-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, k2xo/Losz5Eks2k0bnc9zv9fFsw6joBkrfskkrpnctYBgok/3ImUxy1qnRrHAEvn z3yxAZYtvvOhqoy6agvjrQ== 0000950007-95-000079.txt : 19950803 0000950007-95-000079.hdr.sgml : 19950803 ACCESSION NUMBER: 0000950007-95-000079 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950630 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACKROCK NEW JERSEY INVESTMENT QUALITY MUNICIPAL TRUST INC CENTRAL INDEX KEY: 0000902731 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 133710958 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07670 FILM NUMBER: 95551208 BUSINESS ADDRESS: STREET 1: ONE SEAPORT PLAZA CITY: NEW YORK STATE: NY ZIP: 10292 BUSINESS PHONE: 2122141250 MAIL ADDRESS: STREET 2: ONE SEAPORT PLAZA CITY: NEW YORK STATE: NY ZIP: 10292 N-30D 1 SEMI-ANNUAL - - -------------------------------------------------------------------------------- THE BLACKROCK NEW JERSEY INVESTMENT QUALITY MUNICIPAL TRUST INC. SEMI-ANNUAL REPORT TO SHAREHOLDERS REPORT OF INVESTMENT ADVISER - - -------------------------------------------------------------------------------- May 31, 1995 Dear Shareholder: The fixed income markets experienced both extremely bearish and bullish sentiment during the semi-annual period between November 1, 1994 and April 30, 1995. Closed-end bond funds responded to the broader markets with similar volatility and hit all-time low stock prices during the fourth quarter of 1994. These low levels of stock valuation were further eroded by an unusually high degree of tax-related selling; however, closed-end bond funds have staged a resounding rebound during the first five months of 1995. The U.S. economy appears to have responded to the Fed's vigilance toward inflation with low absolute levels of inflation and moderate rates of growth. This scenario is suggestive of a "soft landing" for the economy, which has sparked a significant Treasury market rally and resulted in overall strength in most fixed income markets. BlackRock Financial Management, Inc., your Trust's investment adviser, is pleased to report that its acquisition by PNC Bank, N.A. ("PNC") was officially completed on February 28, 1995. PNC is a commercial bank whose principal office is in Pittsburgh, Pennsylvania and is wholly-owned by PNC Bank Corp., a bank holding company. The merger was structured to assure continuity of performance and service through stability of our organization. BlackRock retains its name and continues to operate out of its New York office. All members of BlackRock's management team have signed long-term employment contracts and will continue to be responsible for managing BlackRock's business so that shareholders will notice no changes in the management of the Trust. You will note several enhancements to the Trust's semi-annual report designed to improve the report's usefulness to you. The letter to shareholders which reviews the markets and Trust's investment strategy over the semi-annual period is provided by the Trust's portfolio managers. In addition, we have included an investment summary section which provides a synopsis of the Trust's investment objectives and guidelines and reviews its investment strategy. We appreciate your investment in The BlackRock New Jersey Investment Quality Municipal Trust Inc. and look forward to continuing to serve your financial needs. Sincerely, Laurence D. Fink Ralph L. Schlosstein Chairman President 1 May 31, 1995 Dear Shareholder: Characterized by large swings in interest rates across the yield curve, the semi-annual period between November 1, 1994 and April 30, 1995 provided a challenging investment environment for fixed income products including The BlackRock New Jersey Investment Quality Municipal Trust Inc. ("RNJ" or the "Trust"). At the beginning of the fiscal period, RNJ was trading at a stock price of $10.625, while at the end of this fiscal period (April 30, 1995) the Trust closed at $11.875. During this same period, the net asset value (NAV) increased from $11.44 to $12.66. As we write this letter, the Trust's shares are trading at a price of $11.50 per share, which is a 13.92% discount to its net asset value of $13.36 per share. The current annual dividend per share is $0.7692, which is equivalent to a yield of 6.69% on the current stock price. According to Lipper Analytical Services, Inc., 94% of municipal closed-end bond funds are trading at a discount to their net asset values. The significant fixed income market rally of 1995 has resulted in the Trust's NAV increasing more rapidly than its market price, which is reflected in the current discount. BlackRock feels that as investors adapt to the more positive tone in the marketplace, the discount on RNJ should narrow. A review of the fixed income markets over the past year as well as the trading activity in the Trust's portfolio that has taken place since our last annual report appears below. This information should provide you with a greater understanding of the active management strategies you have hired BlackRock to provide to the Trust. The Fixed Income Markets The fourth quarter of 1994 echoed the underperformance that pervaded the fixed income markets throughout 1994. The market experienced periods of illiquidity during November as mutual funds sold securities to meet redemptions and dealers were reluctant to add to their already large inventories. From a yield curve perspective, the municipal curve remained rather steep compared to the taxable curve. However, during the first quarter of 1995, the long end of the municipal bond market witnessed a dramatic rally which resulted in a flattening of the municipal yield curve. This rally was a result of a significant amount of cash which needed to be reinvested in the municipal market due to approximately $35 billion in cash flow from principal and interest payments as well as crossover accounts returning to the market aggressively. Ratios of long-term municipal yields to long-term Treasury yields ended the quarter at 78.7%, the richest levels we have experienced since August of 1992. Interestingly, the municipal yield curve flattened as the Treasury yield curve steepened. The divergent trend between the shape of the municipal yield curve and the Treasury curve was primarily the delayed response of the municipal yield curve to the rapid Treasury curve flattening in late 1994. This recent strong performance is likely to continue to some extent because of favorable technical conditions. Individual investor demand for municipal bonds is expected to