--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
--------------------------------------------------------------------------------
November 30, 2001
Dear Shareholder:
Economic activity slowed significantly during the annual period ended
October 31, 2001, continuing the downturn that began in March 2000. The
September 11 attacks on the World Trade Center and the Pentagon accelerated this
decline. Inflation adjusted Gross Domestic Product (GDP) fell at a 0.4% annual
rate during the third quarter, reaffirming that the economy is officially headed
towards recession, which is defined as two consecutive quarters of negative
growth as measured by GDP. In response to the dramatic slowdown in the U.S.
economy, The Federal Reserve Board aggressively lowered interest rates over the
period. In stark contrast to its three interest rate increases in February,
March, and May of 2000, the Federal Open Market Committee (FOMC) has cut
interest rates ten times in 2001. Year-to-date, the FOMC has reduced interest
rates by 4.50%, bringing the current Federal Funds rate to 2.00%, its lowest
level since September 1961.
The weakening U.S. economic environment and the accompanying Federal
Reserve activity have had a positive effect on the fixed income markets.
Virtually all sectors of the fixed income market, with the exception of high
yield, posted double-digit returns over the annual period ended October 31,
2001. As short-term interest rates declined faster than long-term interest rates
over the period, the yield curve reached historically steep levels, making it a
very attractive time for leveraged bond funds. Because these funds borrow at
short-term rates and invest in long-term securities, the amount they earn grows
as the difference between short-term and long-term rates increases. Furthermore,
inflation is anticipated to decline to multi-decade lows, which should support
high-quality fixed income securities, especially those with longer maturities.
The rallies in the fixed income markets have barely offset the adverse
impact of the deteriorating equity market. For the year ending October 31, 2001,
the S&P 500 and Nasdaq fell 25.49% and 49.39%, respectively, and, while we
believe that aggressive monetary and fiscal stimulus will help stabilize the
economy, we expect growth to remain below potential for a more prolonged period.
Consumption is unlikely to pick up significantly in the face of sizable job
cuts, the likelihood that flexible compensation (bonus, profit sharing, options)
will be sharply lower, and that state and local government spending may be
significantly curtailed next year. In this environment, we expect a period of
prolonged lower interest rates. Although somewhat discouraging for the American
consumer, this low inflation/low interest rate environment should continue to
benefit fixed income securities. We expect spread products like high quality
corporates and mortgages to perform well relative to U.S. Treasuries.
This annual report contains a summary of market conditions during the
annual period and a review of portfolio strategy by your Trust's managers in
addition to the Trust's audited financial statements and a listing of the
portfolio's holdings at October 31, 2001. Continued thanks for your confidence
in BlackRock. We appreciate the opportunity to help you achieve your long-term
investment goals.
Sincerely,
/s/ LAURENCE D. FINK /s/ RALPH L. SCHLOSSTEIN
-------------------- ------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
November 30, 2001
Dear Shareholder:
We are pleased to present the audited annual report for The BlackRock
Investment Quality Municipal Trust Inc. (the "Trust") for the fiscal year ended
October 31, 2001. 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 NAV
over the annual period ended October 31, 2001:
--------------------------------------------------------
10/31/01 10/31/00 CHANGE HIGH LOW
--------------------------------------------------------------------------------------
STOCK PRICE $13.73 $12.125 13.24% $14.10 $11.8125
--------------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $15.19 $14.30 6.22% $15.26 $14.24
--------------------------------------------------------------------------------------
THE FIXED INCOME MARKETS
Investors' hopes for a soft landing quickly turned to fears of a recession
as the U.S. economy rapidly deteriorated over the year. Prior to the events of
September 11, our economic outlook envisioned an extended period of sluggish
growth, with the risk of a more severe deterioration if consumer confidence and
spending declined by any considerable degree. Economic data prior to the attacks
suggests that the scenario of a more severe contraction may have been in the
works. Year-over-year industrial production was down, 4.8% in August, the
largest yearly decline since 1982. The unemployment rate had drifted up to 4.9%
from a low of 3.9% in October of last year, and the four-week average of initial
jobless claims rose to its highest level in nearly a decade. Consumer confidence
was starting to wane, and consumer credit outstanding had begun to decline. The
events of September 11 undoubtedly further weakened consumer sentiment. The
Conference Board's consumer confidence index posted its biggest one-month
decline since 1990. According to the minutes of the October 2, 2001, Federal
Open Market Committee meeting, "The terrorist attacks have significantly
heightened uncertainty in an economy that was already weak. Business and
household spending as a consequence are being further damped. Nonetheless, the
long-term prospects for productivity growth and the economy remain favorable and
should become evident once the unusual forces restraining demand abate." During
the fiscal year ended October 31, 2001, the Federal Reserve Board aggressively
lowered the Federal Funds rate by a total of 4.00% to bring it to 2.50%. On
November 6, 2001, the Federal Reserve Board announced another interest rate cut,
bringing the current Federal Funds rate to 2.00%.
Over the course of the year, the U.S. Treasury yield curve steepened
significantly as the bond market rallied in response to the slowing U.S. economy
and the aggressive interest rate cuts by the Federal Reserve. U.S. Treasury
yields on the short-end of the yield curve fell sharply from a 5.91% yield on
2-year U.S. Treasuries as of October 31, 2000, to a 2.42% yield on October 31,
2001, in reaction to the Federal Reserve Board cutting short-term rates by 4%.
During the period, the yield on the 10-year U.S. Treasury fell from 5.75% on
October 31, 2000, to 4.23% on October 31, 2001. U.S. Treasury yields continue to
fall due to further Federal Reserve easing and an anticipation of increased
supply in order to raise capital to support programs implemented as a result of
the tragic events that occurred on September 11, 2001. On October 31, 2001, the
U.S. Treasury announced plans to stop selling 30-year U.S. Treasuries
maintaining that the government "does not need the 30-year bond to meet [its]
current financing needs." On the news that the U.S. Treasury would discontinue a
program that issued a total of $600 billion in debt since its official inception
in 1977, the 30-year bond price increased by more than 5% and yields, which
react inversely to changes in price, fell over 36 basis points. As a result, the
on-the-run curve, which measures yields on newly issued U.S. Treasuries,
flattened 32 basis points.
