BLACKROCK MUNIHOLDINGS INVESTMENT QUALITY FUND

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number 811-08349

Name of Fund: BlackRock MuniHoldings Investment Quality Fund (MFL)

Fund Address:    100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniHoldings Investment Quality Fund, 55 East 52nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 08/31/2017

Date of reporting period: 08/31/2017

 


Item 1 – Report to Stockholders


AUGUST 31, 2017

 

 

ANNUAL REPORT

 

    LOGO

 

BlackRock Municipal Bond Trust (BBK)

BlackRock Municipal Income Investment Quality Trust (BAF)

BlackRock Municipal Income Quality Trust (BYM)

BlackRock Municipal Income Trust II (BLE)

BlackRock MuniHoldings Investment Quality Fund (MFL)

BlackRock MuniVest Fund, Inc. (MVF)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


The Markets in Review

 

Dear Shareholder,

In the 12 months ended August 31, 2017, risk assets, such as stocks and high-yield bonds, continued to deliver strong performance. These markets showed great resilience during a period with big surprises, including the aftermath of the U.K.’s vote to leave the European Union and the outcome of the U.S. presidential election, which brought only brief spikes in equity market volatility. These expressions of isolationism and discontent were countered by the closely watched and less surprising elections in France, the Netherlands and Australia.

Interest rates rose, which worked against high-quality assets with more interest rate sensitivity. As a result, longer-term U.S. Treasuries posted negative returns, as rising energy prices, modest wage increases, and steady job growth led to expectations of higher inflation and anticipation of interest rate increases by the U.S. Federal Reserve (the “Fed”).

Market prices began to reflect reflationary expectations toward the end of 2016, as investors sensed that a global recovery was afoot. And those expectations have been largely realized in 2017, as many countries throughout the world experienced sustained and synchronized growth for the first time since the financial crisis. Growth rates and inflation are still relatively low, but they are finally rising together.

The Fed responded to these positive developments by increasing interest rates three times and setting expectations for additional interest rate increases. The Fed also appears to be approaching the implementation of its plan to reduce the vast balance sheet reserves that provided liquidity to the global economy in the aftermath of the financial crisis in 2008. Also, growing skepticism about the near-term likelihood of significant U.S. tax reform and infrastructure spending has tempered reflationary expectations in the United States.

By contrast, the European Central Bank and the Bank of Japan reiterated their commitments to economic stimulus and balance sheet expansion despite nascent signs of sustained economic growth in both countries. The Eurozone also benefited from the relatively stable political environment, which is creating momentum for economic reform and pro-growth policies.

Financial markets — and to an extent the Fed — have adopted a “wait-and-see” approach to the economic data and potential fiscal stimulus. Escalating tensions with North Korea and our nation’s divided politics are significant concerns. Nevertheless, benign credit conditions, modest inflation, and the positive outlook for growth in the world’s largest economies have kept markets relatively tranquil.

However, the capacity for rapid global growth is restrained by structural factors, including an aging population in developed countries, low productivity growth, and excess savings. Cyclical factors, such as the Fed moving toward the normalization of monetary policy and the length of the current expansion, also limit economic growth. Tempered economic growth and high valuations across most assets have laid the groundwork for muted returns going forward. At current valuation levels, potential equity gains will likely be closely tied to the pace of earnings growth, which has remained solid thus far in 2017.

In this environment, investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of August 31, 2017  
    6-month     12-month  

U.S. large cap equities
(S&P 500® Index)

    5.65     16.23

U.S. small cap equities
(Russell 2000® Index)

    2.04       14.91  

International equities
(MSCI Europe, Australasia,
Far East Index)

    12.14       17.64  

Emerging market equities
(MSCI Emerging Markets Index)

    18.02       24.53  

3-month Treasury bills
(BofA Merrill Lynch 3-Month
U.S. Treasury Bill Index)

    0.40       0.62  

U.S. Treasury securities
(BofA Merrill Lynch
10-Year U.S. Treasury
Index)

    3.10       (3.26

U.S. investment grade bonds
(Bloomberg Barclays U.S.
Aggregate Bond Index)

    2.74       0.49  

Tax-exempt municipal
bonds (S&P Municipal
Bond Index)

    3.51       0.92  

U.S. high yield bonds
(Bloomberg Barclays U.S. Corporate High Yield 2% Issuer
Capped Index)

    3.03       8.62  
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.  

 

                
2    THIS PAGE NOT PART OF YOUR FUND REPORT      


Table of Contents     

 

     Page  

The Markets in Review

    2  

Annual Report:

 

Municipal Market Overview

    4  

The Benefits and Risks of Leveraging

    5  

Derivative Financial Instruments

    5  

Trust Summaries

    6  
Financial Statements:  

Schedules of Investments

    18  

Statements of Assets and Liabilities

    57  

Statements of Operations

    59  

Statements of Changes in Net Assets

    61  

Statements of Cash Flows

    64  

Financial Highlights

    66  

Notes to Financial Statements

    72  

Report of Independent Registered Public Accounting Firm

    83  

Disclosure of Investment Advisory Agreements

    84  

Automatic Dividend Reinvestment Plans

    89  

Officers and Trustees

    90  

Additional Information

    93  

 

                
   ANNUAL REPORT    AUGUST 31, 2017    3


Municipal Market Overview     

 

For the Reporting Period Ended August 31, 2017      

Municipal Market Conditions

Municipal bonds experienced modestly positive performance for the period as a result of rising interest rates spurring from generally stronger economic data, signs of inflation pressures, Fed monetary policy normalization, and market expectations for pro-growth fiscal policy. However, ongoing reassurance from the Fed that rates would be increased gradually and would likely remain low overall resulted in continued demand for fixed income investments. More specifically, investors favored the income, attractive relative yield, and stability of municipal bonds amid bouts of interest rate volatility (bond prices rise as rates fall) resulting from geopolitical tensions, the contentious U.S. election, and continued global central bank divergence — i.e., policy easing outside the United States while the Fed slowly engages in policy tightening. During the 12 months ended August 31, 2017, municipal bond funds experienced net outflows of approximately $2 billion (based on data from the Investment Company Institute). The asset class came under pressure post the November U.S. election as a result of uncertainty surrounding potential tax-reform, though expectation that tax reform was likely to be delayed or watered down quickly eased investor concerns.

For the same 12-month period, total new issuance remained robust from a historical perspective at $400 billion (though slightly below the $405 billion issued in the prior 12-month period). A noteworthy portion of new supply during this period was attributable to refinancing activity (roughly 55%) as issuers continued to take advantage of low interest rates and a flat yield curve to reduce their borrowing costs.

S&P Municipal Bond Index

Total Returns as of August 31, 2017

  6 months:     3.51%

12 months:     0.92%

A Closer Look at Yields

 

LOGO

From August 31, 2016 to August 31, 2017, yields on AAA-rated 30-year municipal bonds increased by 58 basis points (“bps”) from 2.12% to 2.70%, while 10-year rates rose by 44 bps from 1.42% to 1.86% and 5-year rates increased 26 bps from 0.86% to 1.12% (as measured by Thomson Municipal Market Data). The municipal yield curve steepened over the 12-month period with the spread between 2- and 30-year maturities steepening by 34 bps.

During the same time period, on a relative basis, tax-exempt municipal bonds broadly outperformed U.S. Treasuries with the greatest outperformance experienced in the front and intermediate portions of the yield curve. The relative positive performance of municipal bonds was driven largely by a supply/demand imbalance within the municipal market as investors sought income and incremental yield in an environment where opportunities became increasingly scarce. The asset class is known for its lower relative volatility and preservation of principal with an emphasis on income as tax rates rise.

Financial Conditions of Municipal Issuers

The majority of municipal credits remain strong, despite well-publicized distress among a few issuers. Four of the five states with the largest amount of debt outstanding — California, New York, Texas and Florida — have exhibited markedly improved credit fundamentals during the slow national recovery. However, several states with the largest unfunded pension liabilities have seen their bond prices decline noticeably and remain vulnerable to additional price deterioration. On the local level, Chicago’s credit quality downgrade is an outlier relative to other cities due to its larger pension liability and inadequate funding remedies. BlackRock maintains the view that municipal bond defaults will remain minimal and in the periphery while the overall market is fundamentally sound. We continue to advocate careful credit research and believe that a thoughtful approach to structure and security selection remains imperative amid uncertainty in a modestly improving economic environment.

The opinions expressed are those of BlackRock as of August 31, 2017, and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of any individual holdings or market sectors. Investing involves risk including loss of principal. Bond values fluctuate in price so the value of your investment can go down depending on market conditions. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. There may be less information on the financial condition of municipal issuers than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Some investors may be subject to Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable.

The Standard & Poor’s Municipal Bond Index, a broad, market value-weighted index, seeks to measure the performance of the U.S. municipal bond market. All bonds in the index are exempt from U.S. federal income taxes or subject to AMT. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index.

 

                
4    ANNUAL REPORT    AUGUST 31, 2017   


The Benefits and Risks of Leveraging

 

The Trusts may utilize leverage to seek to enhance the distribution rate on, and net asset value (“NAV”) of, their common shares (“Common Shares”). However, these objectives cannot be achieved in all interest rate environments.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by a Trust on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Trusts (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Trusts’ shareholders benefit from the incremental net income. The interest earned on securities purchased with the proceeds from leverage is paid to shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share NAV.

To illustrate these concepts, assume a Trust’s Common Shares capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of $130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, a Trust’s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the same time, the securities purchased by a Trust with the proceeds from leverage earn income based on longer-term interest rates. In this case, a Trust’s financing cost of leverage is significantly lower than the income earned on a Trust’s longer-term investments acquired from such leverage proceeds, and therefore the holders of Common Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.

However, in order to benefit Common Shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Trusts’ return on assets purchased with leverage proceeds, income to shareholders is lower than if the Trusts had not used leverage. Furthermore, the value of the Trusts’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the value of the Trusts’ obligations under their respective leverage arrangements generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Trusts’ NAVs positively or negatively. Changes in the future

direction of interest rates are very difficult to predict accurately, and there is no assurance that the Trust’s intended leveraging strategy will be successful.

The use of leverage also generally causes greater changes in each Trust’s NAV, market price and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV and market price of a Trust’s Common Shares than if the Trust were not leveraged. In addition, each Trust may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Trusts to incur losses. The use of leverage may limit a Trust’s ability to invest in certain types of securities or use certain types of hedging strategies. Each Trust incurs expenses in connection with the use of leverage, all of which are borne by Common Shareholders and may reduce income to the Common Shares. Moreover, to the extent the calculation of the Trusts’ investment advisory fees includes assets purchased with the proceeds of leverage, the investment advisory fees payable to the Trusts’ investment adviser will be higher than if the Trusts did not use leverage.

