- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
May 31, 1998
Dear Shareholder:
Domestic bonds provided investors with modest total returns during the
past six months, as interest rates generally fell. Supporting the bond market
was favorable inflation news and the belief that the Federal Reserve is unlikely
to raise short-term interest rates in the immediate future.
U.S. economic growth has remained relatively robust, spurred by lower
interest rates and strong consumer demand. However, the economic weakness of
Asia looms large. While the fallout from the Asian fiscal crisis probably has
yet to materialize in the U.S., we expect a "slowdown" in Asia's economies to
slow U.S. growth in 1998. While we expect that interest rates will be fairly
stable in the near-term, our longer-term outlook for the bond market remains
optimistic, based on the fundamentally favorable backdrop of low inflation, a
currently high level of real yields, and declining Treasury borrowing.
As you may know, the five investment management firms that comprised the
PNC Asset Management Group have consolidated under BlackRock, resulting in a
$118 billion money management firm. We look forward to using our global
investment management expertise to present exciting investment opportunities to
closed-end fund shareholders in the future.
This report contains comments from your Trust's managers regarding the
markets and portfolio in addition to the Trust's financial statements and a
detailed portfolio listing. We thank you for your continued investment in the
Trust.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
- --------------------- ------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
May 31, 1998
Dear Shareholder:
We are pleased to present the semi-annual report for The BlackRock
Investment Quality Municipal Trust Inc. ("the Trust") for the six months ended
April 30, 1998. 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 its 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.
The table below summarizes the changes in the Trust's stock price and net
asset value over the past six months:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
4/30/98 10/31/97 CHANGE HIGH LOW
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK PRICE $13.8125 $13.375 3.27% $14.4375 $13.3125
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $15.21 $15.32 (0.72)% $15.68 $15.21
- -----------------------------------------------------------------------------------------------------
</TABLE>
Additionally, on June 1, 1998, the Trust's Board of Directors announced an
increase in the Trust's monthly dividend effective with the July 31, 1998
payment. The new dividend rate was increased from $0.065625 to $0.0719 monthly,
or from $0.7875 to $0.8625 annually.
THE FIXED INCOME MARKETS
The first four months of 1998 have witnessed continued rapid expansion of
the U.S. economy. GDP growth is estimated at an annual rate of 4.2%, far
exceeding the historical non-inflationary level of 2%. Despite the strong
economic growth, inflation stayed surprisingly subdued. After rising only 1.7%
in 1997, inflation inched higher at a 0.2% annual rate for the first quarter of
1998. One explanation for the absence of inflation in the U.S. economy stems
from the aftermath of the Asian crisis. U.S. exports to Asia have slowed, while
the strength of the dollar caused cheaper Asian imports to flood the U.S. market
and exert downward price pressure on domestic goods.
The Treasury market rallied during the fourth quarter of 1997 and into
1998 before giving back some gains during the past few months. For the
semi-annual period, the yield of the 10-year Treasury security fell from 5.83%
on October 31, 1997 to 5.67% on April 30, 1998. The strong performance of the
Treasury market was in response to moderating economic growth, low inflation and
a "flight to quality" from investors seeking a safe haven in U.S. Treasury
securities. Continued expectations that the Asian crisis will slow economic
growth and force the Fed to leave the Federal funds rate unchanged provided
additional support to the bond market. With Treasury supply waning due to
surplus in the federal budget and increased foreign demand for Treasuries due to
their U.S. government backing and relatively attractive yields, we anticipate a
positive environment for Treasuries for the balance of 1998.
Municipal bonds underperformed the taxable domestic bond market during the
past six months, returning 2.77% (as measured by the Lehman Municipal Index)
versus the Lehman Aggregate Index's 3.58% on a pre-tax basis. The main forces
behind municipal bond underperformance were increased municipal bond supply
(fueled by the lowest municipal interest rates since the 1960s) and retail
investors focus on the equity markets. We believe that municipals are
attractively valued versus Treasuries and our outlook for municipal securities
is favorable. The robust economy continues to strengthen the credit quality of
most issuers, and we expect that the attractive taxable equivalent yields
offered by municipal securities should bring investors back into the market.
2
<PAGE>
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 to enhance its income by
borrowing at short-term municipal rates and investing the proceeds in longer
maturity issues that 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. At the end of the semi-annual period, the Trust's leverage amount was
34% of total assets. During the past six months, the Trust's borrowing costs
have remained favorable.