remain high through the summer as approximately $60 billion in coupon and redemption payments will flow into municipal investor hands during June and July and will need to be reinvested. In addition, municipal bond supply, which declined 46% in the first quarter of 1995 from the same quarter last year, is expected to continue to diminish. These trends should allow municipal closed-end bond funds like RNJ to perform well in the near term. Recently proposals for tax simplification, particularly the creation of a "flat tax" have begun to receive attention. Some versions of this proposal would eliminate the taxation of all investment income, which would offset the current tax benefits of municipal bonds. This could 2 result in an underperformance of the municipal market if the flat tax becomes a pivotal 1996 Presidential campaign issue. While actual tax reform is still at best two years away, we will continue to actively follow the situation because investor concerns about tax reform could cause dislocations in the municipal market, creating possible buying opportunities for theTrust. The New Jersey economy is finally experiencing a modest recovery exemplified by positive employment growth in recent months. The state government has deep support in the legislature for its income tax reduction agenda, which will likely result in a short term tax revenue reduction but should attract more business and promote growth in the future. Additionally, demand was strong for New Jersey municipal issues, as new issue supply was limited to approximately 50% of last year's levels. The Closed-End Bond Fund Industry During the final months of 1994, investor demand for closed-end bond funds dropped to an all-time low level. Closed-end bond funds fell victim to a lack of demand stemming from fears of rising inflation coupled with rising interest rates and historically high levels of year-end tax swapping. As a result, the prices of most closed-end bond funds, including RNJ, dropped to historically low levels. Investors who endured the market slump and opted to "hold" or acquire more shares of the Trust during these tumultuous markets benefitted from a substantial increase in both net asset value and share price during the first quarter of 1995 as the market environment for fixed income securities improved considerably. Reflecting the current strength of the fixed income markets, the majority of domestic closed-end bond funds registered positive gains for the one year period ended April 30, 1995 with an average total return* of 6.46%. According to Lipper Analytical Services, Inc., RNJ ranked # 2 out of 8 Closed-End New Jersey Municipal Bond Funds for the one year period ended April 30, 1995 with a total return* of 8.26% versus its category's average of 7.49%. - - ------------- *Total return was calculated based on net asset values and assumes the reinvestment of dividends and distributions. The Trust's Portfolio and Investment Strategy BlackRock continues to actively manage the Trust's portfolio to selectively modify the Trust's allocation to certain sectors, issuers, revenue sources and types of bonds. Due to the 1993 change in tax treatment of market discounts on individual bonds, we have been favoring premiums and discount securities over those selling near par value since we believe that the market is not fully valuing the effects of the tax change on par bonds. The following table illustrates the sector reallocations during the fiscal period: Sector Breakdown (October 31, 1994 to April 30, 1995) - - --------------------------------------------------------------------- Sector April 30, 1995 October 31, 1994 - - --------------------------------------------------------------------- Transportation 15% 14% - - --------------------------------------------------------------------- Hospital 13% 24% - - --------------------------------------------------------------------- Certificates of Participation 11% 5% - - --------------------------------------------------------------------- Housing 10% 10% - - --------------------------------------------------------------------- Miscellaneous Revenue 10% 10% - - --------------------------------------------------------------------- Schools 10% - - - --------------------------------------------------------------------- Utility 9% 7% - - --------------------------------------------------------------------- Building 7% 5% - - --------------------------------------------------------------------- City, County & State 5% 12% - - --------------------------------------------------------------------- Power 5% - - - --------------------------------------------------------------------- Water & Sewer 5% 11% - - --------------------------------------------------------------------- Industrial - 2% - - --------------------------------------------------------------------- 3 The Trust's portfolio consists of investment grade municipal securities (securities rated at least "BBB") with an average maturity of 21 years. We continue to closely monitor the credit quality of the Trust's assets and subject the credits to rigorous credit analysis. Currently, the breakdown by credit quality is as follows: - - -------------------------------------------------------------------- Standard & Poor's/Moody's Credit Rating April 30, 1995 October 31, 1994 - - -------------------------------------------------------------------- AAA/Aaa 41% 36% - - -------------------------------------------------------------------- AA/Aa 27% 24% - - -------------------------------------------------------------------- A/A 22% 24% - - -------------------------------------------------------------------- BBB/Baa 10% 16% - - -------------------------------------------------------------------- We thank you for your investment in The BlackRock New Jersey Investment Quality Municipal Trust Inc. Please feel free to contact us at (800) 227-7BFM (7236) if you have specific questions which were not addressed in this semi-annual report. Sincerely, Robert Kapito Kevin Klingert Vice Chairman and Principal and Senior Portfolio Manager Municipal Portfolio Manager BlackRock Financial Management, Inc. BlackRock Financial Management, Inc. - - -------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. - - -------------------------------------------------------------------- Symbol on American Stock Exchange: RNJ - - -------------------------------------------------------------------- Initial Offering Date: May 28, 1993 - - -------------------------------------------------------------------- Closing Stock Price as of 4/30/95: $11.875 - - -------------------------------------------------------------------- Net Asset Value as of 4/30/95: $12.66 - - -------------------------------------------------------------------- Yield on Closing Stock Price as of 4/30/95 ($11.875)1: 6.474% - - -------------------------------------------------------------------- Current Monthly Distribution per Share2: $0.0641 - - -------------------------------------------------------------------- Current Annualized Distribution per Share2: $0.7692 - - -------------------------------------------------------------------- 1Yield on Closing Stock Price is calculated by annualizing the current monthly distribution per share and dividing it by the closing stock price per share. 