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: 08/31/2019

Date of reporting period: 02/28/2019


Item 1 – Report to Stockholders


FEBRUARY 28, 2019

 

SEMI-ANNUAL REPORT (UNAUDITED)

  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)

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Trust’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from BlackRock or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

You may elect to receive all future reports in paper free of charge. If you hold accounts directly with BlackRock, you can call Computershare at (800) 699-1236 to request that you continue receiving paper copies of your shareholder reports. If you hold accounts through a financial intermediary, you can follow the instructions included with this disclosure, if applicable, or contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Please note that not all financial intermediaries may offer this service. Your election to receive reports in paper will apply to all funds advised by BlackRock Advisors, LLC or its affiliates, or all funds held with your financial intermediary, as applicable.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive electronic delivery of shareholder reports and other communications by contacting your financial intermediary, if you hold accounts through a financial intermediary. Please note that not all financial intermediaries may offer this service.

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


The Markets in Review

Dear Shareholder,

In the 12 months ended February 28, 2019, concerns about a variety of political risks and a modest slowdown in global growth led to modest positive returns for the U.S. equity and bond markets. Though the market’s appetite for risk remained healthy for most of the reporting period, risk taking declined sharply in late 2018.

Volatility rose in emerging market stocks, as the rising U.S. dollar and higher interest rates in the U.S. disrupted economic growth abroad. U.S.-China trade relations and debt concerns adversely affected the Chinese stock market, while Turkey and Argentina became embroiled in currency crises, largely due to hyperinflation in both countries. An economic slowdown in Europe also led to negative performance for European equities.

Volatility in the U.S. equity market spiked in October, as a wide range of risks were brought to bear on markets, ranging from rising interest rates and slowing global growth to heightened trade tensions and political turmoil in several countries, including the United States. These risks manifested in a broad based sell-off in December, leading to the worst December performance on record since 1931.

By comparison, fixed income securities delivered modest positive returns with relatively low volatility. In fixed income markets, short-term U.S. Treasury interest rates rose the fastest, while longer-term rates declined slightly. This led to positive returns for U.S. Treasuries and a substantial flattening of the yield curve. Investment-grade and high-yield corporate bonds also posted positive returns, as the credit fundamentals in corporate markets remained relatively solid.

The U.S. Federal Reserve (the “Fed”) increased short-term interest rates four times during the reporting period. At its most recent meeting in late January, the Fed left interest rates unchanged and signaled a slower pace of rate hikes in response to the global economic slowdown. Relatively low inflation and modest economic growth give the Fed room to maintain support for the economy until the economic data builds the case for changing interest rates.

Although fears of recession drove equity volatility higher at the end of 2018, we continue to believe the probability of recession in 2019 remains relatively low. Economic growth and global earnings are likely to slow somewhat in 2019 because the tax cut stimulus will be less pronounced, and the Fed’s rate hikes in 2018 will gain traction in 2019. We expect profit margins to continue to contract, which tends to happen late in the business cycle.

In addition, trade frictions look more baked into asset prices than a year ago, but markets may be overlooking European political risks. As Brexit moves forward, the U.K. and the European Union may face significant obstacles. Most recently, Britain’s Parliament voted to extend the deadline for the separation, as policy makers continue to seek the least disruptive ways to disentangle Europe’s second-largest economy from the European Union. Consequently, we are cautious on European equities, as European unity remains tenuous with a history of flare-ups. We continue to prefer to take risk in U.S. and emerging market equities. Within U.S. equities, we believe that companies with high-quality earnings and strong balance sheets offer the most attractive risk/reward trade-off.

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 February 28, 2019
     6-month   12-month

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

  (3.04)%   4.68%

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

  (8.86)   5.58

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

  (3.58)   (6.04)

Emerging market equities
(MSCI Emerging Markets Index)

  0.33   (9.89)

3-month Treasury bills
(ICE BofAML 3-Month
U.S. Treasury Bill Index)

  1.10   2.04

U.S. Treasury securities
(ICE BofAML 10-Year
U.S. Treasury Index)

  2.57   4.02

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

  1.99   3.17

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

  2.21   4.03

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

  2.00   4.31
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 IS NOT PART OF YOUR FUND REPORT


Table of Contents

 

      Page  

The Markets in Review

     2  

Semi-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

     56  

Statements of Operations

     58  

Statements of Changes in Net Assets

     60  

Statements of Cash Flows

     63  

Financial Highlights

     65  

Notes to Financial Statements

     71  

Trustee and Officer Information

     81  

Additional Information

     82  

Glossary of Terms Used in this Report

     84  

 

 

 

 

          3  


Municipal Market Overview  For the Reporting Period Ended February 28, 2019

 

Municipal Market Conditions

Municipal bonds experienced positive performance during the period, despite challenged total returns during most of 2018 as interest rates moved higher on the back of continued Fed policy normalization, fiscal stimulus, strong economic growth, and increased U.S. Treasury issuance. Performance turned stronger late in the year, with interest rates rallying as the Fed began to indicate a pivot from forecast based to data driven policy and the potential for a slower pace of future rate hikes. During the period, demand for the asset class remained firm, although it displayed some bouts of volatility. Broadly, investors favored the tax-exempt income, diversification, quality, and value of municipal bonds given that tax reform ultimately lowered the top individual tax rate just 2.6% while eliminating deductions. During the 12 months ended February 28, 2019, municipal bond funds experienced net inflows of approximately $14.4 billion (based on data from the Investment Company Institute).

 

 

For the same 12-month period, total new issuance underwhelmed from a historical perspective at $323 billion (below the $389 billion issued in the prior 12-month period), a direct result of the elimination of advanced refundings through the 2017 Tax Cuts and Jobs Act. This shift transitioned the market from an existing net positive supply environment to a much more favorable net negative supply environment in which reinvestment income (coupons, calls, and maturities) largely outstripped gross issuance and provided a powerful technical tailwind.

    S&P Municipal Bond Index  
    Total Returns as of February 28, 2019  
      6 months: 2.21%  
    12 months: 4.03%  
 

A Closer Look at Yields

 

LOGO

From February 28, 2018 to February 28, 2019, yields on AAA-rated 30-year municipal bonds decreased by eight basis points (“bps”) from 3.06% to 2.98%, while ten-year rates decreased by 37 bps from 2.47% to 2.10% and five-year rates decreased by 30 bps from 1.97% to 1.67% (as measured by Thomson Municipal Market Data). The municipal yield curve flattened modestly over the 12-month period with the spread between two- and 30-year maturities flattening by 14 bps, led by 43 bps of flattening between two- and ten-year maturities. Notably, the municipal yield curve remains nearly 2.5 times steeper than the U.S. Treasury curve.

During the same time period, on a relative basis, tax-exempt municipal bonds strongly outperformed U.S. Treasuries, driven by 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, incremental yield, and tax shelter 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 problems among a few issuers. Four of the five states with the largest amount of debt outstanding — California, New York, Texas and Florida — continue to exhibit improved credit fundamentals. However, several states with the largest unfunded pension liabilities are faced with elevated borrowing costs and difficult budgetary decisions. Across the country on the local level, property values support credit stability. Standard & Poor’s decision to remove its “negative” outlook on New Mexico underscores the improvement in state finances as it was the only remaining state with the designation. Revenue bonds continue to drive performance as investors continue to seek higher yield bonds in the tobacco sector. 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 February 28, 2019 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 the 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    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


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, there is no guarantee that these objectives can 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 (after paying the leverage costs) is paid to shareholders in the form of dividends, and the value of these portfolio holdings (less the leverage liability) 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 amount 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 Trusts’ 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 Trust 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”) or 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 assets 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.

 

 

THE BENEFITS AND RISKS OF LEVERAGING / DERIVATIVE FINANCIAL INSTRUMENTS      5  


Trust Summary  as of February 28, 2019    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 February 28, 2019 ($14.31)(a)

  5.32%

Tax Equivalent Yield(b)

  8.99%

Current Monthly Distribution per Common Share(c)

  $0.0635

Current Annualized Distribution per Common Share(c)

  $0.7620

Economic Leverage as of February 28, 2019(d)

  39%

 

  (a) 

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.

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, 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.

 
  (c) 

The monthly distribution per Common Share, declared on March 1, 2019, was decreased to $.0545 per share. The current yield on closing market price, tax equivalent yield, 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.

 
  (d) 

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 six months ended February 28, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BBK(a)(b)

    2.84      1.82

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    3.68        1.64  

 

  (a) 

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

 
  (b) 

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.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date 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:

After performing poorly in September and October, municipal bonds recovered to post a positive total return for the full six-month period. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

The Trust benefited from its positions in the school district, utilities and health care sectors. Conversely, its exposure to the tobacco sector was a modest detractor due to the Food and Drug Administration’s announcement of its intention to ban menthol cigarettes, which could lead to a larger-than-expected decline in consumption and reduced payments in accordance to the Master Settlement Agreement. After initially selling off on the news, tobacco issues regained much of the lost ground by the close of the period. The Trust maintained its position in the sector in an effort to capitalize on its above-average yields.

Bonds with maturities of three to ten years significantly outpaced longer-term issues. In this environment, the Trust’s positions in pre-refunded bonds outperformed due to their short-dated maturities. The Trust’s allocation to zero-coupon bonds in this part of the yield curve was also a notable outperformer.

Positions in higher-quality AA and A rated bonds, which outperformed the lower-rated categories, were a further plus.

Portfolio income, enhanced by leverage, was a key contributor to absolute returns over the last six months. The use of leverage further aided results by augmenting the effect of rising bond prices.

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy had a small, negative 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    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Trust Summary  as of February 28, 2019  (continued)    BlackRock Municipal Bond Trust

 

Market Price and Net Asset Value Per Share Summary

 

     02/28/19     08/31/18      Change      High      Low  

Market Price

  $ 14.31     $ 14.35        (0.28 )%     $ 14.37      $
13.06
 

Net Asset Value

    15.58       15.78        (1.27      15.78       
15.18
 

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

 

LOGO

Overview of the Trust’s Total Investments *

 

SECTOR ALLOCATION

 

     02/28/19    

08/31/18

 

County/City/Special District/School District

    22     20

Health

    17       18  

Transportation

    15       17  

Utilities

    13       12  

Education

    11       13  

State

    10       7  

Corporate

    5       5  

Tobacco

    5       5  

Housing

    2       3  

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 SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    7

2020

    6  

2021

    11  

2022

    10  

2023

    10  

 

  (c) 

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

 

CREDIT QUALITY ALLOCATION (a)

 

     02/28/19    

08/31/18

 

AAA/Aaa

    4     3

AA/Aa

    36       36  

A

    26       26  

BBB/Baa

    15       17  

BB/Ba

    5       6  

B

    4       3  

NR(b)

    10       9  

 

  (a) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P Global Ratings (“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.

 
  (b) 

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 February 28, 2019 and August 31, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 1% of the Trust’s total investments.

 
 

 

  *

Excludes short-term securities.

 

 

 

TRUST SUMMARY      7  


Trust Summary  as of February 28, 2019    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 and Florida intangible property 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 February 28, 2019 ($13.63)(a)

  5.15%

Tax Equivalent Yield(b)

  8.70%

Current Monthly Distribution per Common Share(c)

  $0.0585

Current Annualized Distribution per Common Share(c)

  $0.7020

Economic Leverage as of February 28, 2019(d)

  42%

 

  (a)

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.

 
  (b)

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, 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.

 
  (c)

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

 
  (d) 

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 six months ended February 28, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BAF(a)(b)

    3.39      1.94

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    3.68        1.64  

 

  (a) 

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

 
  (b) 

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.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date 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:

After performing poorly in September and October, municipal bonds recovered to post a positive total return for the full six-month period. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

Portfolio income, enhanced by leverage, was a key contributor to absolute returns. The use of leverage further aided results by augmenting the effect of rising bond prices. However, the rising cost of leverage — which was a result of the Fed’s interest rate increases — reduced some of the benefit.

Seasoned positions, including pre-refunded bonds (which typically have yields well above current market rates), added to performance as yields fell the most for bonds with maturities of ten years and below. Conversely, positions in longer-dated maturities produced smaller gains.