To obtain leverage, each Trust has issued Variable Rate Demand Preferred Shares (“VRDP Shares”) and Variable Rate Muni Term Preferred Shares (“VMTP Shares”) (collectively, “Preferred Shares”) and/or leveraged its assets through the use of tender option bond trusts (“TOB Trusts”) as described in the Notes to Financial Statements.

Under the Investment Company Act of 1940, as amended (the “1940 Act”), each Trust is permitted to issue debt up to 33 1/3% of its total managed assets or equity securities (e.g., Preferred Shares) up to 50% of its total managed assets. A Trust may voluntarily elect to limit its leverage to less than the maximum amount permitted under the 1940 Act. In addition, a Trust may also be subject to certain asset coverage, leverage or portfolio composition requirements imposed by the Preferred Shares’ governing instruments or by agencies rating the Preferred Shares, which may be more stringent than those imposed by the 1940 Act.

If a Trust segregates or designates on its books and records cash or liquid assets having a value not less than the value of a Trust’s obligations under the TOB Trust (including accrued interest), then the TOB Trust is not considered a senior security and is not subject to the foregoing limitations and requirements imposed by the 1940 Act.

 

 

Derivative Financial Instruments     

 

The Trusts may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or

illiquidity of the instrument. The Trusts’ successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation a Trust can realize on an investment and/or may result in lower distributions paid to shareholders. The Trusts’ investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

 

 

                
   ANNUAL REPORT    AUGUST 31, 2017    5


Trust Summary as of August 31, 2017    BlackRock Municipal Bond Trust

 

 

Trust Overview

BlackRock Municipal Bond Trust’s (BBK) (the “Trust”) investment objective is to provide current income exempt from regular U.S. federal income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from regular U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). The Trust invests, under normal market conditions, at least 80% of its managed assets in municipal bonds that are investment grade quality or, if unrated, determined to be of comparable quality by the investment adviser at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information

Symbol on New York Stock Exchange (“NYSE”)

  BBK

Initial Offering Date

  April 30, 2002

Yield on Closing Market Price as of August 31, 2017 ($15.99)1

  4.77%

Tax Equivalent Yield2

  8.43%

Current Monthly Distribution per Common Share3

  $0.0635

Current Annualized Distribution per Common Share3

  $0.7620

Economic Leverage as of August 31, 20174

  37%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The distribution rate is not constant and is subject to change.

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the 12 months ended August 31, 2017 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BBK1, 2

    (5.18)%        (1.44)%  

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (0.46)%        (0.01)%  

 

  1  

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

  2  

The Trust moved from a premium to NAV to a discount during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

  3   

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

 

The municipal bond market generated mixed returns in the past 12 months. Municipal bonds moved lower early in the period due to a pick-up in new tax-exempt issuance and rising yields in the U.S. Treasury market. (Prices and yields move in opposite directions.) The weakness accelerated in November once Donald Trump’s election victory caused investors to factor in the possibility of faster economic growth and tighter Fed policy. As optimism for meaningful fiscal reforms subsequently waned and the economy failed to experience a significant acceleration, municipal bonds stabilized and retraced the majority of their post-election losses.

 

 

In this environment, the Trust’s positions in longer-dated and longer-duration bonds were the largest detractors from performance. (Duration is a measure of interest rate sensitivity.) Exposure to lower-coupon and zero-coupon bonds, which experienced greater price deterioration than the market as a whole, also detracted from returns. Conversely, positions in pre-refunded issues benefited performance as their low duration and higher credit quality enabled them to hold up better than longer-duration bonds.

 

 

Positions in the transportation, education and utilities sectors, which were among the weaker sectors for the period, negatively impacted performance. The Trust’s exposure to school district bonds, which were adversely affected by their longer durations, was an additional detractor.

 

 

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Trust’s positioning had a positive effect on returns.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

                
6    ANNUAL REPORT    AUGUST 31, 2017   


     BlackRock Municipal Bond Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

      8/31/17      8/31/16      Change      High      Low  

Market Price

     $15.99        $18.22        (12.24)%        $18.55        $14.50  

Net Asset Value

     $16.32        $17.89        (8.78)%        $17.89        $15.30  

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Total Investments*

 

Sector Allocation   8/31/17     8/31/16  

County/City/Special District/School District

    23     17

Health

    18       24  

Transportation

    18       15  

Education

    11       14  

State

    11       9  

Utilities

    9       13  

Corporate

    5       5  

Tobacco

    5       2  

Housing

          1  

For Trust compliance purposes, the Trust’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2017

    4

2018

    6  

2019

    4  

2020

    6  

2021

    11  

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

Credit Quality Allocation1   8/31/17     8/31/16  

AAA/Aaa

    3       4

AA/Aa

    40       47  

A

    26       27  

BBB/Baa

    15       11  

BB/Ba

    6         5  

B

    3         1  

N/R2

    7         5  

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s (“S&P”) or Moody’s Investors Service (“Moody’s”) if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of August 31, 2017 and August 31, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 1% and 3%, respectively, of the Trust’s total investments.

 

 

  *   Excludes short-term securities.

 

                
   ANNUAL REPORT    AUGUST 31, 2017    7


Trust Summary as of August 31, 2017    BlackRock Municipal Income Investment Quality Trust

 

Trust Overview

BlackRock Municipal Income Investment Quality Trust’s (BAF) (the “Trust”) investment objective is to provide current income exempt from U.S. federal income tax, including the alternative minimum tax. The Trust seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its managed assets in municipal bonds exempt from U.S. federal income taxes, including the alternative minimum tax. The Trust also invests at least 80% of its managed assets in municipal bonds that are investment grade quality at the time of investment or, if unrated, determined to be of comparable quality by the investment adviser at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives. Due to the repeal of the Florida intangible personal property tax, in September 2008, the Board gave approval to permit the Trust the flexibility to invest in municipal obligations regardless of geographic location since municipal obligations issued by any state or municipality that provides income exempt from regular U.S. federal income tax would now satisfy the foregoing objective and policy.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information

Symbol on NYSE

  BAF

Initial Offering Date

  October 31, 2002

Yield on Closing Market Price as of August 31, 2017 ($15.11)1

  5.44%

Tax Equivalent Yield2

  9.61%

Current Monthly Distribution per Common Share3

  $0.0685

Current Annualized Distribution per Common Share3

  $0.8220

Economic Leverage as of August 31, 20174

  39%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The distribution rate is not constant and is subject to change.

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the 12 months ended August 31, 2017 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BAF1, 2

    1.15%        0.14%  

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (0.46)%        (0.01)%  

 

  1  

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

  2  

The Trust’s discount to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

  3   

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

 

The municipal bond market generated mixed returns in the past 12 months. Municipal bonds moved lower early in the period due to a pick-up in new tax-exempt issuance and rising yields in the U.S. Treasury market. (Prices and yields move in opposite directions.) The weakness accelerated in November once Donald Trump’s election victory caused investors to factor in the possibility of faster economic growth and tighter Fed policy. As optimism for meaningful fiscal reforms subsequently waned and the economy failed to experience a significant acceleration, municipal bonds stabilized and retraced the majority of their post-election losses.

 

 

The Trust’s exposure to pre-refunded issues benefited performance, as their low duration enabled them to hold up better than longer-duration bonds at a time of rising yields. (Duration is a measure of interest-rate sensitivity.) In addition, the bonds’ higher coupons and income levels further aided their performance. Positions in the tax-backed (local) and transportation sectors also contributed to results.

 

 

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Fund’s positioning had a positive effect on returns.

 

 

The Trust’s use of leverage, while enhancing the level of income, also exacerbated the impact of declining bond prices.

 

 

Positions in intermediate and longer-dated maturities declined the most in value as they typically have longer durations relative to shorter maturities. In addition, the Trust’s exposure to 4% coupon bonds detracted as lower coupons typically underperform in a rising rate environment.

 

 

From a sector allocation perspective, the Trust’s exposure to utilities was a detractor.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

                
8    ANNUAL REPORT    AUGUST 31, 2017   


     BlackRock Municipal Income Investment Quality Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

      8/31/17      8/31/16      Change      High      Low  

Market Price

     $15.11        $15.79        (4.31 )%     $ 16.30      $ 13.68  

Net Asset Value

     $15.69        $16.56        (5.25 )%     $ 16.56      $ 15.07  

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Total Investments*

 

Sector Allocation   8/31/17     8/31/16  

Transportation

    31     28

County/City/Special District/School District

    28       27  

Utilities

    15       17  

Health

    12       14  

State

    6         6  

Education

    5         5  

Tobacco

    1         1  

Corporate

    1         1  

Housing

    1         1  

For Trust compliance purposes, the Trust’s sector classifications refer to one or

more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Call/Maturity Schedule2       

Calendar Year Ended December 31,

 

2018

    11

2019

    17  

2020

    2  

2021

    28  

 

  2   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

Credit Quality Allocation1   8/31/17     8/31/16  

AAA/Aaa

    3       3

AA/Aa

    70       74  

A

    17       19  

BBB/Baa

    8         4  

N/R

    2        

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

 

  *   Excludes short-term securities.

 

                
   ANNUAL REPORT    AUGUST 31, 2017    9


Trust Summary as of August 31, 2017    BlackRock Municipal Income Quality Trust

 

 

Trust Overview

BlackRock Municipal Income Quality Trust’s (BYM) (the “Trust”) investment objective is to provide current income exempt from U.S. federal income taxes, including the alternative minimum tax. The Trust seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its managed assets in municipal bonds exempt from U.S. federal income taxes, including the U.S. federal alternative minimum tax. The Trust also invests at least 80% of its managed assets in municipal bonds that are investment grade quality at the time of investment or, if unrated, determined to be of comparable quality by the investment adviser at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information

Symbol on NYSE

  BYM

Initial Offering Date

  October 31, 2002

Yield on Closing Market Price as of August 31, 2017 ($14.84)1

  4.85%

Tax Equivalent Yield2

  8.57%

Current Monthly Distribution per Common Share3

  $0.0600

Current Annualized Distribution per Common Share3

  $0.7200

Economic Leverage as of August 31, 20174

  37%

 

  1  

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The distribution rate is not constant and is subject to change.

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the 12 months ended August 31, 2017 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BYM1,2

    0.74%        (0.30)%  

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (0.46)%        (0.01)%  

 

  1  

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

  2  

The Trust’s discount to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

  3   

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

 

The municipal bond market generated mixed returns in the past 12 months. Municipal bonds moved lower early in the period due to a pick-up in new tax-exempt issuance and rising yields in the U.S. Treasury market. (Prices and yields move in opposite directions.) The weakness accelerated in November once Donald Trump’s election victory caused investors to factor in the possibility of faster economic growth and tighter Fed policy. As optimism for meaningful fiscal reforms subsequently waned and the economy failed to experience a significant acceleration, municipal bonds stabilized and retraced the majority of their post-election losses.

 

 

Portfolio income made the most significant positive contribution during a period in which bond prices lost ground. However, the Trust’s use of leverage, while enhancing the level of income, also exacerbated the impact of declining bond prices.

