Each Investment Quality Trust has an Administration Agreement with the Manager. The administration fee paid to the Manager is computed weekly and payable monthly based on an annual rate of 0.10% of each respective Trust’s average weekly net assets for the Investment Quality Trusts.
The Manager entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The Manager pays BFM, for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by each Trust to the Manager.
Certain officers and/or Trustees of the Trusts are officers and/or directors of BlackRock or its affiliates. The Trusts reimburse the Manager for compensation paid to the Trusts’ Chief Compliance Officer.
Purchases and sales of investments excluding short-term securities for the six months ended January 31, 2012 were as follows:
As of July 31 2011, the Trusts had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates as follows:
Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Trusts after July 31, 2011 will not be subject to expiration. In addition, any such losses must be utilized prior to the losses incurred in pre-enactment taxable years.
As of January 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
Each Trust invests a substantial amount of their assets in issuers located in a single state or a limited number of states. Please see the Schedules of Investments for concentrations in specific states.
Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.
In the normal course of business, the Trusts invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Trusts may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Trusts; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Trusts may be exposed to counterparty credit risk, or the risk that an entity with which the Trusts have unsettled or open transactions may fail to or be unable to perform on its commitments. The Trusts manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Trusts to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Trusts’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Trusts’ Statements of Assets and Liabilities, less any collateral held by the Trusts.
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Notes to Financial Statements (continued) |
As of January 31, 2012, BFZ invested a significant portion of its assets in securities in the County/City/Special District/School District and Utilities sectors. BFO, RFA, BBF and RNY invested a significant portion of their assets in securities in the County/City/Special District/School District sector. RNJ and BNJ invested a significant portion of their assets in securities in the State sector. Changes in economic conditions affecting the County/City/Special District/School District, State and Utilities sectors would have a greater impact on the Trusts, and could affect the value, income and/or liquidity of positions in such securities.
7. Capital Share Transactions:
Each Investment Quality Trust is authorized to issue 200 million shares, par value $0.01 per share, all of which were initially classified as Common Shares. There are an unlimited number of $0.001 par value Common Shares authorized for the Income Trusts and BFO. Each Trust’s Board is authorized, however, to reclassify any unissued shares without approval of Common Shareholders. At January 31, 2012, Common Shares of BFO owned by affiliates of the Manager was 8,028 shares.
Common Shares
For the periods shown, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:
| | | | | | | |
| | | | | |
| | SIx Months
Ended
January 31,
2012 | | Year Ended
July 31,
2011 | |
BFZ | | | — | | | 13,214 | |
RFA | | | 179 | | | 546 | |
BBF | | | 1,081 | | | 4,809 | |
RNJ | | | 436 | | | 1,268 | |
BNJ | | | 9,751 | | | 22,508 | |
RNY | | | 551 | | | 2,077 | |
BNY | | | 25,361 | | | 50,883 | |
Shares issued and outstanding remained constant for BFO for the six months ended January 31, 2012 and the year ended July 31, 2011.
Preferred Shares
The Trusts’ Preferred Shares rank prior to the Trusts’ Common Shares as to the payment of dividends by the Trusts and distribution of assets upon dissolution or liquidation of the Trusts. The 1940 Act prohibits the declaration of any dividend on the Trusts’ Common Shares or the repurchase of the Trusts’ Common Shares if the Trusts fail to maintain the asset coverage of at least 200% of the liquidation preference of the outstanding Preferred Shares. In addition, pursuant to the Preferred Shares’ governing instrument, the Trusts are restricted from declaring and paying dividends on classes of shares ranking junior to or on parity with the Preferred Shares or repurchasing such shares if the Trusts fail to declare and pay dividends on the Preferred Shares, redeem any Preferred Shares required to be redeemed under the Preferred Shares governing instrument or comply with the basic maintenance amount requirement of the rating agencies then rating the Preferred Shares.
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 (one vote per share) as a single class. However, the holders of Preferred Shares, voting as a separate class, are also entitled to elect two Trustees for each Trust. In addition, the 1940 Act 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 sub-classification as a closed-end investment company or change its fundamental investment restrictions or (c) change its business so as to cease to be an investment company.
