- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
November 30, 1998
Dear Shareholders:
Over the past twelve months, U.S. Treasury securities have experienced a
strong rally, as investors sought a safe haven from global market turmoil and
the Federal Reserve continued to cut interest rates. Other segments of the
fixed income market have lagged behind Treasuries, but still produced positive
returns since our last report. We anticipate that the Federal Reserve will
remain prepared to combat any signs of a credit crunch through interest rate
cuts, and given the unstable economic situation in Brazil, the Fed likely will
retain a loosening bias.
Despite previous worries of a second half slowdown in 1998, the U.S.
economy continues to expand rapidly. Third quarter GDP registered a 3.3%
annualized growth rate, supported by strong consumer spending. This momentum,
however, may not continue as briskly into the new year, based on weaker
corporate profits and a loosening of the labor markets. Already, major
corporations have warned of slower profit growth and announced major layoffs.
This report contains detailed market and portfolio strategy by your
Trust's managers in addition to the Trust's audited financial statements and a
detailed portfolio list of the portfolio's holdings. We thank you for your
continued investment in the Trust and look forward to serving your investment
needs in the future.
Sincerely,
/s/ LAURENCE D. FINK /s/ RALPH L. SCHLOSSTEIN
- -------------------- ------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
November 30, 1998
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, 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 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.
The table below summarizes the changes in the Trust's stock price and net
asset value over the past year:
------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
10/31/98 10/31/97 CHANGE HIGH LOW
STOCK PRICE $ 15.4375 $ 13.375 15.42% $ 15.625 $ 13.3125
NET ASSET VALUE (NAV) $ 15.78 $ 15.32 3.00% $ 16.05 $ 15.21
</TABLE>
THE FIXED INCOME MARKETS
The first half of the Trust's fiscal year was characterized by the
positive momentum and bull market trend that brought Treasury yields towards
historic lows. The low Treasury yields were due to budget surplus projections
as well as the Fed's decision to move from a tightening to a neutral policy.
The positive economic momentum throughout the first half of the fiscal year was
strengthened by unseasonably warm weather that led to increased consumer
spending and job gains, and a less than expected impact on trade from the Asian
financial crisis.
GDP growth measured at a very strong 5% for the first quarter of 1998;
however, signs of a slowdown became evident when economic data for April and
May began to lag.
The second half of the trust's fiscal year witnessed virtually
unparalleled market turbulence. During the second quarter of 1998, GDP growth
faltered to a 1.8% rate due to slower output and an increasing trade deficit
created by a strong U.S. dollar. Although consumers continued their spending
domestically, demand for U.S. goods abroad faltered, as the strong dollar and
weakness overseas, especially Asia, drove prices for U.S. goods higher relative
to foreign goods.
In the Trust's final quarter, U.S. GDP growth rebounded to a 3.3% pace;
however, the instability in global financial markets began to rattle investor
confidence. The devaluation of the Russian ruble and the fear of a possible
devaluation of the Brazilian currency caused a flight-to-quality to U.S.
Treasuries. Spread sectors widened dramatically as a result of the sell-off. In
addition, the global financial markets witnessed a credit crunch where even
higher-grade securities were affected. This dramatic shift of investor
sentiment culminated in the near collapse of a prominent hedge fund.
The Treasury market rally pushed Treasury yields to historic levels below
the 5% barrier. In response to the financial fragility in the third quarter
1998, the Fed eased interest rates on September 29, 1998 by 25 basis points
("bps") and again on October 15, in an unusual between-meetings move. On
November 17, the Fed eased interest rates again by 25bps.
2
<PAGE>
The municipal bond market, represented by the Lehman Municipal Bond Index,
posted a total return of 8.03% for the 12 month period ended October 31, 1998,
a taxable equivalent return of 11.52% for an individual in the 39.6% Federal
Tax income bracket, outperforming the domestic taxable investment grade market
(measured by the Lehman Aggregate Index), which returned 9.33%. Currently,
municipal securities are at their most attractive valuation versus Treasuries
in over a decade. The overwhelming factor that has driven municipals to this
relationship has been enormous new issuance supply. In the first three quarters
of 1998, new issue volume totaled $214 billion, a 37% increase over the same
period last year. However, the rapid decline in Treasury interest rates has
actually begun to reduce the pace of new issue volume, as savings associated
with refunding deals become increasingly negligible due to a technical factor
called "negative arbitrage". This reduction in supply when coupled with
attractive valuations versus Treasuries sets the municipal market up with the
opportunity for significant total return performance going forward.