 

 

Holdings in zero-coupon bonds also detracted. Despite their higher income and lack of reinvestment risk, their longer durations accentuated negative price performance in the rising rate environment. (Duration is a measure of interest-rate sensitivity.)

 

 

The Trust’s exposure to longer-term bonds, which lagged the overall market, further detracted from performance.

 

 

In this challenging market environment, the Trust’s position in high-quality, defensive pre-refunded bonds was the largest positive contributor to performance.

 

 

Positions in the transportation and health care sectors, both of which outperformed the broader market, added value.

 

 

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Trust’s strategy had a positive effect on returns. The Trust’s cash position, though modest, was an additional positive at a time of falling prices.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

                
10    ANNUAL REPORT    AUGUST 31, 2017   


     BlackRock Municipal Income Quality Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

      8/31/17      8/31/16      Change      High      Low  

Market Price

     $14.84        $15.55        (4.57 )%     $ 15.79      $ 13.50  

Net Asset Value

     $15.32        $16.22        (5.55 )%     $ 16.22      $ 14.64  

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Total Investments*

 

Sector Allocation   8/31/17     8/31/16  

Transportation

    32     28

County/City/Special District/School District

    22       25  

Utilities

    15       12  

Health

    14       11  

State

    7       11  

Education

    5         7  

Tobacco

    3         3  

Corporate

    2         2  

Housing

            1  

For Trust compliance purposes, the Trust’s sector classifications refer to one or

more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Call/Maturity Schedule2       

Calendar Year Ended December 31,

 

2017

    3

2018

    14  

2019

    8  

2020

    8  

2021

    8  

 

  2   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

 

Credit Quality Allocation1   8/31/17     8/31/16  

AAA/Aaa

    11     14

AA/Aa

    48       54  

A

    24       24  

BBB/Baa

    11         7  

N/R

    6         1  

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

 

  *   Excludes short-term securities.

 

                
   ANNUAL REPORT    AUGUST 31, 2017    11


Trust Summary as of August 31, 2017    BlackRock Municipal Income Trust II

 

 

Trust Overview

BlackRock Municipal Income Trust II’s (BLE) (the “Trust”) investment objective is to provide current income exempt from regular U.S. federal income tax. The Trust seeks to achieve its investment objective by investing primarily in municipal bonds exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). The Trust invests, under normal market conditions, at least 80% of its managed assets in municipal bonds that are investment grade quality at the time of investment or, if unrated, determined to be of comparable quality by the investment adviser at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information

Symbol on NYSE American

   BLE

Initial Offering Date

   July 30, 2002

Yield on Closing Market Price as of August 31, 2017 ($15.45)1

   5.71%

Tax Equivalent Yield2

   10.09%

Current Monthly Distribution per Common Share3

   $0.0735

Current Annualized Distribution per Common Share3

   $0.8820

Economic Leverage as of August 31, 20174

   38%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The monthly distribution per Common Share, declared on October 2, 2017, was decreased to $0.0650 per share. The yield on closing market price, current monthly distribution per Common Share and current annualized distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and is subject to change in the future.

 

  4   

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

 

Returns for the 12 months ended August 31, 2017 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BLE1,2

    0.29%        (0.18)%  

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (0.46)%        (0.01)%  

 

  1  

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

  2  

The Trust’s premium to NAV widened during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

  3   

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

 

The municipal bond market generated mixed returns in the past 12 months. Municipal bonds moved lower early in the period due to a pick-up in new tax-exempt issuance and rising yields in the U.S. Treasury market. (Prices and yields move in opposite directions.) The weakness accelerated in November once Donald Trump’s election victory caused investors to factor in the possibility of faster economic growth and tighter Fed policy. As optimism for meaningful fiscal reforms subsequently waned and the economy failed to experience a significant acceleration, municipal bonds stabilized and retraced the majority of their post-election losses.

 

 

Portfolio income made the most significant contribution to performance during a period in which bond prices lost ground. However, the Trust’s use of leverage, while enhancing the level of income, also exacerbated the impact of declining bond prices.

 

 

The Trust’s position in high-quality, defensive, pre-refunded bonds was a positive contributor in the rising-rate environment. Positions in the tobacco sector, which outperformed in the period, also added value.

 

 

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Trust’s positioning had a positive effect on returns.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

                
12    ANNUAL REPORT    AUGUST 31, 2017   


     BlackRock Municipal Income Trust II

 

 

Market Price and Net Asset Value Per Share Summary

 

      8/31/17      8/31/16      Change      High      Low  

Market Price

   $ 15.45      $ 16.34        (5.45 )%     $ 16.38      $ 13.87  

Net Asset Value

   $ 15.17      $ 16.12        (5.89 )%     $ 16.12      $ 14.59  

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Total Investments*

 

Sector Allocation   8/31/17     8/31/16  

Transportation

    24     22

Utilities

    16       17  

County/City/Special District/School District

    14       13  

Health

    12       12  

State

    11       11  

Education

    8       10  

Corporate

    7         7  

Tobacco

    7         7  

Housing

    1         1  

For Trust compliance purposes, the Trust’s sector classifications refer to one or

more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2017

    7

2018

    5  

2019

    16  

2020

    13  

2021

    15  

 

  3  

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

Credit Quality Allocation1   8/31/17     8/31/16  

AAA/Aaa

    4       7

AA/Aa

    40       43  

A

    19       20  

BBB/Baa

    19       17  

BB/Ba

    7         4  

B

    2         2  

N/R2

    9         7  

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of August 31, 2017 and August 31, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% and 2%, respectively, of the Trust’s total investments.

 

 

  *   Excludes short-term securities.

 

                
   ANNUAL REPORT    AUGUST 31, 2017    13


Trust Summary as of August 31, 2017    BlackRock MuniHoldings Investment Quality Fund

 

 

Trust Overview

BlackRock MuniHoldings Investment Quality Fund’s (MFL) (the “Trust”) investment objective is to provide shareholders with current income exempt from U.S. federal income tax and to provide shareholders with the opportunity to own shares the value of which is exempt from Florida intangible personal property tax. The Trust seeks to achieve its investment objective by investing primarily in long-term, investment grade (as rated or, if unrated, determined to be of comparable quality by the investment adviser at the time of investment) municipal obligations exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). Under normal market conditions, the Trust invests at least 80% of its assets in municipal obligations with remaining maturities of one year or more at the time of investment. The Trust may invest directly in such securities or synthetically through the use of derivatives. Due to the repeal of the Florida intangible personal property tax, in September 2008, the Board gave approval to permit the Trust the flexibility to invest in municipal obligations regardless of geographic location since municipal obligations issued by any state or municipality that provides income exempt from regular U.S. federal income tax would now satisfy the foregoing objective and policy.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information

Symbol on NYSE

   MFL

Initial Offering Date

   September 26, 1997

Yield on Closing Market Price as of August 31, 2017 ($15.03)1

   5.71%

Tax Equivalent Yield2

   10.09%

Current Monthly Distribution per Common Share3

   $0.0715

Current Annualized Distribution per Common Share3

   $0.8580

Economic Leverage as of August 31, 20174

   41%

 

  1   

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2   

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3   

The distribution rate is not constant and is subject to change.

 

  4   

Represents VRDP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VRDP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the 12 months ended August 31, 2017 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MFL1, 2

    0.46%        (0.34)%  

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (0.46)%        (0.01)%  

 

  1  

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

  2  

The Trust moved from neither a premium nor a discount to NAV to a premium during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

  3   

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

 

The municipal bond market generated mixed returns in the past 12 months. Municipal bonds moved lower early in the period due to a pick-up in new tax-exempt issuance and rising yields in the U.S. Treasury market. (Prices and yields move in opposite directions.) The weakness accelerated in November once Donald Trump’s election victory caused investors to factor in the possibility of faster economic growth and tighter Fed policy. As optimism for meaningful fiscal reforms subsequently waned and the economy failed to experience a significant acceleration, municipal bonds stabilized and retraced the majority of their post-election losses.

 

 

Portfolio income made the most significant positive contribution during a period in which bond prices lost ground. However, the Trust’s use of leverage, while enhancing the level of income, also exacerbated the impact of declining bond prices.

 

 

The Trust’s exposure to longer-term bonds, which lagged the overall market, detracted from performance.

 

 

An underweight in lower investment-grade BBB rated bonds, which outpaced the overall market due to the combination of their superior income accrual and positive price performance in the second half of the reporting period, was an additional detractor.

 

 

The Trust’s cash position, though modest, contributed to performance at a time of falling prices.

 

 

The Trust’s position in high-quality, defensive, pre-refunded bonds was also a positive contributor in the rising-rate environment. Holdings in the transportation sector, which outperformed in the period, also added value.

 

                
14    ANNUAL REPORT    AUGUST 31, 2017   


     BlackRock MuniHoldings Investment Quality Fund

 

 

 

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Trust’s strategy had a positive effect on returns.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

Market Price and Net Asset Value Per Share Summary      

 

      8/31/17      8/31/16      Change      High      Low  

Market Price

     $15.03        $15.86        (5.23)%        $16.16        $13.52  

Net Asset Value

     $14.91        $15.86        (5.99)%        $15.86        $14.32  

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Total Investments*

 

Sector Allocation   8/31/17     8/31/16  

Transportation

    41     37

Utilities

    17       14  

Health

    15       12  

County/City/Special District/School District

    12       12  

State

    8       14  

Education

    5         9  

Tobacco

    1         1  

Housing

    1         1  

Corporate

          1  

 

  1   

Represents less than 1% of total investments.

For Trust compliance purposes, the Trust’s sector classifications refer to one or

more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2017

    1

2018

    9  

2019

    20  

2020

    4  

2021

    18  
  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

Credit Quality Allocation2   8/31/17     8/31/16  

AAA/Aaa

    9       6

AA/Aa

    59       65  

A

    26       25  

BBB/Baa

    4         4  

N/R

    2        

 

  2   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

 

  *   Excludes short-term securities.

 

                
   ANNUAL REPORT    AUGUST 31, 2017    15


Trust Summary as of August 31, 2017    BlackRock MuniVest Fund, Inc.

 

 

Trust Overview

BlackRock MuniVest Fund, Inc.’s (MVF) (the “Trust”) investment objective is to provide shareholders with as high a level of current income exempt from U.S. federal income taxes as is consistent with its investment policies and prudent investment management. The Trust seeks to achieve its investment objective by investing at least 80% of an aggregate of the Trust’s net assets (including proceeds from the issuance of any preferred shares) and the proceeds of any borrowing for investment purposes, in municipal obligations exempt from U.S. federal income taxes (except that the interest may be subject to the U.S. federal alternative minimum tax). Under normal market conditions, the Trust primarily invests in long term municipal obligations rated investment grade at the time of investment (or, if unrated, are considered by the Trust’s investment adviser to be of comparable quality at the time of investment) and in long term municipal obligations with maturities of more than ten years at the time of investment. The Trust may invest up to 20% of its total assets in securities rated below investment grade or deemed equivalent at the time of purchase. The Trust may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Trust’s investment objective will be achieved.

