| | | | | | | | | |
| | | | | | | | For the period | |
| | Six Months Ended | | Year Ended October 31, | | July 27, 20011 | |
| | April 30, 2004 | |
| | through | |
| | (unaudited) | | 2003 | | 2002 | | October 31, 20012,3 | |
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| PER COMMON SHARE OPERATING PERFORMANCE: | | | | | | | | | |
| Net asset value, beginning of period | $ | 14.76 | | $ | 14.47 | | $ | 14.09 | | $ | 14.33 | 4 |
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| Investment operations: | | | | | | | | | | | | |
| Net investment income | | 0.58 | | | 1.14 | | | 1.09 | | | 0.15 | |
| Net realized and unrealized gain (loss) | | (0.01 | ) | | 0.13 | | | 0.29 | | | (0.08 | ) |
| Dividends to preferred shareholders from | | | | | | | | | | | | |
| net investment income | (0.04 | ) | (0.09 | ) | (0.13 | ) | (0.01 | ) |
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| Net increase from investment operations | 0.53 | | 1.18 | | 1.25 | | 0.06 | |
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| |
| Dividends and distributions to common shareholders: | | | | | | | | | | | | |
| Net investment income | | (0.45 | ) | | (0.89 | ) | | (0.87 | ) | | (0.14 | ) |
| In excess of net investment income | — | | — | | — | | (0.02 | ) |
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| |
| |
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| Total dividends and distributions | (0.45 | ) | (0.89 | ) | (0.87 | ) | (0.16 | ) |
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| Capital charges with respect to issuance of: | | | | | | | | | | | | |
| Common shares | | — | | | — | | | — | | | (0.03 | ) |
| Preferred shares | — | | — | | — | | (0.11 | ) |
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| |
| |
| |
| Total capital charges | — | | — | | — | | (0.14 | ) |
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| Net asset value, end of period | $ | 14.84 | | $ | 14.76 | | $ | 14.47 | | $ | 14.09 | |
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| Market price, end of period | $ | 12.98 | | $ | 13.45 | | $ | 13.42 | | $ | 14.62 | |
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| TOTAL INVESTMENT RETURN5 | (0.36 | )% | 6.95 | % | (2.25 | )% | (5.58 | )% |
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| RATIOS TO AVERAGE NET ASSETS OF | | | | | | | | | | | | |
| COMMON SHAREHOLDERS:6 | | | | | | | | | | | | |
| Expenses after fees waived and paid indirectly | | 0.86 | %7 | | 0.88 | % | | 0.90 | % | | 0.73 | %7 |
| Expenses before fees waived and paid indirectly | | 1.26 | %7 | | 1.29 | % | | 1.33 | % | | 1.03 | %7 |
| Net investment income after fees waived and paid indirectly | | | | | | | | | | | | |
| and before preferred share dividends | | 7.57 | %7 | | 7.73 | % | | 7.87 | % | | 3.93 | %7 |
| Preferred share dividends | | 0.50 | %7 | | 0.62 | % | | 0.93 | % | | 0.37 | %7 |
| Net investment income available to common shareholders | | 7.07 | %7 | | 7.11 | % | | 6.94 | % | | 3.56 | %7 |
| SUPPLEMENTAL DATA: | | | | | | | | | | | | |
| Average net assets of common shareholders (000) | $ | 190,931 | | $ | 183,648 | | $ | 173,885 | | $ | 163,077 | |
| Portfolio turnover | | 5 | % | | 14 | % | | 57 | % | | 2 | % |
| Net assets of common shareholders, end of period (000) | $ | 185,858 | | $ | 184,874 | | $ | 181,200 | | $ | 175,110 | |
| Preferred shares value outstanding (000) | $ | 109,750 | | $ | 109,750 | | $ | 109,750 | | $ | 109,750 | |
| Asset coverage per preferred share, end of period | $ | 67,339 | | $ | 67,115 | | $ | 66,279 | | $ | 64,894 | |
The information in the above Financial Highlights represents the operating performance for a common share outstanding, total investment returns, ratios to average net assets and other supplemental data for each period indicated. This information has been determined based upon financial information provided in the financial statements and market price data for the Trust’s common shares.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS (unaudited)
Note 1. Organization & Accounting Policies BlackRock Investment Quality Municipal Trust Inc. (“Municipal Investment Quality”) was organized as a Maryland corporation on November 19, 1992. BlackRock California Investment Quality Municipal Trust Inc. (“California Investment Quality”), BlackRock New Jersey Investment Quality Municipal Trust Inc. (“New Jersey Investment Quality”) and BlackRock New York Investment Quality Municipal Trust Inc. (“New York Investment Quality”) were organized as Maryland corporations on April 12, 1993. BlackRock Florida Investment Quality Municipal Trust (“Florida Investment Quality”) was organized as a Massachusetts business trust on April 15, 1993. BlackRock Municipal Income Trust (“Municipal Income”), BlackRock California Municipal Income Trust (“California Income”), BlackRock Florida Municipal Income Trust (“Florida Income”), BlackRock New Jersey Municipal Income Trust (“New Jersey Income”) and BlackRock New York Municipal Income Trust (“New York Income”) (collectively the “Income Trusts”) were organized as Delaware statuatory trusts on March 30, 2001. Municipal Investment Quality and Municipal Income are registered as diversified, closed-end management investment companies under the Investment Company Act of 1940, as amended. California Investment Quality, California Income, Florida Investment Quality, Florida Income, New Jersey Investment Quality, New Jersey Income, New York Investment Quality and New York Income are registered as non-diversified, closed-end management investment companies under the Investment Company Act of 1940, as amended. Municipal Investment Quality, California Investment Quality, Florida Investment Quality, New Jersey Investment Quality and New York Investment Quality are herein referred to as the Investment Quality Trusts. The ability of issuers of debt securities held by each Trust to meet their obligations may be affected by economic developments in a state, a specific industry or region.
