UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-10339

Name of Fund: BlackRock Municipal Income Trust (BFK)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: Anne F. Ackerley, Chief Executive Officer, BlackRock
Municipal Income Trust, 55 East 52^nd Street, New York, NY 10055

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

Date of fiscal year end: 04/30/2011

Date of reporting period: 10/31/2010

Item 1 – Report to Stockholders

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Semi-Annual Report (Unaudited)

BlackRock Investment Quality Municipal Trust Inc. (BKN)

BlackRock Long-Term Municipal Advantage Trust (BTA)

BlackRock Municipal 2020 Term Trust (BKK)

BlackRock Municipal Income Trust (BFK)

BlackRock Pennsylvania Strategic Municipal Trust (BPS)

BlackRock Strategic Municipal Trust (BSD)

October 31, 2010

Not FDIC Insured • No Bank Guarantee • May Lose Value

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2 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Dear Shareholder

The global economic recovery that began in 2009 has continued on its choppy course this year, delivering mixed but slowly improving economic data and

gradual if uneven improvement of investor sentiment. The risks of a double-dip recession continue to recede, but the economy remains mired in a slow-

growth environment. In the United States, the National Bureau of Economic Research declared that the “Great Recession” ended in June 2009. Spanning

December 2007 to June 2009, this marked the longest reported recession since the Great Depression. Structural problems of ongoing deleveraging and

weak spending among businesses and households weigh heavily on the pace of economic growth. The unemployment rate remains stubbornly high in the

face of sluggish job gains in the private sector. The US dollar, along with other developed market currencies, has experienced devaluation resulting from

aggressively easy monetary and fiscal policies. Given these long-standing conditions, the Federal Reserve Board has announced that additional policy

action will be taken to combat deflation and unemployment and promote economic growth.

The high levels of volatility experienced in global equity markets throughout 2009 continued into 2010 as mixed economic data and lingering credit issues

caused stocks to trade in both directions, but by the end of the first quarter, most markets had managed to post gains. The second quarter, in contrast,

brought higher levels of volatility and a “flight to quality” as investor sentiment was dominated by fears of a double-dip recession. Global equity markets saw

negative quarterly returns — and for many markets, the first significant downturn since the bull market began in March 2009. In the third quarter, economic

data turned less negative and strong corporate earnings reports became increasingly consistent. These factors, along with attractive valuations and expec-

tations for additional quantitative easing, drove equity markets higher, with most markets recapturing their second quarter losses. Stocks continued their

rally into the beginning of the fourth quarter, closing out the 12-month period in positive territory. International equities posted gains on both a six- and

12-month basis. In the United States, both large and small cap equities posted robust gains for the 12-month period, while on a six-month basis, large

cap stocks remained relatively flat and small caps turned slightly negative.

In fixed income markets, yields fluctuated but declined significantly over the past 12 months amid heightened uncertainty. Weak economic data, lingering

credit problems and, near the end of the period, the expectation of additional quantitative easing drove interest rates lower and bond prices higher.

Treasuries rallied over the period, modestly outperforming the credit spread sectors of the market. Corporate credit spreads benefited from the low interest

rate environment and high yield fixed income became increasingly attractive due to declining default rates and better-than-expected results on European

bank stress tests. Tax-exempt municipal bonds performed well over the 12-month period, driven primarily by technical factors including favorable supply-

and-demand dynamics.

Cash investments, as represented by the 3-month Treasury bill, returned only a fraction over 0% for the 12-month period as short-term interest rates

remained low. Yields on money market securities remain near all-time lows.

 

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

As global economic conditions continue to improve, investors across the world continue to face uncertainty about the future of economic growth. Through

periods of uncertainty, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional market perspective and

investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll find the most recent issue of our award-winning Shareholder® magazine, as

well as its quarterly companion newsletter, Shareholder Perspectives. As always, we thank you for entrusting BlackRock with your investments, and we look

forward to your continued partnership in the months and years ahead.

THIS PAGE NOT PART OF YOUR FUND REPORT

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Trust Summary as of October 31, 2010

BlackRock Investment Quality Municipal Trust Inc.

Trust Overview

BlackRock Investment Quality Municipal Trust Inc.’s (BKN) (the “Trust”) investment objective is to provide high current income exempt from regular federal
income tax consistent with the preservation of capital. The Trust seeks to achieve its investment objective by investing at least 80% of its assets in municipal
obligations exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum tax). Under normal market condi-
tions, the Trust invests at least 80% of its assets in securities rated investment grade at the time of investment. The Trust may invest directly in such securi-
ties or synthetically through the use of derivatives.