2
For the annual period ended October 31, 2001, municipal bonds outperformed
the taxable domestic bond market on a tax-adjusted basis, returning 17.12% (as
measured by the LEHMAN MUNICIPAL INDEX at a tax bracket of 38.6%) versus the
LEHMAN AGGREGATE INDEX'S 14.56%. Cash inflows over the period increased
significantly from the previous year due to turmoil in the equity markets and
diversification into fixed income securities. While municipals performed in line
with spread products (i.e. corporates, mortgages, etc.) and U.S. Treasuries
throughout the first half of the period, the municipal yield curve steepened
over the latter half of the year, and showed significant outperformance versus
U.S. Treasuries. Refinancing opportunities, which are expected to reach historic
levels due to falling interest rates, continue to drive the pace of new issues
in the municipal market.
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 via auction rate preferred shares
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 monthly income. At the end of the annual period (October 31, 2001), the
Trust's leverage amount was approximately 36% of total assets.
Municipals outperformed most spread products on a tax-adjusted basis during
the period, except on the short-end of the yield curve. The curve steepened over
most of the period and the 5 to 15 year part of the curve remains very steep on
a historical basis. We remain overweight in premium coupon securities in an
effort to avoid potential market discount problems. Premium coupon securities
offer better price performance during periods of falling interest rates, and
similar performance to discounts when interest rates rise. Retail demand has
been robust throughout the period, with record inflows into municipal bond funds
of $2.92 billion during the month of August 2001, the largest monthly increase
since 1994. Year-to-date, net inflows into municipal bond funds is $7.98
billion.
The following charts compare the Trust's asset composition and credit
quality allocations:
-----------------------------------------------------------------------
SECTOR BREAKDOWN
-----------------------------------------------------------------------
SECTOR OCTOBER 31, 2001 OCTOBER 31, 2000
-----------------------------------------------------------------------
Transportation 19% 20%
-----------------------------------------------------------------------
University/School 14% 13%
-----------------------------------------------------------------------
City, County & State 12% 11%
-----------------------------------------------------------------------
Industrial & Pollution Control 12% 11%
-----------------------------------------------------------------------
Hospital 12% 12%
-----------------------------------------------------------------------
Lease Revenue 8% 5%
-----------------------------------------------------------------------
Power 7% 8%
-----------------------------------------------------------------------
Housing 5% 9%
-----------------------------------------------------------------------
Tax Revenue 4% 4%
-----------------------------------------------------------------------
Other 3% 3%
-----------------------------------------------------------------------
Special District 2% 2%
-----------------------------------------------------------------------
Water & Sewer 1% 1%
-----------------------------------------------------------------------
Resource Recovery 1% 1%
-----------------------------------------------------------------------
3
---------------------------------------------------------------
CREDIT RATING* OCTOBER 31, 2001 OCTOBER 31, 2000
---------------------------------------------------------------
AAA/Aaa 61% 58%
---------------------------------------------------------------
AA/Aa 11% 11%
---------------------------------------------------------------
A/A 16% 19%
---------------------------------------------------------------
BBB/Baa 6% 9%
---------------------------------------------------------------
BB/Ba 2% --
---------------------------------------------------------------
Not Rated 4% 3%
---------------------------------------------------------------
------------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
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 that were not
addressed in this report.
Sincerely,
/s/ ROBERT S. KAPITO /s/ KEVIN M. KLINGERT
-------------------- ---------------------
Robert S. Kapito Kevin M. Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
4
--------------------------------------------------------------------------------
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 10/31/01: $13.73
Net Asset Value as of 10/31/01: $15.19
Yield on Closing Stock Price as of 10/31/01 ($13.73)(1): 5.68%
--------------------------------------------------------------------------------
Current Monthly Distribution per Share(2): $ 0.065
--------------------------------------------------------------------------------
Current Annualized Distribution per Share(2): $ 0.780
--------------------------------------------------------------------------------
-------------
(1) Yield on Closing Stock Price is calculated by dividing the current
annualized distribution per share by the closing stock price per share.
(2) Distribution is not constant and is subject to change.
PRIVACY PRINCIPLES OF THE TRUST
The Trust is committed to maintaining the privacy of shareholders and to
safeguarding its non-public personal information. The following information is
provided to help you understand what personal information the Trust collects,
how we protect that information and why, in certain cases, we may share
information with select other parties.
Generally, the Trust does not receive any non-public personal information
relating to its shareholders, although certain nonpublic personal information of
its shareholders may become available to the Trust. The Trust does not disclose
any non-public personal information about its shareholders or former
shareholders to anyone, except as permitted by law or as is necessary in order
to service shareholder accounts (for example, to a transfer agent or third party
administrator).
The Trust restricts access to non-public personal information about the
shareholders to BlackRock employees with a legitimate business need for the
information. The Trust maintains physical, electronic and procedural safeguards
designed to protect the non-public personal information of its shareholders.