VRDP Shares
BBF has issued Series W-7 VRDP Shares, $100,000 liquidation value per share, in a privately negotiated offering. The VRDP Shares were offered to qualified institutional buyers as defined pursuant to Rule 144A under the Securities Act of 1933 and include a liquidity feature that allows the holders of VRDP Shares to have their shares purchased by the liquidity provider in the event of a failed remarketing. BBF is required to redeem the VRDP Shares owned by the liquidity provider after six months of continuous, unsuccessful remarketing. Upon the occurrence of an unsuccessful remarketing, BBF is required to segregate liquid assets to fund the redemption. The VRDP Shares are subject to certain restrictions on transfer. The VRDP Shares issued for the six months ended January 31, 2012 were as follows:
| | | | | | | | | | | | | |
| | | | | | | | | |
| | Issue
Date | | Shares
Issued | | Aggregate
Principal | | Maturity
Date | |
BBF | | | 9/15/11 | | | 342 | | $ | 34,200,000 | | | 10/1/41 | |
BBF entered into a fee agreement with the liquidity provider that required a per annum liquidity fee to be paid to the liquidity provider. These fees are shown as liquidity fees in the Statements of Operations.
The fee agreement between BBF and the liquidity provider is for a 1-year term and is scheduled to expire on September 12, 2012 unless renewed or terminated in advance. In the event the fee agreement is not renewed or is terminated in advance, and BBF does not enter into a fee agreement with an alternate liquidity provider, the VRDP Shares will be subject to mandatory purchase by the liquidity provider prior to the termination of the fee agreement. BBF is required to redeem any VRDP Shares purchased by the liquidity provider six months after the purchase date. Immediately after the purchase of any VRDP Shares by the liquidity provider, BBF is required to begin to segregate liquid assets with BBF’s custodian to fund the redemption. There is no assurance BBF will replace such redeemed VRDP Shares with any other preferred shares or other form of leverage.
BBF is required to redeem its VRDP Shares on the maturity date, unless earlier redeemed or repurchased. Six months prior to maturity date, BBF is required to begin to segregate liquid assets with BBF’s custodian to fund the redemption. In addition, BBF is required to redeem certain of its outstanding VRDP Shares if it fails to maintain certain asset coverage, basic maintenance amount or leverage requirements.
Subject to certain conditions, VRDP Shares may be redeemed, in whole or in part, at any time at the option of BBF. The redemption price per VRDP Share is equal to the liquidation value per share plus any outstanding unpaid dividends. In the event of an optional redemption of VRDP Shares prior to the initial termination date of the fee agreement, BBF must pay the liquidity
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60 | SEMI-ANNUAL REPORT | JANUARY 31, 2012 |
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Notes to Financial Statements (continued) |
provider fees on such redeemed VRDP Shares for the remaining term of the fee agreement up to the initial termination date.
Dividends on the VRDP Shares are payable monthly at a variable rate set weekly by the remarketing agent. Such dividend rates are generally based upon a spread over a base rate and cannot exceed a maximum rate as discussed below. In the event of a failed remarketing, the dividend rate of the VRDP Shares will be reset to a maximum rate. The maximum rate is determined based on, among other things, the long-term preferred share rating assigned to the VRDP Shares and the length of time that the VRDP Shares fail to be remarketed. At the date of issuance, the VRDP Shares were assigned a long-term rating of Aaa from Moody’s and AAA from Fitch. Moody’s has announced a review of its rating methodologies with respect to investment company securities, and any amendments to its rating methodologies may adversely affect Moody’s current long-term ratings of the VRDP Shares.
The short-term ratings on the VRDP Shares are directly related to the short-term ratings of the liquidity provider. Changes in the credit quality of the liquidity provider could cause a change in the short-term credit ratings of the VRDP Shares. Although not directly correlated, a change in the short-term credit rating of the VRDP Shares may adversely affect the dividend rate paid on such shares. As of January 31, 2012, the short-term ratings of the liquidity provider and the VRDP Shares are P-1/F-1 and P-1/F-1 as rated by Moody’s and Fitch, respectively. The liquidity provider may be terminated prior to the scheduled termination date if the liquidity provider fails to maintain short-term debt ratings in one of the two highest rating categories. Moody’s has placed the liquidity provider and the short-term ratings of the VRDP Shares on review for possible downgrade.