2The distribution is not constant and is subject to change. 4 - - -------------------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. Portfolio of Investments April 30, 1995 (Unaudited) - - --------------------------------------------------------------------------------
Principal Amount Value Rating* (000) Description (Note 1) - - -------------------------------------------------------------------------------------------------------------------- LONG-TERM INVESTMENTS-156.3% New Jersey-138.1% AAA $1,410 Essex Cnty. Impvt. Auth. Rev., Orange Mun. Util. & Lease, 6.00%, 12/01/17, MBIA.. $ 1,392,714 New Jersey Econ. Dev. Auth., AAA 1,000 Sch. Bd. Res., 5.40%, 8/15/12................................................. 940,990 A+ 1,000 St. Cor. Econ. Rec., Ser. A, 6.00%, 3/15/21................................... 966,790 BBB- 500 Trigen-Trenton Proj., Ser. A, 6.20%, 12/01/10................................. 470,475 New Jersey Hlth. Care Facs. Fin. Auth. Rev., BBB 1,570 Englewood Hosp. & Med. Ctr., 6.50%, 7/01/09................................... 1,579,718 AAA 1,000 Riverview Med. Ctr., 5.50%, 7/01/13, AMBAC.................................... 949,250 AA- 1,000 New Jersey St. Bldg. Auth. Rev., 5.00%, 6/15/13.................................. 879,260 New Jersey St. Hsg. & Mtge. Fin. Auth. Rev., MBIA, AAA 1,000 Ser. I, 5.60%, 10/01/16....................................................... 977,980 AAA 1,000 6.30%, 4/01/25................................................................ 999,920 AA+ 1,000 New Jersey St., G.O., Ser. D, 5.50%, 2/15/12..................................... 959,690 A 1,000 New Jersey St. Tpke. Auth. Rev., Ser. C, 6.50%, 1/01/16.......................... 1,051,360 AA 1,000 North Brunswick Twnshp. Brd. of Ed., 6.30%, 2/01/15.............................. 1,018,840 AAA 1,000 Passaic Valley Swge. Comn., Swr. Sys. Rev., Ser. D, 5.75%, 12/01/15, AMBAC....... 971,750 AAA 1,000 Piscataway Twp. Sch. Dist., C.O.P., FBW Lease Corp. Inc., 5.375%, 12/15/10, FSA.. 955,630 Port Auth. New York & New Jersey, AA- 500 Ser. 87, 5.25%, 7/15/15....................................................... 452,030 AA- 1,000 Ser. 94, 6.00%, 12/01/16...................................................... 982,120 AA- 1,000 Ser. 74, 6.75%, 8/01/26....................................................... 1,052,100 AAA 1,000 South Jersey Trans. Auth., Trans. Sys. Rev., Ser. B, 6.00%, 11/01/12, MBIA....... 1,008,630 ----------- 17,609,247 ----------- Puerto Rico-18.2% A 1,000 Puerto Rico Comnwlth. Hwy. And Trans. Auth., Ser. X, 5.50%, 7/01/19.............. 901,260 A- 1,000 Puerto Rico Elec. Pwr. Auth. Rev., Ser. U, 6.00%, 7/01/14........................ 968,930 A 500 Puerto Rico Pub. Bldgs. Auth. Rev., Ser. M, 5.50%, 7/01/21....................... 448,970 ----------- 2,319,160 ----------- Total Investments-156.3% (cost $19,681,006)...................................... 19,928,407 Other assets in excess of liabilities-2.5%.................................... 321,497 Liquidation value of preferred stock-(58.8)%.................................. (7,500,000) ----------- Net Assets Applicable to Common Shareholders-100%................................ $12,749,904 ----------- *Rating: using the higher of Standard & Poor's, Moody's or Fitch's rating. --------------------------------------------------- Key to Abbreviations AMBAC-American Municipal Bond Assurance Corporation C.O.P.-Certificates of Participation FSA-Financial Security Assurance G.O.-General Obligation MBIA-Municipal Bond Insurance Association ---------------------------------------------------
See Notes to Financial Statements. 5 (Left column) - - -------------------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. Statement of Assets and Liabilities April 30, 1995 (Unaudited) - - -------------------------------------------------------------------------------- Assets Investments, at value (cost $19,681,006) (Note 1)............... $19,928,407 Interest receivable............................................. 371,585 Deferred organization expenses and other assets................. 18,890 ----------- 20,318,882 ----------- Liabilities Due to custodian................................................ 46,912 Dividends payable-common stock.................................. 10,772 Advisory fee payable (Note 2)................................... 5,489 Dividends payable-preferred stock............................... 4,237 Administration fee payable (Note 2)............................. 1,568 ----------- 68,978 ----------- Net Investment Assets........................................... $20,249,904 =========== Net investment assets were comprised of: Common stock: Par value (Note 4)........................................ $ 10,071 Paid-in capital in excess of par.......................... 13,907,459 Preferred stock (Note 4)..................................... 7,500,000 ----------- 21,417,530 Undistributed net investment income.......................... 55,592 Accumulated net realized loss................................ (1,470,619) Net unrealized appreciation.................................. 247,401 ----------- Net investment assets, April 30, 1995........................ $20,249,904 =========== Net assets applicable to common shareholders................. $12,749,904 =========== Net asset value per share: ($12,749,904 / 1,007,093 shares of common stock issued and outstanding)................................ $12.66 ====== (Right column) - - -------------------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. Statement of Operations Six Months Ended April 30, 1995 (Unaudited) - - -------------------------------------------------------------------------------- Net Investment Income Income Interest and discount earned.................................. $ 596,457 ---------- Expenses Investment advisory........................................... 