 

Trust Information      

Symbol on NYSE American

   MVF

Initial Offering Date

   September 29, 1988

Yield on Closing Market Price as of August 31, 2017 ($9.84)1

   5.61%

Tax Equivalent Yield2

   9.91%

Current Monthly Distribution per Common Share3

   $0.0460

Current Annualized Distribution per Common Share3

   $0.5520

Economic Leverage as of August 31, 20174

   38%

 

  1  

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

 

  2  

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 43.4%, which includes the 3.8% Medicare tax. Actual tax rates will vary based on income, exemptions and deductions. Lower taxes will result in lower tax equivalent yields.

 

  3  

The distribution rate is not constant and is subject to change.

 

  4  

Represents VMTP Shares and TOB Trusts as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to VMTP Shares and TOB Trusts, minus the sum of accrued liabilities. For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 5.

 

Performance

Returns for the 12 months ended August 31, 2017 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MVF1,2

    (3.10)%        (0.38)%  

Lipper General & Insured Municipal Debt Funds (Leveraged)3

    (0.46)%        (0.01)%  

 

  1  

All returns reflect reinvestment of dividends and/or distributions at actual reinvestment prices.

 

  2  

The Trust’s premium to NAV narrowed during the period, which accounts for the difference between performance based on market price and performance based on NAV.

 

  3   

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend as calculated by Lipper.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Past performance is not indicative of future results.

The following discussion relates to the Trust’s absolute performance based on NAV:

 

 

The municipal bond market generated mixed returns in the past 12 months. Municipal bonds moved lower early in the period due to a pick-up in new tax-exempt issuance and rising yields in the U.S. Treasury market. (Prices and yields move in opposite directions.) The weakness accelerated in November once Donald Trump’s election victory caused investors to factor in the possibility of faster economic growth and tighter Fed policy. As optimism for meaningful fiscal reforms subsequently waned and the economy failed to experience a significant acceleration, municipal bonds stabilized and retraced the majority of their post-election losses.

 

 

Portfolio income made the most significant positive contribution during a period in which bond prices lost ground. However, the Trust’s use of leverage, while enhancing the level of income, also exacerbated the impact of declining bond prices.

 

 

Reinvestment was a drag on results, as the proceeds of higher-yielding bonds that matured or were called needed to be reinvested at materially lower prevailing rates.

 

 

The Trust’s exposure to pre-refunded issues benefited performance, as their low durations enabled them to hold up better than longer-duration bonds at a time of rising yields. (Duration is a measure of interest rate sensitivity.) At the sector level, tax-backed (local) and education issues contributed to performance, while the school districts and health care sectors detracted.

 

 

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that Treasury yields rose, as prices fell, this aspect of the Trust’s positioning had a positive effect on returns.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

 

                
16    ANNUAL REPORT    AUGUST 31, 2017   


     BlackRock MuniVest Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary                              

 

      8/31/17      8/31/16      Change      High      Low  

Market Price

   $ 9.84      $ 10.77        (8.64 )%     $ 10.95      $ 9.35  

Net Asset Value

   $ 9.75      $ 10.38        (6.07 )%     $ 10.38      $ 9.48  

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Total Investments*

 

Sector Allocation   8/31/17     8/31/16  

Transportation

    26     24

Health

    23       26  

County/City/Special District/School District

    11       10  

Education

    9       10  

Corporate

    8         9  

State

    7         7  

Utilities

    7         6  

Housing

    6         4  

Tobacco

    3         4  

For Trust compliance purposes, the Trust’s sector classifications refer to one or

more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.

 

Call/Maturity Schedule3       

Calendar Year Ended December 31,

 

2017

    8

2018

    14  

2019

    19  

2020

    14  

2021

    5  

 

  3   

Scheduled maturity dates and/or bonds that are subject to potential calls by issuers over the next five years.

Credit Quality Allocation1   8/31/17     8/31/16  

AAA/Aaa

    7       9

AA/Aa

    39       40  

A

    16       23  

BBB/Baa

    21       14  

BB/Ba

    4         3  

B

    2         2  

N/R2

    11         9  

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings

 

  2   

The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors and individual investments. Using this approach, the investment adviser has deemed certain of these unrated securities as investment grade quality. As of August 31, 2017 and August 31, 2016, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% and 2%, respectively, of the Trust’s total investments.

 

 

  *   Excludes short-term securities.

 

                
   ANNUAL REPORT    AUGUST 31, 2017    17


Schedule of Investments August 31, 2017

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par
(000)
    Value  
Alabama — 0.6%             

Opelika Utilities Board, Refunding RB, 4.00%, 6/01/41

   $ 960     $ 1,014,778  
Arizona — 7.5%             

Arizona Health Facilities Authority, Refunding RB, Phoenix Children’s Hospital, Series A, 5.00%, 2/01/42

     2,200       2,346,894  

City of Phoenix Arizona IDA, Refunding RB, Basis Schools, Inc. Projects, 5.00%, 7/01/45 (a)

     460       475,934  

County of Pinal Arizona Electric District No.3, Refunding RB:

    

4.75%, 7/01/21 (b)

     680       774,282  

4.75%, 7/01/31

     3,070       3,384,184  

Salt Verde Financial Corp., RB, Senior:

    

5.00%, 12/01/32

     1,500       1,805,565  

5.00%, 12/01/37

     2,065       2,514,943  

University Medical Center Corp., RB, 6.50%, 7/01/19 (b)

     500       550,500  

University Medical Center Corp., Refunding RB, 6.00%, 7/01/21 (b)

     900       1,065,078  
    

 

 

 
               12,917,380  
Arkansas — 2.2%             

City of Benton Arkansas, RB, 4.00%, 6/01/39

     505       534,684  

City of Fort Smith Arkansas Water & Sewer Revenue, Refunding RB, 4.00%, 10/01/40

     840       883,227  

City of Little Rock Arkansas, RB, 4.00%, 7/01/41

     1,835       1,915,226  

County of Pulaski Arkansas Public Facilities Board, RB, 5.00%, 12/01/42

     465       520,028  
    

 

 

 
               3,853,165  
California — 25.9%             

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 5.88%, 8/15/31

     1,900       2,155,968  

California Infrastructure & Economic Development Bank, Refunding RB, Academy Motion Picture Arts and Sciences, Series A, 4.00%, 11/01/45

     1,550       1,608,280  

Carlsbad California Unified School District, GO, Election of 2006, Series B, 0.00%, 5/01/34 (c)

     1,000       1,114,360  

Chaffey Joint Union High School District, GO, Election of 2012, Series C, 5.25%, 8/01/47

     4,955       5,994,708  

City of San Jose California, Refunding ARB, Norman Y Mineta San Jose International Airport SJC, Series A-1, AMT, 5.75%, 3/01/34

     2,000       2,277,420  

County of Los Angeles Metropolitan Transportation Authority, Refunding RB, Series A, 5.00%, 7/01/38

     4,095       4,942,788  

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 0.00%, 8/01/34 (c)

     1,650       1,705,754  

Norwalk-La Mirada Unified School District, GO, Refunding, CAB, Election of 2002, Series E (AGC), 0.00%, 8/01/38 (d)

     8,000       3,617,920  
Municipal Bonds    Par
(000)
    Value  
California (continued)             

Palomar Community College District, GO, CAB, Election of 2006, Series B:

    

0.00%, 8/01/30 (d)

   $ 1,500     $ 1,029,000  

0.00%, 8/01/33 (d)

     4,000       1,647,120  

0.00%, 8/01/39 (c)

     2,605       2,468,680  

San Diego Community College District, GO, CAB, Election of 2002, 0.00%, 8/01/33 (c)

     2,800       3,321,220  

State of California, GO, Refunding:

    

5.00%, 10/01/39

     1,000       1,174,820  

Various Purposes, 5.00%, 2/01/38

     3,000       3,469,800  

State of California, GO, Various Purposes:

    

5.75%, 4/01/31

     2,000       2,153,720  

6.00%, 3/01/33

     1,000       1,123,510  

6.50%, 4/01/33

     1,950       2,127,684  

5.50%, 3/01/40

     2,350       2,599,593  
    

 

 

 
               44,532,345  
Colorado — 0.7%             

Colorado Health Facilities Authority, RB, Catholic Health Initiatives, Series D, 6.25%, 10/01/33

     1,070       1,120,836  
Connecticut — 0.3%             

Connecticut State Health & Educational Facility Authority, Refunding RB, Lawrence & Memorial Hospital, Series F, 5.00%, 7/01/36

     550       593,049  
Delaware — 1.4%             

County of Sussex Delaware, RB, NRG Energy, Inc., Indian River Power LLC Project, 6.00%, 10/01/40

     1,200       1,290,756  

Delaware Transportation Authority, RB, U.S. 301 Project, 5.00%, 6/01/55

     950       1,065,121  
    

 

 

 
               2,355,877  
District of Columbia — 2.0%             

Washington Metropolitan Area Transit Authority, RB, Series B, 5.00%, 7/01/37

     2,855       3,413,238  
Florida — 3.7%             

Capital Trust Agency Inc., RB, M/F Housing, The Gardens Apartment Project, Series A, 4.75%, 7/01/40

     600       627,510  

County of Miami-Dade Florida, RB, AMT, Seaport Department, Series B, 6.00%, 10/01/31

     4,135       4,934,047  

County of Orange Florida Health Facilities Authority, Refunding RB, Mayflower Retirement Center, 5.00%, 6/01/36

     125       132,795  

Stevens Plantation Community Development District, RB, Special Assessment, Series A, 7.10%, 5/01/35 (e)(f)

     860       601,596  
    

 

 

 
               6,295,948  
Hawaii — 0.3%             

State of Hawaii Department of Budget & Finance, Refunding RB, Special Purpose, Senior Living, Kahala Nui, 5.25%, 11/15/37

     400       439,616  
 
Portfolio Abbreviations

 

AGC    Assured Guarantee Corp.      EDA    Economic Development Authority    ISD    Independent School District
AGM    Assured Guaranty Municipal Corp.      EDC    Economic Development Corp.    LRB    Lease Revenue Bonds
AMBAC    American Municipal Bond Assurance Corp.      ERB    Education Revenue Bonds    M/F    Multi-Family
AMT    Alternative Minimum Tax (subject to)      GARB    General Airport Revenue Bonds    NPFGC    National Public Finance Guarantee Corp.
ARB    Airport Revenue Bonds      GO    General Obligation Bonds    PILOT    Payment in Lieu of Taxes
BAM    Build America Mutual Assurance Co.      GTD    Guaranteed    PSF    Permanent School Fund
BARB    Building Aid Revenue Bonds      HFA    Housing Finance Agency    PSF-GTD    Permanent School Fund Guaranteed
BHAC    Berkshire Hathaway Assurance Corp.      HRB    Housing Revenue Bonds    RB    Revenue Bonds
CAB    Capital Appreciation Bonds      IDA    Industrial Development Authority    S/F    Single-Family
COP    Certificates of Participation      IDB    Industrial Development Board      

 

See Notes to Financial Statements.      
                