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 net 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. Over the past twelve months, the Federal Reserve
loosened monetary policy by lowering short term rates by 25bps in September,
October and again in November to 4.75%. Typically, short term municipal rates
(which determine the Trust's borrowing costs) are approximately 65% of Treasury
rates. Accordingly the Trust's cost of leverage decreased as a result of the
Fed's Action.
The main portfolio management theme in the Trust over the past year has
been to take advantage of narrowing credit spreads between higher and lower
rated bonds. Historically, lower rated bonds yield significantly more than
higher rated bonds to compensate the investor for taking on a higher
probability of default. Over the past year, this yield advantage has narrowed
to levels that we believe do not pay investors enough to purchase lower
credits. The Trust's holdings currently emphasize high credit non-callable and
callable premiums in the 10- to 15-year maturity range. Prevailing municipal
market conditions do not reward investors for extending beyond this maturity
range.
The following charts compare the Trust's current and October 31, 1997
asset composition and credit quality allocations:
SECTOR BREAKDOWN
<TABLE>
<CAPTION>
SECTOR OCTOBER 31, 1998 OCTOBER 31, 1997
<S> <C> <C>
Transportation 18% 15%
City, County & State 17% 17%
Industrial & Pollution Control 13% 12%
Hospital 12% 11%
Power 8% 13%
University/School 7% 8%
Lease Revenue 6% 8%
Tax Revenue 6% 4%
Housing 5% 5%
Water & Sewer 5% 5%
Resource Recovery 2% 1%
Miscellaneous Revenue 1% 1%
</TABLE>
3
<PAGE>
STANDARD & POOR'S/MOODY'S
CREDIT RATING OCTOBER 31, 1998 OCTOBER 31, 1997
AAA/Aaa 58% 55%
AA/Aa 12% 12%
A/A 15% 13%
BBB/Baa 15% 20%
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 contact our
marketing center at (800) 227-7BFM (7236) if you have specific questions which
were not addressed in this report.
Sincerely,
/s/ ROBERT S. KAPITO /s/ KEVIN KLINGERT
- -------------------- ------------------
Robert S. 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 10/31/98: $ 15.4375
Net Asset Value as of 10/31/98: $ 15.78
Yield on Closing Stock Price as of 10/31/98 ($15.4375)1: 5.59%
Current Monthly Distribution per Share2: $ 0.0719
Current Annualized Distribution per Share2: $ 0.8628
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 The Distribution is not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (OO0) DESCRIPTION (UNAUDITED) (NOTE 1)
====================================================================================================================================
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS-146.8%
CALIFORNIA -13.8%
Aa2 $ 1,220 California Hsg. Fin. Agcy. Rev., Home Mtg.,
Ser. C, 5.65%, 8/01/14 ....................................... 2/04 at 102 $ 1,260,785
California St. G.O.,
A1 5,770 5.00%, 10/01/14 .............................................. 10/07 at 101 5,893,824
Aa3 2,955 5.25%, 10/01/10 .............................................. No Opt. Call 3,225,087
AAA 15,460 Los Angeles Cnty. Asset Leasing Corp. Rev.,
5.95%, 12/01/07, AMBAC ....................................... No Opt. Call 17,753,646
University of California Rev., Research Fac., Ser. B,
A+ 2,000 6.10%, 9/01/03++ ............................................. N/A 2,239,000
A+ 3,305 6.20%, 9/01/03++ ............................................. N/A 3,714,390
A+ 2,000 6.25%, 9/01/03++ ............................................. N/A 2,252,121
-------------
36,338,853
-------------
COLORADO - 12.9%