35,792 Reports to shareholders....................................... 20,000 Administration................................................ 9,544 Transfer agent................................................ 4,000 Audit......................................................... 3,500 Directors..................................................... 2,500 Legal......................................................... 2,500 Custodian..................................................... 1,800 Miscellaneous................................................. 16,569 ---------- Total expenses................................................ 96,205 ---------- Net investment income............................................ 500,252 ---------- Realized and Unrealized Gain (Loss) on Investments (Note 3) Net realized loss on investments................................. (770,801) Net change in unrealized appreciation on investments............. 2,025,071 ---------- Net gain on investments.......................................... 1,254,270 ---------- Net Increase In Net Investment Assets Resulting from Operations................................. $1,754,522 ========== See Notes to Financial Statements. 6 - - -------------------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. Statements of Changes in Net Investment Assets (Unaudited) - - --------------------------------------------------------------------------------
For the For the Six Months Year Ended Ended Increase (Decrease) in Net Investment Assets April 30, 1995 October 31, 1994 -------------- ---------------- Operations: Net investment income........................................................ $ 500,252 $ 983,731 Net realized loss on investments............................................. (770,801) (689,535) Net change in unrealized appreciation (depreciation) on investments.......... 2,025,071 (2,439,138) ----------- ----------- Net increase (decrease) in net investment assets resulting from operations... 1,754,522 (2,144,942) Dividends: To common shareholders from net investment income............................ (387,328) (774,619) To preferred shareholders from net investment income......................... (141,470) (196,385) Capital stock transactions: Capital charge with respect to initial public offering of shares............. -0- (6,000) ----------- ----------- Total increase (decrease)................................................. 1,225,724 (3,121,946) Net Investment Assets Beginning of period............................................................. 19,024,180 22,146,126 ----------- ----------- End of period................................................................... $20,249,904 $19,024,180 =========== ===========
See Notes to Financial Statements. 7 - - -------------------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. Financial Highlights (Unaudited) - - --------------------------------------------------------------------------------
For the For the For the Period Six Months Year June 4, 1993* Ended Ended Through PER SHARE OPERATING PERFORMANCE: April 30, 1995 October 31, 1994 October 31, 1993 -------------- ---------------- ---------------- Net asset value, beginning of period.................................... $ 11.44 $ 14.54 $ 14.10 -------- -------- -------- Net investment income................................................ .50 .98 .31 Net realized and unrealized gain (loss) on investments............... 1.24 (3.11) .65 -------- -------- -------- Net increase (decrease) from investment operations...................... 1.74 (2.13) .96 -------- -------- -------- Dividends from net investment income to: Common shareholders.................................................. (.38) (.77) (.19) Preferred shareholders............................................... (.14) (.19) (.04) -------- -------- -------- Total dividends......................................................... (.52) (.96) (.23) -------- -------- -------- Capital charge with respect to issuance of common and preferred stock... - (.01) (.29) -------- -------- -------- Net asset value, end of period**........................................ $ 12.66 $ 11.44 $ 14.54# ======== ======== ======== Per share market value, end of period**................................. $ 11.875 $ 10.625 $ 14.00 ======== ======== ======== TOTAL INVESTMENT RETURN(d): ............................................ 15.70% (22.07%) .64% RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS(d)(d): Expenses................................................................ 1.39%(d)(d)(d) 1.35% 1.07%(d)(d)(d) Net investment income................................................... 7.20%(d)(d)(d) 7.42% 5.22%(d)(d)(d) Average net assets of common shareholders (in thousands)................ 14,006 $ 13,253 $ 14,431 Portfolio turnover rate................................................. 84% 88% 7% Net assets of common shareholders, end of period (in thousands)......... $ 12,750 $ 11,524 $ 14,646 Asset coverage per share of preferred stock, end of period.............. $134,999 $126,828 $147,641 Preferred stock outstanding (in thousands).............................. $ 7,500 $ 7,500 $ 7,500 * Commencement of investment operations. ** Net asset value and market value are published in The Wall Street Journal each Monday. # Net asset value immediately after the closing of the first public offering was $14.01. (d) Total investment return is calculated assuming a purchase of common stock at the current market value on the first day and a sale at the current market value on the last day of each period reported. Dividends and distributions are assumed for purposes of this calculation to be reinvested at prices obtained under the Trust's dividend reinvestment plan. This calculation does not reflect brokerage commissions. Total investment returns for periods of less than one year are not annualized. (d)(d) Ratios calculated on the basis of income and expenses applicable to both the common and preferred shares relative to the average net assets of common shareholders. Ratios do not reflect the effect of dividend payments to preferred shareholders. (d)(d)(d) Annualized. The information above represents the unaudited operating performance for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for the period 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. 