At the sector level, positions in transportation and health care issues helped performance.

The Trust benefited from its higher-quality mandate, as its holdings in the AA and A rated categories performed well relative to lower-rated securities.

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy had a small, negative effect on returns.

Reinvestment had an adverse impact on the Trust’s income, as the proceeds of higher-yielding bonds that matured or were called needed to be reinvested at lower prevailing rates.

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    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Trust Summary  as of February 28, 2019  (continued)    BlackRock Municipal Income Investment Quality Trust

 

Market Price and Net Asset Value Per Share Summary

 

     02/28/19     08/31/18      Change      High      Low  

Market Price

  $ 13.63     $ 13.54        0.66    $ 13.63      $ 12.44  

Net Asset Value

    14.75       14.86        (0.74      14.86        14.41  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

SECTOR ALLOCATION

 

     02/28/19    

08/31/18

 

Transportation

    27     25

County/City/Special District/School District

    27       26  

Utilities

    16       16  

Health

    15       11  

State

    5       6  

Education

    5       5  

Tobacco

    3       1  

Housing

    1       2  

Corporate

    1       1  

Health Care

          3  

Financing & Development

          3  

General Government

          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 SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    10

2020

    2  

2021

    27  

2022

    5  

2023

    19  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

     02/28/19    

08/31/18

 

AAA/Aaa

    2     3

AA/Aa

    57       62  

A

    26       21  

BBB/Baa

    10       8  

BB/Ba

          1  

N/R(b)

    5       5  

 

  (a) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P 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.

 
  (b)

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 February 28, 2019 and August 31, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 1% of the Trust’s total investments.

 
 

 

 

 

TRUST SUMMARY      9  


Trust Summary  as of February 28, 2019    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 February 28, 2019 ($13.32)(a)

  4.68%

Tax Equivalent Yield(b)

  7.91%

Current Monthly Distribution per Common Share(c)

  $0.0520

Current Annualized Distribution per Common Share(c)

  $0.6240

Economic Leverage as of February 28, 2019(d)

  39%

 

  (a) 

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.

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, 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.

 
  (c) 

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

 
  (d) 

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 six months ended February 28, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BYM(a)(b)

    4.36      2.14

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    3.68        1.64  
  (a) 

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

 
  (b) 

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.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date 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:

After performing poorly in September and October, municipal bonds recovered to post a positive total return for the full six-month period. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

The Trust benefited from its positions in the school district, utilities and health care sectors. Conversely, its exposure to the tobacco sector was a modest detractor due to the Food and Drug Administration’s announcement of its intention to ban menthol cigarettes, which could lead to a larger-than-expected decline in consumption and reduced payments in accordance to the Master Settlement Agreement. After initially selling off on the news, tobacco issues regained much of the lost ground by the close of the period. The Trust maintained its position in the sector in an effort to capitalize on its above-average yields.

Positions in higher-quality AA and A rated bonds, which outperformed the lower-rated categories, were a further plus.

Bonds with maturities of three to ten years significantly outpaced longer-term issues. In this environment, the Trust’s positions in pre-refunded bonds outperformed due to their short-dated maturities. The Trust’s allocation to zero-coupon bonds in this part of the yield curve was also a notable outperformer.

Portfolio income, enhanced by leverage, was a key contributor to absolute returns. The use of leverage further aided results by augmenting the effect of rising bond prices.

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy had a small, negative 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.

 

 

10    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Trust Summary  as of February 28, 2019 (continued)    BlackRock Municipal Income Quality Trust

 

Market Price and Net Asset Value Per Share Summary

 

    

02/28/19

   

08/31/18

     Change      High      Low  

Market Price

  $ 13.32     $ 13.09        1.76    $ 13.35      $ 12.17  

Net Asset Value

    14.64       14.70        (0.41      14.70        14.15  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

SECTOR ALLOCATION

 

    

02/28/19

   

08/31/18

 

Transportation

    22     23

County/City/Special District/School District

    15       15  

Health

    15       15  

Utilities

    12       14  

Education

    9       9  

State

    6       6  

Health Care

    6       5  

Financing & Development

    4       3  

General Government

    4       3  

Tobacco

    3       3  

Housing

    2       2  

Corporate

    2       2  

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 SCHEDULE (b)

 

Calendar Year Ended December 31,

       

2019

    7

2020

    7  

2021

    9  

2022

    9  

2023

    15  

 

  (b) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

     02/28/19    

08/31/18

 

AAA/Aaa

    10     10

AA/Aa

    43       46  

A

    24       21  

BBB/Baa

    16       16  

N/R

    7       7  

 

  (a) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P 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.

 
 

 

 

TRUST SUMMARY      11  


Trust Summary  as of February 28, 2019    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

  BLE

Initial Offering Date

  July 30, 2002

Yield on Closing Market Price as of February 28, 2019 ($14.05)(a)

  4.95%

Tax Equivalent Yield(b)

  8.36%

Current Monthly Distribution per Common Share(c)

  $0.0580

Current Annualized Distribution per Common Share(c)

  $0.6960

Economic Leverage as of February 28, 2019(d)

  39%

 

  (a) 

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.

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, 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.

 
  (c) 

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

 
  (d) 

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 six months ended February 28, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

BLE(a)(b)

    4.73      1.80

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    3.68        1.64  

 

  (a) 

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

 
  (b) 

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.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date 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:

After performing poorly in September and October, municipal bonds recovered to post a positive total return for the full six-month period. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

Portfolio income, enhanced by leverage, was a key contributor to absolute returns over the last six months. The use of leverage further aided results by augmenting the effect of rising bond prices.

Allocations to the health care, transportation and utilities sectors added value, as did positions in state and local tax-backed issues.

Higher-rated portfolio holdings generally outperformed positions in lower-rated issues, as investment-grade bonds in the AA, A and BBB rated categories outpaced non-investment grade securities.

The Trust’s low exposure to bonds with intermediate maturities in the five- to ten-year range detracted from performance. The municipal curve steepened, with intermediate-term debt outperforming longer-dated securities.

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

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    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Trust Summary  as of February 28, 2019  (continued)    BlackRock Municipal Income Trust II

 

Market Price and Net Asset Value Per Share Summary

 

     02/28/19    

08/31/18

     Change      High      Low  

Market Price

  $ 14.05     $
13.77
 
     2.03    $ 14.10      $ 12.35  

Net Asset Value

    14.43       14.55        (0.82      14.56        14.16  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

SECTOR ALLOCATION

 

     02/28/19    

08/31/18

 

Transportation

    22     25

Utilities

    16       17  

Health

    13       14  

County/City/Special District/School District

    12       14  

State

    12       10  

Corporate

    10       7  

Tobacco

    8       5  

Education

    5       6  

Housing

    2       2  

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 SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    18

2020

    13  

2021

    15  

2022

    10  

2023

    7  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

     02/28/19    

08/31/18

 

AAA/Aaa

    6     6

AA/Aa

    33       36  

A

    22       19  

BBB/Baa

    21       22  

BB/Ba

    8       7  

B

    5       5  

N/R

    5       5 (b) 

 

  (a) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P 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.

 
  (b) 

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, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents less than 1% of the Trust’s total investments.

 
 

 

 

TRUST SUMMARY      13  


Trust Summary  as of February 28, 2019    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 February 28, 2019 ($13.02)(a)

  5.21%

Tax Equivalent Yield(b)

  8.80%

Current Monthly Distribution per Common Share(c)

  $0.0565

Current Annualized Distribution per Common Share(c)

  $0.6780

Economic Leverage as of February 28, 2019(d)

  40%

 

  (a) 

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.

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, 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.

 
  (c) 

The monthly distribution per Common Share, declared on March 1, 2019, was decreased to $.0525 per share. The current yield on closing market price, tax equivalent yield, 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.

 
  (d) 

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 six months ended February 28, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MFL(a)(b)

    5.07      1.92

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    3.68        1.64  

 

  (a) 

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

 
  (b) 

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.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date 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:

After performing poorly in September and October, municipal bonds recovered to post a positive total return for the full six-month period. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

Portfolio income, enhanced by leverage, was a key contributor to absolute returns.

The Trust benefited from its positions in higher-quality bonds, which outpaced lower-rated securities.

Positions in longer-maturity bonds, which outperformed in the environment of falling rates, also aided results. The Trust further benefited from the strong returns of its holdings in the six- to seven-year maturity range. Conversely, shorter-term issues lagged.

All sectors produced positive returns in the period, with utilities leading the way and tobacco finishing as the most notable underperformer.

The Trust sought to manage interest rate risk using U.S. Treasury futures. Given that U.S. Treasury yields fell, as prices rose, this strategy had a small, negative 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.

 

 

14    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Trust Summary  as of February 28, 2019 (continued)    BlackRock MuniHoldings Investment Quality Fund

 

Market Price and Net Asset Value Per Share Summary

 

     02/28/19     08/31/18      Change      High      Low  

Market Price

  $ 13.02     $ 12.73        2.28    $ 13.17      $ 11.79  

Net Asset Value

    13.98       14.09        (0.78      14.10        13.66  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

SECTOR ALLOCATION

 

     02/28/19    

08/31/18

 

Transportation

    37     37

State

    20       15  

Health

    14       14  

County/City/Special District/School District

    11       15  

Utilities

    10       13  

Education

    4       4  

Corporate(a)

    2        

Housing

    1       1  

Tobacco

    1       1  

 

  (a) 

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 SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    14

2020

    4  

2021

    15  

2022

    1  

2023

    20  
  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (b)

 

     02/28/19    

08/31/18

 

AAA/Aaa

    6     6

AA/Aa

    58       62  

A

    28       24  

BBB/Baa

    5       4  

N/R

    3       4  

 

  (b) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P 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.

 
 

 

 

TRUST SUMMARY      15  


Trust Summary  as of February 28, 2019    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

  MVF

Initial Offering Date

  September 29, 1988

Yield on Closing Market Price as of February 28, 2019 ($8.94)(a)

  5.17%

Tax Equivalent Yield(b)

  8.73%

Current Monthly Distribution per Common Share(c)

  $0.0385

Current Annualized Distribution per Common Share(c)

  $0.4620

Economic Leverage as of February 28, 2019(d)

  36%

 

  (a)

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.

 
  (b) 

Tax equivalent yield assumes the maximum marginal U.S. federal tax rate of 40.8%, 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.

 
  (c)

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

 
  (d)

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 six months ended February 28, 2019 were as follows:

 

    Returns Based On  
     Market Price      NAV  

MVF(a)(b)

    4.32      1.38

Lipper General & Insured Municipal Debt Funds (Leveraged)(c)

    3.68        1.64  

 

  (a) 

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

 
  (b) 

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.

 
  (c) 

Average return. Returns reflect reinvestment of dividends and/or distributions at NAV on the ex-dividend date 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:

After performing poorly in September and October, municipal bonds recovered to post a positive total return for the full six-month period. The initial downturn was largely brought about by concerns that the Fed would raise interest rates aggressively in 2019. However, subsequent signs of slowing growth prompted investors to adjust their expectations in favor of more accommodative Fed policy, sparking a rally across the bond market from early November onward.

Portfolio income was a key contributor to absolute returns over the last six months. At the sector level, the Trust’s positions in transportation, state tax-backed and health care issues made the largest contribution to performance. The Trust’s allocation to higher-rated securities, which outperformed lower-quality bonds, also aided results.

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

Positions in the tobacco sector further detracted from performance due to the Food and Drug Administration’s announcement of its intention to ban menthol cigarettes. Reinvestment had an adverse effect on the Trust’s income, as the proceeds of higher-yielding bonds that matured or were called needed to be reinvested at lower prevailing rates.

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    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Trust Summary  as of February 28, 2019  (continued)    BlackRock MuniVest Fund, Inc.