18    ANNUAL REPORT    AUGUST 31, 2017   


Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

 

Municipal Bonds    Par
(000)
    Value  
Idaho — 0.3%             

Idaho Health Facilities Authority, RB, St. Lukes Health System Project, Series A, 5.00%, 3/01/39

   $ 500     $ 553,060  
Illinois — 7.2%             

City of Chicago Illinois, ARB, O’Hare International Airport, Senior Lien, Series D, 5.00%, 1/01/47

     505       577,382  

City of Chicago Illinois, Refunding ARB, O’Hare International Airport Passenger Facility Charge, Series B, AMT, 4.00%, 1/01/29

     1,600       1,677,120  

City of Chicago Illinois, Refunding GARB, O’Hare International Airport, Senior Lien:

    

Series B, 5.00%, 1/01/35

     2,000       2,350,140  

Series B, 5.00%, 1/01/41

     2,000       2,285,000  

Series C, 5.00%, 1/01/38

     1,000       1,148,840  

City of Chicago Illinois Midway International Airport, Refunding GARB, 2nd Lien, Series A, 5.00%, 1/01/41

     870       960,149  

City of Chicago Illinois Transit Authority, RB, Sales Tax Receipts, 5.25%, 12/01/40

     665       718,739  

Illinois Finance Authority, Refunding RB:

    

OSF Healthcare System, 6.00%, 5/15/39

     295       324,031  

Roosevelt University Project, 6.50%, 4/01/44

     1,000       1,063,050  

Railsplitter Tobacco Settlement Authority, RB, 6.00%, 6/01/28

     1,150       1,310,919  
    

 

 

 
               12,415,370  
Kansas — 2.6%             

County of Seward Kansas Unified School District No. 480 Liberal, GO, Refunding:

    

5.00%, 9/01/39

     720       850,983  

5.00%, 9/01/39

     3,280       3,650,115  
    

 

 

 
               4,501,098  
Kentucky — 3.6%             

County of Boyle Kentucky, Refunding RB, Centre College of Kentucky, 5.00%, 6/01/37

     2,500       2,865,200  

Kentucky Economic Development Finance Authority, RB, Catholic Health Initiatives, Series A, 5.38%, 1/01/40

     1,830       1,990,875  

Kentucky Public Transportation Infrastructure Authority, RB, Downtown Crossing Project, Convertible CAB, 1st Tier, Series C (c):

    

0.00%, 7/01/34

     500       447,185  

0.00%, 7/01/39

     830       726,582  

0.00%, 7/01/43

     270       236,350  
    

 

 

 
               6,266,192  
Louisiana — 1.5%             

City of Alexandria Louisiana Utilities, RB, 5.00%, 5/01/39

     860       958,797  

Louisiana Local Government Environmental Facilities & Community Development Authority, RB, Westlake Chemical Corp. Project, Series A-1, 6.50%, 11/01/35

     1,050       1,189,576  

Louisiana Public Facilities Authority, RB, Belle Chasse Educational Foundation Project, 6.50%, 5/01/31

     400       441,804  
    

 

 

 
               2,590,177  
Maryland — 0.2%             

County of Anne Arundel Maryland Consolidated, RB, Special Taxing District, Villages at Two Rivers Project:

    

5.13%, 7/01/36

     170       172,710  

5.25%, 7/01/44

     170       172,451  
    

 

 

 
               345,161  
Municipal Bonds    Par
(000)
    Value  
Massachusetts — 2.1%             

Massachusetts Development Finance Agency, RB, Emerson College Issue, Series A:

    

5.00%, 1/01/47

   $ 630     $ 706,797  

5.25%, 1/01/42

     565       650,897  

Massachusetts Development Finance Agency, Refunding RB, International Charter School, 5.00%, 4/15/40

     400       430,392  

Massachusetts Port Authority, Refunding ARB, Series A, AMT, 5.00%, 7/01/42

     1,500       1,740,600  
    

 

 

 
               3,528,686  
Michigan — 5.1%             

Michigan Finance Authority, RB, Detroit Water & Sewage Disposal System, Senior Lien, Series 2014 C-2, AMT, 5.00%, 7/01/44

     240       256,860  

Michigan Finance Authority, Refunding RB, Henry Ford Health System, 5.00%, 11/15/41

     5,560       6,271,903  

Michigan State Hospital Finance Authority, Refunding RB, Trinity Health Credit Group, Series C, 4.00%, 12/01/32

     2,100       2,183,748  

State of Michigan Building Authority, Refunding RB, Facilities Program, Series I, 6.25%, 10/15/38

     40       42,288  
    

 

 

 
               8,754,799  
Minnesota — 4.5%             

City of Maple Grove Minnesota, Refunding RB, Maple Grove Hospital, Corp., 4.00%, 5/01/37

     880       915,790  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC), 6.50%, 11/15/38

     3,890       4,125,695  

Minneapolis-St. Paul Metropolitan Airports Commission, Refunding ARB, Sub Series D, AMT, 5.00%, 1/01/41

     290       332,827  

Minnesota Higher Education Facilities Authority, RB:

    

Augsburg College, Series B, 4.25%, 5/01/40

     1,185       1,188,033  

College of St. Benedict, Series 8-K, 5.00%, 3/01/37

     660       742,051  

College of St. Benedict, Series 8-K, 4.00%, 3/01/43

     385       397,047  
    

 

 

 
               7,701,443  
Mississippi — 1.9%             

County of Warren Mississippi, RB, Gulf Opportunity Zone Bonds, International Paper Co. Project, Series A, 5.38%, 12/01/35

     400       441,032  

Mississippi Development Bank, RB, Special Obligation:

    

CAB, Hinds Community College District (AGM), 5.00%, 4/01/36

     845       914,848  

County of Jackson Limited Tax Note (AGC), 5.50%, 7/01/32

     1,750       1,873,287  
    

 

 

 
               3,229,167  
Missouri — 3.1%             

Missouri Development Finance Board, RB, Annual Appropriation Sewer System, Series B, 5.00%, 11/01/41

     900       964,863  

Missouri State Health & Educational Facilities Authority, RB:

    

A.T. Still University of Health Sciences, 5.25%, 10/01/31

     500       561,785  

A.T. Still University of Health Sciences, 4.25%, 10/01/32

     320       341,168  

A.T. Still University of Health Sciences, 5.00%, 10/01/39

     500       558,160  

Heartland Regional Medical Center, 4.13%, 2/15/43

     300       311,814  

University of Central Missouri, Series C-2, 5.00%, 10/01/34

     1,000       1,125,820  
 

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    AUGUST 31, 2017    19


Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

 

Municipal Bonds    Par
(000)
    Value  
Missouri (continued)             

Missouri State Health & Educational Facilities Authority, Refunding RB, Kansas City University of Medicine and Biosciences, Series A:

    

5.00%, 6/01/42

   $ 540     $ 620,833  

5.00%, 6/01/47

     770       881,095  
    

 

 

 
               5,365,538  
Montana — 0.7%             

County of Cascade Montana High School District A Great Falls, GO:

    

4.00%, 7/01/34

     570       627,906  

4.00%, 7/01/35

     550       604,885  
    

 

 

 
               1,232,791  
Nebraska — 1.6%             

Central Plains Energy Project Nebraska, RB, Gas Project No. 3, 5.00%, 9/01/42

     600       654,462  

County of Douglas Nebraska Hospital Authority No. 3, Refunding RB, Health Facilities Nebraska Methodist Health System, 5.00%, 11/01/45

     400       444,684  

Nebraska Public Power District, Refunding RB, Series A:

    

5.00%, 1/01/32

     250       283,758  

4.00%, 1/01/44

     400       410,556  

Public Power Generation Agency, Refunding RB, 3.13%, 1/01/35

     960       934,339  
    

 

 

 
               2,727,799  
Nevada — 1.2%             

City of Las Vegas Nevada, RB, Special Assessment, No. 809 Summerlin Area, 5.65%, 6/01/23

     1,025       1,018,706  

County of Clark Nevada, Refunding ARB, Department of Aviation, Subordinate Lien, Series A-2, 4.25%, 7/01/36

     1,000       1,069,020  
    

 

 

 
               2,087,726  
New Jersey — 13.9%             

New Jersey EDA, RB:

    

Continental Airlines, Inc. Project, AMT, Series B, 5.63%, 11/15/30

     660       744,975  

Goethals Bridge Replacement Project (AGM), AMT, 5.13%, 7/01/42

     200       220,038  

School Facilities Construction, Series UU, 5.00%, 6/15/40

     425       450,802  

New Jersey EDA, Refunding RB:

    

Series B, 5.50%, 6/15/30

     1,250       1,453,975  

Special Assessment, Kapkowski Road Landfill Project, 6.50%, 4/01/28

     7,500       8,841,750  

New Jersey Educational Facilities Authority, Refunding RB, College of New Jersey, Series G, 3.50%, 7/01/31

     900       920,556  

New Jersey Health Care Facilities Financing Authority, Refunding RB, St. Barnabas Health Care System, Series A:

    

4.63%, 7/01/21 (b)

     510       576,473  

5.63%, 7/01/21 (b)

     1,700       1,985,855  

5.00%, 7/01/25

     500       570,260  

New Jersey Housing & Mortgage Finance Agency, RB, S/F Housing, Series AA, 6.50%, 10/01/38

     15       15,072  

New Jersey State Turnpike Authority, RB, Series E, 5.00%, 1/01/45

     1,860       2,134,815  

New Jersey Transportation Trust Fund Authority, RB:

    

CAB, Transportation System, Series A, 0.00%, 12/15/35 (d)

     1,000       430,640  

Transportation Program, Series AA, 5.00%, 6/15/45

     900       962,154  

Transportation Program, Series AA, 5.00%, 6/15/46

     400       427,348  
Municipal Bonds    Par
(000)
    Value  
New Jersey (continued)             

New Jersey Turnpike Authority, Refunding RB, Series B, 5.00%, 1/01/40

   $ 1,000     $ 1,177,510  

Tobacco Settlement Financing Corp., Refunding RB, Series 1A, 5.00%, 6/01/41

     3,000       2,899,020  
    

 

 

 
               23,811,243  
New Mexico — 1.1%             

New Mexico Finance Authority, RB, Senior Lien, Series A:

    

3.25%, 6/01/33

     545       563,426  

3.25%, 6/01/34

     840       860,597  

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 8/01/44

     450       511,295  
    

 

 

 
               1,935,318  
New York — 6.0%             

City of New York New York Industrial Development Agency, RB, PILOT, Queens Baseball Stadium (AMBAC), 5.00%, 1/01/39

     925       939,670  

Counties of New York Tobacco Trust IV, Refunding RB, Settlement Pass-Through Turbo, Series A, 6.25%, 6/01/41 (a)