8 (Left column) - - -------------------------------------------------------------------------------- The BlackRock New Jersey Investment Quality Municipal Trust Inc. Notes to Financial Statements (Unaudited) - - -------------------------------------------------------------------------------- Note 1. Accounting Policies The BlackRock New Jersey Investment Quality Municipal Trust Inc. (the "Trust") was organized in Maryland on April 12, 1993 as a non-diversified, closed-end management investment company. The Trust had no transactions until May 27, 1993 when it sold 7,093 shares of common stock for $100,012 to BlackRock Financial Management, Inc., (the "Adviser"). Investment operations commenced on June 4, 1993. The Trust's investment objective is to provide high current income exempt from regular federal and New Jersey state 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 the state, a specific industry or region. No assurance can be given that the Trust's investment objective will be achieved. The following is a summary of significant accounting policies followed by the Trust. Securities Valuation: Municipal securities (including commitments to purchase such securities on a "when-issued" basis) are valued on the basis of prices provided by a pricing service which uses information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining values. Any securities or other assets for which such current market quotations are not readily available are valued at fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Trust's Board of Directors. Short-term securities which mature in more than 60 days are valued at current market quotations. Short-term securities which mature in 60 days or less are valued at amortized cost if their term to maturity from date of purchase is 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original term to maturity from date of purchase exceeded 60 days. Option Selling/Purchasing: When the Trust sells or purchases an option, an amount equal to the premium received or paid by the Trust is recorded as a liability or an asset and is subsequently adjusted to the current market value of the option (Right column) written or purchased. Premiums received or paid from writing or purchasing options which expire unexercised are treated by the Trust on the expiration date as realized gains or losses. The difference between the premium and the amount paid or received on effecting a closing purchase or sale transaction, including brokerage commissions, is also treated as a realized gain or loss. If an option is exercised, the premium paid or received is added to the proceeds from the sale or cost of the purchase in determining whether the Trust has realized a gain or a loss on investment transactions. The Trust, as writer of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the security underlying the written option. 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 Trust, help in maintaining a targeted duration. Duration is a measure of the price sensitivity of a security or a portfolio to relative changes in interest rates. For instance, a duration of "one" means that a portfolio's or a security's price would be expected to change by approximately one percent with a one percent change in interest rates, while a duration of "five" would imply that the price would move approximately five percent in relation to a one percent change in interest rates. 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 Trust can effectively "hedge" more volatile positions so that changes in interest rates do not change the duration of the portfolio unexpectedly. The Trust may invest in financial futures contracts primarily for the purpose of hedging its existing portfolio securities or securities the Trust intends to purchase against fluctuations in value caused by changes in prevailing market interest rates. Should interest rates move unexpectedly, the Trust may not 9 (Left column) achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. The Trust is also at risk of not being able to enter into a closing transaction for the futures contract because of an illiquid secondary market. In addition, since futures are used to shorten or lengthen a portfolio's duration, there is a risk that the portfolio may have temporarily performed better without the hedge or that the Trust may lose the opportunity to realize appreciation in the market price of underlying positions. Short Sales: The Trust may make short sales of securities as a method of hedging potential price declines in similar securities owned. When the Trust makes a short sale, it may borrow the security sold short and deliver it to the broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon conclusion of the sale. The Trust may have to pay a fee to borrow the particular securities and may be obligated to pay over any payments received on such borrowed securities. A gain, limited to the price at which the Trust sold the security short, or a loss, unlimited as to dollar amount, will be recognized upon the termination of a short sale if the market price is greater or less than the proceeds originally received. 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. Interest income is recorded on the accrual basis and the Trust accretes discounts or amortizes premium on securities purchased using the interest method. Federal Income Taxes: It is the Trust's intention to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute sufficient net income to shareholders. Therefore no federal income tax provision is required. Dividends and Distributions: The Trust declares and pays dividends and distributions to common shareholders monthly from net investment income, net realized short-term capital gains and other sources, if necessary. Net long-term capital gains, if any, in excess of loss carryforwards may be distributed annually. Dividends and distributions are recorded on the ex-dividend date. Dividends and distributions to preferred shareholders are accrued and determined as described in Note 4. Deferred Organization Expenses: A total of $16,000 was incurred in connection with the organization of the Trust. These (Right column) costs have been deferred and are being amortized ratably over a period of sixty months from the date the Trust commenced investment operations. Note 2. Agreements The Trust has an Investment Advisory Agreement with the Adviser and an Administration Agreement with Prudential Mutual Fund Management, Inc. ("PMF"), an indirect, wholly-owned subsidiary of The Prudential Insurance Company of America. The investment fee paid to the