 

Market Price and Net Asset Value Per Share Summary

 

     02/28/19     08/31/18      Change      High      Low  

Market Price

  $ 8.94     $ 8.81        1.48    $ 9.00      $ 8.08  

Net Asset Value

    9.22       9.35        (1.39      9.35        9.04  

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

 

LOGO

Overview of the Trust’s Total Investments *

 

SECTOR ALLOCATION

 

     02/28/19    

08/31/18

 

Transportation

    24     24

Health

    21       22  

County/City/Special District/School District

    11       11  

Education

    11       11  

Corporate

    9       9  

State

    7       6  

Tobacco

    7       7  

Utilities

    6       6  

Housing

    4       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 SCHEDULE (c)

 

Calendar Year Ended December 31,

       

2019

    22

2020

    14  

2021

    5  

2022

    6  

2023

    6  

 

  (c) 

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

 
  *

Excludes short-term securities.

 

CREDIT QUALITY ALLOCATION (a)

 

     02/28/19    

08/31/18

 

AAA/Aaa

    4     6

AA/Aa

    30       33  

A

    24       18  

BBB/Baa

    23       23  

BB/Ba

    3       4  

B

    4       3  

N/R(b)

    12       13  

 

  (a) 

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P 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.

 
  (b) 

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 February 28, 2019 and August 31, 2018, the market value of unrated securities deemed by the investment adviser to be investment grade represents 1% each, of the Trust’s total investments.

 
 

 

 

TRUST SUMMARY      17  


Schedule of Investments  (unaudited)

February 28, 2019

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 138.1%

 

Alabama — 0.6%

 

Opelika Utilities Board, Refunding RB, 4.00%, 06/01/41

  $ 960     $ 985,258  
   

 

 

 
Arizona — 7.6%  

Arizona Health Facilities Authority, Refunding RB, Phoenix Children’s Hospital, Series A, 5.00%, 02/01/42

    2,200       2,318,008  

City of Phoenix Arizona IDA, Refunding RB, Basis Schools, Inc. Projects, 5.00%, 07/01/45(a)

    460       465,686  

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

   

4.75%, 07/01/21(b)

    680       728,355  

4.75%, 07/01/31

    3,070       3,247,354  

Salt Verde Financial Corp., RB, Senior:

   

5.00%, 12/01/32

    1,500       1,777,260  

5.00%, 12/01/37

    2,065       2,439,446  

University Medical Center Corp., RB, 6.50%, 07/01/19(b)

    500       507,925  

University Medical Center Corp., Refunding RB, 6.00%, 07/01/21(b)

    900       986,319  
   

 

 

 
    12,470,353  
Arkansas — 2.3%  

City of Benton Arkansas, RB, 4.00%, 06/01/39

    505       522,731  

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

    840       864,142  

City of Little Rock Arkansas, RB, 4.00%, 07/01/41

    1,835       1,877,388  

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

    465       502,451  
   

 

 

 
    3,766,712  
California — 22.0%  

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 5.88%, 08/15/20(b)

    1,900       2,020,251  

California Municipal Finance Authority, RB, Orange County Civic Center Infrastructure Improvement Program, 5.00%, 06/01/43

    500       571,380  

California Statewide Communities Development Authority, Refunding RB, Adventist Health System, Series A, 4.00%, 03/01/48

    1,345       1,353,837  

Carlsbad California Unified School District, GO, Election of 2006, Series B, 6.00%, 05/01/34(c)

    1,000       1,197,110  

City & County of San Francisco Public Utilities Commission Wastewater Revenue, Refunding RB, Sewer System, Series B, 4.00%, 10/01/42

    500       511,465  

City of San Jose California, Refunding ARB, Norman Y Mineta San Jose International Airport SJC, Series A-1, AMT, 5.75%, 03/01/34

    2,000       2,130,200  

County of San Diego Regional Airport Authority, ARB, Subordinate, Series B, AMT, 5.00%, 07/01/47

    1,405       1,557,667  

Golden State Tobacco Securitization Corp., Refunding RB, Series A-1, 5.00%, 06/01/47

    525       505,297  

Hartnell Community College District California, GO, CAB, Election of 2002, Series D, 7.00%, 08/01/34(c)

    1,650       1,773,436  

Norwalk-La Mirada Unified School District, GO, Refunding, CAB, Election of 2002, Series E (AGC), 0.00%, 08/01/38(d)

    8,000       3,708,400  

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

   

0.00%, 08/01/30(d)

    1,500       1,092,750  

0.00%, 08/01/33(d)

    4,000       1,664,480  

6.20%, 08/01/39(c)

    2,605       2,625,710  

San Diego Community College District, GO, CAB, Election of 2002, 6.00%, 08/01/33(c)

    2,800       3,351,348  

State of California, GO, Refunding, Various Purpose, 5.00%, 02/01/38

    3,000       3,284,550  

State of California, GO, Various Purposes:

   

6.50%, 04/01/19(b)

    1,055       1,059,062  
Security   Par
(000)
    Value  
California (continued)  

5.75%, 04/01/31

  $ 2,000     $ 2,006,120  

6.00%, 03/01/33

    1,000       1,043,120  

6.50%, 04/01/33

    895       898,267  

5.50%, 03/01/40

    2,350       2,425,881  

Visalia Unified School District, COP, (AGM), 4.00%, 05/01/48

    1,225       1,233,403  
   

 

 

 
    36,013,734  
Colorado — 0.7%  

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

    1,070       1,074,055  
   

 

 

 
Connecticut — 1.0%  

Connecticut State Health & Educational Facility Authority, Refunding RB, Lawrence & Memorial Hospital, Series F, 5.00%, 07/01/21(b)

    550       589,628  

State of Connecticut, GO, Series E, 5.00%, 09/15/37

    970       1,073,421  
   

 

 

 
    1,663,049  
Delaware — 2.2%  

County of Kent Delaware, RB, CHF-Dover, LLC-Delaware State University Project, Series A:

   

5.00%, 07/01/40

    330       351,074  

5.00%, 07/01/48

    900       950,796  

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

    1,200       1,265,892  

Delaware Transportation Authority, RB, U.S. 301 Project, 5.00%, 06/01/55

    950       1,038,464  
   

 

 

 
    3,606,226  
Florida — 3.4%  

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

    4,135       4,719,152  

County of Orange Florida Health Facilities Authority, Refunding RB, Mayflower Retirement Center, 5.00%, 06/01/36

    125       129,031  

Stevens Plantation Community Development District, RB, Special Assessment, Series A, 7.10%, 05/01/35(e)(f)

    860       688,000  
   

 

 

 
    5,536,183  
Georgia — 1.7%  

City of Atlanta Georgia Water & Wastewater Revenue, Refunding RB, 5.00%, 11/01/40

    1,500       1,672,035  

County of Georgia Housing & Finance Authority, RB, S/F Housing, Series A:

   

3.95%, 12/01/43

    295       297,027  

4.00%, 12/01/48

    210       211,741  

Main Street Natural Gas, Inc., RB, Series A:

   

5.00%, 05/15/38

    255       289,417  

5.00%, 05/15/43

    330       357,627  
   

 

 

 
    2,827,847  
Hawaii — 0.3%  

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

    400       435,312  
   

 

 

 
Idaho — 0.3%  

Idaho Health Facilities Authority, RB, St. Lukes Health System Project, Series A, 5.00%, 03/01/39

    500       536,590  
   

 

 

 
Illinois — 7.6%  

Chicago Board of Education, GO, Refunding Dedicated Revenues, Series D:

   

Dedicated Revenues, Series H, 5.00%, 12/01/36

    235       242,713  

Project, Series C, 5.25%, 12/01/35

    775       803,667  

Chicago Board of Education, GO, Refunding, Dedicated Revenues, Series C, 5.00%, 12/01/34

    235       244,433  

Chicago Board of Education, GO:

   

5.00%, 12/01/46

    280       283,643  
 

 

 

18    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Illinois (continued)  

5.00%, 12/01/46

  $ 725     $ 730,111  

Series C, 5.00%, 12/01/25

    425       453,981  

Series F, 5.00%, 12/01/23

    310       327,692  

Refunding Series C, 5.00%, 12/01/25

    335       357,844  

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

    1,600       1,635,088  

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

    870       938,608  

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

    665       699,214  

County of Will Illinois, GO, 5.00%, 11/15/45

    600       660,096  

Illinois Finance Authority, RB, Chicago LLC, University of Illinois at Chicago Project, Series A:

   

5.00%, 02/15/37

    300       325,572  

5.00%, 02/15/47

    205       218,507  

5.00%, 02/15/50

    100       106,369  

Illinois Finance Authority, Refunding RB:

   

OSF Health Care System, Series A, 5.00%, 11/15/45

    1,205       1,289,507  

OSF Healthcare System, 6.00%, 05/15/39

    205       211,417  

Roosevelt University Project, 6.50%, 10/01/19(b)

    395       405,890  

Roosevelt University Project, 6.50%, 10/01/19(b)

    605       621,680  

Railsplitter Tobacco Settlement Authority, RB,
6.00%, 06/01/21(b)

    1,150       1,257,743  

State of Illinois, GO, Series D, 5.00%, 11/01/28

    645       695,555  
   

 

 

 
    12,509,330  
Iowa — 0.2%  

Iowa Finance Authority, Refunding RB, Iowa Fertilizer Co. Project, Series B, 5.25%, 12/01/50(g)

    250       266,053  
   

 

 

 
Kansas — 2.7%  

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

   

5.00%, 09/01/22(b)

    3,280       3,645,425  

5.00%, 09/01/39

    720       794,289  
   

 

 

 
    4,439,714  
Kentucky — 3.8%  

County of Boyle Kentucky, Refunding RB, Centre College of Kentucky, 5.00%, 06/01/37

    2,500       2,736,400  

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

    1,830       1,955,776  

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

   

6.75%, 07/01/34

    500       495,030  

6.60%, 07/01/39

    830       808,088  

6.75%, 07/01/43

    270       262,926  
   

 

 

 
    6,258,220  
Louisiana — 1.5%  

City of Alexandria Louisiana Utilities, RB, 5.00%, 05/01/39

    860       956,707  

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

    1,050       1,115,404  

Louisiana Public Facilities Authority, RB, Belle Chasse Educational Foundation Project, 6.50%, 05/01/31

    400       419,844  
   

 

 

 
    2,491,955  
Maryland — 0.4%  

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

   

5.13%, 07/01/36

    170       170,813  

5.25%, 07/01/44

    170       170,542  
Security   Par
(000)
    Value  
Maryland (continued)  

Maryland Community Development Administration, Refunding RB, S/F Housing, Series A, 4.10%, 09/01/38

  $ 315     $ 323,634  
   

 

 

 
    664,989  
Massachusetts — 3.5%  

Massachusetts Development Finance Agency, RB:

   

Emerson College Issue, Series A, 5.00%, 01/01/47

    630       680,362  

Emerson College Issue, 5.00%, 01/01/48

    1,115       1,212,674  

Emerson College Issue, Series A, 5.25%, 01/01/42

    565       622,195  

UMass Darthmouth Student Housing Project, 5.00%, 10/01/48

    830       891,362  

Massachusetts Development Finance Agency, Refunding RB:

   

Emmanuel College Issue, Series A, 5.00%, 10/01/43

    750       804,225  

International Charter School, 5.00%, 04/15/40

    400       417,472  

Western New England University, 5.00%, 09/01/43

    750       821,970  

Massachusetts Housing Finance Agency, RB, M/F Housing, Series A:

   

3.80%, 12/01/43

    160       158,189  

3.85%, 06/01/46

    205       202,915  
   

 

 

 
    5,811,364  
Michigan — 7.2%  

Michigan Finance Authority, RB:

   

Beaumont Health Credit Group, Series A, 5.00%, 11/01/44

    1,555       1,688,886  

Detroit Water & Sewage Disposal System, Senior Lien, Series 2014 C-2, AMT, 5.00%, 07/01/44

    240       253,970  

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

    5,560       6,035,769  

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

    2,100       2,166,045  

Michigan State Housing Development Authority, RB, S/F Housing, Series A, 3.80%, 10/01/38

    1,690       1,677,410  
   

 

 

 
    11,822,080  
Minnesota — 2.0%  

City of Maple Grove Minnesota, Refunding RB, Maple Grove Hospital, Corp., 4.00%, 05/01/37