Arapahoe Cnty. Cap. Impvt. Hwy. Rev., Trust Fund, Ser. E,
AAA 3,100 Zero Coupon, 8/31/04 ......................................... No Opt. Call 2,454,301
Denver City & Cnty. Arpt. Rev.,
Baa1 1,120 Ser. C, 6.65%, 11/15/05 ...................................... 11/02 at 102 1,222,558
Baa1 3,000 Ser. C, 6.50%, 11/15/06 ...................................... 11/02 at 102 3,253,680
Aaa 3,705 Ser. D, 7.00%, 11/15/01++ ................................... N/A 4,041,303
Baa1 14,085 Ser. D, 7.00%, 11/15/25 ...................................... 11/01 at 100 14,993,905
E-470 Pub. Hwy. Auth. Rev., Ser. B,
AAA 3,000 Zero Coupon, 9/01/11, MBIA ................................... No Opt. Call 1,685,220
AAA 10,000 Zero Coupon, 9/01/18, MBIA ................................... No Opt. Call 3,686,500
AAA 2,250 6.90%, 8/31/05 ++ ............................................ N/A 2,695,230
-------------
34,032,697
-------------
CONNECTICUT - 3.6%
Aa3 8,750 Connecticut St. G.O., Ser. A, 5.50%, 11/15/08 ................. 11/03 at 102 9,491,825
-------------
DISTRICT OF COLUMBIA - 1.9%
District of Columbia G.O., Ser. E, CAPMAC,
AAA 1,830 6.00%, 6/01/09 ............................................... 6/03 at 102 1,981,744
AAA 70 6.00%, 6/01/03++ ............................................. N/A 77,120
AAA 3,000 Washington D.C. Convention Ctr. Auth. Ded. Tax Rev.,
5.25%, 10/01/17, AMBAC ....................................... 10/08 at 101 3,054,690
-------------
5,113,554
-------------
FLORIDA - 2.4%
AAA 1,745 Florida Hsg. Fin. Agcy. Rev., Sngl. Fam. Mtg.,
Ser. 1994-A, 6.55%, 7/01/14 .................................. 1/05 at 102 1,876,241
BBB- 4,000 Santa Rosa Bay Bridge Auth. Rev., 6.25%, 7/01/28. ............. 7/06 at 102 4,448,400
-------------
6,324,641
-------------
GEORGIA - 0.9%
AAA 2,250 Georgia St. Hsg. & Fin. Auth. Rev., Sngl.
Fam. Mtg., Ser. C, 7.00%, 12/01/15, FHA ...................... 12/04 at 102 2,436,750
-------------
ILLINOIS - 8.6%
AAA 5,050 Chicago Wtr. Rev., 5.25%, 11/01/23, FGIC ...................... 11/07 at 102 5,140,849
AAA 3,000 Cook Cnty. Cap. Impt., 5.875%, 11/15/06, FGIC++.. ............. N/A 3,393,840
AAA 4,165 Cook Cnty. G.O., Ser. A, 5.20%, 11/15/08, MBIA ................ 11/07 at 101 4,438,057
Illinois Edl. Fac. Auth. Rev., Loyola Univ., FGIC,
AAA 5,000 5.70%, 7/01/03++ ............................................. N/A 5,353,050
AAA 4,000 5.45%, 7/01/14 ............................................... 7/03 at 102 4,240,680
-------------
22,566,476
-------------
INDIANA - 3.2%
Baa2 7,595 Indianapolis Arpt. Auth. Rev., Spl. Fac. Fed.
Express Corp. Proj., 7.10%, 1/15/17 .......................... 7/04 at 102 8,473,590
-------------
KENTUCKY - 7.2%
AAA 2,850 Boone Cnty. P.C.R., 5.50%, 1/01/24, MBIA ...................... 1/04 at 102 2,960,637
AAA 15,000 Kentucky St. Tpke. Auth., Econ. Dev. Road Rev.,
5.75%, 7/01/13, AMBAC ........................................ 7/03 at 102 16,110,300
-------------
19,070,937
-------------
LOUISIANA - 7.3%
AAA 14,400 Louisiana Pub. Fac. Auth. Hosp. Rev.,
Our Lady of the Lake Regl. Med. Ctr.,
5.90%, 12/01/03, FSA++ ........................................ N/A 15,950,736
AAA 2,860 Louisiana Stadium & Expo Dist., Htl. Ocpcy. Tax,
6.00%, 7/01/16, FGIC ......................................... 7/06 at 102 3,319,931
-------------
19,170,667
-------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (OO0) DESCRIPTION (UNAUDITED) (NOTE 1)
====================================================================================================================================
<S> <C> <C> <C> <C>
MARYLAND - 5.4%
Aa2 $ 9,940 Maryland St. Dept. Hsg. & Comn. Dev. Admin., Sngl.