5
-----------------------------------------------------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST, INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2001
-----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--155.8%
ALABAMA--5.9%
AAA $14,000 University of Alabama Hosp. Rev., Ser. A, 5.875%, 9/01/31, MBIA ..... 9/10 @ 101 $ 14,979,160
------------
ALASKA--2.4%
AAA 6,015 Alaska St. Hsg. Fin. Corp. Rev., Ser. A, 5.875%, 12/01/24, MBIA ..... 12/05 @ 102 6,211,209
------------
CALIFORNIA--15.5%
Aa2 1,220 California Hsg. Fin. Agcy. Rev., Home Mtg., Ser. C, 5.65%, 8/01/14 .. 2/04 @ 102 1,268,727
AA 5,770 California St., G.O., 5.625%, 5/01/18 ............................... 5/10 @ 101 6,131,202
BBB 3,000 Foothill/Eastn. Transp. Corridor Agcy. Toll Road Rev., 5.75%, 1/15/40 1/10 @ 101 3,092,730
AAA 10,945 Los Altos Sch. Dist., Zero Coupon, 8/01/24, MBIA .................... 8/13 @ 53.632 3,073,028
AAA 15,460 Los Angeles Cnty. Asset Leasing Corp. Rev., 5.95%, 12/01/07, AMBAC .. No Opt. Call 17,862,020
University of California Rev., Research Fac., Ser. B,
Aaa 2,000++ 6.10%, 9/01/03 .................................................... N/A 2,185,280
Aaa 3,305++ 6.20%, 9/01/03 .................................................... N/A 3,617,058
Aaa 2,000++ 6.25%, 9/01/03 .................................................... N/A 2,190,620
------------
39,420,665
------------
COLORADO--10.9%
AAA 3,100 Arapahoe Cnty. Cap. Impvt. Hwy. Rev., Trust Fund, Ser. E, Zero Coupon,
8/31/04 ........................................................... ETM 2,858,851
Denver City & Cnty. Arpt. Rev.,
A+ 3,000 Ser. C, 6.50%, 11/15/06 ........................................... 11/02 @ 102 3,147,300
A+ 1,120 Ser. C, 6.65%, 11/15/05 ........................................... 11/02 @ 102 1,179,718
Aaa 3,705++ Ser. D, 7.00%, 11/15/01 ........................................... N/A 3,709,928
A 14,085++ Ser. D, 7.00%, 11/15/01 ........................................... N/A 14,103,733
AAA 2,250++ E-470 Pub. Hwy. Auth. Rev., Ser. B, 6.90%, 8/31/05 .................. N/A 2,640,060
------------
27,639,590
------------
CONNECTICUT--1.1%
Baa3 3,000 Mashantucket Western Pequot Tribe, Spl. Rev., Ser. A, 5.50%, 9/01/28** 9/09 @ 101 2,823,810
------------
DELAWARE--3.0%
NR 7,000 Charter Mac Equity Issuer Trust, Ser. B, 7.60%, 11/30/10** .......... No Opt. Call 7,525,910
------------
DISTRICT OF COLUMBIA--0.8%
District of Columbia, G.O., Ser. E, CAPMAC,
AAA 195++ 6.00%, 6/01/03 .................................................... N/A 210,313
AAA 1,705 6.00%, 6/01/09 .................................................... 6/03 @ 102 1,823,975
------------
2,034,288
------------
FLORIDA--3.1%
AAA 1,615 Florida Hsg. Fin. Agcy. Rev., Sngl. Fam. Mtg., Ser. 1994-A, 6.55%,
7/01/14, GNMA ..................................................... 1/05 @ 102 1,710,366
NR 3,700 Hillsborough Cnty. Ind. Dev. Auth. Fac. Rev., National Gypsum, Ser. A,
7.125%, 4/01/30 ................................................... 4/10 @ 101 2,960,740
BB- 4,000 Santa Rosa Bay Bridge Auth. Rev., 6.25%, 7/01/28 .................... 7/06 @ 102 3,325,079
------------
7,996,185
------------
See Notes to Financial Statements.
6
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
---------------------------------------------------------------------------------------------------------------------
HAWAII--1.1%
AAA $ 2,500 Hawaii St. Dept. Budget & Fin. Spl. Purp. Rev., Hawaiian
Elec. Co. Inc., Ser. D, 6.15%, 1/01/20, AMBAC .............. 1/09 @ 101 $ 2,721,600
------------
ILLINOIS--12.5%
AAA 10,000 Chicago Brd. of Ed., Chicago Sch. Reform, 5.75%,
12/01/27, AMBAC ............................................ 12/07 @ 102 10,609,800
AAA 5,000 Chicago Pub. Bldg. Rev., Ser. A, 7.00%, 1/01/20, MBIA ........ ETM 6,380,300
AAA 5,050 Chicago Wtr. Rev., 5.25%, 11/01/23, FGIC ..................... 11/07 @ 102 5,096,157
Illinois Edl. Fac. Auth. Rev., Loyola Univ., FGIC,
AAA 4,000++ 5.45%, 7/01/05 ............................................. N/A 4,237,000
AAA 5,000++ 5.70%, 7/01/05 ............................................. N/A 5,320,700
------------
31,643,957
------------
INDIANA--3.1%
BBB 7,420 Indianapolis Arpt. Auth. Rev., Spl. Fac. Fed. Express
Corp. Proj., 7.10%, 1/15/17 ................................ 7/04 @ 102 7,806,582
------------
KENTUCKY--8.3%
AAA 15,715 Kentucky Econ. Dev. Fin. Sys., Norton Hlth. Care Inc.,
Ser. B, Zero Coupon, 10/01/23, MBIA ........................ No Opt. Call 4,902,766
AAA 15,000++ Kentucky St. Tpke. Auth., Econ. Dev. Road Rev., 5.75%,
7/01/03, AMBAC ............................................. N/A 16,162,800
------------
21,065,566
------------
LOUISIANA--8.2%
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 15,748,416
------------
AAA 4,640 New Orleans Pub. Impvt., G.O., 5.875%, 11/01/29, FSA ......... 11/09 @ 100 4,993,800
------------
20,742,216
------------
MARYLAND--6.7%
Aa2 8,870 Maryland St. Dept. Hsg. & Cmnty. Dev. Admin., Sngl. Fam.
Prog., Ser. 2, 6.55%, 4/01/26 .............................. 4/05 @ 102 9,319,531
NR 4,000 MuniMae Te Bond Subsidiary LLC, Ser. B, 7.75%, 11/01/10** .... No Opt. Call 4,310,920
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 @ 102 3,395,758
------------
17,026,209
------------
MASSACHUSETTS--1.2%
AAA 3,000 Massachusetts St. Hlth. & Edl. Fac. Auth. Rev., Hallmark Hlth.