    880       896,817  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series A, 5.00%, 11/15/49

    560       618,593  

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

    290       321,961  

Minnesota Higher Education Facilities Authority, RB:

   

Augsburg College, Series B, 4.25%, 05/01/40

    1,075       1,057,252  

College of St. Benedict, Series 8-K, 4.00%, 03/01/43

    385       375,236  
   

 

 

 
    3,269,859  
Mississippi — 1.9%  

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

    400       429,844  

Mississippi Development Bank, RB, Special Obligation:

   

CAB, Hinds Community College District (AGM), 5.00%, 04/01/21(b)

    845       903,220  

County of Jackson Limited Tax Note (AGC), 5.50%, 07/01/32

    1,750       1,771,175  
   

 

 

 
    3,104,239  
Missouri — 2.7%  

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

    900       962,298  

Missouri State Health & Educational Facilities Authority, RB:

   

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

    500       539,415  

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

    320       334,685  

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

    500       549,930  

Heartland Regional Medical Center, 4.13%, 02/15/43

    300       304,218  

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

    1,000       1,114,460  
 

 

 

SCHEDULES OF INVESTMENTS      19  


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Missouri (continued)  

Missouri State Health & Educational Facilities Authority, Refunding RB, Kansas City University of Medicine and Biosciences, Series A, 5.00%, 06/01/42

  $ 540     $ 599,292  
   

 

 

 
    4,404,298  
Nebraska — 1.1%  

Central Plains Nebraska Energy Project, RB, Gas Project No. 3, 5.00%, 09/01/42

    600       644,028  

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

    400       427,440  

Nebraska Public Power District, Refunding RB, Series A:

   

5.00%, 01/01/32

    250       269,482  

4.00%, 01/01/44

    400       404,000  
   

 

 

 
    1,744,950  
Nevada — 1.1%  

City of Las Vegas Nevada, RB, Special Assessment, No. 809 Summerlin Area, 5.65%, 06/01/23

    785       790,432  

County of Clark Nevada, Refunding ARB, Department of Aviation, Subordinate Lien, Series A-2, 4.25%, 07/01/36

    1,000       1,041,800  
   

 

 

 
    1,832,232  
New Hampshire — 0.2%  

New Hampshire Business Finance Authority, Refunding RB, Resource Recovery, Covanta Project(a):

   

Series B, 4.63%, 11/01/42

    255       249,066  

Series C, AMT, 4.88%, 11/01/42

    145       144,688  
   

 

 

 
    393,754  
New Jersey — 13.7%  

New Jersey EDA, RB:

   

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

    660       744,843  

Goethals Bridge Replacement Project (AGM), AMT, 5.13%, 07/01/42

    200       215,408  

School Facilities Construction, Series UU, 5.00%, 06/15/40

    425       444,469  

New Jersey EDA, Refunding RB, Special Assessment, Kapkowski Road Landfill Project, 6.50%, 04/01/28

    7,500       8,610,150  

New Jersey Health Care Facilities Financing Authority, Refunding RB:

   

Hospital Asset Transfer Program, 5.00%, 10/01/37

    685       731,498  

St. Barnabas Health Care System, Series A, 4.63%, 07/01/21(b)

    510       543,731  

St. Barnabas Health Care System, Series A, 5.63%, 07/01/21(b)

    1,700       1,851,028  

St. Barnabas Health Care System, Series A, 5.00%, 07/01/25

    500       549,040  

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

    1,860       2,048,269  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program Bonds, Series S, 5.25%, 06/15/43

    1,070       1,161,678  

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

    1,000       479,280  

Transportation Program, Series AA, 5.00%, 06/15/45

    900       937,485  

Transportation Program, Series AA, 5.00%, 06/15/46

    400       415,216  

New Jersey Transportation Trust Fund Authority, Refunding RB, Transportation System, Series A, 5.00%, 12/15/36

    140       151,302  

South Jersey Port Corp., RB, Marine Terminal, Series B, AMT, 5.00%, 01/01/35

    625       687,356  

Tobacco Settlement Financing Corp., Refunding RB, Series A:

   

5.00%, 06/01/35

    760       847,408  

5.25%, 06/01/46

    1,810       1,953,189  
   

 

 

 
    22,371,350  
New Mexico — 0.3%  

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 08/01/44

    450       495,148  
   

 

 

 
Security   Par
(000)
    Value  
New York — 5.1%  

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

  $ 925     $ 936,683  

Counties of New York Tobacco Trust IV, Refunding RB, Settlement Pass-Through Turbo, Series A,
6.25%, 06/01/41(a)

    900       924,003  

Counties of New York Tobacco Trust VI, Refunding RB, Tobacco Settlement Pass-Through, Series A-2B, 5.00%, 06/01/45

    500       509,390  

Erie Tobacco Asset Securitization Corp., Refunding RB, Asset-Backed, Series A, 5.00%, 06/01/45

    1,160       1,131,847  

New York City Water & Sewer System, Refunding RB, 2nd Generation, Fiscal 2013, 5.00%, 06/15/47

    1,000       1,091,530  

New York Liberty Development Corp., Refunding RB:

   

2nd Priority, Bank of America Tower at One Bryant Park Project, Class 3, 6.38%, 07/15/49

    800       829,032  

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

    405       428,863  

New York Transportation Development Corp., Refunding ARB, American Airlines, Inc., AMT, 5.00%, 08/01/31

    1,295       1,342,811  

State of New York Mortgage Agency, Refunding RB, Series 211, 3.75%, 10/01/43

    1,190       1,180,837  
   

 

 

 
    8,374,996  
North Dakota — 0.3%  

County of Burleigh North Dakota, Refunding RB, St. Alexius Medical Center Project, Series A, 5.00%, 07/01/21(b)

    480       515,150  
   

 

 

 
Ohio — 4.1%  

Buckeye Tobacco Settlement Financing Authority, RB, Asset-Backed, Senior Turbo Term, Series A-2, 6.50%, 06/01/47

    2,000       1,987,460  

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       2,039,280  

Northwest Local School District/Hamilton & Butler Counties, GO, School Improvements, 4.00%, 12/01/50

    1,135       1,149,517  

State of Ohio, Refunding RB, University Hospitals Health System, Series A, 5.00%, 01/15/41

    1,500       1,579,935  
   

 

 

 
    6,756,192  
Oklahoma — 0.9%  

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

    720       822,319  

Oklahoma Development Finance Authority, RB, OU Medicine Project, Series B, 5.25%, 08/15/48

    605       661,126  
   

 

 

 
    1,483,445  
Oregon — 1.4%  

Oregon Health & Science University, RB, Series A, 4.00%, 07/01/37

    675       718,544  

State of Oregon State Facilities Authority, Refunding RB, University of Portland Project, Series A, 5.00%, 04/01/45

    1,475       1,640,879  
   

 

 

 
    2,359,423  
Pennsylvania — 6.4%  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment:

   

5.00%, 06/01/33

    335       381,619  

5.00%, 06/01/34

    750       850,552  

(AGM), 4.00%, 06/01/39

    1,365       1,397,296  

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

    1,695       1,742,138  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jefferson University, Series A, 4.00%, 09/01/49

    495       496,871  

Delaware River Port Authority, RB:

   

4.50%, 01/01/32

    1,500       1,617,720  

Series D (AGM), 5.00%, 01/01/20(b)

    2,600       2,672,748  
 

 

 

20    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Pennsylvania (continued)  

Pottsville Hospital Authority, Refunding RB, Lehigh Valley Health Network, Series B, 5.00%, 07/01/45

  $ 1,250     $ 1,369,500  
   

 

 

 
    10,528,444  
Puerto Rico — 1.3%  

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

   

5.50%, 05/15/39

    315       318,226  

5.63%, 05/15/43

    345       348,602  

Puerto Rico Sales Tax Financing Corp. Sales Tax Revenue, RB, Restructured, Series A-1:

   

4.50%, 07/01/34

    15       14,981  

4.75%, 07/01/53

    388       356,289  

5.00%, 07/01/58

    1,144       1,084,569  
   

 

 

 
    2,122,667  
Rhode Island — 4.3%  

Narragansett Bay Commission, Refunding RB, Series A, 4.00%, 09/01/43

    900       913,869  

Rhode Island Health & Educational Building Corp., Refunding RB, Series A (AGM), 3.75%, 05/15/32

    1,155       1,184,372  

Rhode Island Housing & Mortgage Finance Corp., RB, (FHA), S/F Housing, Series 3-B, 4.13%, 10/01/49

    480       483,811  

State of Rhode Island, COP, School for the Deaf Project, Series C (AGC), 5.38%, 04/01/19(b)

    900       902,601  

Tobacco Settlement Financing Corp., Refunding RB:

   

Series A, 5.00%, 06/01/40

    1,000       1,037,340  

Series B, 4.50%, 06/01/45

    2,730       2,561,859  
   

 

 

 
    7,083,852  
South Carolina — 0.8%  

State of South Carolina Public Service Authority, RB, Series E, 5.50%, 12/01/53

    1,000       1,082,080  

State of South Carolina Public Service Authority, Refunding RB, Series A, 5.00%, 12/01/36

    175       194,476  
   

 

 

 
    1,276,556  
South Dakota — 0.5%  

City of Rapid City South Dakota, RB, 4.00%, 12/01/48

    740       749,768  
   

 

 

 
Tennessee — 3.0%  

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

    1,950       2,075,346  

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

    875       930,212  

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

    275       280,979  

County of Nashville & Davidson Metropolitan Government Health & Educational Facilities Board, RB, Vanderbilt University Medical Center, Series A, 5.00%, 07/01/40

    675       740,421  

Johnson City Health & Educational Facilities Board, RB, Mountain States Health, Series A, 5.00%, 08/15/42

    800       845,520  
   

 

 

 
    4,872,478  
Texas — 10.9%  

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

    11,690       3,873,364  

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

    1,500       1,549,410  

County of Midland Texas Fresh Water Supply District No. 1, RB, CAB, City of Midland Project, Series A, 0.00%, 09/15/38(d)

    10,760       4,699,537  

El Paso Independent School District, GO, (PSF-GTD), 4.00%, 08/15/43

    890       924,185  

Leander ISD, GO, Refunding CAB, Series D (PSF-GTD)(d):

   

0.00%, 08/15/24(b)

    370       197,869  
Security   Par
(000)
    Value  
Texas (continued)  

0.00%, 08/15/35

  $ 3,630     $ 1,880,413  

Red River Texas Education Financing Corp., RB, Texas Christian University Project, 5.25%, 03/15/38

    760       846,617  

San Antonio Public Facilities Corp., Refunding RB, Convention Center Refinancing and Expansion Project, 4.00%, 09/15/42

    1,355       1,368,984  

San Jacinto College District, GOL, Series A, 5.00%, 02/15/44

    345       394,542  

Texas Private Activity Bond Surface Transportation Corp., RB, Senior Lien, LBJ Infrastructure Group LLC, 7.00%, 06/30/40

    2,000       2,123,800  
   

 

 

 
    17,858,721  
Utah — 1.9%  

Salt Lake City Corp. Airport Revenue, ARB, Series A, AMT, 5.00%, 07/01/43

    530       593,929  

Utah Charter School Finance Authority, RB, Utah Charter Academies Project, 5.00%, 10/15/48

    360       392,587  

Utah State Charter School Finance Authority, Refunding RB, Mountainville Academy, 4.00%, 04/15/42

    400       404,540  

Utah Transit Authority, Refunding RB, Series A, 5.00%, 06/15/38

    1,500       1,701,255  
   

 

 

 
    3,092,311  
Vermont — 0.7%  

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

    500       517,260  

Vermont Student Assistance Corp., RB, Series A, 4.13%, 06/15/30

    570       591,079  
   

 

 

 
    1,108,339  
Virginia — 2.0%  

Ballston Quarter Community Development Authority, Tax Allocation Bonds, Series A, 5.38%, 03/01/36

    490       505,234  

Virginia Beach Development Authority, Refunding RB, Westminster-Canterbury on Chesapeake Bay:

   