The following is a summary of significant accounting policies followed by the Trusts.
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 selected under the supervision of each Trust’s Board of Trustees or Board of Directors as the case may be (each, a “Board”). 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. A futures contract is valued at the last sale price as of the close of the commodities exchange on which it trades. Short-term investments may be valued at amortized cost. Investments in other investment companies are valued at net asset value. 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, each Trust’s Board.
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. Each Trust also records interest income on an accrual basis and amortizes premium and/or accretes discount on securities purchased using the interest method.
Financial Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument for a set price on a future date. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Trust records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Trust’s basis in the contract.
Financial futures contracts, when used by the Trusts, help in maintaining a targeted duration. Futures contracts can be sold to effectively shorten an otherwise longer duration portfolio. In the same sense, futures contracts can be purchased to lengthen a portfolio that is shorter than its duration target. Thus, by buying or selling futures contracts, the Trusts may attempt to manage the duration of positions so that changes in interest rates do not change the duration of the portfolio unexpectedly.
Segregation: In cases in which the Investment Company Act of 1940, as amended, and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that each Trust segregate assets in connection with certain investments (e.g., when-issued securities, reverse repurchase agreements or futures contracts), each Trust will, consistent with certain interpretive letters issued by the SEC, designate on its books and records cash or other liquid debt securities having a market value at least equal to the amount that would otherwise be required to be physically segregated.
Federal Income Taxes: It is each Trust’s intention to continue to be treated as a regulated investment company under the Internal Revenue Code and to distribute sufficient net income to shareholders. For this reason and because substantially all of the gross income of each Trust consists of tax-exempt interest, no Federal income tax provisions are required.
Dividends and Distributions: Each 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 these estimates.
Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by the Trust’s Board, non-interested Trustees/Directors (“Trustees”) are required to defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of other BlackRock closed-end trusts selected by the Trustees. This has the same economic effect for the Trustees as if the Trustees had invested the deferred amounts in such Trusts.
52
The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of the Trust. Each Trust may, however, elect to invest in common shares of those Trusts selected by the Trustees in order to match its deferred compensation obligations.
Note 2. Agreements Each Trust has an Investment Management Agreement with BlackRock Advisors, Inc. (the “Advisor”), which is a wholly owned subsidiary of BlackRock, Inc. BlackRock Financial Management, Inc., a wholly owned subsidiary of BlackRock, Inc., serves as sub-advisor to the Income Trusts. BlackRock, Inc. is an indirect, majority owned subsidiary of The PNC Financial Services Group, Inc. The investment management agreement covers both investment advisory and administration services.
Each Trust’s investment advisory fee paid to the Advisor is computed weekly and payable monthly based on an annual rate, 0.35% for the Investment Quality Trusts and 0.60% for the Income Trusts, of the Trust’s average weekly managed assets. “Managed assets” means the total assets of a Trust (including any assets attributable to any preferred shares that may be outstanding) minus the sum of accrued liabilities (other than debt representing financial leverage). The Advisor has voluntarily agreed to waive a portion of the investment advisory fee or other expenses on the Income Trusts as a percentage of managed assets as follows: 0.25% for the first five years of each of the Trust’s operations, 0.20% in year six, 0.15% in year seven, 0.10% in year eight and 0.05% in year nine.
Pursuant to the agreements, the Advisor provides continuous supervision of the investment portfolio and pays the compensation of officers of each Trust who are affiliated persons of the Advisor, occupancy and certain clerical and accounting costs of each Trust. Each Trust bears all other costs and expenses, which include reimbursements to the Advisor for certain operational support services provided to each Trust.
Pursuant to the terms of each Trust’s custody agreement, each Trust received earning credits from its custodian for positive cash balances maintained, which are used to offset custody fees.