Adviser is computed weekly and payable monthly at an annual rate of 0.35% of the Trust's average weekly net investment assets. The administration fee paid to PMF is also computed weekly and payable monthly at an annual rate of 0.10% of the Trust's average weekly net investment assets. Pursuant to the agreements, the Adviser provides continuous supervision of the investment portfolio and pays the compensation of officers of the Trust who are affiliated persons of the Adviser. PMF pays occupancy and certain clerical and accounting costs of the Trust. The Trust bears all other costs and expenses. On February 28, 1995, the Adviser was acquired by PNC Bank, N.A. Following acquisition, the Adviser has become a wholly-owned corporate subsidiary of PNC Asset Management Group, Inc., the holding company for PNC's asset management businesses. Note 3. Portfolio Securities Purchases and sales of investment securities, other than short-term investments, for the six months ended April 30, 1995 aggregated $16,185,462 and $16,049,591, respectively. The federal income tax basis of the Trust's investments at April 30, 1995 was substantially the same as the basis for financial reporting and, accordingly, net unrealized appreciation for federal income tax purposes was $247,401 (gross unrealized appreciation $532,444; gross unrealized depreciation $285,043). For federal income tax purposes, the Trust had a capital loss carryforward at October 31, 1994 of approximately $700,000 of which $10,000 will expire in 2001 and $690,000 will expire in 2002. Accordingly, no capital gains distribution is expected to be paid to shareholders until net gains have been realized in excess of such amount. 10 (Left column) Note 4. Capital There are 200 million shares of $.01 par value common stock authorized. Of the 1,007,093 shares outstanding at April 30, 1995, the Adviser owned 7,093 shares. Offering costs ($94,638) incurred in connection with the Trust's underwriting of common stock have been charged to paid-in capital in excess of par of the common stock. The Trust may classify or reclassify any unissued shares of common stock into one or more series of preferred stock. On July 29, 1993 the Trust reclassified 150 shares of common stock and issued a series of Auction Market Preferred Stock ("Preferred Stock") Series T7. The Preferred Stock has a liquidation value of $50,000 per share plus any accumulated but unpaid dividends. The underwriting discounts ($112,500) and offering costs ($75,344) incurred in connection with the Preferred Stock offering have been charged to paid-in capital in excess of par of the common stock. Dividends on Series T7 are cumulative at a rate which is reset every 7 days based on the results of an auction. Dividend rates ranged from 3.20% to 5.50% during the six months ended April 30, 1995. 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 $50,000 per share plus any accumulated or unpaid dividends whether or not declared. The Preferred Stock is also subject to mandatory redemption at $50,000 per share plus any accumulated or unpaid dividends, whether or not declared if certain requirements relating to the composition of the assets and liabilities of the Trust as set forth in the Articles of Incorporation are not satisfied. The holders of Preferred Stock have voting rights equal to the holders of common stock (one vote per share) and will vote together with holders of shares of common stock as a single class. However, holders of Preferred Stock are also entitled to elect two of the Trust's directors. In addition, the Investment Company Act of 1940 requires that along with approval by stockholders that might otherwise be required, the approval of the holders of a majority of any outstanding preferred shares, voting separately as a class would be required to (a) adopt any plan of reorganization that would adversely affect the preferred shares and (b) take any action requiring a vote of security holders, including, among other things, changes in the Trust's subclassification as a closed-end investment company or changes in its fundamental investment restrictions. On May 16, 1995 shareholders approved a proposal to split each share of the Trust's Auction Rate Municipal Preferred Stock into two shares and simultaneously reduce each share's liquidation preference from $50,000 to $25,000. Note 5. Dividends Subsequent to April 30, 1995, the Board of Directors of the Trust declared a dividend from undistributed earnings of $0.0641 per common share payable May 31, 1995 to shareholders of record on May 15, 1995. For the period May 1, 1995 to May 31, 1995, dividends declared on Preferred Stock totalled $26,475 in aggregate for the outstanding Preferred Stock. 11 Note 6. Quarterly Data (Unaudited)
- - ------------------------------------------------------------------------------------------------------------------------------------ Net realized Net increase/decrease Dividends and unrealized in net investment and distributions Net investment gains (losses) assets resulting Common Preferred income on investments from operations Shares Shares** Period Per Per Per Per Per Share price of end Quarterly Total Common Common Common Common Common Common stock net asset period income Amount share Amount share Amount share Amount share Amount share High Low value - - --------- ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ ---- --- --------- June 4, 1993* to July 31, 1993 $ 78,722 $ 57,738 $.06 $ (7,745) - $ 49,993 $ .05 - - $ 1,310 - $15 $14-3/8 $13.87 August 1, 1993 to October 31, 1993 293,836 251,596 .25 658,930 $ .65 910,526 .91 $193,665 $.19 42,948 $.04 14-1/2 13-3/4 14.54 November 1, 1993 to January 31, 1994 291,248 250,482 .25 205,013 .20 455,495 .45 193,666 .20 42,929 .04 14-1/4 13 14.76 February 1, 1994 to April 30, 1994 285,829 246,592 .24(2,322,201) (2.31)(2,075,609)(2.06) 193,662 .19 42,572 .04 14-1/4 12 12.46 May 1, 1994 to July 31, 1994 288,399 248,655 .25 333,190 .33 581,845 .58 193,655 .19 52,458 .05 12-1/2 11-1/4 12.80 August 1, 1994 to October 31, 1994 296,652 238,002 .24(1,344,675) (1.33)(1,106,673)(1.10) 193,636 .19 58,426 .06 12-1/8 11-1/8 11.44 November 1, 1994 to January 31, 1995 297,854 257,093 .26 544,900 .54 801,993 .80 193,664 .19 71,022 .07 11-1/4 9-7/8 11.97 February 1, 1995 to April 30, 1995 298,603 243,159 .24 709,370 .70 952,529 .94 193,664 .19 70,448 .07 12-3/4 11-1/4 12.66 *Commencement of investment operations. **For the six months ended April 30, 1995, the average annualized rate paid to preferred shareholders was 3.80%.