5.00%, 09/01/44

    585       647,987  

4.00%, 09/01/48

    375       379,192  

Virginia HDA, RB, M/F Housing, Rental Housing, Series B, 4.00%, 06/01/53

    385       386,267  

Virginia Small Business Financing Authority, RB, AMT:

   

Covanta Project, 5.00%, 01/01/48(a)(g)

    470       479,485  

Senior Lien, Elizabeth River Crossings OpCo LLC Project, 6.00%, 01/01/37

    725       791,620  
   

 

 

 
    3,189,785  
Washington — 0.4%  

Washington State Housing Finance Commission, Refunding RB, Horizon House Project, 5.00%, 01/01/38(a)

    600       633,300  
   

 

 

 
West Virginia — 0.9%  

West Virginia Hospital Finance Authority, RB, Improvement, West Virginia University Health System Obligated Group, Series A, 4.00%, 06/01/51

    1,570       1,547,392  
   

 

 

 
Wisconsin — 1.2%  

Public Finance Authority, Refunding RB, National Gypsum Co., AMT, 4.00%, 08/01/35

    280       270,816  

Wisconsin Health & Educational Facilities Authority, Refunding RB, Milwaukee Regional Medical Center Thermal Service, 5.00%, 04/01/44

    800       902,664  

WPPI Energy Power Supply Systems, Refunding RB, Series A, 5.00%, 07/01/37

    665       744,793  
   

 

 

 
    1,918,273  
 

 

 

 

Total Municipal Bonds — 138.1%
(Cost — $212,612,829)

 

    226,265,946  
 

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      21  


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Bond Trust (BBK)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds Transferred to Tender Option Bond Trusts(h)

 

California — 1.0%

 

Los Angeles California Unified School District, GO, Election of 2008, Series B-1, 5.25%, 07/01/42(i)

  $ 1,451     $ 1,704,779  
   

 

 

 
Connecticut — 1.7%  

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

    2,611       2,874,730  
   

 

 

 
New Jersey — 0.9%  

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B, 5.25%, 06/15/36(i)

    1,400       1,454,692  
   

 

 

 
New York — 13.5%  

City of New York, GO, Refunding Fiscal 2015, Series B, 4.00%, 08/01/32

    3,990       4,201,650  

City of New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Series FF-2, 5.50%, 06/15/40

    405       409,228  

City of New York Water & Sewer System, Refunding RB, 2nd General Resolution, Fiscal 2013:

   

Series BB, 4.00%, 06/15/47

    3,660       3,727,515  

Series CC, 5.00%, 06/15/47

    6,000       6,678,586  

Hudson Yards Infrastructure Corp., RB, Senior-Fiscal 2012:(i)

   

5.75%, 02/15/21

    1,548       1,664,410  

5.75%, 02/15/47

    952       1,023,895  

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

    2,505       2,717,362  

State of New York Thruway Authority, Refunding RB, Transportation, Personal Income Tax, Series A, 5.00%, 03/15/31

    1,560       1,675,089  
   

 

 

 
    22,097,735  
Texas — 2.9%  

City of Houston Texas Community College, GO, Limited Tax, 4.00%, 02/15/43

    2,999       3,031,520  

City of San Antonio Texas Electric and Gas Systems, RB, Junior Lien, 5.00%, 02/01/43

    1,580       1,717,104  
   

 

 

 
    4,748,624  
Virginia — 1.4%  

Hampton Roads Transportation Accountability Commission, RB, Transportation Fund, Senior Lien, Series A, 5.00%, 07/01/48

    1,996       2,282,638  
   

 

 

 
Washington — 2.1%  

Washington Metropolitan Area Transit Authority, RB, Series B, 5.00%, 07/01/42

    2,992       3,396,180  
   

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 23.5%
(Cost — $37,734,773)

 

    38,559,378  
 

 

 

 

Total Long-Term Investments — 161.6%
(Cost — $250,347,602)

 

    264,825,324  
 

 

 

 
Security       
Shares
    Value  
Short-Term Securities — 0.1%  

BlackRock Liquidity Funds, MuniCash, Institutional Class, 1.55%(j)(k)

    189,753     $ 189,772  
   

 

 

 

Total Short-Term Securities — 0.1%
(Cost — $189,772)

 

    189,772  
 

 

 

 

Total Investments — 161.7%
(Cost — $250,537,374)

 

    265,015,096  

Other Assets Less Liabilities — 1.4%

 

    2,430,599  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (14.4)%

 

    (23,629,198

VMTP Shares, at Liquidation Value, Net of Deferred Offering Costs — (48.7)%

 

    (79,900,000
 

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 163,916,497  
 

 

 

 

 

(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) 

Issuer filed for bankruptcy and/or is in default.

(f) 

Non-income producing security.

(g) 

Variable or floating rate security, which interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as of period end.

(h) 

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.

(i) 

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 June 15, 2019 to January 1, 2026, is $3,415,794. See Note 4 of the Notes to Financial Statements for details.

(j) 

Annualized 7-day yield as of period end.

 
(k) 

During the six months ended February 28, 2019, 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:

 

Affiliate   

Shares

Held at

08/31/18

     Net
Activity
    

Shares

Held at

02/28/19

    

Value at

02/28/19

     Income      Net
Realized
Gain (Loss)
 (a)
    

Change in

Unrealized

Appreciation

(Depreciation)

 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     2,100,576        (1,910,823      189,753      $ 189,772      $ 20,642      $ 430      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

 

 

22    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

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:

                 

10-Year U.S. Treasury Note

     25          06/19/19        $ 3,050        $ 15,823  

Long U.S. Treasury Bond

     87          06/19/19          12,569          143,190  

5-Year U.S. Treasury Note

     16          06/28/19          1,833          5,475  
                 

 

 

 
                  $ 164,488  
                 

 

 

 

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:

 

     

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized appreciation(a)

   $      $      $      $      $ 164,488      $      $ 164,488  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

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 six months ended February 28, 2019, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

     

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ (254,903    $      $ (254,903
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 136,966      $      $ 136,966  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 15,804,254  

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 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 Investments(a)

   $        $ 264,825,324        $        $ 264,825,324  

Short-Term Securities

     189,772                            189,772  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 189,772        $ 264,825,324        $        $ 265,015,096  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

 

Assets:

 

Interest rate contracts

   $ 164,488        $        $        $ 164,488  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 
  (b) 

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

 

 

 

SCHEDULES OF INVESTMENTS      23  


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

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

   $        $ (23,564,266      $        $ (23,564,266

VMTP Shares at Liquidation Value

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

 

 

      

 

 

      

 

 

      

 

 

 
   $        $ (103,464,266      $        $ (103,464,266
  

 

 

      

 

 

      

 

 

      

 

 

 

During the six months ended February 28, 2019, there were no transfers between levels.

See notes to financial statements.

 

 

24    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited)

February 28, 2019

  

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 101.3%

 

Alabama — 1.9%

 

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

   

6.00%, 06/01/19

  $ 1,000     $ 1,010,380  

6.13%, 06/01/19

    1,000       1,010,680  

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

    335       359,994  
   

 

 

 
    2,381,054  
Arizona — 0.2%  

County of Maricopa IDA, Refunding RB, Honorhealth, Series A, 4.13%, 09/01/38

    300       307,695  
   

 

 

 
California — 11.5%  

California Health Facilities Financing Authority, RB, Sutter Health, Series B, 6.00%, 08/15/20(a)

    1,120       1,192,879  

California Municipal Finance Authority, Refunding RB, Emerson College, Series B, 5.00%, 01/01/36

    750       841,785  

California Statewide Communities Development Authority, Refunding RB, Adventist Health System, Series A, 4.00%, 03/01/42

    1,000       1,018,190  

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

    1,025       1,188,672  

Los Angeles Municipal Improvement Corp., Refunding LRB, Real Property, Series B (AGC), 5.50%, 04/01/19(a)

    1,810       1,815,647  

Redondo Beach Unified School District, GO, Election of 2008, Series E, 5.50%, 08/01/21(a)

    1,000       1,097,000  

Regents of the University of California Medical Center Pooled Revenue, Refunding RB, Series J:

   

5.25%, 05/15/23(a)

    1,835       2,111,443  

5.25%, 05/15/38

    520       580,653  

San Diego Public Facilities Financing Authority Water, Refunding RB, Series B (AGC), 5.38%, 08/01/19(a)

    1,125       1,143,034  

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

   

5.50%, 11/01/30

    1,000       1,144,300  

5.50%, 11/01/31

    1,500       1,711,455  

State of California Public Works Board, RB, Department of Corrections & Rehabilitation, Series F, 5.25%, 09/01/33

    505       567,044  

Township of Washington California Health Care District, GO, Election of 2004, Series B, 5.50%, 08/01/40

    380       441,518  
   

 

 

 
    14,853,620  
Colorado — 4.3%  

City & County of Denver Colorado, RB, Capital Appreciation Bonds Series, Series A-2, 0.00%, 08/01/38(b)

    915       417,386  

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

    3,250       3,661,515  

Colorado Health Facilities Authority, RB, Hospital, NCMC, Inc. Project, Series B (AGM), 6.00%, 05/15/19(a)

    1,425       1,437,412  
   

 

 

 
    5,516,313  
Connecticut — 0.3%  

Connecticut Housing Finance Authority, Refunding RB, S/F Housing, Sub-Series B-1, 4.00%, 05/15/45

    415       418,009  
   

 

 

 
Florida — 9.9%  

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

    4,525       4,851,071  

County of Collier Florida Health Facilities Authority, Refunding RB, Series A, 5.00%, 05/01/45

    795       844,012  

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

    4,215       4,826,091  

County of Orange Florida Health Facilities Authority, Refunding RB, Presbyterian Retirement Communities Project, 5.00%, 08/01/41

    1,305       1,396,037  
Security   Par
(000)
    Value  
Florida (continued)  

Reedy Creek Florida Improvement District, GO, Series A, 5.25%, 06/01/32

  $ 745     $ 840,486  
   

 

 

 
    12,757,697  
Georgia — 4.0%  

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

    2,500       2,688,000  

Main Street Natural Gas, Inc., RB, Series A, 5.00%, 05/15/49

    2,225       2,511,491  
   

 

 

 
    5,199,491  
Idaho — 0.7%  

Idaho Health Facilities Authority, RB, Trinity Health Credit Group, 4.00%, 12/01/43

    670       676,915  

Idaho State Building Authority, RB, Department of Health And Welfare Project, 4.00%, 09/01/48

    230       233,974  
   

 

 

 
    910,889  
Illinois — 20.8%  

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

    1,000       1,025,770  

City of Chicago Illinois O’Hare International Airport, GARB, 3rd Lien:

   

Series A, 5.75%, 01/01/21(a)

    690       741,281  

Series A, 5.75%, 01/01/39

    135       142,919  

Series C, 6.50%, 01/01/21(a)

    3,740       4,067,512  

City of Chicago Illinois Transit Authority, RB, Sales Tax Receipts:

   

5.25%, 12/01/36

    3,185       3,366,035  

5.25%, 12/01/40

    3,000       3,154,350  

City of Chicago Illinois Transit Authority, Refunding RB, Federal Transit Administration, Section 5309 (AGM), 5.00%, 06/01/28

    3,000       3,093,510  

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

    1,480       1,548,850  

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

   

5.50%, 12/01/38

    855       894,048  

5.25%, 12/01/43

    1,430       1,477,705  

Illinois Finance Authority, RB, Series A:

   

Carle Foundation, 6.00%, 08/15/41

    1,885       2,046,356  

Chicago LLC, University of Illinois at Chicago Project, 5.00%, 02/15/37

    520       564,325  

Railsplitter Tobacco Settlement Authority, RB(a):

   

5.50%, 06/01/21

    915       990,707  

6.00%, 06/01/21

    260       284,359  

State of Illinois, GO:

   

5.25%, 02/01/31

    610       639,689  

5.25%, 02/01/32

    1,010       1,055,036  

5.50%, 07/01/33

    1,000       1,055,740  

5.50%, 07/01/38

    270       281,966  

State of Illinois, GO, Refunding, Series B, 5.00%, 10/01/27

    345       374,563  
   

 