Note 3. Portfolio Securities Purchases and sales of investment securities, other than short-term investments, for the period ended April30, 2004, were as follows:
Trust | Purchases | | Sales | | Trust | Purchases | | Sales | |
|
| |
| |
|
| |
| |
| Municipal Investment Quality | $ | 65,502,421 | | $ | 60,546,801 | | Florida Income | $ | 7,989,540 | | $ | 7,355,560 | |
| Municipal Income | | 188,842,551 | | | 162,638,357 | | New Jersey Investment Quality | | 964,610 | | | 1,235,880 | |
| California Investment Quality | | 1,065,360 | | | 1,671,086 | | New Jersey Income | | 6,416,898 | | | 5,240,277 | |
| California Income | | 15,919,910 | | | 17,802,680 | | New York Investment Quality | | 315,000 | | | 2,171,648 | |
| Florida Investment Quality | | 1,973,410 | | | 215,000 | | New York Income | | 16,645,572 | | | 16,116,315 | |
Details of open financial futures contracts at April 30, 2004 were as follows:
| | Number of | | | | Expiration | | Value at Trade | | Value at | | Unrealized | |
Trust | Contracts | | Type | | Date | | Date | | April 30, 2004 | | Appreciation | |
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| |
| |
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| |
| Short Positions: | | | | | | | | | | | | |
| Municipal Investment | | | | | | | | | | | | | | | |
| Quality | 600 | | 10 Yr. U.S. T-Note | | June ’04 | | $ | 68,193,366 | | $ | 66,300,003 | | $ | 1,893,363 | |
| Municipal Income | 2,098 | | 10 Yr. U.S. T-Note | | June ’04 | | | 238,449,085 | | | 231,829,013 | | | 6,620,072 | |
| California Income | 777 | | 10 Yr. U.S. T-Note | | June ’04 | | | 88,310,445 | | | 85,858,504 | | | 2,451,941 | |
| Florida Income | 295 | | 10 Yr. U.S. T-Note | | June ’04 | | | 33,528,406 | | | 32,597,502 | | | 930,904 | |
| New Jersey Income | 368 | | 10 Yr. U.S. T-Note | | June ’04 | | | 41,825,183 | | | 40,664,002 | | | 1,161,181 | |
| New York Income | 511 | | 10 Yr. U.S. T-Note | | June ’04 | | | 58,077,976 | | | 56,465,503 | | | 1,612,473 | |
At April 30, 2004, the total cost of securities for Federal income tax purposes and the aggregate gross unrealized appreciation and depreciation for securities held by each Trust were as follows:
Trust | Cost | | Appreciation | | Depreciation | | Net | |
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| |
| |
| |
| |
| Municipal Investment Quality | $ | 375,804,923 | | $ | 24,130,629 | | $ | 1,636,464 | | $ | 22,494,165 | |
| Municipal Income | | 962,160,523 | | | 22,549,195 | | | 8,776,318 | | | 13,772,877 | |
| California Investment Quality | | 20,359,798 | | | 999,833 | | | 445,922 | | | 553,911 | |
| California Income | | 344,239,992 | | | 6,038,928 | | | 9,341,112 | | | (3,302,184 | ) |
| Florida Investment Quality | | 23,422,988 | | | 1,452,112 | | | 98,461 | | | 1,353,651 | |
| Florida Income | | 152,205,123 | | | 3,306,340 | | | 1,091,161 | | | 2,215,179 | |
| New Jersey Investment Quality | | 20,262,099 | | | 1,564,270 | | | 212,677 | | | 1,351,593 | |
| New Jersey Income | | 169,069,856 | | | 4,093,479 | | | 1,778,882 | | | 2,314,597 | |
| New York Investment Quality | | 27,137,174 | | | 1,603,583 | | | 56,126 | | | 1,547,457 | |
| New York Income | | 285,525,836 | | | 8,719,052 | | | 2,767,858 | | | 5,951,194 | |
53
For Federal income tax purposes, the following Trusts had capital loss carryforwards at October 31, 2003, the Trusts’ last tax year-end except for New York Income which had its last tax year-end at July 31, 2003. These amounts may be used to offset future realized capital gains, if any:
| | Capital Loss | | | | | Capital Loss | | | |
| | Carryforward | | | | | Carryforward | | | |
Trust | Amount | | Expires | | Trust | Amount | | Expires | |
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| Municipal Investment Quality | $ | 2,870,542 | | 2011 | | New Jersey Investment Quality | $ | 228,242 | | 2008 | |
| | | 324,268 | | 2010 | | | 6,166 | | 2004 | |
| | | 133,706 | | 2009 | | |
| | | |
| | | 5,068,444 | | 2008 | | | $ | 234,408 | | | |
| | | 312,281 | | 2007 | | |
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| | | |
| |
|
| | | | New Jersey Income | $ | 28,207 | | 2011 | |
| | $ | 8,709,241 | | | | | | 615,438 | | 2010 | |
| |
|
| | | | | | 49,975 | | 2009 | |
| Municipal Income | $ | 21,749,392 | | 2011 | | |
| | | |
| | | 15,055,804 | | 2010 | | | $ | 693,620 | | | |
| | | 526,271 | | 2009 | | |
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| | | | New York Investment Quality | $ | 68,365 | | 2008 | |
| | $ | 37,331,467 | | | | |
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| | | |
| |
| | | | New York Income | $ | 2,021,656 | | 2011 | |
| California Income | $ | 124,338 | | 2011 | | | | 68,166 | | 2010 | |
| | 2,398,646 | | 2010 | | |
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|
| | | | | $ | 2,089,822 | | | |
| | | 2,522,984 | | | | |
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| | | |
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| | | | | | | | |
| Florida Investment Quality | | — | | — | | | | | | | |
| Florida Income | $ | 192,363 | | 2010 | | | | | | | |
| |
| | | | | | | | | |
Accordingly, no capital gain distributions are expected to be paid to shareholders of a Trust until that Trust has net realized capital gains in excess of its capital loss carryforward amounts.
