholders ............................................. (0.79) (0.82) (0.90) (0.45)
Preferred shareholders .......................................... (0.28) (0.31) (0.21) (0.11)
Distributions from net realized gain on investments to:
Common shareholders ............................................. (0.01) -- -- --
Preferred shareholders .......................................... (0.01) -- -- --
------- ------- ------- -------
Total dividends and distributions ....................... (1.09) (1.13) (1.11) (0.56)
------- ------- ------- -------
Capital charge with respect to issuance of shares ............... -- -- (0.02) (0.18)
------- ------- ------- -------
Net asset value, end of period** ..................................... $ 14.52 $ 14.18 $ 12.05 $ 14.76#
======= ======= ======= =======
Per share market value, end of period** .............................. $ 12.44 $ 12.00 $10.375 $14.125
======= ======= ======= =======
TOTAL INVESTMENT RETURN+ ............................................. 10.41% 24.01% (20.98%) 3.36%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:+++
Expenses ............................................................. 1.12% 1.16% 1.14% 1.04%++
Net investment income ................................................ 7.57% 8.36% 7.80% 6.86%++
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) ............. $238,540 $219,740 $226,935 $236,810
Portfolio turnover ................................................... 164% 182% 210% 110%
Net assets of common shareholders, end of period (in thousands) ...... $242,547 $236,990 $201,343 $246,631
Preferred stock outstanding (in thousands) ........................... $130,000 $130,000 $130,000 $130,000
Asset coverage per share of preferred stock, end of period## ......... $ 71,644 $ 70,575 $127,440 $144,858
</TABLE>
- --------------------------------------------------------------------------------
* 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.
## A stock split occurred on July 24, 1995 (Note 4).
+ 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 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. Total
investment returns for periods of less than one year are not annualized.
++ Annualized.
+++ Ratios are 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.
Contained above is audited 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.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING The BlackRock Investment Quality Municipal Trust Inc.
POLICIES (the "Trust") was organized in Maryland on 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.
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 original issue 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. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, 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.
RECLASSIFICATION OF CAPITAL ACCOUNTS: Effective January 1, 1994, the Trust began
accounting and reporting for permanent differences between financial and tax
reporting in accordance with the American Institute of Certified Public
Accountants' Statement of Position 93-2: Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies. The effect of adopting the statement for
the year ended October 31, 1996 was to decrease accumulated net realized gain
and increase undistributed net investment income by $44,488. Net investment
income, net realized gains and net assets were not affected by this change.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS The Trust has an Investment Advisory Agreement with
BlackRock Financial Management, Inc., (the
"Adviser"), a wholly-owned corporate subsidiary of PNC Asset Management Group,
Inc., the holding company for PNC's asset management businesses and an
Administration Agreement with Princeton Administrators, L.P. (the
"Administrator"), an indirect wholly-owned subsidiary of Merrill Lynch & Co.,
Inc.
11
<PAGE>
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.
NOTE 3. PORTFOLIO Purchases and sales of investment securities, other
SECURITIES than short-term investments, for the year ended
October 31, 1996, aggregated $595,691,677 and
$608,082,725, respectively.
The federal income tax basis of the Trust's investments at October 31, 1996
was $355,710,329, and accordingly, net unrealized appreciation was $9,315,302
(gross unrealized appreciation--$10,177,708, gross unrealized
depreciation--$862,406).
NOTE 4. CAPITAL There are 200 million shares of $.01 par value common
stock authorized. Of the 16,707,093 common shares
outstanding at October 31, 1996, the Adviser owned 7,093 shares. As of October
31, 1996, there were 5,200 shares of Preferred Stock outstanding as follows:
Series T7--2,600 and Series T28--2,600.
Offering costs ($1,046,346) incurred in connection with the underwriting of
the Trust's 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 had a liquidation value of $50,000 per share plus
any accumulated but unpaid dividends. On May 16, 1995 shareholders approved a
proposal to split each share of the Trust's Auction Market Preferred Stock into
two shares and simultaneously reduce each share's liquidation preference from
$50,000 to $25,000 per share plus any accumulated but unpaid dividends. The
stock split occurred on July 24, 1995.
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. 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 3.26% to 6.29% during the year ended October 31,
1996.
The Trust may not declare dividends or make other distributions 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 $25,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $25,000 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 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.
NOTE 5. DIVIDENDS Subsequent to October 31, 1996, the Board of
AND DISTRIBUTIONS Directors of the Trust declared a dividend from
undistributed earnings of $0.065625 per common share
payable November 29, 1996, to shareholders of record on November 15, 1996.
For the period November 1 through November 30, dividends declared on
Preferred Stock totalled $434,860 in aggregate for the two outstanding Preferred
Stock series.