 

 
    26,804,721  
Louisiana — 0.6%  

Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, Series A, 5.50%, 05/15/29

    790       794,764  
   

 

 

 
Maryland — 0.6%  

Maryland Community Development Administration, Refunding RB, S/F Housing, Series A, 4.10%, 09/01/38

    710       729,461  
   

 

 

 
Massachusetts — 1.0%  

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

    695       750,558  

Massachusetts Development Finance Agency, Refunding RB, Emmanuel College Issue, Series A, 5.00%, 10/01/35

    500       548,500  
   

 

 

 
    1,299,058  
 

 

 

SCHEDULES OF INVESTMENTS      25  


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Michigan — 1.3%  

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

   

6.25%, 07/01/19(a)

  $ 1,695     $ 1,720,273  

6.25%, 07/01/36

    5       5,068  
   

 

 

 
    1,725,341  
Minnesota — 3.2%  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series A, 4.00%, 11/15/48

    395       399,408  

Duluth Economic Development Authority, Refunding RB, Essentia Health Obligated Group, Series A, 5.25%, 02/15/58

    520       574,720  

Duluth EDA, Refunding RB, Essentia Health Obligated Group, Series A, 4.25%, 02/15/48

    3,050       3,090,290  
   

 

 

 
    4,064,418  
Mississippi — 1.8%  

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

    1,000       1,185,270  

Mississippi State University Educational Building Corp., Refunding RB, Mississippi State University Improvement Project, 5.25%, 08/01/23(a)

    1,000       1,150,600  
   

 

 

 
    2,335,870  
Nevada — 1.6%  

County of Clark Nevada Water Reclamation District, GO, Series A, 5.25%, 07/01/19(a)

    2,000       2,024,040  
   

 

 

 
New Jersey — 7.3%  

New Jersey Health Care Facilities Financing Authority, RB:

   

Inspira Health Obligated Group, 4.00%, 07/01/47

    300       305,643  

Virtua Health, Series A (AGC), 5.50%, 07/01/38

    1,300       1,314,742  

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

    1,220       1,223,367  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program Bonds, Series S, 5.00%, 06/15/46

    2,070       2,180,973  

Transportation System, Series AA, 5.50%, 06/15/39

    1,620       1,719,419  

New Jersey Turnpike Authority, RB, Series A, 4.00%, 01/01/48

    270       276,375  

Tobacco Settlement Financing Corp., Refunding RB:

   

Series A, 5.00%, 06/01/35

    580       646,706  

Series A, 5.00%, 06/01/46

    1,365       1,439,597  

Sub-Series B, 5.00%, 06/01/46

    340       344,243  
   

 

 

 
    9,451,065  
New York — 2.5%  

Metropolitan Transportation Authority, RB:

   

Series A, 5.25%, 11/15/21(a)

    1,565       1,718,213  

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

    1,000       1,115,780  

Westchester New York Tobacco Asset Securitization, Refunding RB, Tobacco Settlement Bonds, Sub-Series C, 4.00%, 06/01/42

    420       393,935  
   

 

 

 
    3,227,928  
Ohio — 0.6%  

Ohio Housing Finance Agency, RB, S/F Housing, Series A (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 09/01/48

    280       282,246  

State of Ohio Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1, 5.25%, 02/15/31

    470       523,885  
   

 

 

 
    806,131  
Oregon — 0.2%  

County of Clackamas Oregon School District No. 12 North Clackamas, GO, CAB, Series A, 0.00%, 06/15/38(b)

    510       237,558  
   

 

 

 
Security   Par
(000)
    Value  
Pennsylvania — 3.1%  

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

  $ 530     $ 532,523  

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

    1,720       1,854,624  

Township of Bristol Pennsylvania School District, GO, 5.25%, 06/01/37

    1,500       1,660,080  
   

 

 

 
    4,047,227  
Rhode Island — 0.8%  

Tobacco Settlement Financing Corp., Refunding RB, Series A, 5.00%, 06/01/40

    1,050       1,089,207  
   

 

 

 
South Carolina — 7.5%  

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

    1,525       1,726,224  

South Carolina Jobs EDA, Refunding RB:

   

Anmed Health Projects, 5.00%, 02/01/38

    2,875       3,098,560  

Prisma Health Obligated Group, Series A, 5.00%, 05/01/48

    785       858,876  

State of South Carolina Jobs EDA, Refunding RB, Prisma Health Obligated Group, Series A, 5.00%, 05/01/43

    880       968,062  

State of South Carolina Public Service Authority, RB, Series E:

   

5.00%, 12/01/48

    440       467,971  

5.50%, 12/01/53

    500       541,040  

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

    1,825       1,995,455  
   

 

 

 
    9,656,188  
Texas — 13.0%  

City of Beaumont Texas, GO, Certificates of Obligation, 5.25%, 03/01/37

    980       1,090,760  

City of Frisco Texas ISD, GO, School Building (AGM), 5.50%, 08/15/41

    3,365       3,421,667  

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

   

6.00%, 05/15/19

    2,465       2,486,372  

6.00%, 05/15/19

    135       136,185  

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

   

5.38%, 05/15/19

    1000       1,007,455  

6.00%, 05/15/19

    2,215       2,234,217  

Lower Colorado River Authority, Refunding RB, 5.50%, 05/15/33

    1,000       1,130,970  

North Texas Tollway Authority, Refunding RB:

   

4.25%, 01/01/49

    2,555       2,640,056  

1st Tier (AGM), 6.00%, 01/01/21(a)

    1,000       1,076,920  

Red River Texas Education Financing Corp., RB, Texas Christian University Project, 5.25%, 03/15/38

    440       490,147  

Texas Transportation Commission, RB, First Tier Toll Revenue:

   

0.00%, 08/01/39(b)

    1,000       390,650  

0.00%, 08/01/43(b)

    795       247,062  

5.00%, 08/01/57

    340       369,022  
   

 

 

 
    16,721,483  
Virginia — 0.3%  

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

    370       399,045  
   

 

 

 
Washington — 2.2%  

City of Seattle Washington Municipal Light & Power, Refunding RB, Series A, 5.25%, 02/01/21(a)

    1,025       1,095,028  

State of Washington, GO, Various Purposes, Series B, 5.25%, 02/01/21(a)

    795       849,314  

Washington State Housing Finance Commission, Refunding RB, Horizon House Project, 5.00%, 01/01/43(c)

    900       940,860  
   

 

 

 
    2,885,202  
 

 

 

26    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
West Virginia — 0.1%  

West Virginia Hospital Finance Authority, RB, Improvement, West Virginia University Health System Obligated Group, Series A, 4.00%, 06/01/51

  $ 140     $ 137,984  
   

 

 

 

Total Municipal Bonds — 101.3%
(Cost — $124,926,651)

 

    130,781,459  
 

 

 

 

Municipal Bonds Transferred to Tender Option Bond Trusts(d)

 

California — 12.8%

 

Fremont Union High School District, GO, Refunding Series A, 4.00%, 08/01/46

    1,640       1,711,045  

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

    2,775       3,132,355  

San Marcos Unified School District, GO, Election of 2010, Series A, 5.25%, 08/01/21(a)

    10,680       11,652,307  
   

 

 

 
    16,495,707  
Connecticut — 1.1%  

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

    1,306       1,437,365  
   

 

 

 
District of Columbia — 0.6%  

District of Columbia Housing Finance Agency, RB, M/F Housing, Series B-2 (FHA), 4.10%, 09/01/39

    790       802,652  
   

 

 

 
Georgia — 0.8%  

County of Dalton Whitfield Joint Development Authority, RB, Hamilton Health Care System Obligation, 4.00%, 08/15/48

    1,025       1,049,979  
   

 

 

 
Idaho — 1.3%  

Idaho State Building Authority, RB, State Office Campus Project, Series A, 4.00%, 09/01/48

    1,700       1,737,102  
   

 

 

 
Illinois — 5.5%  

State of Illinois Toll Highway Authority, RB:

   

Series A, 5.00%, 01/01/40

    825       919,721  

Series B, 5.00%, 01/01/40

    3,329       3,685,774  

Series C, 5.00%, 01/01/38

    2,252       2,494,806  
   

 

 

 
    7,100,301  
Iowa — 1.1%  

Iowa Finance Authority, Refunding RB, UnityPoint Health, Series E, 4.00%, 08/15/46

    1,455       1,459,937  
   

 

 

 
Michigan — 2.3%  

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

    2,650       3,008,969  
   

 

 

 
Nevada — 3.4%  

Las Vegas Valley Water District, GO, Refunding, Series C, 5.00%, 06/01/28

    4,100       4,379,620  
   

 

 

 
New Jersey — 6.0%  

New Jersey State Turnpike Authority, RB, Series A, 5.00%, 07/01/22(a)(e)

    6,020       6,650,670  

New Jersey Transportation Trust Fund Authority, RB, Transportation System, Series B, 5.25%, 06/15/36(e)

    1,000       1,039,066  
   

 

 

 
    7,689,736  
New York — 15.3%  

City of New York Housing Development Corp., Refunding RB, Sustainable Neighborhood Bonds, Series A, 4.15%, 12/01/43

    1,890       1,952,512  

City of New York Municipal Water Finance Authority, Refunding RB, Series FF, 5.00%, 06/15/45

    3,019       3,269,594  

City of New York New York, GO, Sub-Series-D1, Series D, 5.00%, 12/01/43(e)

    2,620       2,999,350  
Security   Par
(000)
    Value  
New York (continued)  

City of New York New York Municipal Water Finance Authority, Refunding RB, Water & Sewer System, 2nd General Resolution, Series BB, 5.25%, 06/15/44

  $ 4,993     $ 5,413,248  

Hudson Yards Infrastructure Corp., RB, Senior-Fiscal 2012(e):

   

5.75%, 02/15/21(a)

    619       665,764  

5.75%, 02/15/47

    381       409,558  

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

    2,955       3,205,511  

New York Liberty Development Corp., Refunding RB, 4 World Trade Center Project, 5.75%, 11/15/51(e)

    1,740       1,897,730  
   

 

 

 
    19,813,267  
North Carolina — 2.9%  

North Carolina Capital Facilities Finance Agency, Refunding RB, Duke University Project, Series B, 5.00%, 10/01/55

    2,400       2,695,164  

North Carolina Housing Finance Agency, RB, S/F Housing, Series 39-B (Ginnie Mae, Fannie Mae & Freddie Mac), 4.00%, 01/01/48

    985       989,455  
   

 

 

 
    3,684,619  
Pennsylvania — 3.6%  

County of Westmoreland Pennsylvania Municipal Authority, Refunding RB, (BAM), 5.00%, 08/15/38

    1,349       1,509,286  

Pennsylvania Turnpike Commission, RB, Sub-Series A, 5.50%, 12/01/42

    1,094       1,254,226  

Pennsylvania Turnpike Commission, Refunding RB, Sub Series B-2 (AGM), 5.00%, 06/01/35

    1,640       1,852,101  
   

 

 

 
    4,615,613  
Rhode Island — 1.6%  

Rhode Island Health & Educational Building Corp., RB, Series A, 4.00%, 09/15/47

    1,982       2,019,741  
   

 

 

 
Texas — 5.7%  

County of Tarrant Texas Cultural Education Facilities Finance Corp., RB, Baylor Health Care System Project, Series A, 5.00%, 11/15/38

    4,456       4,817,859  

North Texas Tollway Authority, RB, Special Projects System, Series A, 5.50%, 09/01/21(a)

    2,310       2,522,070  
   

 

 

 
    7,339,929  
Utah — 0.8%  

City of Riverton Utah, RB, IHC Health Services, Inc., 5.00%, 08/15/19(a)

    1,005       1,020,064  
   

 

 

 
Virginia — 1.2%  

Hampton Roads Transportation Accountability Commission, RB, Transportation Fund, Senior Lien, Series A, 5.50%, 07/01/57(e)

    1,337       1,572,134  
   

 

 

 
West Virginia — 1.2%  

Morgantown Utility Board, Inc., RB, Series B,
4.00%, 12/01/48(e)

    1,511       1,537,392  
   

 

 

 
Wisconsin — 2.4%  

Wisconsin Housing & Economic Development Authority, RB, M/F Housing, Series A:

   

4.10%, 11/01/43

    1,342       1,359,389  

4.45%, 05/01/57

    1,678       1,699,267  
   

 

 

 
    3,058,656  
 

 

 

 

Total Municipal Bonds Transferred to Tender Option Bond Trusts — 69.6%
(Cost — $86,833,018)

 

    89,822,783  
 

 

 

 

Total Long-Term Investments — 170.9%
(Cost — $211,759,669)

 

    220,604,242  
 

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      27  


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Income Investment Quality Trust (BAF)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Short-Term Securities — 0.5%

 

BlackRock Liquidity Funds, MuniCash, Institutional Class, 1.55%(f)(g)

    589,555     $ 589,614  
   

 

 

 

Total Short-Term Securities — 0.5%
(Cost — $589,614)

 

    589,614  
 

 

 

 

Total Investments — 171.4%
(Cost — $212,349,283)

 

    221,193,856  

Other Assets Less Liabilities — 1.4%

 

    1,832,204  

Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (40.1)%

 

    (51,779,752

VMTP Shares, at Liquidation Value — (32.7)%

 

    (42,200,000
 

 

 

 

Net Assets Applicable to Common Shares — 100.0%

 

  $ 129,046,308  
 

 

 

 

 

(a) 

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.