Fam. Prog., Ser. 2, 6.55%, 4/01/26............................ 4/05 at 102 $ 10,668,105
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 3,475,641
-------------
14,143,746
-------------
MASSACHUSETTS - 2.4%
AAA 6,500 Massachusetts St. Hlth.& Edl. Fac. Auth. Rev.,
Hallmark Hlth. Sys., Ser. A., 5.00% 7/01/21, FSA ............. 7/08 at 101 6,370,455
-------------
MICHIGAN - 3.7%
AAA 4,000 Greater Detroit Res. Rec. Auth. Rev., Ser. A,
6.25%, 12/13/08, AMBAC ....................................... No Opt. Call 4,628,800
AAA 5,000 River Rouge Sch. Dist., 5.625%, 5/01/22, FSA .................. 5/03 at 101.50 5,246,150
-------------
9,874,950
-------------
MONTANA - 1.7%
Lake of the Ozarks Cmnty. Brdg. Corp. Brdg. Sys. Rev.,
NR 2,000 5.25%, 12/01/14 .............................................. 12/08 at 102 1,973,520
NR 2,500 5.25%, 12/01/26 .............................................. 12/08 at 102 2,387,550
-------------
4,361,070
-------------
NEVADA - 1.5%
AAA 3,750 Washoe Cnty. Arpt. Auth., Arpt. Sys. Impvt. Rev.,
Ser. B, 5.80%, 7/01/09, MBIA ................................. 7/03 at 102 4,060,012
-------------
NEW YORK - 23.6%
AAA 5,400 Metropolitan Trans. Auth. Commuter Fac. Rev., Ser. A,
5.75%, 7/01/21, MBIA ......................................... 7/07 at 101.5 5,874,768
New York City G.O.,
A3 4,140 Ser. A, 6.00%, 8/01/05 ....................................... No Opt. Call 4,565,550
AAA 3,000 Ser. D, 5.60%, 11/01/05, AMBAC ............................... No Opt. Call 3,276,930
A3 7,000 Ser. E, 6.50%, 2/15/06 ....................................... No Opt. Call 7,958,650
A- 6,160 Ser. H, 7.20%, 2/01/02++, .................................... N/A 6,894,457
A3 840 Ser. H, 7.20%, 2/01/13 ....................................... 2/02 at 101.50 926,033
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 4,295,320
A 1,000 6.00%, 1/01/15 ............................................... 1/04 at 102 1,060,080
AAA 9,375 New York City Mun. Wtr. Fin. Auth., Wtr. & Swr.
Rev., Ser. A, 5.125%, 6/15/22, AMBAC ......................... 6/07 at 101 9,444,188
AA 4,000 New York City Transitional Fin. Auth. Rev.,
Ser. C, 4.75%, 5/01/23 ....................................... 5/08 at 102 3,843,720
A3 3,000 New York St. Dorm. Auth. Rev., St. Univ. Edl. Fac.,
Ser. B, 6.10%, 5/15/04++ ..................................... N/A 3,373,920
A- 1,955 New York St. Hsg. Fin. Agcy., Hlth. Fac. of
New York City, Ser. A, 6.375%, 11/04/04 ...................... No Opt. Call 2,167,000
AAA 5,000 New York St. Med. Care Fac. Rev., New York Hosp.,
Ser. A, 6.60%, 2/15/05++, AMBAC .............................. N/A 5,808,450
AAA 2,620 New York St. Urban Dev. Corp. Rev., Correctional Fac.,
5.625%, 1/01/07, AMBAC ....................................... 1/03 at 102 2,823,679
-------------
62,312,745
-------------
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 5,985,500
-------------
OHIO - 0.7%
NR 500 Cleveland Cuyahoga Cnty. Port Auth. Rev.,
Port Dev. Proj., 6.00%, 3/01/07 .............................. No Opt. Call 511,200
AAA 1,220 Ohio St. Higher Edl. Fac. Com., Univ. Dayton Proj.,
5.35%, 12/01/17, AMBAC ....................................... 12/07 at 101 1,283,489
-------------
1,794,689
-------------
PENNSYLVANIA - 12.2%
AAA 8,000 Delaware Valley Regl. Fin. Auth. Ser. A,
5.50%, 8/01/28, AMBAC ........................................ No Opt. Call 8,631,280
AAA 10,100 Lehigh Cnty. Gen. Purpose Auth. Rev., St. Lukes Hosp.
Bethlehem Proj., 5.50%, 11/15/13, AMBAC ...................... 11/03 at 102 10,609,444
AAA 7,000 Montgomery Cnty. Ed. & Hlth. Care Auth., Holy Redeemer,
5.25%, 10/01/23, AMBAC ....................................... 10/07 at 101 7,119,000
AAA 4,000 Pennsylvania Intergovernmental Coop. Auth., Spl.