12 - - -------------------------------------------------------------------------------- THE BLACKROCK NEW JERSEY INVESTMENT QUALITY MUNICIPAL TRUST INC. DIVIDEND REINVESTMENT PLAN - - -------------------------------------------------------------------------------- Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), shareholders will automatically have all distributions of dividends and capital gains reinvested by State Street Bank & Trust Company (the "Plan Agent") in Trust shares pursuant to the Plan unless an election is made to receive such amounts in cash. The Plan Agent will affect purchases of shares under the Plan in the open market. 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 American Stock Exchange or elsewhere, for the participants' accounts. The Trust will not issue any new shares in connection with the Plan. Participants in the Plan may withdraw from the Plan upon written notice to the Plan Agent and will receive certificates for whole Trust shares and a cash payment for any fraction of a Trust share. The Plan Agent's fees for the handling of the reinvestment of dividends and distributions will be paid by the Trust. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of dividends and distributions. The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income taxes that may be payable on such dividends or distributions. Experience under the Plan may indicate that changes are desirable. Accordingly, the Trust reserves the right to amend or terminate the Plan as applied to any dividend or distribution paid subsequent to written notice of the change sent to all shareholders of the Trust at least 90 days before the record date for the dividend or distribution. The Plan also may be amended by the Plan Agent upon at least 90 days' written notice to all shareholders of the Trust. The Plan may be terminated by the Plan Agent or the Trust upon at least 30 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 addresses are 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. At a Special Meeting of Trust Shareholders held on February 15, 1995 to approve the Trusts' advisory agreement with BlackRock Financial Management, Inc. Shareholders approved the agreement. The result of the voting is as follows: Votes For 591,163 Votes Against 2,633 Votes Withheld 12,026 The Annual Meeting of Trust Shareholders was held May 16, 1995 to vote on the following matters: (1) To elect the following three Directors to serve as follows: Director Class Term Expiring -------- ----- ---- -------- James Grosfeld......................... I 3 years 1998 James Clayburn La Force, Jr............ I 3 years 1998 Kent Dixon............................. III 2 years 1997 and to elect Richard E. Cavanagh as a Class I Director to represent the preferred shareholders for a three year term expring in 1998. Directors whose term of office continues beyond this meeting are Andrew F. Brimmer, Frank J. Fabozzi, Laurence D. Fink and Ralph L. Schlosstein. (2) To consider and act on a proposal to split each share of the Trust's Auction Rate Preferred Stock (Preferred) into two shares and simultaneously reduce each share's liquidation preference, as provided in the Trust's Articles Supplementary, from $50,000 to $25,000. (3) To ratify the selection of Deloitte & Touche LLP as independent public accountants of the Trust for the fiscal year ending October 31, 1995. Shareholders elected the four Directors, approved the proposal to split each Preferred share into two shares and ratified the selection of Deloitte & Touche LLP. The results of the voting was as follows: Votes* For Votes* Against Votes* Withheld ---------- -------------- --------------- James Grosfeld.................... 676,575 - 6,806 James Clayburn La Force, Jr. ..... 676,795 - 6,806 Kent Dixon........................ 676,575 - 6,587 Richard E. Cavanagh............... 150 - - Preferred share split............. 662,914 14,392 6,075 Deloitte & Touche LLP............. 678,815 1,401 3,166 - - ------------ *The votes represent common and preferred shareholders voting as a single class except for the election of Richard E. Cavanagh who was elected by the preferred shareholders. 13 - - -------------------------------------------------------------------------------- THE BLACKROCK NEW JERSEY INVESTMENT QUALITY MUNICIPAL TRUST INC. INVESTMENT SUMMARY - - -------------------------------------------------------------------------------- The Trust's Investment Objective The BlackRock New Jersey Investment Quality Municipal Trust's investment objective is to provide high current income exempt from regular Federal income tax and New Jersey gross income tax consistent with the preservation of capital. Who Manages the Trust? BlackRock Financial Management, Inc. ("BlackRock" or the "Adviser") is the investment adviser for the Trust. BlackRock is a registered investment adviser specializing in fixed income securities. Currently, BlackRock manages over $27 billion of assets across the government, mortgage, corporate and municipal sectors. These assets are managed on behalf of institutional and individual investors in 21 closed-end funds, several open-end funds and over 75 separate accounts for various clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset Management Group which is a division of PNC Bank, N.A., the nation's twelfth largest banking organization. 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 investment grade ("BBB" by Standard & Poor's and "Baa" by Moody's Investor Services) and up to 20% of its assets may instead be deemed to be of equivalent credit quality by the Adviser. The Trust intends to invest substantially all of the assets in a portfolio of investment grade New Jersey Municipal Obligations, which include debt obligations issued by or on behalf of New Jersey, its political subdivisions, agencies and instrumentalities and by other qualifying issuers that pay interest which, in the opinion of the bond counsel of the issuer, is exempt from regular Federal income tax and New Jersey gross income tax. New Jersey Municipal Obligations are issued to obtain funds for various public functions, including the construction of public facilities, the refinancing of outstanding obligations, the obtaining of funds for general operating expenses and for loans to other public institutions and