(b) 

Zero-coupon bond.

(c) 

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.

(d) 

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.

(e) 

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 June 15, 2019 to December 1, 2026, is $9,988,902. See Note 4 of the Notes to Financial Statements for details.

(f) 

Annualized 7-day yield as of period end.

 
(g) 

During the six months ended February 28, 2019, 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:

 

Affiliate    Shares
Held at
08/31/18
     Net
Activity
     Shares
Held at
02/28/19
     Value at
02/28/19
     Income      Net
Realized
Gain (Loss)
 (a)
     Change in
Unrealized
Appreciation
(Depreciation)
 

BlackRock Liquidity Funds, MuniCash, Institutional Class

     690,077        (100,522      589,555      $ 589,614      $ 8,450      $ 478      $  
           

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Includes net capital gain distributions, if applicable.

 

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:

                 

10-Year U.S. Treasury Note

     13          06/19/19        $ 1,586        $ 8,219  

Long U.S. Treasury Bond

     50          06/19/19          7,223          82,293  

5-Year U.S. Treasury Note

     20          06/28/19          2,291          6,844  
                 

 

 

 
        $ 97,356  
                 

 

 

 

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:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Net unrealized appreciation(a)

   $      $      $      $      $ 97,356      $      $ 97,356  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

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.

 

 

 

28    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Income Investment Quality Trust (BAF)

 

For the six months ended February 28, 2019, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from:

                    

Futures contracts

   $      $      $      $      $ (218,010    $      $ (218,010
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Net Change in Unrealized Appreciation (Depreciation) on:                                                 

Futures contracts

   $      $      $      $      $ 86,680      $      $ 86,680  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — short

   $ 10,070,953  

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 Investments(a)

   $        $ 220,604,242        $        $ 220,604,242  

Short-Term Securities

     589,614                            589,614  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 589,614        $ 220,604,242        $        $ 221,193,856  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(b)

                 

Assets:

                 

Interest rate contracts

   $ 97,356        $        $             —        $ 97,356  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a)

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

 
  (b)

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

 

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

   $        $ (51,608,191      $        $ (51,608,191

VMTP Shares at Liquidation Value

              (42,200,000                 (42,200,000
  

 

 

      

 

 

      

 

 

      

 

 

 
   $             —        $ (93,808,191      $             —        $ (93,808,191
  

 

 

      

 

 

      

 

 

      

 

 

 

During the six months ended February 28, 2019, there were no transfers between levels.

See notes to financial statements.

 

 

SCHEDULES OF INVESTMENTS      29  


Schedule of Investments  (unaudited)

February 28, 2019

  

BlackRock Municipal Income Quality Trust (BYM)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  

Municipal Bonds — 116.4%

 

Alabama — 3.3%

 

City of Birmingham Alabama, GO, Convertible CAB, Series A1, 5.00%, 03/01/45

  $ 1,165     $ 1,266,378  

City of Birmingham Alabama Airport Authority, ARB, (AGM), 5.50%, 07/01/40

    5,800       6,027,882  

City of Birmingham Alabama Special Care Facilities Financing Authority, RB, Children’s Hospital (AGC), 6.00%, 06/01/19(a)

    1,495       1,510,518  

State of Alabama Docks Department, Refunding RB, 6.00%, 10/01/20(a)

    3,800       4,059,578  
   

 

 

 
    12,864,356  
Alaska — 0.3%  

Alaska Industrial Development & Export Authority, RB, Providence Health Services, Series A, 5.50%, 10/01/41

    1,070       1,150,411  
   

 

 

 
Arizona — 0.8%  

Arizona State University, RB, Green Bonds, Series B, 5.00%, 07/01/42

    1,395       1,576,280  

State of Arizona, COP, Department of Administration, Series A (AGM):

   

5.00%, 10/01/27

    1,250       1,274,213  

5.25%, 10/01/28

    250       255,200  
   

 

 

 
    3,105,693  
California — 10.5%  

California Health Facilities Financing Authority, RB, St. Joseph Health System, Series A, 5.75%, 07/01/39

    625       633,044  

California Health Facilities Financing Authority, Refunding RB, Kaiser Permanente, Sub-Series A-2, 5.00%, 11/01/47

    1,465       1,902,068  

California Infrastructure & Economic Development Bank, RB, Bay Area Toll Bridges, 1st Lien, Series A (AMBAC), 5.00%, 01/01/28(a)

    10,100       12,660,552  

California Statewide Communities Development Authority, RB, Kaiser Permanente, Series A, 5.00%, 04/01/42

    1,620       1,735,927  

California Statewide Communities Development Authority, Refunding RB, Adventist Health System, Series A, 4.00%, 03/01/48

    3,175       3,195,860  

City & County of San Francisco Public Utilities Commission Wastewater Revenue, Refunding RB, Sewer System, Series B, 4.00%, 10/01/42

    1,500       1,534,395  

Mount San Antonio Community College District, GO, Refunding, CAB, Election of 2008, Series A, 0.00%, 08/01/43(b)

    1,580       1,354,202  

San Diego California Unified School District, GO, Election of 2008(c):

   

CAB, Series C, 0.00%, 07/01/38

    2,000       991,760  

CAB, Series G, 0.00%, 07/01/34

    725       364,030  

CAB, Series G, 0.00%, 07/01/35

    775       365,947  

CAB, Series G, 0.00%, 07/01/36

    1,155       512,912  

CAB, Series G, 0.00%, 07/01/37

    770       321,698  

CAB, Series K-2, 0.00%, 07/01/38

    1,745       839,555  

CAB, Series K-2, 0.00%, 07/01/39

    2,115       981,656  

CAB, Series K-2, 0.00%, 07/01/40

    2,715       1,205,460  

San Diego California Unified School District, GO, Refunding, CAB, Series R-1, 0.00%, 07/01/31(c)

    1,400       954,338  

State of California, GO, Refunding, Various Purposes, 5.00%, 10/01/41

    1,100       1,180,421  

State of California, GO, Various Purposes, 5.00%, 04/01/42

    3,000       3,234,990  

State of California Public Works Board, LRB, Various Capital Projects, Series I, 5.50%, 11/01/33

    1,415       1,609,110  
Security   Par
(000)
    Value  
California (continued)  

Yosemite Community College District, GO, CAB, Election of 2004, Series D, 0.00%, 08/01/37(c)

  $ 10,000     $ 5,103,200  
   

 

 

 
    40,681,125  
Colorado — 0.6%  

Regional Transportation District, COP, Refunding, Series A, 5.38%, 06/01/31

    960       999,341  

Regional Transportation District, COP, Series A, 5.00%, 06/01/39

    1,305       1,435,656  
   

 

 

 
    2,434,997  
Connecticut — 1.4%  

State of Connecticut, GO, Series E, 5.00%, 09/15/37

    2,280       2,523,094  

University of Connecticut, RB, Series A, 5.00%, 01/15/34

    2,620       2,910,322  
   

 

 

 
    5,433,416  
Delaware — 0.8%  

County of Kent Delaware, RB, CHF-Dover, LLC-Delaware State University Project, Series A:

   

5.00%, 07/01/40

    770       819,172  

5.00%, 07/01/48

    2,110       2,229,089  
   

 

 

 
    3,048,261  
District of Columbia — 2.5%  

District of Columbia Tobacco Settlement Financing Corp., Refunding RB, Asset-Backed, 6.75%, 05/15/40

    9,500       9,806,470  
   

 

 

 
Florida — 7.0%  

County of Brevard Florida Health Facilities Authority, Refunding RB, Health First, Inc. Project, 5.00%, 04/01/39

    1,795       1,934,956  

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

    2,770       3,171,594  

County of Miami-Dade Florida Aviation, Refunding ARB(a):

   

Aviation, Miami International Airport, Series A-1, 5.50%, 10/01/20

    5,000       5,298,800  

Series A, 5.50%, 10/01/19

    5,000       5,111,100  

County of Miami-Dade Florida Educational Facilities Authority, RB, University of Miami, Series A, 5.00%, 04/01/40

    3,910       4,281,411  

County of Miami-Dade Florida Health Facilities Authority, Refunding RB, Nicklaus Children’s Hospital Project, 5.00%, 08/01/42

    685       759,706  

County of Orange Florida Health Facilities Authority, Refunding RB, Presbyterian Retirement Communities Project:

   

5.00%, 08/01/41

    630       673,949  

5.00%, 08/01/47

    1,845       1,965,202  

County of Sarasota Florida Public Hospital District, RB, Sarasota Memorial Hospital Project, Series A, 5.63%, 07/01/19(a)

    300       303,870  

Reedy Creek Improvement District, GO, Series A, 5.25%, 06/01/33

    1,340       1,508,840  

Tohopekaliga Water Authority, Refunding RB, Series A, 5.25%, 10/01/21(a)

    2,000       2,179,700  
   

 

 

 
    27,189,128  
Georgia — 3.6%  

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

    7,500       8,064,000  

City of Atlanta Georgia Water & Wastewater Revenue, Refunding RB, 5.00%, 11/01/40

    1,500       1,672,035  

County of Gainesville Georgia & Hall Hospital Authority, Refunding RB, Northeast Georgia Health System, Inc. Project, Series A (GTD), 5.50%, 08/15/54

    545       619,605  
 

 

 

30    2019 BLACKROCK SEMI-ANNUAL REPORT TO SHAREHOLDERS


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Income Quality Trust (BYM)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Georgia (continued)  

County of Georgia Housing & Finance Authority, RB, S/F Housing, Series A:

   

3.95%, 12/01/43

  $ 685     $ 689,706  

4.00%, 12/01/48

    500       504,145  

Main Street Natural Gas, Inc., RB, Series A:

   

5.00%, 05/15/38

    595       675,307  

5.00%, 05/15/43

    775       839,883  

Private Colleges & Universities Authority, RB, Savannah College of Art & Design:

   

5.00%, 04/01/33

    155       169,686  

5.00%, 04/01/44

    595       636,811  
   

 

 

 
    13,871,178  
Hawaii — 1.4%  

State of Hawaii Harbor System, RB, Series A, 5.50%, 07/01/35

    5,000       5,234,650  
   

 

 

 
Illinois — 13.6%  

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

   

3rd Lien, 5.63%, 01/01/21(a)

    1,230       1,318,658  

3rd Lien, 5.63%, 01/01/35

    295       311,977  

Senior Lien, Series D, 5.25%, 01/01/42

    3,300       3,729,561  

City of Chicago Illinois O’Hare International Airport, Refunding GARB, Senior Lien, Series D, 5.25%, 01/01/34

    9,800       10,747,366  

City of Chicago Illinois Transit Authority, RB:

   

5.25%, 12/01/49

    3,500       3,832,745  

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

    650       686,946  

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

   

5.13%, 12/01/38

    7,700       7,929,383  

5.50%, 12/01/38

    1,000       1,045,670  

County of Cook Illinois Forest Preserve District, GO, Refunding, Limited Tax Project, Series B, 5.00%, 12/15/37

    210       220,214  

County of Will Illinois, GO, 5.00%, 11/15/45

    1,400       1,540,224  

Illinois Finance Authority, RB, Chicago LLC, University of Illinois at Chicago Project, Series A:

   

5.00%, 02/15/37

    700       759,668  

5.00%, 02/15/47

    480       511,627  

5.00%, 02/15/50

    240       255,286  

Illinois Finance Authority, Refunding RB:

   

OSF Health Care System, Series A, 5.00%, 11/15/45

    2,815       3,012,416  

Silver Cross Hospital & Medical Centers, Series C, 4.13%, 08/15/37

    3,130       3,119,890  

Silver Cross Hospital & Medical Centers, Series C, 5.00%, 08/15/44

    390       416,692  

University of Chicago Medical Center, Series B, 4.00%, 08/15/41

    900       916,974  

Railsplitter Tobacco Settlement Authority, RB, 6.00%, 06/01/21(a)

    710       776,520  

State of Illinois, GO:

   

5.25%, 07/01/29

    8,345       8,783,864  

5.50%, 07/01/33

    880       929,051  

5.50%, 07/01/38

    1,475       1,540,372  
   

 

 

 
    52,385,104  
Indiana — 0.3%  

Indiana Finance Authority, RB, CWA Authority Project, 1st Lien, Series A, 5.25%, 10/01/38

    1,100       1,186,427  
   

 

 

 
Iowa — 2.2%  

Iowa Finance Authority, RB, Iowa Health Care Facilities:

   

Genesis Health System, 5.50%, 07/01/33

    3,000       3,381,150  

Series A (AGC), 5.63%, 08/15/19(a)

    5,000       5,088,350  
   

 

 

 
    8,469,500  
Security   Par
(000)
    Value  
Kentucky — 0.1%  

State of Kentucky Property & Building Commission, Refunding RB, Project No. 93 (AGC), 5.25%, 02/01/29

  $ 170     $ 170,447  
   

 

 

 
Maryland — 1.7%  

County of Montgomery Maryland, RB, Trinity Health Credit Group, 4.00%, 12/01/44

    1,810       1,835,105  

Maryland Community Development Administration, Refunding RB, S/F Housing, Series A, 4.10%, 09/01/38

    745       765,420  

Maryland Health & Higher Educational Facilities Authority, RB, University of Maryland Medical System Issue, 4.00%, 07/01/48

    4,000       4,063,480  
   

 

 

 
    6,664,005  
Massachusetts — 3.1%  

Massachusetts Development Finance Agency, RB:

   

Emerson College Issue, Series A, 5.00%, 01/01/47

    2,370       2,559,458  

Emerson College Issue, 5.00%, 01/01/48

    2,595       2,822,322  

UMass Darthmouth Student Housing Project, 5.00%, 10/01/48

    1,970       2,115,642  

Massachusetts Development Finance Agency, Refunding RB:

   

Foxborough Regional Charter School Issue, 5.00%, 07/01/37

    190       200,986  

Western New England University, 5.00%, 09/01/43

    1,750       1,917,930  

Massachusetts Housing Finance Agency, RB, M/F Housing, Series A:

   

3.80%, 12/01/43

    365       360,868  

3.85%, 06/01/46

    490       485,016  

Massachusetts School Building Authority, RB, Dedicated Sales Tax, Senior Series A, 5.00%, 05/15/43

    1,395       1,534,012  
   

 

 

 
    11,996,234  
Michigan — 7.2%  

City of Lansing Michigan, RB, Board of Water & Light Utilities System, Series A, 5.50%, 07/01/41

    1,100       1,186,823  

Michigan Finance Authority, RB, Beaumont Health Credit Group, Series A, 5.00%, 11/01/44

    3,640       3,953,404  

Michigan Finance Authority, Refunding RB:

   

Henry Ford Health System, 5.00%, 11/15/41

    2,235       2,426,249  

Hospital; Trinity Health Credit Group, 5.00%, 12/01/39

    9,020       9,596,198  

Trinity Health Credit Group, 5.00%, 12/01/21(a)

    30       32,623  

Michigan State Housing Development Authority, RB, S/F Housing, Series A, 3.80%, 10/01/38

    3,965       3,935,461  

Royal Oak Hospital Finance Authority Michigan, Refunding RB, Beaumont Health Credit Group, Series D, 5.00%, 09/01/39

    1,560       1,685,908  

State of Michigan Building Authority, Refunding RB, Facilities Program:

   

Series I-A, 5.38%, 10/15/36

    2,000       2,167,860  

Series I-A, 5.38%, 10/15/41

    800       865,440  

Series II-A, 5.38%, 10/15/36

    1,500       1,625,895  

Western Michigan University, Refunding RB, General, University and College Improvements (AGM), 5.00%, 11/15/39

    430       481,320  
   

 

 

 
    27,957,181  
Minnesota — 0.4%  

City of Minneapolis Minnesota, Refunding RB, Fairview Health Services, Series A, 5.00%, 11/15/49

    1,315       1,452,588  
   

 

 

 
Nebraska — 1.8%  

Central Plains Nebraska Energy Project, RB, Gas Project No. 3, 5.25%, 09/01/37

    6,345       6,863,069  
   

 

 

 
 

 

 

SCHEDULES OF INVESTMENTS      31  


Schedule of Investments  (unaudited) (continued)

February 28, 2019

  

BlackRock Municipal Income Quality Trust (BYM)

(Percentages shown are based on Net Assets)

 

Security   Par
(000)
    Value  
Nevada — 1.9%  

County of Clark Nevada, ARB, Las Vegas-McCarran International Airport, Series A:

   

5.25%, 07/01/42

  $ 3,000     $ 3,068,580  

(AGM), 5.25%, 07/01/39

    4,100       4,198,154  
   

 

 

 
    7,266,734  
New Jersey — 9.7%  

New Jersey EDA, RB:

   

School Facilities Construction Bonds, Series DDD, 5.00%, 06/15/42

    375       393,953  

Series WW, 5.25%, 06/15/33

    170       185,164  

Series WW, 5.00%, 06/15/34

    225       240,903  

Series WW, 5.00%, 06/15/36

    1,395       1,483,499  

Series WW, 5.25%, 06/15/40

    400       424,828  

New Jersey EDA, Refunding RB, Sub-Series A, 4.00%, 07/01/32

    930       932,632  

New Jersey Health Care Facilities Financing Authority, Refunding RB, Hospital Asset Transfer Program, 5.00%, 10/01/37

    1,605       1,713,947  

New Jersey Transportation Trust Fund Authority, RB:

   

Transportation Program Bonds, Series S, 5.25%, 06/15/43

    2,150       2,334,212  

5.00%, 06/15/36

    5,070       5,305,501  

CAB, Transportation System, Series A, 0.00%, 12/15/38(c)

    5,845       2,352,612  

Transportation Program, Series AA, 5.25%, 06/15/33

    1,660       1,767,867  

Transportation Program, Series AA, 5.00%, 06/15/38

    945       992,250  

Transportation System, Series A, 5.50%, 06/15/41

    3,000       3,117,660  

Transportation System, Series AA, 5.50%, 06/15/39

    3,785       4,017,285  

Transportation System, Series B, 5.25%, 06/15/36(d)

    5,000       5,194,150  

Transportation System, Series D, 5.00%, 06/15/32

    900       965,340  

New Jersey Transportation Trust Fund Authority, Refunding RB, Transportation System, Series A, 5.00%, 12/15/36

    340       367,448  

South Jersey Port Corp., RB, Sub-Marine Terminal, Series A, 5.00%, 01/01/49

    720       783,562  

Tobacco Settlement Financing Corp., Refunding RB, Series A:

   

5.00%, 06/01/35

    1,750       1,951,268  

5.25%, 06/01/46

    1,725       1,861,465  

Tobacco Settlement Bonds, 5.00%, 06/01/33

    1,000       1,129,380  
   

 

 

 
    37,514,926  
New Mexico — 0.1%  

New Mexico Hospital Equipment Loan Council, Refunding RB, Presbyterian Healthcare Services, 5.00%, 08/01/44

    405       445,634  
   

 

 

 
New York — 3.0%  

City of New York Transitional Finance Authority, Refunding RB, Future Tax Secured, Series B, 5.00%, 11/01/32

    1,650       1,816,667  

City of New York Water & Sewer System, Refunding RB, Water and Sewer System, 2nd General Resolution, Fiscal 2013, Series BB, 4.00%, 06/15/47

    2,855       2,907,675  

Hudson Yards Infrastructure Corp., RB, Senior, Fiscal 2012:

   

5.75%, 02/15/21(a)

    480       518,419  

5.75%, 02/15/47

    290       310,874  

Metropolitan Transportation Authority, Refunding RB, Series B, 5.00%, 11/15/37

    1,570       1,754,271  

State of New York Dormitory Authority, RB, Education, Series B, 5.75%, 03/15/19(a)

    1,300       1,301,690  

State of New York Mortgage Agency, Refunding RB, Series 211, 3.75%, 10/01/43

    2,810       2,788,363  
   

 

 

 
    11,397,959  
Security   Par
(000)
    Value  
Ohio — 3.0%  

County of Lucas Ohio, Refunding RB, Promedica Healthcare, Series A, 6.50%, 11/15/21(a)

  $ 610     $ 686,335  

Northwest Local School District/Hamilton & Butler Counties, GO, School Improvements, 4.00%, 12/01/50

    2,645       2,678,830  

State of Ohio, Refunding RB, University Hospitals Health System, Series A, 5.00%, 01/15/41

    3,500       3,686,515  

State of Ohio Turnpike Commission, RB, Junior Lien, Infrastructure Projects, Series A-1:

   

5.25%, 02/15/32

    780       868,803  

5.25%, 02/15/33

    1,095       1,218,790  

University of Akron, Refunding RB, Series A, 5.00%, 01/01/37

    2,000       2,236,560  
   

 

 

 
    11,375,833  
Oregon — 0.4%  

Counties of Washington & Multnomah Oregon School District No. 48J Beaverton, GO, Convertible CAB, Series D, 5.00%, 06/15/36

    945       1,097,504  

County of Clackamas Oregon School District No. 12 North Clackamas, GO, CAB, Series A, 0.00%, 06/15/38(c)

    1,115       519,367  
   

 

 

 
    1,616,871  
Pennsylvania — 5.7%  

Commonwealth Financing Authority, RB, Tobacco Master Settlement Payment:

   

5.00%, 06/01/33

    790       899,936  

5.00%, 06/01/34

    1,750       1,984,623  

(AGM), 4.00%, 06/01/39

    3,230       3,306,422  

County of Montgomery Higher Education & Health Authority, Refunding RB, Thomas Jefferson University, Series A, 4.00%, 09/01/49

    1,145       1,149,328  

Pennsylvania HFA, RB, S/F Housing Mortgage, Series 118-B, 4.05%, 10/01/40

    1,770       1,786,443  

Pennsylvania Higher Educational Facilities Authority, Refunding RB, Thomas Jefferson University, Series A, 5.25%, 09/01/50

    4,245       4,768,111  

Pennsylvania Turnpike Commission, RB:

   

Series A, 5.00%, 12/01/38

    695       763,492  

Series A-1, 5.00%, 12/01/41

    2,730       3,000,407  

Series B, 5.00%, 12/01/40

    1,060       1,162,608  

Series C, 5.50%, 12/01/23(a)

    630       738,914  

Subordinate, Special Motor License Fund, 6.00%, 12/01/20(a)

    625       671,581  

Pennsylvania Turnpike Commission, Refunding RB:

   

Series A-1, 5.00%, 12/01/40

    850       926,730  

Turnpike Subordinate Revenue, Second Series, 5.00%, 12/01/35

    860       961,962