Sys., Ser. A, 5.00%, 7/01/21, FSA .......................... 7/08 @ 101 2,966,430
------------
MICHIGAN--0.8%
AAA 2,000 River Rouge Sch. Dist., 5.625%, 5/01/22, FSA ................. 5/03 @ 101.5 2,078,640
------------
MISSOURI--1.6%
Lake of the Ozarks Cmnty. Brdg. Corp., Brdg. Sys. Rev.,
BBB- 2,000 5.25%, 12/01/14 ............................................ 12/08 @ 102 1,905,660
BBB- 2,500 5.25%, 12/01/26 ............................................ 12/08 @ 102 2,282,300
------------
4,187,960
------------
See Notes to Financial Statements.
7
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
---------------------------------------------------------------------------------------------------------------------
NEVADA--1.6%
AAA $ 3,750 Washoe Cnty. Arpt. Auth., Arpt. Sys. Impvt. Rev., Ser. B,
5.80%, 7/01/09, MBIA ....................................... 7/03 @ 102 $ 3,978,300
-----------
NEW JERSEY--3.9%
AAA 2,000 Delaware River Port Auth. PA & NJ Port Dist. Proj., Ser. B,
5.70%, 1/01/22, FSA ........................................ 1/10 @ 100 2,148,380
AA 7,000 New Jersey St. Transp. Trust Fund Auth. Sys. Rev., Transp.
Sys., Ser. A, 6.00%, 6/15/19 ............................... 6/10 @ 100 7,791,770
-----------
9,940,150
-----------
NEW MEXICO--0.8%
AAA 1,945 Farmington, P.C.R., So. CA. Edison Co., Ser. A, 5.875%,
6/01/23, MBIA ............................................... 6/03 @ 102 2,044,798
-----------
NEW YORK--17.2%
New York City, G.O.,
A+ 4,140 Ser. A, 6.00%, 8/01/05 ..................................... No Opt. Call 4,534,501
A+ 7,000 Ser. E, 6.50%, 2/15/06 ..................................... No Opt. Call 7,821,310
Aaa 7,000++ Ser. H, 7.20%, 2/01/02 ..................................... N/A 7,191,310
New York City Ind. Dev. Agcy. Spec. Fac. Rev., Term. One Group
Assoc. Proj.,
A- 4,000 6.00%, 1/01/08 ............................................. 1/04 @ 102 4,177,520
A- 1,000 6.00%, 1/01/15 ............................................. 1/04 @ 102 1,022,230
AA+ 10,000 New York City Transl. Fin. Auth. Rev., Ser. B, 6.00%, 11/15/21 5/10 @ 101 10,907,800
AAA 3,000++ New York St. Dorm. Auth. Rev., St. Univ. Edl. Fac., Ser. B,
6.10%, 5/15/04 .............................................. N/A 3,335,010
New York St. Dorm. Auth. Rev., Univ. of Rochester, MBIA,
AAA 1,865 Ser. A, Zero Coupon, 7/01/21 ............................... 7/10 @ 101 1,204,007
AAA 2,030 Ser. A, Zero Coupon, 7/01/23 ............................... 7/10 @ 101 1,307,462
A 1,955 New York St. Hsg. Fin. Agcy., Hlth. Fac. of New York City,
Ser. A, 6.375%, 11/01/04 ................................... No Opt. Call 2,148,740
-----------
43,649,890
-----------
NORTH CAROLINA--2.3%
AAA 5,000 North Carolina Eastn. Mun. Pwr. Agcy. Sys. Rev., Ser. B, 7.00%,
1/01/08, CAPMAC ............................................ No Opt. Call 5,867,250
-----------
OHIO--0.2%
AAA 450 Cleveland Cuyahoga Cnty. Port Auth. Rev., Port Dev. Proj.,
6.00%, 3/01/07 ............................................. ETM 487,418
-----------
OREGON--2.2%
BBB- 5,600 Klamath Falls Elec. Rev., Sr. Lien-Klamath Cogen,
5.50%, 1/01/07 ............................................. No Opt. Call 5,570,656
-----------
PENNSYLVANIA--12.4%
AAA 10,100 Lehigh Cnty. Gen. Purp. Auth. Rev., St. Lukes Hosp.
Bethlehem Proj., 5.50%, 11/15/13, AMBAC .................... 11/03 @ 102 10,702,768
AAA 3,305 McKeesport Area Sch. Dist., Cap. Apprec., Zero Coupon,
10/01/31, FGIC .............................................. No Opt. Call 671,411
AAA 5,500 Montgomery Cnty. Edl. & Hlth. Care Auth., Holy Redeemer,
5.25%, 10/01/23, AMBAC ..................................... 10/07 @ 101 5,556,650
AAA 4,000 Pennsylvania Intergovtl. Coop. Auth. Spl. Tax Rev.,
Philadelphia Fdg. Prog.,
5.50%, 6/15/20, FGIC ....................................... 6/06 @ 100 4,114,360
AAA 5,000 Pennsylvania St. Dept. Gen. Svcs., 5.25%, 5/01/16, FSA ....... 11/11@100 5,272,150
Pennsylvania St. Higher Edl. Fac. Auth., Hlth. Svcs.
Rev., Ser. A,
A 2,300 5.75%, 1/01/17 ............................................. 1/06 @ 101 2,352,670
A 2,750 5.875%, 1/01/15 ............................................ 1/06 @ 101 2,839,952
-----------
31,509,961
-----------
See Notes to Financial Statements.
8
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS+ VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
---------------------------------------------------------------------------------------------------------------------
RHODE ISLAND--2.1%
AA+ $ 3,040 Rhode Island Hsg. & Mtg. Fin., Homeownership Oppty.,
Ser. 15-B, 6.75%, 10/01/17 ................................. 4/04 @ 102 $ 3,167,893
AAA 2,000 RHODE ISLAND ST. HLTH. & EDL. BLDG. CORP. REV., HOSP. FIN.,
5.50%, 5/15/16, MBIA ....................................... 5/07 @ 102 2,108,300
5,276,193
------------
TENNESSEE--5.3%
A3 7,800 Maury Cnty. Ind. Dev. Brd., P.C.R., Saturn Corp.