For financial reporting purposes, VRDP Shares are considered debt of the issuer; therefore, the liquidation value of VRDP Shares is recorded as a liability in the Statements of Assets and Liabilities. Unpaid dividends are included in interest expense and fees payable in the Statements of Assets and Liabilities, and the dividends paid on the VRDP Shares are included as a component of interest expense, fees and amortization of offering costs in the Statements of Operations. VRDP Shares are treated as equity for tax purposes. Dividends paid to holders of VRDP Shares are generally classified as tax-exempt income for tax-reporting purposes.
BBF pays commissions of 0.10% on the aggregate principal amount of all VRDP Shares, which are included in remarketing fees on Preferred Shares in the Statements of Operations. All of BBF’s VRDP Shares have successfully remarketed since issuance with an annualized dividend rate of 0.27% for the six months ended January 31, 2012.
VRDP Shares issued and outstanding remained constant for the six months ended January 31, 2012.
AMPS
The AMPS are redeemable at the option of BFZ, BFO, RFA, RNJ, BNJ, RNY and BNY (collectively, the “AMPS Funds”), in whole or in part, on any dividend payment date at their liquidation preference per share plus any accumulated and unpaid dividends whether or not declared. The AMPS are also subject to mandatory redemption at their liquidation preference plus any accumulated and unpaid dividends, whether or not declared, if certain requirements relating to the composition of the assets and liabilities of the AMPS Funds, as set forth in each AMPS Funds’ Articles Supplementary (the “Governing Instrument”) are not satisfied.
From time to time in the future, each AMPS Fund may effect repurchases of its AMPS at prices below their liquidation preference as agreed upon by the Trust and seller. Each AMPS Fund also may redeem its AMPS from time to time as provided in the applicable Governing Instrument. Each AMPS Fund intends to effect such redemptions and/or repurchases to the extent necessary to maintain applicable asset coverage requirements or for such other reasons as the Board may determine.
The AMPS Funds had the following series of AMPS outstanding, effective yields and reset frequency as of January 31, 2012:
| | | | | | | | | | | | | |
| | | | | | | | | |
| | Series | | AMPS | | Effective
Yield | | Reset
Frequency
Days | |
BFZ | | | F7 | | | 2,151 | | | 0.12 | % | | 7 | |
| | | R7 | | | 2,351 | | | 0.12 | % | | 7 | |
| | | T7 | | | 2,351 | | | 0.12 | % | | 7 | |
BFO | | | F7 | | | 1,716 | | | 0.12 | % | | 7 | |
RFA | | | R7 | | | 183 | | | 0.12 | % | | 7 | |
RNJ | | | T7 | | | 276 | | | 0.12 | % | | 7 | |
BNJ | | | R7 | | | 2,364 | | | 0.12 | % | | 7 | |
RNY | | | F7 | | | 389 | | | 0.12 | % | | 7 | |
BNY | | | F7 | | | 1,890 | | | 0.12 | % | | 7 | |
| | | W7 | | | 1,890 | | | 0.12 | % | | 7 | |
Dividends on seven-day AMPS are cumulative at a rate which is reset every seven days based on the results of an auction. If the AMPS fail to clear the auction on an auction date, each Trust is required to pay the maximum applicable rate on the AMPS to holders of such shares for successive dividend periods until such time as the shares are successfully auctioned. The maximum applicable rate on all series of AMPS is the higher of 110% of the AA commercial paper rate or 100% of 90% of the Kenny S&P 30-day High Grade Index rate divided by 1.00 minus the marginal tax rate. The low, high and average dividend rates on the AMPS for each Trust for the six months ended January 31, 2012 were as follows:
| | | | | | | | | | | | | |
| | | | | | | | | |
| | Series | | Low | | High | | Average | |
BFZ | | | F7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
| | | R7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
| | | T7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
BFO | | | F7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
RFA | | | R7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
BBF | | | Y7 | | | 0.24 | % | | 0.31 | % | | 0.27 | % |
RNJ | | | Y7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
BNJ | | | R7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
RNY | | | F7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
BNY | | | F7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
| | | W7 | | | 0.11 | % | | 0.31 | % | | 0.21 | % |
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| SEMI-ANNUAL REPORT | JANUARY 31, 2012 | 61 |
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Notes to Financial Statements (concluded) |
Since February 13, 2008, the AMPS of the Trusts failed to clear any of their auctions. As a result, the AMPS dividend rates were reset to the maximum applicable rate, which ranged from 0.11% to 0.31% for the six months ended January 31, 2012. A failed auction is not an event of default for the Trusts but it has a negative impact on the liquidity of AMPS. A failed auction occurs when there are more sellers of a Trust’s AMPS than buyers. A successful auction for the Trusts’ AMPS may not occur for some time, if ever, and even if liquidity does resume, holders of AMPS may not have the ability to sell the AMPS at their liquidation preference.