Within the municipal market, we find the best relative value on the yield
curve to be in the 14 to 17 year sector of the yield curve, which we believe
offers the most attractive taxable equivalent yields for the least amount of
incremental duration. Additionally, the Trust has been emphasizing higher rated
credits (AA- and AAA-rated issues) over lower rated credits (BBB and A) to take
advantage of historically narrow credit spreads between higher and lower rated
bonds.
The following charts compare the Trust's current and October 31, 1997
asset composition and credit quality allocations:
SECTOR BREAKDOWN
- --------------------------------------------------------------------------------
SECTOR APRIL 30, 1998 OCTOBER 31, 1997
- --------------------------------------------------------------------------------
City, County & State 17% 17%
- --------------------------------------------------------------------------------
Transportation 17% 15%
- --------------------------------------------------------------------------------
Hospital 14% 11%
- --------------------------------------------------------------------------------
Industrial 14% 8%
- --------------------------------------------------------------------------------
Power 11% 13%
- --------------------------------------------------------------------------------
University/School 7% 8%
- --------------------------------------------------------------------------------
Lease Revenue 6% 8%
- --------------------------------------------------------------------------------
Housing 6% 5%
- --------------------------------------------------------------------------------
Tax Revenue 4% 4%
- --------------------------------------------------------------------------------
Water & Sewer 2% 5%
- --------------------------------------------------------------------------------
Resource Recovery 1% 1%
- --------------------------------------------------------------------------------
Miscellaneous Revenue 1% 1%
- --------------------------------------------------------------------------------
Pollution Control -- 4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STANDARD & POOR'S/MOODY'S
CREDIT RATING APRIL 30, 1998 OCTOBER 31, 1997
- --------------------------------------------------------------------------------
AAA/Aaa 57% 55%
- --------------------------------------------------------------------------------
AA/Aa 7% 12%
- --------------------------------------------------------------------------------
A/A 13% 13%
- --------------------------------------------------------------------------------
BBB/Baa 23% 20%
- --------------------------------------------------------------------------------
3
<PAGE>
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 4/30/98: $13.8125
- --------------------------------------------------------------------------------
Net Asset Value as of 4/30/98: $15.21
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 4/30/98 ($13.8125)1: 5.70%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.065625
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $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.
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1998 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION (a) PROVISIONS+ (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS -- 148.6%
CALIFORNIA -- 15.1%
AAA $ 4,115 Antelope Valley, Healthcare Dist., Ser. A, 5.00%, 1/01/12, FSA ...... 1/08 at 102 $ 4,085,413
AA 1,220 California Hsg. Fin. Agcy. Rev., Home Mtg., Ser. C, 5.65%, 8/01/14 .. 2/04 at 102 1,250,671
A1 5,770 California St. G.O., 5.00%, 10/01/14 ............................... 10/07 at 101 5,661,120
AAA 15,460 Los Angeles Cnty. Asset Leasing Corp. Rev., 5.95%, 2/01/07, AMBAC ... No Opt. Call 17,028,726