Note 4. Distributions to Shareholders The tax character of distributions paid during the period ended April 30, 2004 and the year ended October 31, 2003 were as follows:
| | Period ended April 30, 2004 | |
| |
| |
| | | | | | Long-term | | | |
| Distributions Paid From: | Tax-exempt Income | | Ordinary Income | | Capital Gains | | Total Distributions | |
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| Municipal Investment Quality | $ | 8,330,574 | | $ | — | | $ | — | | $ | 8,330,574 | |
| Municipal Income | | 22,923,867 | | | — | | | — | | | 22,923,867 | |
| California Investment Quality | | 455,093 | | | — | | | 52,176 | | | 507,269 | |
| California Income | | 7,455,598 | | | — | | | — | | | 7,455,598 | |
| Florida Investment Quality | | 505,513 | | | — | | | 280,537 | | | 786,050 | |
| Florida Income | | 3,237,091 | | | — | | | — | | | 3,237,091 | |
| New Jersey Investment Quality | | 436,634 | | | — | | | — | | | 436,634 | |
| New Jersey Income | | 3,619,743 | | | — | | | — | | | 3,619,743 | |
| New York Investment Quality | | 615,816 | | | — | | | — | | | 615,816 | |
| New York Income | | 6,137,737 | | | — | | | — | | | 6,137,737 | |
| | | | | | | | | | | | | |
| | Year ended October 31, 2003 | |
| |
| |
| | | | | | | | Long-term | | | | |
| Distributions Paid From: | Tax-exempt Income | | Ordinary Income | | Capital Gains | | Total Distributions | |
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| Municipal Investment Quality | $ | 16,282,840 | | $ | — | | $ | — | | $ | 16,282,840 | |
| Municipal Income | | 45,162,896 | | | — | | | — | | | 45,162,896 | |
| California Investment Quality | | 899,044 | | | — | | | — | | | 899,044 | |
| California Income | | 14,616,191 | | | — | | | — | | | 14,616,191 | |
| Florida Investment Quality | | 1,028,098 | | | — | | | — | | | 1,028,098 | |
| Florida Income | | 6,435,446 | | | — | | | — | | | 6,435,446 | |
| New Jersey Investment Quality | | 862,609 | | | — | | | — | | | 862,609 | |
| New Jersey Income | | 7,144,591 | | | — | | | — | | | 7,144,591 | |
| New York Investment Quality | | 1,235,682 | | | — | | | — | | | 1,235,682 | |
| New York Income | | 12,228,638 | | | — | | | — | | | 12,228,638 | |
54
As of April 30, 2004, the components of distributable earnings on a tax basis were as follows:
| | | | | | Undistributed | | | |
| | Undistributed | | Undistributed | | Long-term | | Unrealized | |
| | Tax-exempt Income | | Ordinary Income | | Capital Gains | | Net Appreciation | |
| |
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| |
| |
| |
| Municipal Investment Quality | $ | 12,344,534 | | $ | — | | $ | — | | $ | 22,494,165 | |
| Municipal Income | | 19,906,305 | | | — | | | — | | | 13,772,877 | |
| California Investment Quality | | 468,184 | | | 460 | | | 146 | | | 533,911 | |
| California Income | | 6,272,686 | | | — | | | — | | | — | |
| Florida Investment Quality | | 580,847 | | | — | | | 2,504 | | | 1,353,651 | |
| Florida Income | | 2,455,347 | | | — | | 627,491 | | | 2,215,179 | |
| New Jersey Investment Quality | | 646,312 | | | — | | | — | | | 1,351,593 | |
| New Jersey Income | | 3,149,195 | | | — | | 106,348 | | | 2,314,597 | |
| New York Investment Quality | | 735,988 | | | — | | | — | | | 1,547,457 | |
| New York Income | | 4,852,515 | | | — | | | — | | | 5,951,194 | |
Note 5. Capital There are 200 million of $0.01 par value common shares authorized for each of the Investment Quality Trusts. There are an unlimited number of $0.001 par value common shares authorized for the Income Trusts. Each Trust may classify or reclassify any unissued common shares into one or more series of preferred shares. At April 30, 2004, the common shares outstanding and the shares owned by affiliates of the Advisor of each Trust were as follows:
| | Common | | Common | | | Common | | Common | |
| | Shares | | Shares | | | Shares | | Shares | |
Trust | Outstanding | | Owned | | Trust | Outstanding | | Owned | |
|
| |
| |
|
| |
| |
| Municipal Investment Quality | 16,707,093 | | — | | Florida Income | 6,646,343 | | — | |
| Municipal Income | 43,588,385 | | — | | New Jersey Investment Quality | 1,007,093 | | 7,093 | |
| California Investment Quality | 1,007,093 | | 7,093 | | New Jersey Income | 7,414,793 | | — | |
| California Income | 14,985,501 | | — | | New York Investment Quality | 1,307,093 | | 7,093 | |
| Florida Investment Quality | 1,127,093 | | 7,093 | | New York Income | 12,521,494 | | — | |
During the six months ended April 30, 2004, Municipal Income issued 35,706 additional shares under its dividend reinvestment plan. During the year ended October 31, 2003, Municipal Income issued 69,968 additional shares under its dividend reinvestment plan.