Tax Rev., Philadelphia Fdg. Prog., 5.50%, 6/15/20, FGIC ...... 6/06 at 100 4,161,240
AAA 1,500 Pennsylvania St. G.O., First Ser., 5.375%, 5/15/09, FGIC ...... 5/06 at 101.50 1,616,220
-------------
32,137,184
-------------
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 3,913,072
AAA 2,000 Rhode Island St. Hlth. & Edu. Bldg. Corp. Rev.,
Hosp. Fin., 5.50%, 5/15/16, MBIA ............................. 5/07 at 102 2,110,440
-------------
6,023,512
-------------
TENNESSEE - 3.3%
A2 7,800 Maury Cnty. Ind. Dev. Brd., P.C.R.,
Saturn Corp. Proj., 6.50%, 9/01/24 ........................... 9/04 at 102 8,654,880
-------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (OO0) DESCRIPTION (UNAUDITED) (NOTE 1)
====================================================================================================================================
<S> <C> <C> <C> <C>
TEXAS - 6.0%
BBB+ $ 9,800 Brazos River Auth., P.C.R., Coll-Texas Utilities Co.
Proj., 8.25%, 1/01/19 ........................................ 1/99 at 102 $ 10,054,310
A+ 2,500 Port of Bay City Auth. Matagorda Cnty. Rev.,
Hoechst Celanese Corp. Proj., 6.50%, 5/01/26 ................. 5/06 at 102 2,773,300
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 2,867,937
-------------
15,695,547
-------------
UTAH - 6.6%
AAA 4,450 Intermountain Pwr. Agcy. Rev., Pwr. Supply,
Ser. F, 5.00%, 7/01/13, AMBAC ................................ No Opt. Call 4,450,267
A1 1,800 Intermountain Pwr. Agcy. Rev., Fst. Crossover,
Ser. 86 B, 5.00%, 7/01/16 .................................... No Opt. Call 1,770,660
BBB 11,250 Tooele Cnty. Hazardous Wst. Trmt. Rev.,
Union Pacific Proj., 5.70%, 11/01/26 ......................... 4/08 at 102 11,142,563
-------------
17,363,490
-------------
WASHINGTON - 11.7%
Aa 6,900 Seattle G.O., 5.40%, 1/01/08 .................................. 1/03 at 102 7,306,341
AA 2,650 Seattle Wtr. Sys. Rev., 5.50%, 6/01/18 ........................ 6/03 at 102 2,727,539
AA+ 4,000 Washington St. G.O., Ser. A, 5.375%, 7/01/21 .................. 7/06 at 100 4,104,560
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 13,395 Nuclear Proj. No. 1, 5.75%, 7/01/11, MBIA .................... 7/06 at 102 14,633,234
AAA 2,000 Nuclear Proj. No. 2, 5.55%, 7/01/10, FGIC .................... 7/03 at 102 2,114,540
-------------
30,886,214
-------------
WISCONSIN - 1.6%
AAA 4,000 Wisconsin St. Hlth. & Edl. Fac. Auth. Rev., Marquette Univ.,
5.50%, 6/01/18, MBIA ......................................... 6/08 at 102 4,161,840
-------------
Total Long-Term Investments (cost $360,077,039)................ 386,845,824
-------------
TOTAL INVESTMENTS - 146.8% (cost $360,077,039)................. 386,845,824
Other assets in excess of liabilities - 2.5% .................. 6,744,128
Liquidation value of preferred stock - (49.3)% ................ (130,000,000)
-------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS - 100% ........... $ 263,589,952
=============
</TABLE>
- ----------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
+ 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 FSA - Financial Security Assurance
CAPMAC - Capital Markets Assurance Corporation G.O. - General Obligation Bond
FGIC - Financial Guaranty Insurance Company MBIA - Municipal Bond Insurance Association
FHA - Federal Housing Administration 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
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $360,077,039) (Note 1) . $ 386,845,824
Cash ................................................. 4,631,467
Interest receivable .................................. 6,817,001
Other assets ......................................... 9,515
-------------
398,303,807
-------------
LIABILITIES
Payable for investments purchased .................... 4,190,060
Dividends payable-preferred stock .................... 138,906
Investment advisory fee payable (Note 2) ............. 115,987
Administration fee payable (Note 2) .................. 49,709
Other accrued expenses ............................... 219,193
-------------
4,713,855
-------------
NET INVESTMENT ASSETS ................................ $393,589,952
=============
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 ................. 1,449,281
Accumulated net realized gain ....................... 3,127,050
Net unrealized appreciation ......................... 26,768,785
-------------
Net investment assets, October 31, 1998 .............. $ 393,589,952
=============
Net assets applicable to common shareholders ......... $ 263,589,952
=============
Net asset value per common share:
($263,589,952 [div] 16,707,093 shares of
common stock issued and outstanding) ............... $ 15.78
=============
</TABLE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET INVESTMENT INCOME
Income
Interest and discount earned ........... $20,724,998
-----------
Expenses
Investment advisory .................... 1,361,169