AA 2,500 Metropolitan Wtr. Dist. Southern California Waterworks Rev.,
Ser. A, 5.00%, 7/01/26 ............................................ 1/08 at 101 2,380,600
University of California Rev., Research Fac., Ser. B,
A+ 2,000 6.10%, 9/01/03+++ ................................................. N/A 2,191,340
A+ 3,305 6.20%, 9/01/03+++ ................................................. N/A 3,636,723
A+ 2,000 6.25%, 9/01/03+++ ................................................. N/A 2,205,440
-----------
38,440,033
-----------
COLORADO -- 13.1%
Arapahoe Cnty. Cap. Impvt. Hwy. Rev., Trust Fund, Ser. E,
AAA 3,100 Zero Coupon, 8/31/04 .............................................. No Opt. Call 2,325,341
Denver City & Cnty. Arpt. Rev.,
Baa 1,120 Ser. C, 6.65%, 11/15/05 ........................................... 11/02 at 102 1,211,011
Baa 3,000 Ser. C, 6.50%, 11/15/06 ........................................... 11/02 at 102 3,219,420
Aaa 3,705 Ser. D, 7.00%, 11/15/01+++. N/A 4,016,516
Baa1 14,085 Ser. D, 7.00%, 11/15/25 ........................................... 11/01 at 100 15,041,653
E-470 Pub. Hwy. Auth. Rev., Ser. B,
AAA 3,000 Zero Coupon, 9/01/11, MBIA ........................................ No Opt. Call 1,545,990
AAA 10,000 Zero Coupon, 9/01/18, MBIA ........................................ No Opt. Call 3,387,200
AAA 2,250 6.90%, 8/31/05 +++ ................................................ N/A 2,632,230
-----------
33,379,361
-----------
CONNECTICUT -- 3.7%
Aa3 8,750 Connecticut St. G.O., Ser. A, 5.50%, 11/15/08 ....................... 11/03 at 102 9,292,412
-----------
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 2,032,525
-----------
FLORIDA -- 2.7%
AAA 1,750 Florida Hsg. Fin. Agcy. Rev., Sngl. Fam. Mtg.,
Ser. 1994-A, 6.55%, 7/01/14 ....................................... 1/05 at 102 1,882,300
AAA 550 Florida St. Div. Brd. Fin. Dept. Env. Prot.,
5.50%, 7/01/09, FSA ............................................... 7/08 at 101 582,659
BBB- 4,000 Santa Rosa Bay Bridge Auth. Rev., 6.25%, 7/01/28. ................... 7/06 at 102 4,368,360
-----------
6,833,319
-----------
GEORGIA -- 3.4%
AAA 6,000 Georgia Mun. Pwr. & Elec. Auth., Ser. T, 6.50%, 1/01/99+++, FGIC .... N/A 6,103,500
AA+ 2,250 Georgia St. Hsg. & Fin. Auth. Rev., Sngl. Fam. Mtg.,
Ser. C, 7.00%, 12/01/15, FHA ...................................... 12/04 at 102 2,441,565
-----------
8,545,065
-----------
ILLINOIS -- 8.5%
AAA 5,050 Chicago Wtr. Rev., 5.25%, 11/01/23, FGIC ........................... 11/07 at 102 4,932,588
AAA 3,000 Cook Cnty. Cap. Impt. 5.875%, 11/15/22, FGIC ........................ 11/06 at 101 3,147,270
AAA 4,165 Cook Cnty. G.O., Ser. A, 5.20%, 11/15/08, MBIA ...................... 11/07 at 101 4,310,067
Illinois Edl. Fac. Auth. Rev., Loyola Univ., FGIC,
AAA 5,000 4.125%+, 7/01/13 .................................................. 7/03 at 102 5,204,850
AAA 4,000 5.45%, 7/01/14 .................................................... 7/03 at 102 4,099,280
-----------
21,694,055
-----------
INDIANA -- 6.4%
Baa2 7,595 Indianapolis Arpt. Auth. Rev., Spl. Fac. Fed. Express Corp. Proj.,
7.10%, 1/15/17 .................................................... 7/04 at 102 8,511,261
AAA 8,150 Marion Cnty. Cnvtn. & Rec. Fac. Auth., Excise Tax Rev.,
Ser. A., 5.00%, 6/01/27, MBIA ..................................... 6/08 at 101 7,675,344
-----------
16,186,605
-----------
KENTUCKY -- 6.1%
AAA 15,000 Kentucky St. Tpke. Auth., Econ. Dev. Road Rev., 3.95%+,
7/01/13, AMBAC .................................................... 7/03 at 102 15,624,300
-----------
LOUISIANA -- 7.0%
AAA 14,400 Louisiana Pub. Fac. Auth. Hosp. Rev.,
Our Lady of the Lake Regl. Med. Ctr., 4.19%+, 12/01/22, FSA ....... 12/03 at 102 14,833,152