     900       925,533  

Counties of New York Tobacco Trust VI, Refunding RB, Settlement Pass-Through Turbo, Series C, 4.00%, 6/01/51

     500       468,655  

Erie Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed, Series A, 5.00%, 6/01/45

     1,160       1,140,930  

Hudson Yards Infrastructure Corp., Refunding RB, Series A, 5.00%, 2/15/37

     2,190       2,599,793  

New York Liberty Development Corp., Refunding RB:

    

2nd Priority, Bank of America Tower at One Bryant Park Project, Class 3, 6.38%, 7/15/49

     800       865,072  

3 World Trade Center Project, Class 2, 5.38%, 11/15/40 (a)

     405       449,433  

New York Transportation Development Corp., ARB, LaGuardia Airport Terminal B Redevelopment Project, Series A, AMT, 5.00%, 7/01/41

     1,000       1,104,490  

New York Transportation Development Corp., Refunding RB, American Airlines, Inc., AMT, 5.00%, 8/01/31

     1,295       1,383,435  

Niagara Area Development Corp., Refunding RB, Solid Waste Disposal Facility, Covanta Energy Project, Series A, AMT, 5.25%, 11/01/42 (a)

     400       400,816  
    

 

 

 
               10,277,827  
North Dakota — 0.3%             

County of Burleigh North Dakota, Refunding RB, St. Alexius Medical Center Project, Series A, 5.00%, 7/01/21 (b)

     480       548,904  
Ohio — 2.4%             

Buckeye Tobacco Settlement Financing Authority, RB, Asset-Backed, Senior Turbo Term, Series A-2, 6.50%, 6/01/47

     2,000       1,990,080  

City of Dayton Ohio Airport Revenue, Refunding ARB, James M. Cox Dayton International Airport, Series A (AGM), AMT, 4.00%, 12/01/32

     2,000       2,076,160  
    

 

 

 
               4,066,240  
Oklahoma — 1.8%             

Norman Oklahoma Regional Hospital Authority, Refunding RB, 4.00%, 9/01/37

     1,275       1,312,918  

Oklahoma City Public Property Authority, Refunding RB, 5.00%, 10/01/39

     720       819,893  

Oklahoma Development Finance Authority, RB, Provident Oklahoma Education Resources, Inc., Cross Village Student Housing Project, Series A, 5.25%, 8/01/57

     820       903,911  
    

 

 

 
               3,036,722  
 

 

See Notes to Financial Statements.      
                
20    ANNUAL REPORT    AUGUST 31, 2017   


Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

 

Municipal Bonds    Par
(000)
    Value  
Oregon — 1.6%             

County of Lane Oregon School District No. 19 Springfield, GO, CAB, Series B, 0.00%, 6/15/40 (d)

   $ 1,000     $ 419,060  

Oregon Health & Science University, RB, Series A, 4.00%, 7/01/37

     675       720,812  

State of Oregon State Facilities Authority, Refunding RB, University of Portland Project, Series A, 5.00%, 4/01/45

     1,475       1,665,187  
    

 

 

 
               2,805,059  
Pennsylvania — 7.8%             

County of Allegheny Pennsylvania IDA, Refunding RB, U.S. Steel Corp. Project, 6.55%, 12/01/27

     1,695       1,772,207  

Delaware River Port Authority, RB:

    

4.50%, 1/01/32

     1,500       1,667,235  

Series D (AGM), 5.00%, 1/01/40

     2,600       2,817,204  

Pennsylvania Turnpike Commission, RB, Sub-Series B-1, 5.00%, 6/01/42

     5,000       5,667,800  

Pottsville Hospital Authority, Refunding RB, Lehigh Valley Health Network, Series B, 5.00%, 7/01/45

     1,250       1,402,375  
    

 

 

 
               13,326,821  
Puerto Rico — 1.1%             

Children’s Trust Fund, Refunding RB, Tobacco Settlement Asset-Backed Bonds:

    

5.50%, 5/15/39

     940       944,606  

5.63%, 5/15/43

     890       895,474  
    

 

 

 
               1,840,080  
Rhode Island — 4.5%             

Rhode Island Health & Educational Building Corp., Refunding RB, Series A (AGM), 3.75%, 5/15/32

     1,155       1,206,536  

Rhode Island Turnpike & Bridge Authority, Refunding RB, Series A, 5.00%, 10/01/40

     1,540       1,774,034  

State of Rhode Island, COP, School for the Deaf Project, Series C (AGC), 5.38%, 4/01/19 (b)

     900       963,684  

Tobacco Settlement Financing Corp., Refunding RB:

    

Series A, 5.00%, 6/01/40

     1,000       1,085,440  

Series B, 4.50%, 6/01/45

     2,730       2,761,914  
    

 

 

 
               7,791,608  
Tennessee — 2.9%             

Chattanooga Health Educational & Housing Facility Board, RB, Catholic Health Initiatives, Series A, 5.25%, 1/01/40

     1,950       2,074,585  

County of Chattanooga-Hamilton Tennessee Hospital Authority, Refunding RB, Series A, 5.00%, 10/01/44

     875       954,966  

County of Memphis-Shelby Tennessee Sports Authority, Inc., Refunding RB, Memphis Arena Project, Series A, 5.38%, 11/01/28

     275       300,303  

Johnson City Health & Educational Facilities Board, RB, Mountain States Health, Series A, 5.00%, 8/15/42

     800       859,040  

Metropolitan Government of Nashville & Davidson County Health & Educational Facilities Board, RB, Vanderbilt University Medical Center, Series A, 5.00%, 7/01/40

     675       765,045  
    

 

 

 
               4,953,939  
Texas — 8.7%             

County of Harris Texas Houston Sports Authority, Refunding RB, CAB, Senior Lien, Series G (NPFGC), 0.00%, 11/15/41 (d)

     11,690       3,652,190  

County of Matagorda Texas Navigation District No. 1, Refunding RB, Central Power & Light Co., Project, Series A, 6.30%, 11/01/29

     1,500       1,663,395  

County of Midland Texas Fresh Water Supply District No. 1, RB, CAB, City of Midland Project, Series A, 0.00%, 9/15/38 (d)

     10,760       4,454,640  
Municipal Bonds    Par
(000)
    Value  
Texas (continued)             

Leander Independent School District, GO, Refunding, CAB, Series D (PSF-GTD) (d):

    

0.00%, 8/15/24 (b)

   $ 370     $ 196,196  

0.00%, 8/15/35

     3,630       1,774,525  

Red River Texas Education Financing Corp., RB, Texas Christian University Project, 5.25%, 3/15/38

     760       869,159  

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, LBJ Infrastructure Group LLC, 7.00%, 6/30/40

     2,000       2,267,580  
    

 

 

 
               14,877,685  
Utah — 0.2%             

Utah State Charter School Finance Authority, Refunding RB, Mountainville Academy, 4.00%, 4/15/42

     400       411,956  
Vermont — 0.8%             

University of Vermont & State Agricultural College, Refunding RB, 4.00%, 10/01/37

     500       528,735  

Vermont Student Assistance Corp., RB, Series A, 4.13%, 6/15/30

     810       852,444  
    

 

 

 
               1,381,179  
Virginia — 0.8%             

Ballston Quarter Community Development Authority, Tax Allocation Bonds, Series A, 5.38%, 3/01/36

     490       494,415  

Virginia Small Business Financing Authority, RB, Senior Lien, Elizabeth River Crossings OpCo LLC Project, AMT, 6.00%, 1/01/37

     725       824,593  
    

 

 

 
               1,319,008  
Wisconsin — 0.6%             

Public Finance Authority, Refunding RB, National Gypsum Co., AMT, 4.00%, 8/01/35

     280       272,955  

WPPI Energy Power Supply Systems, Refunding RB, Series A, 5.00%, 7/01/37

     665       752,740  
    

 

 

 
               1,025,695  
Total Municipal Bonds — 134.7%              231,244,523  
    
   
Municipal Bonds Transferred to
Tender Option Bond Trusts (g)
              
Colorado — 2.2%             

Colorado Health Facilities Authority, RB, Catholic Health, Series C-7 (AGM), 5.00%, 5/01/18 (b)

     3,750       3,855,413  
Connecticut — 1.7%             

Connecticut State Health & Educational Facility Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/45

     2,611       2,980,034  
Georgia — 2.7%             

City of Atlanta Georgia Water & Wastewater Revenue, Refunding RB, 5.00%, 11/01/43

     4,003       4,639,592  
New Jersey — 0.9%             

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B, 5.25%, 6/15/36 (h)

     1,400       1,480,883  
New York — 12.8%             

City of New York New York, GO, Fiscal 2015, Series B, 4.00%, 8/01/32

     3,990       4,370,566  

City of New York New York Municipal Water Finance Authority, RB, Water & Sewer System, Fiscal 2009, Series A:

    

5.75%, 6/15/18 (b)

     104       107,659  

5.75%, 6/15/40

     346       360,061  
 

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    AUGUST 31, 2017    21


Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

 

Municipal Bonds Transferred to
Tender Option Bond Trusts (g)
   Par
(000)
    Value  
New York (continued)             

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution:

    

Fiscal 2013, Series CC, 5.00%, 6/15/47

   $ 6,000     $ 6,873,707  

Series FF-2, 5.50%, 6/15/40

     405       437,837  

Hudson Yards Infrastructure Corp., RB, Fiscal 2012, Series A, 5.75%, 2/15/47 (h)

     2,500       2,888,705  

New York Liberty Development Corp., RB, 1 World Trade Center Port Authority Consolidated Bonds, 5.25%, 12/15/43

     2,505       2,852,232  

State of New York Dormitory Authority, RB, State University Dormitory Facilities, New York University, Series A, 5.00%, 7/01/18 (b)

     2,199       2,277,220  

State of New York Thruway Authority, Refunding RB, Transportation, Personal Income Tax, Series A, 5.00%, 3/15/31

     1,560       1,786,153  
    

 

 

 
               21,954,140  
Ohio — 1.9%             

County of Montgomery Ohio, RB, Catholic Health, Series C-1 (AGM), 5.00%, 4/28/18 (b)

     1,260       1,294,726  

Ohio Higher Educational Facility Commission, RB, Cleveland Clinic Health, Series A, 5.25%, 1/01/18 (b)

     2,000       2,028,800  
    

 

 

 
               3,323,526  
Municipal Bonds Transferred to
Tender Option Bond Trusts (g)
   Par
(000)
    Value  
Texas — 1.1%             

City of San Antonio Texas Public Service Board, RB, Electric & Gas Systems, Junior Lien, 5.00%, 2/01/43

   $ 1,580     $ 1,798,656  
Total Municipal Bonds Transferred to
Tender Option Bond Trusts — 23.3%
             40,032,244  
Total Long-Term Investments
(Cost — $250,194,591) — 158.0%
             271,276,767  
    
                  
Short-Term Securities    Shares         

BlackRock Liquidity Funds, MuniCash, Institutional Class, 0.62% (i)(j)

     136,442       136,483  
Total Short-Term Securities
(Cost — 136,483) — 0.1%
             136,483  

Total Investments (Cost — $250,331,074) — 158.1%

 

    271,413,250  

Other Assets Less Liabilities — 1.5%

 

    2,642,663  

Liability for TOB Trust Certificates, Including Interest
Expense and Fees Payable — (13.1)%

 

    (22,451,244

VMTP Shares at Liquidation Value — (46.5)%

 

    (79,900,000
    

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 171,704,669  
    

 

 

 

 

 
Notes to Schedule of investments

 

(a)   Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(b)   U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par.