As of April 30, 2004, each Trust had the following series of preferred shares outstanding as listed in the table below. The preferred shares have a liquidation value of $25,000 per share plus any accumulated unpaid dividends.
Trust | Series | | Shares | | Trust | Series | | Shares | |
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| |
| |
|
| |
| |
| Municipal Investment Quality | T7 | | 3,262 | | Florida Investment Quality | R7 | | 340 | |
| | T28 | | 2,600 | | Florida Income | T7 | | 2,302 | |
| Municipal Income | M7 | | 3,001 | | New Jersey Investment Quality | T7 | | 300 | |
| | T7 | | 3,001 | | New Jersey Income | R7 | | 2,552 | |
| | W7 | | 3,001 | | New York Investment Quality | F7 | | 392 | |
| | R7 | | 3,001 | | New York Income | W7 | | 2,195 | |
| | F7 | | 3,001 | | | F7 | | 2,195 | |
| California Investment Quality | W7 | | 300 | | | | | | |
| California Income | T7 | | 2,639 | | | | | | |
| | R7 | | 2,639 | | | | | | |
Dividends on seven-day preferred shares are cumulative at a rate which resets every seven days based on the results of an auction. Dividends on 28 day preferred shares are cumulative at a rate which resets every 28 days based on the results of an auction. The dividend ranges on the preferred shares for each of the Trusts for the period ended April 30, 2004, were as follows:
Trust | Low | | High | | Trust | Low | | High | |
|
| |
| |
|
| |
| |
| Municipal Investment Quality | 0.80 | % | 1.34 | % | Florida Income | 0.19 | % | 1.10 | % |
| Municipal Income | 0.45 | | 1.35 | | New Jersey Investment Quality | 0.45 | | 1.10 | |
| California Investment Quality | 0.45 | | 1.25 | | New Jersey Income | 0.40 | | 1.25 | |
| California Income | 0.75 | | 1.40 | | New York Investment Quality | 0.45 | | 1.25 | |
| Florida Investment Quality | 0.80 | | 2.20 | | New York Income | 0.40 | | 1.30 | |
A Trust may not declare dividends or make other distributions on common shares or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding preferred shares would be less than 200%.
The preferred shares are redeemable at the option of each 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 shares are 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 a Trust, as set forth in each Trust’s Declaration of Trust, are not satisfied.
55
The holders of preferred shares have voting rights equal to the holders of common shares (one vote per share) and will vote together with holders of common shares as a single class. However, holders of preferred shares, voting as a separate class, are also entitled to elect two Trustees for each Trust. In addition, the Investment Company Act of 1940, as amended, requires that along with approval by shareholders 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, (b) change a Trust’s subclassification as a closed-end investment company or change its fundamental investment restrictions and (c) change its business so as to cease to be an investment company.