AAA 2,860 Louisiana Stadium & Expo Dist., Htl. Ocpcy. Tax, 6.00%,
7/01/16, FGIC ..................................................... 7/06 at 102 3,065,291
-----------
17,898,443
-----------
See Notes to Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OPTION CALL VALUE
RATING* (000) DESCRIPTION (A) PROVISIONS+ (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MARYLAND -- 5.5%
AA $ 9,940 Maryland St. Dept. Hsg. & Comn. Dev. Admin., Sngl. Fam. Prog.,
Ser. 2, 6.55%, 4/01/26 ........................................... 4/05 at 102 $10,679,834
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 3,398,044
-----------
14,077,878
-----------
MASSACHUSETTS -- 3.4%
AAA 9,000 Massachusetts St. Hlth.& Edl. Fac. Auth. Rev.,
Hallmark Hlth. Sys., Ser. A., 5.00%
7/01/21, FSA ..................................................... 7/08 at 101 8,549,730
-----------
MICHIGAN -- 3.8%
AAA 4,000 Greater Detroit Res. Rec. Auth. Rev., Ser. A, 6.25%,
12/13/08, AMBAC .................................................. No Opt. Call 4,479,480
AAA 5,000 River Rouge Sch. Dist., 5.625%, 5/01/22, FSA ....................... 5/03 at 101.50 5,128,550
-----------
9,608,030
-----------
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 4,003,462
-----------
NEW YORK -- 21.8%
AAA 5,400 Metropolitan Trans. Auth. Commuter Fac. Rev.,
Ser. A, 5.75%, 7/01/21, MBIA ..................................... 7/07 at 101 5,616,000
New York City G.O.,
Baa1 4,140 Ser. A, 6.00%, 8/01/05 ........................................... No Opt. Call 4,424,791
AAA 3,000 Ser. D, 5.60%, 11/01/05, AMBAC ................................... No Opt. Call 3,182,520
Baa1 7,000 Ser. E, 6.50%, 2/15/06 .......................................... No Opt. Call 7,702,940
Baa1 6,160 Ser. H, 7.20%, 2/01/02+++, N/A 6,826,574
Baa1 840 Ser. H, 7.20%, 2/01/13 ........................................... 2/02 at 101.50 921,136
New York City Ind. Dev. Agcy. Spec. Fac. Rev., Term.
One Group Assoc. Proj.,
A 4,000 6.00%, 1/01/08 ................................................... 1/04 at 102 4,217,880
A 1,000 6.00%, 1/01/15 ................................................... 1/04 at 102 1,039,690
AA 4,000 New York City Transitional Fin. Auth. Rev., Ser. C, 4.75%, 5/01/23 . 5/08 at 102 3,640,640
A3 3,000 New York St. Dorm. Auth. Rev., St. Univ. Edl. Fac.,
Ser. B, 6.10%, 5/15/04+++ ........................................ N/A 3,296,790
Baa1 4,000 New York St. Hsg. Fin. Agcy., Svc. Contract Oblig. Rev.,
Ser. A, 5.50%, 9/15/22 ........................................... 3/03 at 102 3,994,680
Baa 1,955 New York St. Hsg. Fin. Agcy. Rev., Hlth. Fac. of New York City,
Ser. A, 6.375%, 11/01/04 ......................................... No Opt. Call 2,117,949
AAA 5,000 New York St. Med. Care Fac. Rev., New York Hosp.,
Ser. A, 6.60%, 2/15/05+++, AMBAC ................................. N/A 5,681,050
AAA 2,620 New York St. Urban Dev. Corp. Rev., Correctional Fac. 5.625%,
1/01/07, AMBAC ................................................... 1/03 at 102 2,777,148
-----------
55,439,788
-----------
NORTH CAROLINA -- 2.3%
AAA 5,000 North Carolina Eastn. Mun. Pwr. Agcy. Rev., Ser. B, 7.00%,
1/01/08, CAPMAC .................................................. No Opt. Call 5,826,900
-----------
OHIO -- 0.7%
NR 500 Cleveland Cuyahoga Cnty. Ohio Port Auth. Rev., Port Dev. Proj.,
6.00%, 3/01/07 ................................................... No Opt. Call 509,335
AAA 1,220 Ohio St. Higher Edl. Fac. Com., Univ. Dayton Proj.,
5.35%, 12/01/17, AMBAC ........................................... 12/07 at 101 1,242,106
-----------
1,751,441
-----------
PENNSYLVANIA -- 9.5%
AAA 10,100 Lehigh Cnty. Gen. Purpose Auth. Rev., St. Lukes Hosp.