Proj., 6.50%, 9/01/24 ...................................... 9/04 @ 102 8,220,420
AAA 4,865 Memphis Shelby Cnty. Arpt. Auth. Rev., Ser. D, 6.00%,
3/01/24, AMBAC ............................................. 3/10 @ 101 5,232,453
------------
13,452,873
------------
TEXAS--6.4%
Dallas Cnty. Util. & Cap. Reclam. Dist., Ser. A, AMBAC,
AAA 6,085 Zero Coupon, 2/15/19 ....................................... 2/05 @ 44.538 2,273,721
AAA 3,800 Zero Coupon, 2/15/20 ....................................... 2/05 @ 41.799 1,332,964
BB 5,500 Dallas Ft. Worth Intl. Arpt. Fac. Impvt. Rev., Amer.
Airlines Inc.,
6.375%, 5/01/35 ............................................ 11/09 @ 101 4,531,175
AAA 6,000 Grapevine, G.O., 5.875%, 8/15/24, FGIC ....................... 8/10 @ 100 6,396,480
AAA 5,000 Harris Cnty. Houston Sports Auth. Spl. Rev., Ser. A,
Zero Coupon, 11/15/38, MBIA ................................ 11/30 @ 61.166 597,850
Aa1 1,000 Texas St. Wtr. Fin. Asst., G.O., 5.75%, 8/01/22 .............. 8/10 @ 100 1,069,510
------------
16,201,700
------------
UTAH--2.5%
Intermountain Pwr. Agcy. Pwr. Supply Rev.,
AAA 2,810 5.00%, 7/01/13, AMBAC ...................................... ETM 2,816,603
AAA 1,640 5.00%, 7/01/13, AMBAC ...................................... 11/01 @ 100 1,641,837
A+ 1,145 Ser. 86-B, 5.00%, 7/01/16 .................................. ETM 1,195,861
A+ 655 Ser. 86-B, 5.00%, 7/01/16 .................................. 11/01 @ 100 655,210
------------
6,309,511
------------
WASHINGTON--8.6%
Washington St., G.O.,
AA+ 4,000 Ser. A, 5.375%, 7/01/21 .................................... 7/06 @ 100 4,071,280
AA+ 1,000 Ser. B, 6.00%, 1/01/25 ..................................... 1/10 @ 100 1,085,200
Washington St. Pub. Pwr. Supply Sys. Rev.,
AAA 13,395 Nuclear Proj. No. 1, 5.75%, 7/01/11, MBIA .................. 7/06 @ 102 14,593,049
AAA 2,000 Nuclear Proj. No. 2, 5.55%, 7/01/10, FGIC .................. 7/03 @ 102 2,091,140
------------
21,840,669
------------
WYOMING--4.1%
A 10,000 Sweetwater Cnty., P.C.R., Idaho Pwr. Co. Proj., Ser. A,
6.05%, 7/15/26 ............................................. 7/06 @ 102 10,461,000
------------
TOTAL LONG-TERM INVESTMENTS (COST $370,960,013) 395,460,346
------------
SHORT-TERM INVESTMENT***--1.8%
NEW YORK--1.8%
A-1+ 4,500 Jay St. Dev. Corp. Cts. Fac. Lease Rev., New York City,
Jay St. Proj., Ser. A-2,
1.90%, 11/01/01, FRDD (cost $4,500,000) .................... N/A 4,500,000
------------
See Notes to Financial Statements.
9
---------------------------------------------------------------------------------------------------------------------
VALUE
DESCRIPTION (NOTE 1)
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--157.6% (COST $375,460,013) .............................. $399,960,346
Other assets in excess of liabilities--0.1% ................................ 366,165
Liquidation value of preferred stock--(57.7%) .............................. (146,550,000)
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100% ......................... $253,776,511
============
---------------------------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration to qualified institutional buyers.
*** 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.
+ Option call provisions: date (month/year) and price of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
++ This bond is prerefunded. See glossary for definition.
-----------------------------------------------------------------------------------------------------------------------
KEY TO ABBREVIATIONS:
AMBAC -- American Municipal Bond Assurance Corporation FSA -- Financial Security Assurance
CAPMAC -- Capital Markets Assurance Company GNMA -- Government National Mortgage Association
ETM -- Escrowed to Maturity G.O. -- General Obligation
FGIC -- Financial Guaranty Insurance Company MBIA -- Municipal Bond Insurance Association
FRDD -- Floating Rate Daily Demand P.C.R. -- Pollution Control Revenue
-----------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
10
--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2001
--------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $375,460,013) (Note 1) ............. $399,960,346
Cash ........................................................... 751,762
Interest receivable ............................................ 6,963,359
Other assets ................................................... 50,139
------------
407,725,606
------------
LIABILITIES
Dividends payable--common stock ................................ 1,085,961
Dividends payable--preferred stock ............................. 92,395
Payable for investments purchased .............................. 5,837,244
Investment advisory fee payable (Note 2) ....................... 118,868
Administration fee payable (Note 2) ............................ 50,943
Deferred directors fees (Note 1) ............................... 27,641
Other accrued expenses ......................................... 186,043
------------
7,399,095
------------
NET INVESTMENT ASSETS .......................................... $400,326,511
============
Net investment assets were comprised of:
Common stock:
Par value (Note 4) ......................................... $ 167,071
Paid-in capital in excess of par ........................... 231,766,743
Preferred stock (Note 4) ..................................... 146,550,000
------------
378,483,814
Undistributed net investment income (Note 1) ................. 2,938,017
Accumulated net realized loss ................................ (5,595,653)
Net unrealized appreciation (Note 1) ......................... 24,500,333
------------
Net investment assets, October 31, 2001 ........................ $400,326,511
============
Net assets applicable to common shareholders ................... $253,776,511
============
Net asset value per share:
($253,776,511 / 16,707,093 shares of
common stock issued and outstanding) ......................... $15.19
======
--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 2001
--------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (Note 1) ...................................... $22,893,538
-----------
Expenses
Investment advisory .................................... 1,384,129
Administration ......................................... 593,198
Auction agent .......................................... 386,500
Custodian .............................................. 104,500
Directors .............................................. 73,000
Reports to shareholders ................................ 70,500
Registration ........................................... 32,000
Legal .................................................. 26,500
Independent accountants ................................ 25,500
Transfer agent ......................................... 25,000
Miscellaneous .......................................... 109,030
-----------
Total expenses ......................................... 2,829,857
-----------
Net investment income .................................... 20,063,681
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss on investments ......................... (139,260)
Net change in unrealized appreciation on
investments ............................................ 12,674,420
-----------
Net gain on investments .................................. 12,535,160
-----------
NET INCREASE IN NET INVESTMENT ASSETS
RESULTING FROM OPERATIONS ................................ $32,598,841
===========
See Notes to Financial Statements.