facilities. What is the Adviser's Investment Strategy? The Adviser will manage the assets of the Trust in accordance with the Trust's investment objective and policies to seek to achieve its objective by investing in investment grade New Jersey Municipal Obligations. The Adviser actively manages the assets in relation to market conditions and interest rate changes. Depending on yield and portfolio allocation considerations, the Adviser may choose to invest a portion of the Trust's assets in securities which pay interest that is subject to AMT (alternative minimum tax). The Trust intends to emphasize investments in New Jersey Municipal Obligations with long-term maturities and expects to maintain an average portfolio maturity of 15-20 years, but the average maturity may be shortened or lengthened from time to time depending on market conditions. Under current market conditions the use of leverage increases the income earned by the Trust. The Trust employs leverage primarily through the issuance of preferred stock. Preferred stockholders will receive dividends based on short-term rates in exchange for allowing the Trust to borrow additional assets. These assets will be invested in longer-term assets which typically offer higher interest rates and the difference between the cost of the dividends paid to preferred stockholders and the interest earned on the longer-term securities will provide higher income levels for common stockholders in most interest rate environments. The Trust issued preferred stock to leverage the portfolio at approximately 35% of total assets. See "Leverage Considerations in the Trust" below. How Are the Trust's Shares Purchased and Sold? Does the Trust Pay Dividends Regularly? The Trust's shares are traded on the American Stock Exchange which provides investors with liquidity on a daily basis. Orders to buy or sell shares of the Trust must be placed through a registered broker or financial advisor. The Trust pays monthly dividends which are typically paid on the last business day of the month. For shares held in the shareholder's name, dividends may be reinvested in additional shares of the fund through the Trust's transfer agent, Boston Financial Data Services. 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 fund in a declining rate environment, but can cause net assets to decline faster in a rapidly rising interest 14 rate environment. The Trust may reduce, or unwind, the amount of leverage employed should BlackRock consider that reduction to be in the best interests of the Trust. BlackRock's portfolio managers continuously monitor and regularly review the Trust's use of leverage and maintain the ability to unwind the leverage if that course is chosen. Special Considerations and Risk Factors Relevant to the Trust The Trust is intended to be a long-term investment and is not a short-term trading vehicle. Investment Objective. Although the objective of the Trust is to provide high current income exempt from regular Federal income tax and New Jersey gross income tax consistent with the preservation of capital, there can be no assurance that this objective will be achieved. Dividend Considerations. The income and dividends paid by the Trust are likely to vary over time as fixed income market conditions change. Future dividends may be higher or lower than the dividend the Trust is currently paying. Leverage. The Trust utilizes leverage through preferred stock, which involves special risks. The Trust's net asset value and market value may be more volatile due to its use of leverage. Market Price of Shares. The shares of closed-end investment companies such as the Trust trade on the American Stock Exchange (AMEX symbol: RNJ) and as such are subject to supply and demand influences. As a result, shares may trade at a discount or a premium to their net asset value. Investment Grade Municipal Obligations. The value of municipal debt securities generally varies inversely with changes in prevailing market interest rates. Depending on the amount of call protection that the securities in the Trust have, the Trust may be subject to certain reinvestment risks in environments of declining interest rates. Illiquid Securities. The Trust may invest in securities that are illiquid, although under current market conditions the Trust expects to do so to only a limited extent. These securities involve special risks. Antitakeover Provisions. Certain antitakeover provisions will make a change in the Trust's business or management more difficult without the approval of the Trust's Board of Directors and may have the effect of depriving shareholders of an opportunity to sell their shares at a premium above the prevailing market price. 15 (Left column) BlackRock Directors Laurence D. Fink, Chairman Andrew F. Brimmer Richard E. Cavanagh Kent Dixon Frank J. Fabozzi James Grosfeld James Clayburn La Force, Jr. Ralph L. Schlosstein Officers Ralph L. Schlosstein, President Keith T. Anderson, Vice President Michael C. Huebsch, Vice President Robert S. Kapito, Vice President Kevin Klingert, Vice President Richard M. Shea, Vice President/Tax Henry Gabbay, Treasurer James Kong, Assistant Treasurer Karen H. Sabath, Secretary Investment Adviser BlackRock Financial Management, Inc. 345 Park Avenue New York, NY 10154 (800) 227-7BFM Administrator Prudential Mutual Fund Management, Inc. One Seaport Plaza New York, NY 10292 Custodian and Transfer Agent State Street Bank and Trust Company One Heritage Drive North Quincy, MA 02171 (800) 699-1BFM Auction Agent Bankers Trust Company 4 Albany Street New York, NY 10006 Independent Auditors Deloitte & Touche LLP Two World Financial Center New York, NY 10281-1434 Legal Counsel Skadden, Arps, Slate, Meagher & Flom 919 Third Avenue New York, NY 10022 The accompanying financial statements as of April 30, 1995 were not audited and, accordingly, no opinion is expressed on them. This report is for shareholder information. This is not a prospectus intended for use in the purchase or sale of any securities. The BlackRock New Jersey Investment Quality Municipal Trust c/o Prudential Mutual Fund Management, Inc. 32nd Floor One Seaport Plaza New York, NY 10292 (800) 227-7BFM (Right column) The BlackRock New Jersey Investment Quality Municipal Trust Inc. Semi-Annual Report April 30, 1995 -----END PRIVACY-ENHANCED MESSAGE-----