Bethlehem Proj., 4.00%,+ 11/15/13, AMBAC ......................... 11/03 at 102 10,198,980
AAA 7,000 Montgomery Cnty. Ed. & Hlth. Care Auth., Holy Redeemer,
5.25%, 10/01/23, AMBAC ........................................... 10/07 at 101 6,894,230
AAA 4,000 Pennsylvania Intergovernmental Coop. Auth., Spl. Tax Rev.,
Philadelphia Fdg. Prog., 5.50%, 6/15/20, FGIC .................... 6/06 at 100 4,057,480
AAA 1,500 Pennsylvania St. G.O., First Ser., 5.375%, 5/15/09, FGIC ........... 5/06 at 101.50 1,575,870
AAA 1,500 Pittsburgh Wtr. & Swr. Auth., Ser. A., 5.00%, 9/01/17, FGIC ........ 3/08 at 100 1,440,495
-----------
24,167,055
-----------
RHODE ISLAND -- 2.3%
AA+ 3,640 Rhode Island Hsg. & Mtg. Fin., Homeownership Oppty.,
Ser. 15-B, 6.75%, 10/01/17 ....................................... 4/04 at 102 3,914,092
AAA 2,000 Rhode Island St. Hlth. & Edu. Bldg. Corp. Rev., Hosp. Fin.,
5.50%, 5/15/16, MBIA ............................................. 5/07 at 102 2,054,100
-----------
5,968,192
-----------
TENNESSEE -- 3.4%
A3 7,800 Maury Cnty. Ind. Dev. Brd., P.C.R., Saturn Corp. Proj.,
6.50%, 9/01/24 ................................................... 9/04 at 102 8,544,588
-----------
TEXAS -- 9.9%
AAA 9,500 Austin Util. Sys. Rev., 5.00%, 11/15/14, FSA ....................... 11/07 at 100 9,299,550
BBB+ 9,800 Brazos River Auth., P.C.R., Coll-Texas Utilities Co.Proj.,
8.25%, 1/01/19 ................................................... 1/99 at 100 10,221,498
See Notes to Financial Statements.
6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION
AMOUNT CALL
RATING* (000) DESCRIPTION PROVISIONS++ (NOTE 1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXAS (CONTINUED)
A2 $ 2,500 Port of Bay City Auth. Matagorda Cnty. Rev.,
Hoechst Celanese Corp. Proj., 6.50%, 5/01/26 ..................... 5/06 at 102 $ 2,745,475
Baa1 2,640 Sabine River Auth., P.C.R., Coll-Texas Utilities Elec. Proj.,
Ser. B, 8.25%, 10/01/20 .......................................... 10/00 at 102 2,893,414
------------
25,159,937
------------
UTAH -- 6.8%
AAA 4,450 Intermountain Pwr. Agcy., Rev. Pwr. Supply,
Ser. F, 5.00%, 7/01/13, AMBAC .................................... No Opt. Call 4,351,566
A1 1,800 Intermountain Pwr. Agcy., Fst. Crossover, Ser. 86 B,
5.00%, 7/01/16 ................................................... No Opt. Call 1,708,956
BBB 11,250 Tooele Cnty. Hazardous Wst. Trmt. Rev., Union Pacific Proj.,
5.70%, 11/01/26 .................................................. 4/08 at 102 11,245,725
------------
17,306,247
------------
WASHINGTON -- 10.8%
Aa 6,900 Seattle G.O., 5.40%, 1/01/08 ....................................... 1/03 at 102 7,128,321
AA+ 4,000 Washington St. G.O., Ser. A, 5.375%, 7/01/21 ...................... 7/06 at 100 3,996,000
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 13,395 Nuclear Proj. No. 1, 5.75%, 7/01/11, MBIA ........................ 7/06 at 102 14,136,815
AAA 2,000 Nuclear Proj. No. 2, 5.55%, 7/01/10, FGIC ........................ 7/03 at 102 2,049,440
------------
27,310,576
------------
Total Long-Term Investments (cost $359,509,483) .................... 377,639,942
------------
SHORT-TERM INVESTMENTS** -- 1.9%
GEORGIA -- 0.1%
A 100 Bartow Cnty. Dev. Auth., P.C.R., GA Pwr. Co., 4.05%, 5/01/98, FRDD . N/A 100,000
------------
MISSISSIPPI -- 0.4%
Aa2 1,000 Jackson Cnty., P.C.R., Chevron U.S.A. Inc. Proj., 4.10%,
5/01/98, FRDD .................................................... N/A 1,000,000
------------
WASHINGTON -- 0.5%
Washington St. Hlth. Care Fac. Auth. Rev., Sisters of Providence, FRDD,
A-1+ 110 Ser. B, 4.15%, 5/01/98 ........................................... N/A 110,000
A1 1,300 Ser. D, 4.15%, 5/01/98 ........................................... N/A 1,300,000
------------
1,410,000
------------
WYOMING -- 0.9%
Aa2 2,300 Unita Cnty., P.C.R., Chevron USA Inc. Proj., 4.10%, 5/01/98, FRDD .. N/A 2,300,000
------------
Total Short-Term Investments (cost $4,810,000) ..................... 4,810,000
------------
TOTAL INVESTMENTS -- 150.5% (cost $364,319,483) .................... 382,449,942
Other assets in excess of liabilities -- 0.7% ................ 1,651,192
Liquidation value of preferred stock-- (51.2)% ..................... (130,000,000)
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS-- 100% ................ $254,101,134
============