Administration ......................... 583,358
Auction agent .......................... 345,000
Custodian .............................. 107,500
Reports to shareholders ................ 69,000
Directors .............................. 64,000
Audit .................................. 41,000
Transfer agent ......................... 23,000
Legal .................................. 6,000
Miscellaneous .......................... 92,838
-----------
Total expenses ......................... 2,692,865
-----------
Net investment income .................... 18,032,133
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 3)
Net realized gain on investments ......... 3,208,243
Net change in unrealized appreciation
on investments ......................... 8,422,329
-----------
Net gain on investments .................. 11,630,572
-----------
NET INCREASE IN NET INVESTMENT ASSETS
RESULTING FROM OPERATIONS ............... $29,662,705
===========
</TABLE>
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,
-----------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
Operations:
Net investment income ................................................... $ 18,032,133 $ 18,096,994
Net realized gain on investments ........................................ 3,208,243 4,449,946
Net change in unrealized appreciation on investments .................... 8,422,329 8,949,932
------------- -------------
Net increase in net investment assets resulting from operations ......... 29,662,705 31,496,872
Dividends and distributions:
To common shareholders from net investment income ....................... (13,554,216) (13,100,478)
To common shareholders from net realized gain on investments ............ (3,343,299) (322,193)
To preferred shareholders from net investment income .................... (3,967,577) (4,591,740)
To preferred shareholders from net realized gain on investments ......... (1,133,378) (104,104)
------------- -------------
Total dividends and distributions ....................................... (21,998,470) (18,118,515)
------------- -------------
Total increase ......................................................... 7,664,235 13,378,357
NET INVESTMENT ASSETS
Beginning of year ........................................................ 385,925,717 372,547,360
------------- -------------
End of year .............................................................. $ 393,589,952 $ 385,925,717
============= =============
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------
1998 1997
PER SHARE OPERATING PERFORMANCE: ------------ ------------
<S> <C> <C>
Net asset value, beginning of year ................................ $ 15.32 $ 14.52
-------- -------
Net investment income ............................................. 1.08 1.08
Net realized and unrealized gain (loss)
on investments ................................................... 0.70 0.80
-------- -------
Net increase (decrease) from investment operations ................ 1.78 1.88
-------- -------
Dividends and Distributions:
Dividends from net investment income to:
Common shareholders .............................................. ( 0.81) ( 0.78)
Preferred shareholders ........................................... ( 0.24) ( 0.27)
Distributions from net realized gain on
investments to:
Common shareholders .............................................. ( 0.20) ( 0.02)
Preferred shareholders ........................................... ( 0.07) ( 0.01)
-------- --------
Total dividends and distributions ............................... ( 1.32) ( 1.08)
-------- --------
Capital charge with respect to issuance
of shares ........................................................ - -
-------- --------
Net asset value, end of year* ..................................... $ 15.78 $ 15.32
======== ========
Per share market value, end of year* .............................. $ 15.44 $ 13.38
======== ========
TOTAL INVESTMENT RETURN+ .......................................... 22.07% 14.20%
======== ========
RATIOS TO AVERAGE NET ASSETS
OF COMMON SHAREHOLDERS:++
Expenses .......................................................... 1.04% 1.07%
Net investment income before preferred stock dividends ............ 6.95% 7.42%
Preferred stock dividends ......................................... 1.53% 1.88%
Net investment income available to common
shareholders ..................................................... 5.42% 5.54%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) .......... $259,280 $243,947
Portfolio turnover ................................................ 46% 160%
Net assets of common shareholders, end of year (in thousands) ..... $263,590 $255,926
Preferred stock outstanding (in thousands) ........................ $130,000 $130,000
Asset coverage per share of preferred stock,
end of year# ..................................................... $ 75,690 $ 74,241