Note 6. Dividends Subsequent to April 30, 2004, the Board of each Trust declared dividends from undistributed earnings per common share payable June 1, 2004, to shareholders of record on May 14, 2004. The per share common dividends declared were as follows:
| | Common Dividend | | | Common Dividend |
Trust | Per Share | | Trust | Per Share |
|
| |
|
|
| Municipal Investment Quality | $0.076189 | | Florida Income | $0.075375 |
| Municipal Income | 0.081125 | | New Jersey Investment Quality | 0.067148 |
| California Investment Quality | 0.070600 | | New Jersey Income | 0.075108 |
| California Income | 0.076074 | | New York Investment Quality | 0.073125 |
| Florida Investment Quality | 0.070781 | | New York Income | 0.075339 |
The dividends declared on preferred shares for the period May 1, 2004 to May 31, 2004, for each of the Trusts were as follows:
| | | | Dividends | | | | | Dividends | |
Trust | Series | | Declared | | Trust | Series | | Declared | |
|
| |
| |
|
| |
| |
| Municipal Investment Quality | T7 | | $ | 61,456 | | Florida Investment Quality | R7 | | $ | 6,992 | |
| | T28 | | | 45,864 | | Florida Income | T7 | | | 42,242 | |
| Municipal Income | M7 | | | 72,954 | | New Jersey Investment Quality | T7 | | | 3,813 | |
| | T7 | | | 58,129 | | New Jersey Income | R7 | | | 45,630 | |
| | W7 | | | 57,229 | | New York Investment Quality | F7 | | | 8,052 | |
| | R7 | | | 58,700 | | New York Income | W7 | | | 36,613 | |
| | F7 | | | 56,329 | | | F7 | | | 43,966 | |
| California Investment Quality | W7 | | | 5,178 | | | | | | | |
| California Income | T7 | | | 48,505 | | | | | | | |
| | R7 | | | 47,264 | | | | | | | |
Note 7. Reimbursements In December of 2003, the Advisor determined that each of the Municipal Investment Quality, California Investment Quality, Florida Investment Quality, New Jersey Investment Quality and New York Investment Quality had purchased high yield bonds in violation of a non-fundamental investment policy requiring their investments to be of investment grade quality at the time of purchase. The Advisor has reimbursed each of the Trusts for the realized and unrealized losses incurred from the date of purchase through December 18, 2003, as a result of these unauthorized purchases. The net realized and unrealized gains on these securities as of December 18, 2003 was $167,280.00 for Municipal Investment Quality, $10,779.26 for California Investment Quality, $46,655.67 for Florida Investment Quality and $4,284.00 for New York Investment Quality. The amount of the reimbursement for the losses was $18,420.76 for California Investment Quality, $86,481.10 for New Jersey Investment Quality and $3,690.00 for New York Investment Quality. Such amounts have been reflected in the accompanying financial statements for the six months ended April 30, 2004.
Note 8. Investment Policy On December 18, 2003, the Board approved a resolution for each of the Municipal Investment Quality, California Investment Quality, Florida Investment Quality, New Jersey Investment Quality and New York Investment Quality whereby each such Trust adopted a non-fundamental investment policy permitting each Trust to invest up to 20% of its managed assets, measured at the time of purchase, in securities rated BB/Ba or B by Moody’s Investors Service, Inc., Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies Inc., Fitch Ratings or another nationally recognized rating agency or, if unrated, deemed to be of comparable credit quality by BlackRock Advisors, Inc. or its affiliates.
56
DIVIDEND REINVESTMENT PLANS
Pursuant to each Trust’s Dividend Reinvestment Plan (the “Plan"), common shareholders are automatically enrolled to have all distributions of dividends and capital gains reinvested by EquiServe Trust Company, N.A. (the “Plan Agent") in the respective Trust’s shares pursuant to the Plan. Shareholders who elect not to participate in the Plan will receive all distributions in cash paid by check and 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 Plan Agent, which serves as agent for the shareholders in administering the Plan.
After an Investment Quality Trust declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ account, by the purchase of outstanding shares on the open market, on the Trust’s primary exchange or elsewhere (“open market purchases"). The Investment Quality Trusts will not issue any new shares under the Plan.
After an Income Trust declares a dividend or determines to make a capital gain distribution, the Plan Agent will acquire shares for the participants’ account, depending upon the circumstances described below, either (i) through receipt of unissued but authorized shares from the Trust (“newly issued shares") or (ii) by open market purchases. If, on the dividend payment date, the net asset value per share (“NAV") is equal to or less than the market price per share plus estimated brokerage commissions (such condition being referred to herein as "market premium"), the Plan Agent will invest the dividend amount in newly issued shares on behalf of the participants. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the NAV on the date the shares are issued. However, if the NAV is less than 95% of the market price on the payment date, the dollar amount of the dividend will be divided by 95% of the market price on the payment date. If, on the dividend payment date, the NAV is greater than the market value per share plus estimated brokerage commissions (such condition being referred to herein as “market discount"), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participants in open market purchases.
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 each 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.
Each Trust reserves the right to amend or terminate the Plan. There is no direct service charge to participants in the Plan, however, each Trust reserves the right to amend the Plan to include a service charge payable by the participants. Participants that request a sale of shares through the Plan Agent are subject to a $2.50 sales fee and a $0.15 per share sold brokerage commission. All correspondence concerning the Plan should be directed to the Plan Agent at 250 Royall Street, Canton, MA 02021, or (800) 699-1BFM.