The AMPS Funds pay commissions of 0.15% on the aggregate principal amount of all shares that fail to clear their auctions and 0.25% on the aggregate principal amount of all shares that successfully clear their auctions. Certain broker dealers have individually agreed to reduce commissions for failed auctions. The commissions paid to these broker dealers are included in remarketing fees on Preferred Shares in the Statements of Operations.
During the six months ended January 31, 2012, BBF announced the following redemptions of AMPS at a price of $25,000 per share plus any accrued and unpaid dividends through the redemption date:
| | | | | | | | | | | | | |
| | Series | | Redemption
Date | | Shares
Redeemed | | Aggregate
Principal | |
BBF | | | T-7 | | | 10/12/2011 | | | 1,370 | | $ | 34,250,000 | |
BBF financed the AMPS redemptions with proceeds received from the issuance of VRDP Shares.
AMPS issued and outstanding remained constant for the six months ended January 31, 2012 and the year ended July 31, 2011 for the AMPS Funds.
8. Subsequent Events:
Management’s evaluation of the impact of all subsequent events on the Trusts’ financial statements was completed through the date the financial statements were issued and the following items were noted:
Each Trust paid a net investment income dividend on March 1, 2012 to Common Shareholders of record on February 15, 2012 as follows:
| | | | |
| | Common Dividend
Per Share | |
BFZ | | $ | 0.075700 | |
BFO | | $ | 0.056000 | |
RFA | | $ | 0.070000 | |
BBF | | $ | 0.075375 | |
RNJ | | $ | 0.065500 | |
BNJ | | $ | 0.791000 | |
RNY | | $ | 0.073000 | |
BNY | | $ | 0.082500 | |
The dividends declared on VRDP Shares and AMPS for the period February 1, 2012 to February 29, 2012 were as follows:
| | | | | | | |
| | Series | | Dividends
Declared | |
BFZ AMPS | | | F7 | | $ | 7,722 | |
| | | R7 | | $ | 8,370 | |
| | | T7 | | $ | 11,355 | |
BFO AMPS | | | F7 | | $ | 6,160 | |
RFA AMPS | | | R7 | | $ | 651 | |
BBF VRDP Shares | | | W7 | | $ | 7,802 | |
RNJ AMPS | | | Y7 | | $ | 1,333 | |
BNJ AMPS | | | R7 | | $ | 8,416 | |
RNY AMPS | | | F7 | | $ | 1,397 | |
BNY AMPS | | | F7 | | $ | 6,785 | |
| | | W7 | | $ | 6,691 | |
On February 10, 2012, the Boards of RFA, RNJ and RNY approved a plan of liquidation and dissolution. If approved by shareholders, the liquidation and distribution of substantially all of RFA’s, RNJ’s and RNY’s assets is expected to occur by the end of the third quarter of 2012.