11
--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
--------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------
2001 2000
------------ ------------
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
OPERATIONS:
Net investment income ........................................... $ 20,063,681 $ 18,877,184
Net realized loss on investments ................................ (139,260) (5,068,444)
Net change in unrealized appreciation on investments ............ 12,674,420 12,219,832
------------ ------------
Net increase in net investment assets resulting from operations 32,598,841 26,028,572
------------ ------------
DIVIDENDS:
To common shareholders from net investment income ............... (13,030,933) (13,953,202)
To preferred shareholders from net investment income ............ (4,799,537) (5,841,351)
------------
Total dividends ............................................... (17,830,470) (19,794,553)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from additional issuance of preferred shares ....... -- 16,080,131
Unused offering costs relating to issuance of preferred shares .. 158,743 --
------------ ------------
Total increase ................................................ 14,927,114 22,314,150
------------ ------------
NET INVESTMENT ASSETS
Beginning of year ................................................. 385,399,397 363,085,247
------------ ------------
End of year (including undistributed net investment income of
$2,938,017 and $277,455, respectively) ......................... $400,326,511 $385,399,397
============ ============
See Notes to Financial Statements.
12
--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------
2001(1) 2000 1999 1998 1997
---- ---- ---- ---- ----
PER COMMON SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year .......................... $ 14.30 $ 13.95 $ 15.78 $ 15.32 $ 14.52
------- ------- ------- ------- -------
Net investment income ..................................... 1.20 1.13 1.09 1.08 1.08
Net realized and unrealized gain (loss) on investments .... .75 .43 (1.63) .70 .80
------- ------- ------- ------- -------
Net increase (decrease) from investment operations .......... 1.95 1.56 (.54) 1.78 1.88
------- ------- ------- ------- -------
Dividends and distributions:
Dividends from net investment income to:
Common shareholders ....................................... (.78) (.83) (.86) (.81) (.78)
Preferred shareholders .................................... (.29) (.35) (.24) (.24) (.27)
Distributions from net realized gain on investments to:
Common shareholders ....................................... -- -- (.15) (.20) (.02)
Preferred shareholders .................................... -- -- (.04) (.07) (.01)
------- ------- ------- ------- -------
Total dividends and distributions ........................... (1.07) (1.18) (1.29) (1.32) (1.08)
------- ------- ------- ------- -------
Capital change with respect to issuance of preferred shares . .01 (.03) -- -- --
------- ------- ------- ------- -------
Net asset value, end of year(2) ............................. $ 15.19 $ 14.30 $ 13.95 $ 15.78 $ 15.32
======= ======= ======= ======= =======
Market value, end of year(2) ................................ $ 13.73 $ 12.13 $ 13.13 $ 15.44 $ 13.38
======= ======= ======= ======= =======
Total investment return(3) .................................. 20.03% (1.27)% (9.03)% 23.81% 14.39%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS:(4)
Expenses .................................................... 1.14% 1.20% 1.05% 1.04% 1.07%
Net investment income before preferred stock dividends ...... 8.10% 8.18% 7.21% 6.95% 7.42%
Preferred stock dividends ................................... 1.94% 2.53% 1.60% 1.53% 1.88%
Net investment income available to common shareholders ...... 6.16% 5.65% 5.61% 5.42% 5.54%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (000) ............. $247,832 $230,746 $252,536 $259,280 $243,947
Portfolio turnover .......................................... 4% 35% 26% 46% 160%
Net assets of common shareholders, end of year (000) ........ $253,777 $238,849 $233,085 $263,590 $255,926
Preferred stock outstanding (000) ........................... $146,550 $146,550 $130,000 $130,000 $130,000
Asset coverage per share of preferred stock, end of year .... $ 68,308 $ 65,745 $ 69,824 $ 75,690 $ 74,241
----------------
(1) Effective November 1, 2000, the Trust adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began amortizing
market discount on debt securities. The effect of this accounting policy
change had no impact on the total net assets of the Trust. The reclass of
this change for the year ended October 31, 2001 to the net investment
income from net realized and unrealized gains and losses per common share
were $0.007 per share. The ratio of net investment income to average net
assets on common shares increased from 6.11% to 6.16% and from 8.05% to
8.10% on net investment income before preferred stock dividends. Per
share, ratios and supplemental data for prior periods have not been
restated to reflect this change in presentation.
(2) Net asset value and market value are published in BARRON'S on Saturday and
THE WALL STREET JOURNAL on Monday.
(3) 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. Past
performance is not a guarantee of future results.
(4) 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.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for 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 common shares.
See Notes to Financial Statements.
13
--------------------------------------------------------------------------------
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
portfolio of investment 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 dealers or pricing services approved by the Trust's Board of
Directors. In determining the value of a particular security, pricing services
may use certain information with respect to transactions in such securities,
quotations from bond dealers, market transactions in comparable securities and
various relationships between securities in determining values. Short-term
securities are valued at amortized cost. 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.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. The Trust also records interest income
on the accrual basis and amortizes premium and accretes discount, respectively,
to interest income 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.