57
ADDITIONAL INFORMATION
The Joint Annual Meeting of Shareholders was held on May 26, 2004, to elect a certain number of Directors/Trustees for each of the following Trusts to three year terms, unless otherwise indicated, expiring in 2007:
| Municipal Investment Quality | | | | |
| | | | |
| Elected the Class II Directors as follows: | | | | |
| Director | Votes for | | Votes Withheld |
|
| |
|
| Frank J. Fabozzi | 4,579 | | 456 | |
| Walter F. Mondale | 13,260,683 | | 1,070,810 | |
| Ralph L. Schlosstein | 14,148,010 | | 183,483 | |
| | | | | |
| Municipal Income | | | | |
| | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld |
|
| |
|
| Andrew F. Brimmer | 38,345,234 | | 639,292 | |
| Kent Dixon | 38,443,181 | | 541,345 | |
| Robert S. Kapito | 38,446,429 | | 538,097 | |
| | | | | |
| | | | | |
| California Investment Quality | | | | |
| | | | |
| Elected the Class I Directors as follows: | | | | |
| Director | Votes for | | Votes Withheld |
|
| |
|
| Richard E. Cavanagh | 279 | | 2 | |
| James Clayburn La Force, Jr. | 602,054 | | 7,123 | |
| | | | | |
| | | | | |
| California Income | | | | |
| | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld |
|
| |
|
| Andrew F. Brimmer | 12,705,364 | | 94,387 | |
| Kent Dixon | 12,703,580 | | 96,171 | |
| Robert S. Kapito | 12,711,349 | | 88,402 | |
| | | | | |
| | | | | |
| Florida Investment Quality | | | | |
| | | | |
| Elected the Class I Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld |
|
| |
|
| Richard E. Cavanagh | 322 | | 0 | |
| James Clayburn La Force, Jr. | 950,094 | | 7,762 | |
| | | | | |
| | | | | |
| Florida Income | | | | |
| | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld |
|
| |
|
| Andrew F. Brimmer | 5,803,225 | | 83,799 | |
| Kent Dixon | 5,811,225 | | 75,799 | |
| Robert S. Kapito | 5,811,678 | | 75,346 | |
| | | | | |
| | | | | |
| New Jersey Investment Quality | | | | |
| | | | |
| Elected the Class I Directors as follows: | | | | |
| Director | Votes for | | Votes Withheld |
|
| |
|
| Richard E. Cavanagh | 300 | | 0 | |
| James Clayburn La Force, Jr. | 896,815 | | 8,087 | |
58
| New Jersey Income | | | | |
| | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld |
|
| |
|
| Andrew F. Brimmer | 6,233,270 | | 80,392 | |
| Kent Dixon | 6,242,455 | | 71,207 | |
| Robert S. Kapito | 6,244,416 | | 69,246 | |
| | | | | |
| | | | | |
| New York Investment Quality | | | | |
| | | | |
| Elected the Class I Directors as follows: | | | | |
| Director | Votes for | | Votes Withheld |
|
| |
|
| Richard E. Cavanagh | 377 | | 2 | |
| James Clayburn La Force, Jr. | 1,075,136 | | 6,314 | |
| | | | | |
| | | | | |
| New York Income | | | | |
| | | | |
| Elected the Class III Trustees as follows: | | | | |
| Trustee | Votes for | | Votes Withheld |
|
| |
|
| Andrew F. Brimmer | 10,998,688 | | 136,186 | |
| Kent Dixon | 11,009,087 | | 125,787 | |
| Robert S. Kapito | 10,989,106 | | 145,768 | |
In addition to the election of Directors/Trustees, the following Trusts had an additional proposal (Proposal #2) to amend its respective Articles Supplementary in order to require an annual, instead of a quarterly, valuation date in connection with certain asset coverage tests:
| | Votes for | | Votes Against | | Votes Withheld |
| |
| |
| |
|
| Municipal Investment Quality | 12,903,291 | | | 1,260,154 | | | 168,048 | |
| California Investment Quality | 584,120 | | | 21,157 | | | 3,900 | |
| New Jersey Investment Quality | 875,194 | | | 6,272 | | | 23,436 | |
| New York Investment Quality | 1,027,905 | | | 33,033 | | | 20,512 | |
Quarterly performance and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com/funds/cefunds/index.html. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Trusts and does not, and is not intended, to incorporate BlackRock’s website into this report.
Certain of the officers of the Trusts listed on the inside back cover of this Report to Shareholders are also officers of the Advisor or Sub-Advisor. They serve in the following capacities for the Advisor or Sub-Advisor: Robert S. Kapito—Director and Vice Chairman of the Advisor and the Sub-Advisor, Kevin M. Klingert, Henry Gabbay and Anne Ackerley—Managing Directors of the Advisor and the Sub-Advisor, Richard M. Shea and James Kong—Managing Directors of the Sub-Advisor, Vincent B. Tritto—Director of the Sub-Advisor, and Brian P. Kindelan—Director of the Advisor.