12
<PAGE>
NOTE 6. QUARTERLY DATA
(UNAUDITED)
<TABLE>
<CAPTION>
============================================================================================
NET REALIZED AND
UNREALIZED
NET INVESTMENT GAIN (LOSSES) ON
INCOME INVESTMENTS
PER PER
QUARTERLY TOTAL COMMON COMMON
PERIOD INCOME AMOUNT SHARE AMOUNT SHARE
------ ------ ------- ------- ------ ---------
November 1, 1994
<S> <C> <C> <C> <C> <C>
to January 31, 1995 $5,167,141 $4,505,179 $0.27 $10,324,567 $0.62
February 1, 1995
to April 30, 1995 0 5,256,532 4,656,763 0.28 11,243,606 0.67
May 1, 1995
to July 31, 1995 5,251,803 4,622,475 0.28 5,576,430 0.33
August 1, 1995
to October 31, 1995 5,200,417 4,555,429 0.27 9,084,105 0.54
November 1, 1995
to January 31, 1996 5,173,253 4,502,933 0.27 9,286,914 0.55
February 1, 1996
to April 30, 1996 5,143,005 4,487,437 0.27 (13,425,805) (0.80)
May 1, 1996
to July 31, 1996 5,188,846 4,532,239 0.27 4,406,715 0.27
August 1, 1996
to October 31, 1996 5,241,328 4,544,764 0.28 5,327,296 0.32
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================================
NET INCREASE (DECREASE)
IN NET INVESTMENT
ASSETS RESULTING DIVIDENDS AND DISTRIBUTIONS
FROM OPERATIONS COMMON SHARES PREFERRED SHARES* PERIOD
PER PER PER SHARE PRICE OF END
QUARTERLY COMMON COMMON COMMON COMMON STOCK NET ASSET
PERIOD AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE HIGH LOW VALUE
------ ------ ------- ------ ------- ------ ------- ---- --- -----
November 1, 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
to January 31, 1995 $14,829,746 $0.89 $3,759,096 $0.22 $1,289,763 $0.08 $11.50 $9.750 $12.64
February 1, 1995
to April 30, 1995 15,900,369 0.95 3,445,751 0.20 1,276,017 0.08 12.25 11.250 13.31
May 1, 1995
to July 31, 1995 10,198,905 0.61 3,289,160 0.20 1,336,807 0.08 12.25 11.375 13.64
August 1, 1995
to October 31, 1995 13,639,534 0.81 3,289,154 0.20 1,235,030 0.07 12.00 11.375 14.18
November 1, 1995
to January 31, 1996 13,789,847 0.83 3,768,573 0.21 1,310,376 0.08 12.625 11.875 14.72
February 1, 1996
to April 30, 1996 (8,938,368) (0.54) 3,289,097 0.19 1,105,076 0.07 13.000 11.875 13.92
May 1, 1996
to July 31, 1996 8,938,954 0.54 3,049,461 0.20 1,176,124 0.07 12.250 11.750 14.19
August 1, 1996
to October 31, 1996 9,872,060 0.60 3,289,105 0.20 1,117,371 0.07 12.625 12.125 14.52
========================================================================================================================
</TABLE>
*For the year ended October 31, 1996, the average annualized rate paid to
preferred shareholders was 3.62%.
13
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The BlackRock Investment Quality Municipal Trust Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The BlackRock Investment Quality Municipal
Trust Inc. as of October 31, 1996 and the related statements of operations for
the year then ended and of changes in net investment assets for each of the two
years in the period then ended and the financial highlights for the each of the
three years in the period then ended and for the period February 26, 1993
(commencement of investment operations) to October 31, 1993. These financial
statements and the 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 assurance about whether the financial statements and financial
highlights are free of material misstatement. 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 October
31, 1996 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 Municipal Trust Inc. at October 31, 1996, and the results of
its operations, the changes in its net investment assets and its 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
December 6, 1996
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days
of the Trust's fiscal year end as to the federally exempt interest dividends
received by you during such fiscal year. Accordingly, we are advising you that
all regular dividends paid by the Trust during the fiscal year were federally
tax-exempt interest dividends. Additionally, the following summarizes the
special taxable distributions declared by the Trust during the fiscal year:
<TABLE>
<CAPTION>
TAXABLE
RECORD PAYABLE ORDINARY
DATE DATE INCOME
----- ------ -------
<S> <C> <C> <C>
Common Stock Shareholders 12/29/95 1/31/96 $0.014347
Preferred Stock Series T-7 11/20/95 11/21/95 17.25
Preferred Stock Series T-28 12/11/95 12/12/95 17.11
</TABLE>
- --------------------------------------------------------------------------------
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 and 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.
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 $43
billion of assets across the government, mortgage, corporate and municipal
sectors. These assets are managed on behalf of institutional and individual
investors in 21 closed-end funds traded on either the New York or American Stock
Exchanges, several open-end funds and over 100 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., one of the nations
largest banking organizations.
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).
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
16
<PAGE>
reinvested in additional shares of the fund through the Trust's transfer agent,
State Street Bank and Trust. 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.
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 Trust 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
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THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
GLOSSARY
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<TABLE>
<CAPTION>
<S> <C>
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 elect to 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.
PREREFUNDED BONDS: are held in escrow and are used to pay principal and interest on the tax
exempt issue and retire the bond in full at the date indicated, typically
at a premium to par.
</TABLE>
18
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BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
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BlackRock Financial Management (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages over $43 billion of assets
across the government, mortgage, corporate and municipal sectors. These assets
are managed on behalf of many individual investors in twenty-one closed-end
funds traded on either the New York or American stock exchanges, and several
open-end funds and on behalf of more than 100 institutional clients in the
United States and overseas. BlackRock's institutional investor base includes
Chrysler Corporation Master Retirement Trust, General Retirement System of the
City of Detroit, State Treasurer of Florida, Ford Motor Company Pension Plan,
General Electric Pension Trust and Unisys Corporation Master Trust.
BlackRock was formed in April 1988 by fixed income professionals who
sought to create an asset management firm specializing in managing fixed income
securities for individuals and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities markets, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. BlackRock introduced the first closed-end mortgage fund, the first
taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAAf rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund having specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
19
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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
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(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, 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 MUNICIPAL TRUST INC.
C/O PRINCETON ADMINISTRATORS, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 227-7BFM
09247D-105
09247D-204
Printed on recycled paper 09247D-303
THE
INVESTMENT QUALITY
MUNICIPAL TRUST INC.
================================================================================
ANNUAL REPORT
OCTOBER 31, 1996