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------
1996 1995 1994
PER SHARE OPERATING PERFORMANCE: ------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of year ................................ $ 14.18 $ 12.05 $ 14.76
------- ------- --------
Net investment income ............................................. 1.09 1.10 1.06
Net realized and unrealized gain (loss)
on investments ................................................... 0.34 2.16 (2,64)
------- ------- --------
Net increase (decrease) from investment operations ................ 1.43 3.26 (1.58)
------- ------- --------
Dividends and Distributions:
Dividends from net investment income to:
Common shareholders .............................................. (0.79) (0.82) (0.90)
Preferred shareholders ........................................... (0.28) (0.31) (0.21)
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)
-------- -------- --------
Capital charge with respect to issuance
of shares ........................................................ -- -- (0.02)
-------- -------- --------
Net asset value, end of year* ..................................... $ 14.52 $ 14.18 $ 12.05
======== ======== ========
Per share market value, end of year* .............................. $ 12.44 $ 12.00 $ 10.38
======== ======== ========
TOTAL INVESTMENT RETURN+ .......................................... 10.41% 24.01% (20.98%)
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
OF COMMON SHAREHOLDERS:++
Expenses .......................................................... 1.12% 1.16% 1.14%
Net investment income before preferred stock dividends ............ 7.57% 8.36% 7.80%
Preferred stock dividends ......................................... 1.97% 2.34% 1.55%
Net investment income available to common
shareholders ..................................................... 5.60% 6.02% 6.25%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) .......... $238,540 $219,740 $226,935
Portfolio turnover ................................................ 164% 182% 210%
Net assets of common shareholders, end of year (in thousands) ..... $242,547 $236,990 $201,343
Preferred stock outstanding (in thousands) ........................ $130,000 $130,000 $130,000
Asset coverage per share of preferred stock,
end of year# ..................................................... $ 71,644 $ 70,575 $127,440
</TABLE>
- ----------
* Net asset value and market value are published in THE WALL STREET JOURNAL
each Monday.
# 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 year 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.
++ 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.
The information above represents the audited operating performance for a share
of common stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the years indicated. This information
has been determined based upon financial information provided in the financial
statements and market value data for the Trust's shares.
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION & ACCOUNTING POLICIES
The BlackRock Investment Quality Municipal Trust Inc. (the "Trust") was
organized in Maryland on November 19, 1992 as a diversified, closed-end
management investment company. The Trust's investment objective is to manage a
diversified portfolio of high-quality securities while providing 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 have been
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 of Income, Capital Gain and Return of Capital Distributions
by Investment Companies. The effect of adopting the statement for the year
ended October 31, 1998 was to increase accumulated net realized gain and
decrease undistributed net investment income by $31,244. 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
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 SECURITIES
Purchases and sales of invest ment securities, other than short-term
investments, for the year ended October 31, 1998, aggregated $177,852,627 and
$176,510,441, respectively.
The federal income tax basis of the Trust's investments at October 31,
1998 was $360,158,261, and accordingly, net unrealized appreciation was
$26,687,563 (gross unrealized appreciation-$26,828,690, gross unrealized
depreciation-$141,127).
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, 1998, the Adviser owned
7,205 shares. As of October 31, 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 year ended October 31,
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 AND DISTRIBUTIONS
Subsequent to October 31, 1998, the Board of Directors of the Trust
declared a dividend from undistributed earnings of $0.0719 per common share
payable November 30, 1998, to shareholders of record on November 16, 1998.
For the period November 1 through November 30, dividends declared on
Preferred Stock totalled $560,312 in aggregate for the two outstanding
Preferred Stock series.