RECLASSIFICATION OF CAPITAL ACCOUNTS: The Trust accounts for and reports
distributions to shareholders 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. For the year ended October 31, 2001, the
Trust decreased undistributed net investment income and decrease accumulated net
realized loss by $5,554. Net investment, net realized losses and net assets were
not affected by this change.
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.
ESTIMATES: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
DEFERRED COMPENSATION PLAN: Under a deferred compensation plan approved by the
Board of Directors on February 24, 2000, non-interested Directors may elect to
defer receipt of all or a portion of their annual compensation.
Deferred amounts earn a return for the Directors as though equivalent dollar
amounts had been invested in common shares of other BlackRock funds selected by
the Directors. This has the same economic effect for the Directors as if the
Directors had invested the deferred amounts in such other BlackRock funds.
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the Trust. The
Trust may, however, elect to invest in common shares of those funds selected by
the Directors in order to match its deferred compensation obligations.
NEW ACCOUNTING POLICIES: Effective November 1, 2000, the Trust has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies, as
revised, and began accreting market discount on debt securities. Prior to
November 1, 2000, the Trust amortized premiums and original issue discount on
debt securities. The cumulative effect of this accounting policy change had no
impact on the total net assets of the Trust. This resulted in a $432,905
increase to undistributed net investment income and a corresponding decrease in
net unrealized appreciation, based on securities held by the Trust on October
31, 2001. The Statement of Changes in Net Investment Assets and the Financial
Highlights of the Trust for prior periods have not been restated to reflect this
change.
14
The effect of this change for the year ended October 31, 2001 was to
increase net investment income by $112,511, decrease net unrealized appreciation
by $106,957 and decrease net realized gains by $5,554.
NOTE 2. AGREEMENTS
The Trust has an Investment Advisory Agreement with BlackRock Advisors,
Inc., (the "Advisor"), which is a wholly-owned subsidiary of BlackRock, Inc.,
which in turn is an indirect, majority-owned subsidiary of PNC Financial
Services Group, Inc. The Trust has an Administration Agreement with Princeton
Administrators, L.P. (the "Administrator"), an indirect wholly-owned affiliate
of Merrill Lynch & Co., Inc.
The investment advisory fee paid to the Advisor 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, subject to a minimum monthly fee of
$12,500.
Pursuant to the agreements, the Advisor provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Advisor. 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 investments, other than short-term investments, for the
year ended October 31, 2001, aggregated $18,303,540 and $16,467,288,
respectively.
The Trust may invest in securities which are not readily marketable,
including those which are restricted as to disposition under securities law
("restricted securities"). At October 31, 2001, the Trust held 6% of its net
assets in securities restricted as to resale.
The Federal income tax basis of the Trust's investments at October 31, 2001
was $375,001,373, and accordingly, net unrealized appreciation was $24,958,973
(gross unrealized appreciation--$27,577,561, gross unrealized depreciation--
$2,618,588).
For Federal income tax purposes, the Trust had a capital loss carryforward
at October 31, 2001 of approximately $5,514,000 of which $312,000 will expire in
2007, $5,068,000 will expire in 2008 and $134,000 will expire in 2009.
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net gains have been realized in excess of such amount.
NOTE 4. CAPITAL
There are 200 million shares of $.01 par value common stock authorized. The
Trust may classify or reclassify any unissued shares of common stock into one or
more series of preferred stock. Of the 16,707,093 common shares outstanding at
October 31, 2001, the Advisor owned 7,205 shares. As of October 31, 2001, there
were 5,862 shares of preferred stock outstanding as follows: Series T7--3,262
and Series T28--2,600, which includes 662 shares of series T7 issued on March
10, 2000.
On March 10, 2000, the Trust reclassified 662 shares of common stock and
issued an additional 662 shares of Series T7 preferred stock. The additional
shares issued have identical rights and features of the existing Series T7
preferred stock. Offering cost of $145,626 and underwriting discount of $165,500
have been charged to paid-in capital in excess of par of the common shares.
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 1.65% to 5.10% during the year ended October 31,
2001.
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 stock, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
stock, 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, 2001, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.065 per common share payable December
3, 2001, to shareholders of record on November 15, 2001.
For the period November 1, 2001 to November 30, 2001, dividends declared on
preferred stock totaled $199,811 in aggregate for the two outstanding preferred
stock series.
15
--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
The BlackRock Investment Quality Municipal Trust Inc.
We have audited the accompanying statement of assets and liabilities of The
BlackRock Investment Quality Municipal Trust Inc. (the "Trust"), including the
portfolio of investments, as of October 31, 2001, and the related statement of
operations for the year then ended, the statements of changes in net investments
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 as of October 31, 2001, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
BlackRock Investment Quality Municipal Trust Inc. as of October 31, 2001, the
results of its operations for the year then ended, the changes in its net
investments assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ DELOITTE & TOUCHE LLP
-------------------------
Boston, Massachusetts
December 7, 2001
16
--------------------------------------------------------------------------------
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 (October 31, 2001) as to the federal tax status of
dividends you received during such fiscal year. Accordingly, during the year the
Trust paid Federal tax-exempt dividends of $0.7800 per share to common
shareholders and $831.49 per share to preferred shareholders.
For purposes of preparing your annual Federal income tax return, you
should report the amounts as reflected on the appropriate Form 1099-DIV or
substitute 1099-DIV.
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders are automatically enrolled to have all distributions of dividends
and capital gains reinvested by EquiServe Trust Company, N.A. (the "Plan Agent")
in Trust shares pursuant to the Plan. Shareholders who elect not to 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 income tax that may be payable on
such dividends or distributions.
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.
Quarterly performance and other information regarding the Trust may be
found on BlackRock's website, which can be accessed at
http://www.blackrock.com/funds/cefunds.html. This reference to BlackRock's
website is intended to allow investors public access to quarterly information
regarding the Trust and is not intended to incorporate BlackRock's website into
this report.
17
--------------------------------------------------------------------------------
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 current income exempt from regular Federal income tax consistent with
the preservation of capital.
WHO MANAGES THE TRUST?