</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 price 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
<S> <C> <C> <C>
AMBAC -- American Municipal Bond Assurance Corporation FRDD -- Floating Rate Daily Demand
CAPMAC -- Capital Markets Assurance Corporation FSA -- Financial Security Assurance
FGIC -- Financial Guaranty Insurance Company G.O. -- General Obligation Bond
FHA -- Federal Housing Administration MBIA -- Municipal Bond Insurance Association
P.C.R. -- Pollution Control Revenue
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments, at value
(cost $364,319,483) (Note 1) ........... $382,449,942
Cash ..................................... 14,396
Interest receivable ...................... 6,509,231
Receivable for investments sold .......... 5,576,083
Other assets ............................. 20,201
-------------
394,569,853
-------------
LIABILITIES
Payable for investments purchased ........ 10,031,493
Investment advisory fee payable (Note 2) . 112,004
Administration fee payable (Note 2) ...... 48,001
Dividends payable--preferred stock ....... 27,191
Other accrued expenses ................... 250,030
-------------
10,468,719
-------------
NET INVESTMENT ASSETS .................... $384,101,134
=============
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 .... 1,556,139
Accumulated net realized gain .......... 2,169,700
Net unrealized appreciation ............ 18,130,459
-------------
Net investment assets, April 30, 1998 .. $384,101,134
=============
Net assets applicable to common
shareholders ......................... $254,101,134
=============
Net asset value per common share:
($254,101,134 / 16,707,093 shares of
common stock issued and outstanding) . $15.21
======
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned ............ $10,135,982
------------
Expenses
Investment advisory ..................... 674,147
Administration .......................... 288,920
Auction agent ........................... 181,000
Custodian ............................... 52,000
Reports to shareholders ................. 31,000
Directors ............................... 29,000
Audit ................................... 17,500
Transfer agent .......................... 10,500
Legal ................................... 3,000
Miscellaneous ........................... 69,910
------------
Total expenses .......................... 1,356,977
------------
Net investment income ..................... 8,779,005
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain on investments .......... 2,250,913
Net change in unrealized appreciation
on investments .......................... (215,997)
------------
Net gain on investments ................... 2,034,916
------------
NET INCREASE IN NET INVESTMENT ASSETS
RESULTING FROM OPERATIONS ............... $10,813,921
============
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
INCREASE (DECREASE) IN NET INVESTMENT ASSETS 1998 1997
--------- ---------
<S> <C> <C>
OPERATIONS:
Net investment income ....................................................... $ 8,779,005 $ 18,096,994
Net realized gain on investments ............................................ 2,250,913 4,449,946
Net change in unrealized appreciation on investments ........................ (215,997) 8,949,932
------------ ------------
Net increase in net investment assets resulting from operations ............. 10,813,921 31,496,872
DIVIDENDS AND DISTRIBUTIONS:
To common shareholders from net investment income ........................... (6,578,090) (13,100,478)
To common shareholders from net realized gain on investments ................ (3,321,913) (322,193)
To preferred shareholders from net investment income ........................ (1,614,961) (4,591,740)
To preferred shareholders from net realized gain on investments ............. (1,123,540) (104,104)
------------ ------------
Total dividends and distributions ........................................... (12,638,504) (18,118,515)
------------ ------------
Total increase (decrease) ............................................... (1,824,583) 13,378,357
NET INVESTMENT ASSETS
Beginning of period ............................................................ 385,925,717 372,547,360
------------ ------------
End of period .................................................................. $384,101,134 $385,925,717
============ ============
See Notes to Financial Statements.