On March 22, 2012, the following Trusts issued W-7 Variable Rate Muni Term Preferred Shares (“VMTP Shares”), $100,000 liquidation value per share, with a maturity date of April 1, 2015 in a privately negotiated offering and sale of VMTP Shares exempt from registration under the Securities Act of 1933 to finance the AMPS redemption. The VMTP Shares issued were as follows:
| | | | | | | |
| | Shares
Issued | | Proceeds | |
BFZ | | | 1,713 | | $ | 171,300,000 | |
BNJ | | | 591 | | $ | 59,100,000 | |
BNY | | | 945 | | $ | 94,500,000 | |
On March 23, 2012, the following Trusts announced the redemptions of AMPS at a price of $25,000 per share plus any accrued and unpaid dividends through the redemption date:
| | | | | | | | | | | | | |
| | Series | | Redemption
Date | | Shares
to be
Redeemed | | Aggregate
Principal to be
Redeemed | |
BFZ | | | F7 | | | 4/16/12 | | | 2,151 | | $ | 53,775,000 | |
| | | R7 | | | 4/13/12 | | | 2,351 | | $ | 58,775,000 | |
| | | T7 | | | 4/8/12 | | | 2,351 | | $ | 58,775,000 | |
BNJ | | | R7 | | | 4/13/12 | | | 2,364 | | $ | 59,100,000 | |
BNY | | | F7 | | | 4/16/12 | | | 1,890 | | $ | 47,250,000 | |
| | | W7 | | | 4/12/12 | | | 1,890 | | $ | 47,250,000 | |
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62 | SEMI-ANNUAL REPORT | JANUARY 31, 2012 |
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Richard E. Cavanagh, Chairman of the Board and Trustee |
Karen P. Robards, Vice Chairperson of the Board, Chairperson of the Audit Committee and Trustee |
Paul L. Audet, Trustee |
Michael J. Castellano, Trustee and Member of the Audit Committee |
Frank J. Fabozzi, Trustee and Member of the Audit Committee |
Kathleen F. Feldstein, Trustee |
James T. Flynn, Trustee and Member of the Audit Committee |
Henry Gabbay, Trustee |
Jerrold B. Harris, Trustee |
R. Glenn Hubbard, Trustee |
W. Carl Kester, Trustee and Member of the Audit Committee |
John M. Perlowski, President and Chief Executive Officer |
Anne Ackerley, Vice President |
Brendan Kyne, Vice President |
Neal Andrews, Chief Financial Officer |
Jay Fife, Treasurer |
Brian Kindelan, Chief Compliance Officer and Anti-Money Laundering Officer |
Ira P. Shapiro, Secretary |
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| 1 | John F. Powers, who was a Trustee of the Trusts, resigned as of February 21, 2012. |
Investment Advisor
BlackRock Advisors, LLC
Wilmington, DE 19809
Sub-Advisor
BlackRock Financial Management, Inc.
New York, NY 10055
Custodian
State Street Bank and Trust Company
Boston, MA 02110
Transfer Agent
Common Shares:
Computershare Trust Company, N.A.
Providence, RI 02940
AMPS Auction Agent
BNY Mellon Shareowner Services
Jersey City, NJ 07310
VRDP Tender and Paying Agent and
VMTP Redemption and Paying Agent
The Bank of New York Mellon
New York, NY 10289
VRDP Liquidity Provider and Remarketing Agent
Morgan Stanley & Co. LLC
New York, NY 10056
Accounting Agent
State Street Bank and Trust Company
Boston, MA 02110
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Boston, MA 02116
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
New York, NY 10036
Address of the Trusts
100 Bellevue Parkway
Wilmington, DE 19809
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| SEMI-ANNUAL REPORT | JANUARY 31, 2012 | 63 |
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Additional Information |
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Dividend Policy |
Each Trust’s dividend policy is to distribute all or a portion of its net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of dividend distributions, the Trusts may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the Trusts for any particular month may be more or less than the amount of net investment income earned by the Trusts during such month. The Trusts’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.
On July 29, 2010, the Manager announced that a shareholder derivative complaint was filed on July 27, 2010 in the Supreme Court of the State of New York, New York County with respect to BFZ and BNJ, which had previously received a demand letter from a law firm on behalf of each trust’s common shareholders. The complaint was filed against the Manager, BlackRock, BFZ, BNJ and certain of the directors, officers and portfolio managers (collectively, the “BlackRock Parties”) in connection with the redemption of auction-market preferred shares, auction rate preferred shares, auction preferred shares and auction rate securities (collectively, “AMPS”). The complaint alleges, among other things, that the BlackRock Parties breached their fiduciary duties to the common shareholders of BFZ and BNJ (the “Shareholders”) by redeeming AMPS at their liquidation preference and alleges that such redemptions caused losses to the Shareholders. The plaintiffs are seeking monetary damages for the alleged losses suffered and to enjoin BFZ and BNJ from future redemptions of AMPS at their liquidation preference. The BlackRock Parties believe that the claims asserted in the complaint are without merit and intend to vigorously defend themselves in the litigation.