 

(c)   Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

 

(d)   Zero-coupon bond.

 

(e)   Non-income producing security.

 

(f)   Issuer filed for bankruptcy and/or is in default.

 

(g)   Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Trust. These bonds serve as collateral in a secured borrowing. See Note 4 of the Notes to Financial Statements for details.

 

(h)   All or a portion of security is subject to a recourse agreement. The aggregate maximum potential amount the Trust could ultimately be required to pay under the agreements, which expire between February 15, 2019 to June 15, 2019, is $2,411,645. See Note 4 of the Notes to Financial Statements for details.

 

(i)   Annualized 7-day yield as of period end.

 

(j)   During the year ended August 31, 2017, investments in issuers considered to be an affiliate of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated   Shares Held
at August 31,
2016
    Net
Activity
    Shares Held
at August 31,
2017
    Value
at August 31,
2017
    Income     Net
Realized Gain1
    Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

    2,139,553       (2,003,111     136,442     $ 136,483     $ 13,328     $ 2,430        

 

  1   

Includes net capital gain distributions.

 

See Notes to Financial Statements.      
                
22    ANNUAL REPORT    AUGUST 31, 2017   


Schedule of Investments (continued)

  

BlackRock Municipal Bond Trust (BBK)

 

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

Description   Number of
Contracts
       Expiration Date      Notional
Amount
(000)
    Value/
Unrealized
Appreciation
(Depreciation)
 

Short Contracts

               

5-Year U.S. Treasury Note

    (21      December 2017      $ 2,489       $ (3,870

10-Year U.S. Treasury Note

    (53      December 2017      $ 6,730         (9,278

Long U.S. Treasury Bond

    (72      December 2017      $ 11,239         (50,614

Ultra Long U.S. Treasury Bond

    (15      December 2017      $ 2,536               (11,712
Total       $ (75,474
   

 

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:

 

Liabilities — Derivative Financial Instruments     Commodity
Contracts
    Credit
Contracts
    Equity
Contracts
    Foreign
Currency
Exchange
Contracts
    Interest
Rate
Contracts
    Other
Contracts
    Total  

Futures contracts

    Net unrealized  depreciation 1                            $ 75,474           $ 75,474  

 

  1  

Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

For the year ended August 31, 2017, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

Net Realized Gain (Loss) from:   Commodity
Contracts
    Credit
Contracts
    Equity
Contracts
    Foreign
Currency
Exchange
Contracts
    Interest
Rate
Contracts
    Other
Contracts
    Total  

Futures contracts

                          $ 642,731           $ 642,731  
Net Change in Unrealized Appreciation (Depreciation) from:                                                 

Futures contracts

                          $ (89,339         $ (89,339

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:  

Average notional value of contracts – long

  $ 241,875 1 

Average notional value of contracts – short

  $ 21,966,457  

 

  1   

Actual amounts for the period are shown due to limited outstanding derivative financial instruments as of each quarter end.

For more information about the Trust’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

     Level 1        Level 2        Level 3     Total  

Assets:

             
Investments:              

Long-Term Investments1

           $ 271,276,767              $ 271,276,767  

Short-Term Securities

  $ 136,483                         136,483  
 

 

 

      

 

 

      

 

 

   

 

 

 

Total

  $ 136,483        $ 271,276,767              $ 271,413,250  
 

 

 

      

 

 

      

 

 

   

 

 

 
             
Derivative Financial Instruments 2                                      

Liabilities:

             

Interest rate contracts

  $ (75,474                     $ (75,474

1   See above Schedule of Investments for values in each state or political subdivision.

 

2   Derivative financial instruments are futures contracts which are valued at the unrealized appreciation (depreciation) on the instrument.

    

    

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    AUGUST 31, 2017    23


Schedule of Investments (concluded)

  

BlackRock Municipal Bond Trust (BBK)

 

 

The Trust may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:  
     Level 1        Level 2        Level 3     Total  

Liabilities:

             

TOB Trust Certificates

           $ (22,403,733            $ (22,403,733

VMTP Shares at Liquidation Value

             (79,900,000              (79,900,000
 

 

 

      

 

 

      

 

 

   

 

 

 

Total

           $ (102,303,733            $ (102,303,733
 

 

 

      

 

 

      

 

 

   

 

 

 

During the year ended August 31, 2017, there were no transfers between levels.

 

See Notes to Financial Statements.      
                
24    ANNUAL REPORT    AUGUST 31, 2017   


Schedule of Investments August 31, 2017

  

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)

 

Municipal Bonds    Par
(000)
    Value  
Alabama — 1.9%             

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC) (a):

    

6.00%, 6/01/19

   $ 1,000     $ 1,088,090  

6.13%, 6/01/19

     1,000       1,090,260  

City of Selma Alabama IDB, RB, Gulf Opportunity Zone, International Paper Co. Project, Series A, 5.38%, 12/01/35

     335       372,704  
    

 

 

 
               2,551,054  
California — 15.0%             

California Educational Facilities Authority, RB, University of Southern California, Series A, 5.25%, 10/01/18 (a)

     2,005       2,102,483  

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 6.00%, 8/15/42

     1,120       1,272,141  

City of Los Angeles California Department of Water & Power, RB, Power System, Sub-Series A-1, 5.25%, 7/01/38

     1,175       1,217,171  

County of Sacramento California, ARB, Senior Series A (AGC), 5.50%, 7/01/18 (a)

     1,400       1,455,482  

Kern Community College District, GO, Safety, Repair & Improvement, Series C, 5.50%, 11/01/33

     1,025       1,258,157  

Los Angeles Municipal Improvement Corp., Refunding LRB, Real Property, Series B (AGC), 5.50%, 4/01/19 (a)

     3,210       3,447,957  

Redondo Beach Unified School District, GO, Election of 2008, Series E, 5.50%, 8/01/21 (a)

     1,000       1,173,460  

San Diego Public Facilities Financing Authority Water, Refunding RB, Series B (AGC), 5.38%, 8/01/19 (a)

     1,125       1,222,132  

State of California, GO, Refunding Various Purposes, 4.00%, 11/01/36 (b)

     490       531,645  

State of California Public Works Board, LRB, Various Capital Projects, Series I:

    

5.50%, 11/01/30

     1,000       1,210,470  

5.50%, 11/01/31

     1,500       1,811,820  

State of California Public Works Board, RB, Department of Corrections & Rehabilitation, Series F, 5.25%, 9/01/33

     505       598,617  

Township of Washington California Health Care District, GO, Election of 2004, Series B, 5.50%, 8/01/40

     380       464,136  

University of California, Refunding RB, The Regents of Medical Center, Series J, 5.25%, 5/15/38

     2,355       2,776,828  
    

 

 

 
               20,542,499  
Colorado — 3.9%             

City & County of Denver Colorado Airport System, ARB, Sub-System, Series B, 5.25%, 11/15/32

     3,250       3,802,175  

Colorado Health Facilities Authority, RB, Hospital, NCMC, Inc. Project, Series B (AGM), 6.00%, 5/15/19 (a)

     1,425       1,547,977  
    

 

 

 
               5,350,152  
Florida — 9.3%             

City of Jacksonville Florida, RB, Series A, 5.25%, 10/01/31

     4,525       5,212,574  

City of Jacksonville Florida, Refunding RB, Series A, 5.25%, 10/01/33

     205       243,109  

County of Miami-Dade Florida, RB, Seaport Department, Series A, 6.00%, 10/01/38

     4,215       5,084,891  

County of Orange Florida Health Facilities Authority, Refunding RB, Presbyterian Retirement Communities Project, 5.00%, 8/01/41

     1,305       1,423,690  

Reedy Creek Florida Improvement District, GO, Series A, 5.25%, 6/01/32

     745       878,534  
    

 

 

 
               12,842,798  
Municipal Bonds    Par
(000)
    Value  
Georgia — 2.1%             

City of Atlanta Georgia Department of Aviation, Refunding GARB, Series C, 6.00%, 1/01/30

   $ 2,500     $ 2,906,075  
Illinois — 22.3%             

City of Chicago Illinois, Refunding GARB, O’Hare International Airport, 3rd Lien, Series C (AGC), 5.25%, 1/01/30

     1,000       1,080,850  

City of Chicago Illinois O’Hare International Airport, ARB, 3rd Lien, Series A:

    

5.75%, 1/01/21 (a)

     690       795,453  

5.75%, 1/01/39

     135       153,206  

City of Chicago Illinois O’Hare International Airport, GARB, 3rd Lien, Series C, 6.50%, 1/01/21 (a)

     3,740       4,403,214  

City of Chicago Illinois Transit Authority, RB:

    

Federal Transit Administration, Section 5309, Series A (AGC), 6.00%, 12/01/18 (a)

     1,300       1,383,447  

Sales Tax Receipts, 5.25%, 12/01/36

     3,185       3,460,853  

Sales Tax Receipts, 5.25%, 12/01/40

     3,000       3,242,430  

City of Chicago Illinois Transit Authority, Refunding RB, Federal Transit Administration, Section 5309 (AGM), 5.00%, 6/01/28

     3,000       3,184,590  

City of Chicago Illinois Wastewater Transmission, RB, 2nd Lien, 5.00%, 1/01/42

     1,480       1,561,770  

County of Cook Illinois Community College District No. 508, GO, City College of Chicago:

    

5.50%, 12/01/38

     855       920,835  

5.25%, 12/01/43

     1,430       1,506,877  

Illinois Finance Authority, RB, Carle Foundation, Series A, 6.00%, 8/15/41

     1,885       2,154,140  

Railsplitter Tobacco Settlement Authority, RB:

    

5.50%, 6/01/23

     915       1,043,137  

6.00%, 6/01/28

     260       296,382  

State of Illinois, GO:

    

5.25%, 2/01/31

     610       658,483  

5.25%, 2/01/32

     1,000       1,076,540  

5.50%, 7/01/33

     1,000       1,083,250  

5.50%, 7/01/38

     270       291,600  

State of Illinois Toll Highway Authority, Refunding RB, Series B, 5.50%, 1/01/18 (a)

     2,250       2,285,482  
    

 

 

 
               30,582,539  
Indiana — 1.8%             

Indianapolis Local Public Improvement Bond Bank, Refunding RB, Waterworks Project, Series A (AGC):

    

5.50%, 1/01/19 (a)

     470       499,361  

5.50%, 1/01/38

     1,945       2,051,002  
    

 

 

 
               2,550,363  
Kentucky — 0.7%             

Kentucky State Property & Building Commission, Refunding RB, Project No. 93, (AGC) (a):

    

5.25%, 2/01/19

     800       849,024  

5.25%, 2/01/19

     100       105,964  
    

 

 

 
               954,988  
Louisiana — 1.0%             

City of New Orleans Louisiana Aviation Board, Refunding GARB, Restructuring (AGC) (a):

    

Series A-1, 6.00%, 1/01/19

     375       400,492  

Series A-2, 6.00%, 1/01/19

     150       160,197  

Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, Series A, 5.50%, 5/15/29

     790       834,430  
    

 

 

 
               1,395,119  
Massachusetts — 1.5%             

Massachusetts Development Finance Agency, RB, Emerson College Issue, Series A, 5.00%, 1/01/47

     695       779,720  
 

 

See Notes to Financial Statements.      
                