9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED OCTOBER 31, FEBRUARY 26, 1993*
APRIL 30, ------------------------------------------- TO OCTOBER 31,
PER SHARE OPERATING PERFORMANCE: 1998 1997 1996 1995 1994 1993
------ ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 15.32 $ 14.52 $ 14.18 $ 12.05 $ 14.76 $ 14.10
-------- -------- -------- -------- -------- -------
Net investment income ...................... 0.53 1.08 1.09 1.10 1.06 0.66
Net realized and unrealized gain (loss)
on investments ............................ 0.12 0.80 0.34 2.16 (2,64) 0.74
-------- -------- -------- -------- -------- -------
Net increase (decrease) from
investment operations ...................... 0.65 1.88 1.43 3.26 (1.58) 1.40
-------- -------- -------- -------- -------- -------
Dividends and Distributions:
Dividends from net investment income to:
Common shareholders ...................... (0.39) (0.78) (0.79) (0.82) (0.90) (0.45)
Preferred shareholders ................... (0.10) (0.27) (0.28) (0.31) (0.21) (0.11)
Distributions from net realized gain on
investments to:
Common shareholders ...................... (0.20) (0.02) (0.01) -- -- --
Preferred shareholders ................... (0.07) (0.01) (0.01) -- -- --
-------- -------- -------- -------- -------- -------
Total Dividends and Distributions ..... (0.76) (1.08) (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** .............. $ 15.21 $ 15.32 $ 14.52 $ 14.18 $ 12.05 $ 14.76#
======== ======== ======== ======== ======== =======
Per share market value, end of period** ....... $13.8125 $ 13.375 $ 12.44 $ 12.00 $ 10.375 $14.125
======== ======== ======== ======== ======== =======
TOTAL INVESTMENT RETURN+ ...................... 6.22% 14.20% 10.41% 24.01% (20.98)% 3.36%
======== ======== ======== ======== ======== =======
RATIOS TO AVERAGE NET ASSETS
OF COMMON SHAREHOLDERS:++
Expenses ...................................... 1.06%+++ 1.07% 1.12% 1.16% 1.14% 1.04%+++
Net investment income before preferred
stock dividends ............................. 6.88%+++ 7.42% 7.57% 8.36% 7.80% 6.86%+++
Preferred stock dividends ..................... 1.27%+++ 1.88% 1.94% 2.34% 1.55% 1.11%+++
Net investment income available to common
shareholders ................................ 5.61%+++ 5.54% 5.63% 6.02% 6.25% 5.75%+++
SUPPLEMENTAL DATA:
Average net assets of common shareholders
(in thousands) .............................. $257,350 $243,947 $238,540 $219,740 $226,935 $236,810
Portfolio turnover ............................ 22% 160% 164% 182% 210% 110%
Net assets of common shareholders,
end of period (in thousands) ................ $254,101 $255,926 $242,547 $236,990 $201,343 $246,631
Preferred stock outstanding (in thousands) .... $130,000 $130,000 $130,000 $130,000 $130,000 $130,000
Asset coverage per share of preferred stock,
end of period ## .......................... $ 73,866 $ 74,217 $ 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 less than one full year are not 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.
+++ Annualized.
The information above represents the 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.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING The BlackRock Investment Quality
POLICIES Municipal Trust Inc. (the "Trust") was
organized in Maryland on November 19,
1992 as a diversified, closed-end management investment company. 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 trade date. Realized and unrealized gains and losses are calculated
on the identified cost basis. Interest income is recorded on the accrual basis
and the Trust accretes original issue discount or amortizes premium 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 were deferred and amortized
ratably over a period of sixty months from the date the Trust commenced
investment operations.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2. AGREEMENTS The Trust has an Investment Advisory
Agreement with BlackRock Financial
Management, Inc., (the "Adviser"), a wholly-owned corporate subsidiary of
BlackRock Advisors, Inc., which is an indirect majority-owned subsidiary of PNC
Bank, N.A., and an Administration Agreement with Princeton 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.
11
<PAGE>
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 securities, other than short-term
investments, for the six months ended
April 30, 1998, aggregated $84,778,616 and $90,841,022, respectively.
The federal income tax basis of the Trust's investments at April 30, 1998 was
$364,400,705, and accordingly, net unrealized appreciation was $18,049,237
(gross unrealized appreciation--$18,635,174, gross unrealized depreciation--
$585,937).
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, 1998, the Adviser owned 7,205
shares. As of April 30, 1998, there were 5,200 shares of Preferred Stock
outstanding as follows: Series T7--2,600 and Series T28--2,600.