On March 29, 2011, the Manager announced that BBF received a demand letter from a law firm on behalf of BBF’s common shareholders. The demand letter alleges that the Manager and BBF’s officers and Board of Trustees (the “Board”) breached their fiduciary duties by redeeming at par certain of BBF’s AMPS, and demanded that the Board take action to remedy those alleged breaches. A committee consisting of the Independent Directors, with the assistance of their independent counsel, reviewed these demands. Based on the committee’s investigation and unanimous recommendation, the Board rejected these demands as inconsistent with the best interests of BBF and its shareholders.
The Trusts do not make available copies of their Statements of Additional Information because the Trusts’ shares are not continuously offered, which means that the Statement of Additional Information of each Trust has not been updated after completion of the respective Trust’s offerings and the information contained in each Trust’s Statement of Additional Information may have become outdated.
During the period, there were no material changes in the Trusts’ investment objectives or policies or to the Trusts’ charters or by-laws that would delay or prevent a change of control of the Trusts that were not approved by the shareholders or in the principal risk factors associated with investment in the Trusts. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Trusts’ portfolios.
Quarterly performance, semi-annual and annual reports and other information regarding the Trusts may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. 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 in this report.
Electronic Delivery
Electronic copies of most financial reports are available on the Trusts’ websites or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports by enrolling in the Trusts’ electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all investment advisors, banks or brokerages may offer this service.
Householding
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 call the Trusts at (800) 441-7762.
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64 | SEMI-ANNUAL REPORT | JANUARY 31, 2012 | |
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Additional Information (continued) |
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General Information (concluded) |
Availability of Quarterly Schedule of Investments
The Trusts file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Trusts’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Trusts’ Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Trusts use to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.
Availability of Proxy Voting Record
Information about how the Trusts voted proxies relating to securities held in the Trusts’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.
Availability of Trust Updates
BlackRock will update performance and certain other data for the Trusts on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Trusts.
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| SEMI-ANNUAL REPORT | JANUARY 31, 2012 | 65 |
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Additional Information (concluded) |
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BlackRock Privacy Principles |
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
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66 | SEMI-ANNUAL REPORT | JANUARY 31, 2012 | |
This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Trusts have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term dividend rates of the Preferred Shares may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.
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#CEF -BK8-1/12-SAR | 
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Item 2 – | Code of Ethics – Not Applicable to this semi-annual report |
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Item 3 – | Audit Committee Financial Expert – Not Applicable to this semi-annual report |
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Item 4 – | Principal Accountant Fees and Services – Not Applicable to this semi-annual report |
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Item 5 – | Audit Committee of Listed Registrants – Not Applicable to this semi-annual report |
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Item 6 – | Investments |
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| (a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form. |
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| (b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing. |
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Item 7 – | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable to this semi-annual report |
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Item 8 – | Portfolio Managers of Closed-End Management Investment Companies |
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| (a) Not Applicable to this semi-annual report |
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| (b) As of the date of this filing, there have been no changes in any of the portfolio managers identified in the most recent annual report on Form N-CSR. |
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Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable |
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Item 10 – | Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures. |
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Item 11 – | Controls and Procedures |
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| (a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended. |
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| (b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
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Item 12 – | Exhibits attached hereto |
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| (a)(1) – Code of Ethics – Not Applicable to this semi-annual report |
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| (a)(2) – Certifications – Attached hereto |
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| (a)(3) – Not Applicable |
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| (b) – Certifications – Attached hereto |
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| 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. |
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| BlackRock Municipal Income Investment Trust |
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| | By: | /s/ John M. Perlowski | |
| | | John M. Perlowski |
| | | Chief Executive Officer (principal executive officer) of |
| | | BlackRock Municipal Income Investment Trust |
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| | Date: April 2, 2012 |
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| | Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
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| | By: | /s/ John M. Perlowski | |
| | | John M. Perlowski |
| | | Chief Executive Officer (principal executive officer) of |
| | | BlackRock Municipal Income Investment Trust |
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| | Date: April 2, 2012 |
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| | By: | /s/ Neal J. Andrews | |
| | | Neal J. Andrews |
| | | Chief Financial Officer (principal financial officer) of |
| | | BlackRock Municipal Income Investment Trust |
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| | Date: April 2, 2012 |
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