BlackRock Advisors, Inc. (the "Advisor") manages the Trust. The Advisor is a
wholly-owned subsidiary of BlackRock, Inc. ("BlackRock"), which is one of the
largest publicly traded investment management firms in the United States with
$226 billion of assets under management as of September 30, 2001. BlackRock
manages assets on behalf of more than 3,300 institutions and 200,000 individuals
worldwide through a variety of equity, fixed income, liquidity and alternative
investment separate accounts and mutual funds, including BLACKROCK FUNDS and
BLACKROCK PROVIDENT INSTITUTIONAL FUNDS. In addition, BlackRock provides risk
management and investment system services to institutional investors under the
BLACKROCK SOLUTIONS name. Clients are served from the Company's headquarters in
New York City, as well as offices in Wilmington, DE, San Francisco, Edinburgh,
Scotland, Tokyo, Japan and Hong Kong. BlackRock is a member of The PNC Financial
Services Group, Inc. (NYSE: PNC), one of the largest diversified financial
services organizations in the United States, and is majority-owned by PNC and by
BlackRock employees.
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 or "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 Advisor.
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 ADVISOR'S INVESTMENT STRATEGY?
The Advisor 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 Advisor 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 Advisor 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. See "Leverage Considerations in the Trust".
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's common 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 first business
day of the month. For shares held in the shareholder's
18
name, dividends may be reinvested in additional shares of the Trust through the
Trust's transfer agent, EquiServe Trust Company, N.A. 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 than the market in a rapidly rising interest rate
environment. The Trust may reduce, or unwind, the amount of leverage employed
should the Advisor consider that reduction to be in the best interests of the
Trust. The Advisor'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.
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 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 the issuance of preferred stock,
which involves special risks. The Trust's net asset value and market value maybe
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.
19
--------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
GLOSSARY
--------------------------------------------------------------------------------
CLOSED-END FUND: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange. The
fund invests in a portfolio of securities in
accordance with its stated investment objectives and
policies.
DISCOUNT: When a fund's net asset value is greater than its
stock price the fund is said to be trading at a
discount.
DIVIDEND: Income generated by securities in a portfolio and
distributed to shareholders after the deduction of
expenses. This Trust declares and pays dividends to
common shareholders on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may have all dividends and distributions
of capital gains automatically reinvested into
additional shares of a fund.
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 common shares. It is
the underlying value of a single common share on a
given day. Net asset value for the Trust is
calculated weekly and published in BARRON'S on
Saturday and THE WALL STREET JOURNAL on Monday.
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.
20
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
SUMMARY OF CLOSED-END FUNDS
--------------------------------------------------------------------------------
TAXABLE TRUSTS
--------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ ---------
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
The BlackRock High Yield Trust BHY N/A
BlackRock Core Bond Trust BHK N/A
TERM TRUSTS
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
------------------------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS 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
The Blackrock Pennsylvania Strategic Municipal Trust BPS N/A
The Blackrock Strategic Municipal Trust BSD N/A
BlackRock California Municipal Income Trust BFZ N/A
BlackRock Municipal Income Trust BFK N/A
BlackRock New York Municipal Income Trust BNY N/A
BlackRock New Jersey Municipal Income Trust BNJ N/A
BlackRock Florida Municipal Income Trust BBF 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
BlackRock California Municipal 2018 Term Trust BJZ 12/18
BlackRock New York Municipal 2018 Term Trust BLH 12/18
BlackRock Municipal 2018 Term Trust BPK 12/18
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE CALL BLACKROCK AT
(800) 227-7BFM (7236) OR CONSULT WITH YOUR FINANCIAL ADVISOR.
21
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
AN OVERVIEW
--------------------------------------------------------------------------------
BlackRock Advisors, Inc. (the "Advisor") manages the Trust. The Advisor is
a wholly-owned subsidiary of BlackRock, Inc. ("BlackRock"), which is one of the
largest publicly traded investment management firms in the United States with
$226 billion of assets under management as of September 30, 2001. BlackRock
manages assets on behalf of more than 3,300 institutions and 200,000 individuals
worldwide through a variety of equity, fixed income, liquidity and alternative
investment separate accounts and mutual funds, including the BLACKROCK FUNDS and
BLACKROCK PROVIDENT INSTITUTIONAL FUNDS. In addition, BlackRock provides risk
management and investment system services to institutional investors under the
BLACKROCK SOLUTIONS name. Clients are served from the Company's headquarters in
New York City, as well as offices in Wilmington, DE, San Francisco, Edinburgh,
Scotland, Tokyo, Japan, and Hong Kong. BlackRock is a member of The PNC
Financial Services Group (NYSE: PNC), one of the largest diversified financial
services organizations in the United States, and is majority-owned by PNC and by
BlackRock employees.
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
22
--------- ------------------------------
BLACKROCK
--------- ------------------------------
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS THE BLACKROCK
Ralph L. Schlosstein, PRESIDENT INVESTMENT QUALITY
Robert S. Kapito, VICE PRESIDENT MUNICIPAL TRUST INC.
Kevin Klingert, VICE PRESIDENT =======================
Richard M. Shea, VICE PRESIDENT/TAX ANNUAL REPORT
Henry Gabbay, TREASURER OCTOBER 31, 2001
James Kong, ASSISTANT TREASURER
Anne Ackerley, SECRETARY
INVESTMENT ADVISOR
BlackRock Advisors, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
(800) 227-7BFM
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. BOX 9095
Princeton, NJ 08543-9095
(800) 543-6217
CUSTODIAN
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
TRANSFER AGENT
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
(800) 699-1BFM
AUCTION AGENT
Deutsche Bank
4 Albany Street
New York, NY 10006
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
LEGAL COUNSEL -- INDEPENDENT DIRECTORS
Debevoise & Plimpton
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.
Statements and other information contained in this report are as dated and
are subject to change.
THE BLACKROCK INVESTMENT QUALITY
MUNICIPAL TRUST INC.
c/o Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 543-6217
[Recycle Logo]Printed on recycled paper 09247D-10-5 [Logo]BLACKROCK
09247D-20-4
09247D-30-3