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.
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 3.30% to 6.01% during the six months ended April 30,
1998.
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 April 30, 1998, the Board
AND DISTRIBUTIONS of Directors of the Trust declared a
divi-dend from undistributed earnings of
$0.065625 per common share payable May 29, 1998, to shareholders of record on
May 15, 1998.
For the period May 1 through May 31, dividends declared on Preferred Stock
totalled $415,311 in aggregate for the two outstanding Preferred Stock series.
12
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
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 or to its charter or
by-laws or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio. The Annual Meeting of
Trust Shareholders was held May 6, 1998 to vote on the following matters: (1)To
elect two Directors as follows:
<TABLE>
<CAPTION>
DIRECTOR CLASS TERM EXPIRING
-------- ----- ----- -------
<S> <C> <C> <C>
Ralph L. Schlosstein ..................................... II 3 years 2000
Walter F. Mondale ........................................ II 3 years 2000
</TABLE>
Directors whose term of office continues beyond this meeting are Andrew
F. Brimmer, Kent Dixon, Laurence D. Fink, Richard E. Cavanagh, James
Grosfeld, Frank J. Fabozzi and James Clayburn La Force, Jr.
(2)To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 1998.
Shareholders elected the two Directors and ratified the selection of
Deloitte & Touche LLP. The results of the voting wasas follows:
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS
-------- ----------- ----------
<S> <C> <C> <C>
Ralph L. Schlosstein ..................................... 13,897,300 0 161,037
Walter F. Mondale ........................................ 13,808,720 0 249,617
Ratification of Deloitte & Touche LLP .................... 13,813,320 42,839 202,178
</TABLE>
13
<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") is an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $118
billion on behalf of taxable and tax-exempt clients worldwide. Strategies
include fixed income, equity and cash and may incorporate both domestic and
international securities. Domestic fixed income strategies utilize the
government, mortgage, corporate and municipal bond sectors. BlackRock manages
twenty-one closed-end funds that are traded on either the New York or American
stock exchanges, and a $23 billion family of open-end equity and bond funds.
Current institutional clients number 334, domiciled in the United States and
overseas.
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 at least 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
14
<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.
15
<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 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: These securities are collateralized by U.S. Government
securities which 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.
16
<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
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM (7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
</TABLE>
17
<PAGE>
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BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------
BlackRock Financial Management, Inc. ("BlackRock") is an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $118
billion on behalf of taxable and tax-exempt clients worldwide. Strategies
include fixed income, equity and cash and may incorporate both domestic and
international securities. BlackRock manages twenty-one closed-end funds that are
traded on either the New York or American stock exchanges, and a $23 billion
family of open-end equity and bond funds. Current institutional clients number
334, domiciled in the United States and overseas.
BlackRock's fixed income product was introduced in 1988 by a team of
highly seasoned fixed income professionals. These professionals had extensive
experience creating, analyzing and trading a variety of fixed income
instruments, including the most complex structured securities. In fact, several
individuals at BlackRock were responsible for developing many of the major
innovations in the mortgage-backed and asset-backed securities markets,
including the creation of the first 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
emphasis it places on the development of proprietary analytical capabilities.
Over one quarter of the firm's professionals is dedicated to the design,
maintenance and use of these systems, which are not otherwise available to
investors. BlackRock's proprietary analytical tools are used for evaluating, and
designing fixed income investment strategies for client portfolios. Securities
purchased include mortgages, corporate bonds, municipal bonds and a variety of
hedging instruments.
BlackRock has developed investment products that respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. In fact, 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 AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
Currently, BlackRock's closed-end funds have dividend reinvestment plans, which
are designed to provide ongoing demand for the stock in the secondary market.
BlackRock manages a wide range of investment vehicles, each 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
that you may have about your BlackRock funds and we thank you for the continued
trust that you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
18
<PAGE>
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BLACKROCK
- ---------------
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Kevin Klingert, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
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) 543-6217
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
The accompanying financial statements as of April 30, 1998 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 Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 227-7BFM
09247D-105
09247D-204
[Logo] Printed on recycled paper 09247D-303
THE BLACKROCK
INVESTMENT QUALITY
MUNICIPAL TRUST INC.
- ------------------------
SEMI-ANNUAL REPORT
APRIL 30, 1998
[GRAPHIC]