   ANNUAL REPORT    AUGUST 31, 2017    25


Schedule of Investments (continued)

  

BlackRock Municipal Income Investment Quality Trust (BAF)

 

Municipal Bonds    Par
(000)
    Value  
Massachusetts (continued)             

Massachusetts Development Finance Agency, Refunding RB, Series A:

    

Emerson College, 5.00%, 1/01/36 (b)

   $ 395     $ 458,066  

Emerson College, 5.00%, 1/01/37 (b)

     215       248,712  

Emmanuel College Issue, 5.00%, 10/01/35

     500       574,695  
    

 

 

 
               2,061,193  
Michigan — 2.3%             

City of Detroit Michigan Water Supply System Revenue, RB, 2nd Lien, Series B (AGM):

    

6.25%, 7/01/19 (a)

     1,695       1,860,144  

6.25%, 7/01/36

     5       5,408  

Royal Oak Michigan Hospital Finance Authority, Refunding RB, William Beaumont Hospital, Series V, 8.25%, 9/01/18 (a)

     1,205       1,294,531  
    

 

 

 
               3,160,083  
Minnesota — 2.8%             

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series B (AGC):

    

6.50%, 11/15/18 (a)

     565       603,250  

6.50%, 11/15/38

     3,115       3,303,738  
    

 

 

 
               3,906,988  
Mississippi — 1.8%             

Mississippi Development Bank, RB, Jackson Water & Sewer System Project (AGM), 6.88%, 12/01/40

     1,000       1,284,290  

Mississippi State University Educational Building Corp., Refunding RB, Mississippi State University Improvement Project, 5.25%, 8/01/38

     1,000       1,171,950  
    

 

 

 
               2,456,240  
Montana — 0.5%             

Missoula County Elementary School District No. 1, GO, School Building, 4.00%, 7/01/37 (b)

     250       271,515  

Missoula High School District No. 1, GO, School Building (b):

    

4.00%, 7/01/35

     205       223,735  

4.00%, 7/01/36

     125       135,867  
    

 

 

 
               631,117  
Nevada — 3.4%             

County of Clark Nevada, GO, Limited Tax, 5.00%, 6/01/18 (a)

     2,410       2,487,482  

County of Clark Nevada Water Reclamation District, GO, Series A, 5.25%, 7/01/19 (a)

     2,000       2,158,960  
    

 

 

 
               4,646,442  
New Jersey — 4.9%             

New Jersey Health Care Facilities Financing Authority, RB, Virtua Health, Series A (AGC), 5.50%, 7/01/38

     1,300       1,398,085  

New Jersey Housing & Mortgage Finance Agency, RB, S/F Housing, Series CC, 5.25%, 10/01/29

     1,480       1,531,253  

New Jersey Transportation Trust Fund Authority, RB, Transportation System:

    

Series A (AGC), 5.50%, 12/15/38

     2,000       2,089,700  

Series AA, 5.50%, 6/15/39

     1,620       1,771,486  
    

 

 

 
               6,790,524  
New York — 4.4%             

City of New York New York Transitional Finance Authority, BARB, Fiscal 2009, Series S-4 (AGC), 5.50%, 1/15/29

     2,465       2,618,791  

Metropolitan Transportation Authority, RB:

    

Series A, 5.25%, 11/15/38

     1,565       1,797,872  

Series A-1, 5.25%, 11/15/39

     1,000       1,180,430  
Municipal Bonds    Par
(000)
    Value  
New York (continued)             

Westchester Tobacco Asset Securitization, Refunding RB, Tobacco Settlement Bonds, Sub-Series C, 4.00%, 6/01/42

   $ 430     $ 430,598  
    

 

 

 
               6,027,691  
Ohio — 0.4%             

State of Ohio Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1, 5.25%, 2/15/31

     470       557,655  
Oklahoma — 1.2%             

Norman Regional Hospital Authority, Refunding RB, 5.00%, 9/01/37

     490       548,334  

Oklahoma Development Finance Authority, RB, Provident Oklahoma Education Resources, Inc., Cross Village Student Housing Project, Series A, 5.25%, 8/01/57

     990       1,091,307  
    

 

 

 
               1,639,641  
Oregon — 0.2%             

County of Clackamas Oregon School District No. 12 North Clackamas, GO, CAB, Series A, 0.00%, 6/15/38 (c)

     510       221,070  
Pennsylvania — 3.1%             

Pennsylvania Housing Finance Agency, RB, S/F Housing Mortgage, Series 123-B, 4.00%, 10/01/42

     535       556,068  

Pennsylvania Turnpike Commission, RB, Series C, 5.00%, 12/01/43

     1,720       1,929,221  

Township of Bristol Pennsylvania School District, GO, 5.25%, 6/01/37

     1,500       1,725,660  
    

 

 

 
               4,210,949  
South Carolina — 2.8%             

County of Charleston South Carolina, RB, Special Source, 5.25%, 12/01/38

     1,525       1,801,025  

State of South Carolina Public Service Authority, RB, Series E, 5.00%, 12/01/48

     275       300,809  

State of South Carolina Public Service Authority, Refunding RB, Series E, 5.25%, 12/01/55

     1,490       1,702,384  
    

 

 

 
               3,804,218  
Texas — 12.8%             

Austin Community College District Public Facility Corp., RB, Educational Facilities Project, Round Rock Campus, 5.25%, 8/01/18 (a)

     1,000       1,040,400  

City of Beaumont Texas, GO, Certificates of Obligation, 5.25%, 3/01/37

     980       1,137,898  

City of Frisco Texas ISD, GO, School Building (AGC), 5.50%, 8/15/41

     3,365       3,637,632  

City of Houston Texas Combined Utility System Revenue, Refunding RB, Combined 1st Lien, Series A (AGC):

    

5.38%, 5/15/19 (a)

     945       1,016,914  

6.00%, 5/15/19 (a)

     2,465       2,678,592  

6.00%, 5/15/19 (a)

     2,100       2,281,965  

6.00%, 11/15/35

     135       146,823  

6.00%, 11/15/36

     115       125,072  

5.38%, 11/15/38

     55       58,721  

County of Tarrant Texas Cultural Education Facilities Finance Corp., Refunding RB, Christus Health, Series A (AGC):

    

6.50%, 1/01/19 (a)

     205       220,150  

6.50%, 7/01/37

     795       843,551  

Lower Colorado River Authority, Refunding RB, 5.50%, 5/15/33

     1,000       1,188,990  
 

 

See Notes to Financial Statements.      
                
26    ANNUAL REPORT    AUGUST 31, 2017   


Schedule of Investments (continued)

  

BlackRock Municipal Income Investment Quality Trust (BAF)

 

Municipal Bonds    Par
(000)
    Value  
Texas (continued)             

North Texas Tollway Authority, Refunding RB, 1st Tier:

    

(AGM), 6.00%, 1/01/43

   $ 1,000     $ 1,141,890  

Series K-1 (AGC), 5.75%, 1/01/19 (a)

     1,500       1,596,600  

Red River Texas Education Financing Corp., RB, Texas Christian University Project, 5.25%, 3/15/38

     440       503,197  
    

 

 

 
               17,618,395  
Virginia — 1.1%             

City of Lexington Virginia IDA, RB, Washington & Lee University, 5.00%, 1/01/43

     370       416,994  

State of Virginia Public School Authority, RB, Fluvanna County School Financing, 6.50%, 12/01/18 (a)

     1,000       1,070,950  
    

 

 

 
               1,487,944  
Washington — 1.5%             

City of Seattle Washington Municipal Light & Power, Refunding RB, Series A, 5.25%, 2/01/36

     1,025       1,150,440  

State of Washington, GO, Various Purposes, Series B, 5.25%, 2/01/36

     795       897,388  
    

 

 

 
               2,047,828  
Wisconsin — 0.6%             

Wisconsin Health & Educational Facilities Authority, Refunding RB, Marshfield Clinic Health System Inc., Series C, 4.00%, 2/15/50 (b)

     860       861,987  
Total Municipal Bonds — 103.3%       141,805,552  
    
                  
Municipal Bonds Transferred to
Tender Option Bond Trusts (d)
              
Alabama — 0.8%             

Auburn University, Refunding RB, Series A, 4.00%, 6/01/41

     1,000       1,062,170  
California — 12.6%             

Fremont Union High School District, GO, Refunding, Series A, 4.00%, 8/01/46

     1,640       1,763,705  

Sacramento Area Flood Control Agency, Refunding RB, Consolidated Capital Assessment District No. 2, Series A, 5.00%, 10/01/43

     2,775       3,251,856  

San Marcos Unified School District, GO, Election of 2010, Series A, 5.25%, 8/01/31

     10,680       12,275,806  
    

 

 

 
               17,291,367  
Connecticut — 1.1%             

Connecticut State Health & Educational Facility Authority, Refunding RB, Trinity Health Credit Group, 5.00%, 12/01/45

     1,306       1,490,017  
District of Columbia — 0.6%             

District of Columbia Water & Sewer Authority, Refunding RB, Senior Lien, Series A, 6.00%, 10/01/18 (a)(e)

     759       802,078  
Illinois — 5.3%             

State of Illinois Toll Highway Authority, RB:

    

Senior Priority, Series A, 5.00%, 1/01/40

     825       942,020  

Senior, Series B, 5.00%, 1/01/40

     3,329       3,816,343  

Series C, 5.00%, 1/01/38

     2,252       2,559,374  
    

 

 

 
               7,317,737  
Michigan — 2.2%             

Michigan State Building Authority, Refunding RB, Facilities Program, Series I, 5.00%, 10/15/45

     2,650       3,023,306  
Nevada — 4.9%             

County of Clark Nevada Water Reclamation District, GO, Limited Tax, 6.00%, 7/01/18 (a)

     2,000       2,087,380  
Municipal Bonds Transferred to
Tender Option Bond Trusts (d)
   Par
(000)