12
<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, 1998 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 five years in the period then ended. 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, 1998 by correspondence with the custodian and brokers. 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, 1998, 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 11, 1998
13
<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 SHORT-TERM LONG-TERM
RECORD PAYABLE ORDINARY CAPITAL CAPITAL GAINS
DATE DATE INCOME GAIN 28% 20%
---------- ---------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock Shareholders ........... 12/15/97 12/31/97 0.003187 0.160334 0.01532 0.021792
Common Stock Shareholders ........... 6/15/98 6/30/98 0.00128 -- -- --
Preferred Stock Series T-7 .......... 11/18/97 11/19/97 0.18 22.04 3.00 2.11
Preferred Stock Series T-7 .......... 11/25/97 11/26/97 0.20 22.23 3.02 2.12
Preferred Stock Series T-7 .......... 12/2/97 12/3/97 0.19 21.84 2.97 2.09
Preferred Stock Series T-7 .......... 12/9/97 12/10/97 0.19 21.26 2.89 2.03
Preferred Stock Series T-7 .......... 12/16/97 12/17/97 0.18 21.46 2.92 2.05
Preferred Stock Series T-7 .......... 12/23/97 12/24/97 0.18 21.61 2.94 2.07
Preferred Stock Series T-7 .......... 12/30/97 12/31/97 0.20 23.20 3.15 2.22
Preferred Stock Series T-7 .......... 1/6/98 1/7/98 0.18 19.83 2.69 1.89
Preferred Stock Series T-28 ......... 12/9/97 12/10/97 0.76 88.14 11.98 8.42
Preferred Stock Series T-28 ......... 1/6/98 1/7/98 0.76 86.85 11.80 8.30
Preferred Stock Series T-7 .......... 6/30/98 7/1/98 1.52 0.31 0.07 -
Preferred Stock Series T-28 ......... 7/21/98 7/22/98 1.53 0.30 0.06 -
</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 pursuant to the Plan. Shareholders who do not participate in the
Plan will receive all distributions in cash paid by check in United States
dollars mailed directly to the shareholders of record (or if the shares are
held in street or other nominee name, then to the nominee) by the 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 or elsewhere, for the participants' accounts. The Trust will not
issue any new 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.
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
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
YEAR 2000 READINESS DISCLOSURE. The Trust is currently in the process of
evaluating its information technology infrastructure for Year 2000 compliance.
Substantially all of the Trust's information systems are supplied by the
Adviser. The Adviser has advised the Trust that it is currently evaluating
whether such systems are year 2000 compliant and that it expects to incure
costs of up to approximately five hundred thousand dollars to complete such
evaluation and to make any modifications to its systems as may be necessary to
achieve Year 2000 compliance. The Adviser has advised the Trust that it expects
to have fully tested its systems for Year 2000 compliance by December 31, 1998.
The Trust may be required to bear a portion of such cost incurred by the
Adviser in this regard. The Adviser has advised the Trust that it does not
anticipate any material disruption in the operations of the Trust as a result
of any failure by the Adviser to achieve Year 2000 compliance. There can be no
assurance that the costs will not exceed the amount referred to above or that
the Trust will not experience a disruption in operations.
The Adviser has advised the Trust that it is in the process of evaluating
the Year 2000 compliance of various suppliers of the Adviser and the Trust. The
Adviser has advised the Trust that it intends to communicate with such
suppliers to determine their Year 2000 compliance status and the extent to
which the Adviser or the Trust could be affected by any supplier's Year 2000
compliance issues. To date, however, the Adviser has not received responses
from all such suppliers with respect to their Year 2000 compliance, and there
can be no assurance that the systems of such suppliers, who are beyond the
Trust's control, will be Year 2000 compliant. In the event that any of the
Trust's significant suppliers do not successfully and timely achieve Year 2000
compliance, the Trust's business or operations could be adversely affected. The
Adviser has advised the Trust that it is in the process of preparing a
contingency plan for Year 2000 compliance by its suppliers. There can be no
assurance that such contingency plan will be successful in preventing a
disruption of the Trust's operations.
The Trust is designating this disclosure as its Year 2000 readiness
disclosure for all purposes under the Year 2000 Information and Readiness
Disclosure Act and the foregoing information shall constitute a Year 2000
statement for purposes of that Act.
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") is an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $122
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 410, 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.
16
<PAGE>
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The
Trust pays monthly dividends which are typically paid on the last business day
of the month. For shares held in the shareholder's name, dividends may be
reinvested in additional shares of the fund through the Trust's transfer agent,
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
<PAGE>
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THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
GLOSSARY
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<TABLE>
<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.
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.
</TABLE>
18
<PAGE>
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THE BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS TAXABLE TRUST
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TAXABLE TRUSTS
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<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS ---------- ---------
<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
</TABLE>
TAX-EXEMPT TRUSTS
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<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS --------- ---------
<S> <C> <C>
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE DO NOT HESITATE TO CALL BLACKROCK
AT (800) 227-7BFM (7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
19
<PAGE>
BLACKROCK
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
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
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) 543-6217
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THE BLACKROCK
INVESTMENT QUALITY
MUNICIPAL TRUST INC.
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ANNUAL REPORT
OCTOBER 31, 1998
[GRAPHIC OMITTED]
09247D-105
[LOGO] Printed on recycled paper 09247D-204
09247D-303