59
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BlackRock Closed-End Funds
| Director/Trustees | Transfer Agent | |
| | Ralph L. Schlosstein, Chairman | | EquiServe Trust Company, N.A. | |
| | Andrew F. Brimmer | | 250 Royall Street | |
| | Richard E. Cavanagh | | Canton, MA 02021 | |
| | Kent Dixon | | (800) 699-1BFM | |
| | Frank J. Fabozzi | | |
| | Robert S. Kapito | Auction Agent1 | |
| | James Clayburn La Force, Jr. | | Bank of New York | |
| | Walter F. Mondale | | 100 Church Street, 8th Floor | |
| | | | New York, NY 10286 | |
| Officers | | |
| | Robert S. Kapito, President | Auction Agent2 | |
| | Henry Gabbay, Treasurer | | Deutsche Bank Trust Company Americas | |
| | Anne Ackerley, Vice President | | 60 Wall Street, 27th Floor | |
| | Kevin M. Klingert, Vice President | | New York, NY 10005 | |
| | Richard M. Shea, Vice President/Tax | | | |
| | James Kong, Assistant Treasurer | Independent Accountants | |
| | Vincent B. Tritto, Secretary | | Deloitte & Touche LLP | |
| | Brian P. Kindelan, Assistant Secretary | | 200 Berkeley Street | |
| | | | Boston, MA 02116 | |
| Investment Advisor | | | |
| | BlackRock Advisors, Inc. | Legal Counsel | |
| | 100 Bellevue Parkway | | Skadden, Arps, Slate, Meagher & Flom LLP | |
| | Wilmington, DE 19809 | | Four Times Square | |
| | (800) 227-7BFM | | New York, NY 10036 | |
| | | | | |
| Sub-Advisor1 | Legal Counsel – Independent Trustees | |
| | BlackRock Financial Management, Inc. | | Debevoise & Plimpton LLP | |
| | 40 East 52nd Street | | 919 Third Avenue | |
| | New York, NY 10022 | | New York, NY 10022 | |
| | | | | |
| Custodian | | This report is for shareholder information. This is not a prospectus | |
| | State Street Bank and Trust Company | | intended for use in the purchase or sale of Trust shares. | |
| | 225 Franklin Street | | Statements and other information contained in this report are as | |
| | Boston, MA 02110 | | dated and are subject to change. | |
|
| | | |
| 1 | For the Income Trusts. | | BlackRock Closed-End Funds | |
| 2 | For the Investment Quality Trusts. | | c/o BlackRock Advisors, Inc. | |
| | | | 100 Bellevue Parkway | |
| | | | Wilmington, DE 19809 | |
| | | | (800) 227-7BFM | |
The Trusts will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Trusts at (800)227-7BFM.
The Trusts have delegated to the Advisor the voting of proxies relating to their voting securities pursuant to the Advisor’s proxy voting policies and procedures. You may obtain a copy of these proxy voting policies and procedures, without charge, by calling (800) 699-1236. These policies and procedures are also available on the website of the Securities and Exchange Commission at http://www.sec.gov.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of Trust shares. Statements and other
information contained in this report are as dated and are subject to change. CEF-SEMI-1 | |
Not applicable for semi-annual reports.
| Item 3. | Audit Committee Financial Expert. |
Not applicable for semi-annual reports.
| Item 4. | Principal Accountant Fees and Services. |
Not applicable for semi-annual reports.
| Item 5. | Audit Committee of Listed Registrants. |
Not applicable for semi-annual reports.
| Item 6. | Schedule of Investments. |
Not applicable for reports for periods ending on or before July 9, 2004.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable for semi-annual reports.
| Item 8. | Purchases of Equity Securities by Closed-End Management Company and Affiliated Purchasers. |
Not applicable for reports covering periods ending on or before June 15, 2004.
| Item 9. | Submission of Matters to a Vote of Security Holders. |
Not applicable.
| Item 10. | Controls and Procedures. |
(a) The Registrant’s principal executive officer and principal financial officer have evaluated the Registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the Registrant’s disclosure controls and procedures are effective, as of a date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The Registrant’s principal executive officer and principal financial officer are aware of no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
(a)(1) Not applicable.
(a)(2) Separate certifications of Principal Executive and Financial Officers pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(a)(3) Not applicable.
(b) Certification of Principal Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (Registrant) ___The BlackRock Florida Municipal Income Trust__________________________________________ |
| | | |
| | | |
| | | |
| | | |
| By: | | /s/ Henry Gabbay
___________________________________________ |
| Name: | | Henry Gabbay |
| Title: | | Treasurer |
| Date: | | July 2, 2004 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | |
| | | |
| | | |
| By: | | /s/ Robert S. Kapito
___________________________________________ |
| Name: | | Robert S. Kapito |
| Title: | | Principal Executive Officer |
| Date: | | July 2, 2004 |
| | | |
| | | |
| | | |
| | | |
| By: | | /s/ Henry Gabbay
___________________________________________ |
| Name: | | Henry Gabbay |
| Title: | | Principal Financial Officer |
| Date: | | July 2, 2004 |
3