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

Performance

For the six months ended October 31, 2010, the Trust returned 9.33% based on market price and 8.11% based on net asset value (“NAV”). For the same
period, the closed-end Lipper General Municipal Debt Funds (Leveraged) category posted an average return of 7.68% based on market price and 6.42%
based on NAV. All returns reflect reinvestment of dividends. The Trust's premium to NAV, which widened during the period, accounts for the difference
between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust benefited
from its moderately long duration (sensitivity to interest rates) relative to its Lipper category and fully invested posture (low cash balance) as bond prices
rallied in the declining interest rate environment. The bond rally had a particularly strong impact on the Trust’s recently purchased new-issue discount
coupon bonds, which had been structured with the goal of creating greater potential for price appreciation when interest rates fall. The Trust’s exposure
to traditionally higher yielding sectors, including health, housing and corporate-related debt, enhanced performance as credit quality spreads tightened
during the period. Conversely, the Trust’s exposure to traditionally higher quality sectors, including tax-backed (state, county, city and school district), utilities
and pre-refunded debt, detracted from performance as these sectors experienced weak demand while investors sought yield. In addition, the Trust’s holdings
of pre-refunded bonds had limited upward price movement in the declining interest rate environment due to their shorter maturity structure.
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.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution is not constant and is subject to change.
⁴ Represents Auction Market Preferred Shares (“Preferred Shares”) and tender option bond trusts (“TOBs”) as a percentage of total managed assets, which is the total assets of the
Trust, including any assets attributable to Preferred Shares and TOBs, 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 10.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

⁵ Using the higher of Standard & Poor’s (“S&P’s”) or Moody’s Investors Service
(“Moody’s”) ratings.
⁶ The investment advisor has deemed certain of these securities to be of investment
grade quality. As of October 31, 2010 and April 30, 2010, the market value of these
securities was $22,868,847 representing 6% and $17,071,058 representing 5%,
respectively, of the Trust’s long-term investments.

4 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Trust Summary as of October 31, 2010

BlackRock Long-Term Municipal Advantage Trust

Trust Overview

BlackRock Long-Term Municipal Advantage Trust’s (BTA) (the “Trust”) investment objective is to provide current income exempt from regular federal income
tax. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in municipal obligations and
derivative instruments with exposure to such municipal obligations, in each case that are exempt from federal income tax (except that the interest may be
subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, primarily in long-term municipal bonds with a maturity of
more than ten years at the time of investment and, under normal market conditions, the Trust's municipal bond portfolio will have a dollar-weighted average
maturity of greater than 10 years. 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.

Performance

For the six months ended October 31, 2010, the Trust returned 9.74% based on market price and 6.61% based on NAV. For the same period, the closed-
end Lipper General Municipal Debt Funds (Leveraged) category posted an average return of 7.68% based on market price and 6.42% based on NAV. All
returns reflect reinvestment of dividends. The Trust's discount to NAV, which narrowed during the period, accounts for the difference between performance
based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s outperformance relative to its
Lipper category was driven by sector allocation, particularly with respect to concentrations in health, education, and housing, all of which continued to
perform well during the period. The Trust’s focus on lower quality credits had a positive impact due to the ongoing contraction of credit quality spreads. In
addition, the Trust’s modestly long portfolio duration (sensitivity to interest rates) relative to the Lipper category average proved beneficial in the declining
interest rate environment. Conversely, a concentration of holdings in longer dated issues detracted from performance as the intermediate range of the yield
curve outperformed the longer end of the curve.

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.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution is not constant and is subject to change.
⁴ Represents TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to TOBs, 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 10.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these securities to be of investment
grade quality. As of October 31, 2010 and April 30, 2010, the market value of these
securities was $3,788,367 representing 2% and $5,264,180 representing 2%,
respectively, of the Trust’s long-term investments.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

5

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Trust Summary as of October 31, 2010

BlackRock Municipal 2020 Term Trust

Trust Overview

BlackRock Municipal 2020 Term Trust’s (BKK) (the “Trust”) investment objectives are to provide current income exempt from regular federal income tax
and to return $15 per Common Share (the initial offering price per Common Share) to holders of Common Shares on or about December 31, 2020. The
Trust seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its assets in municipal bonds exempt from
federal income taxes (except that the interest may be subject to the federal alternative minimum tax). The Trust invests, under normal market conditions, at
least 80% of its assets in municipal bonds that are investment grade quality 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.

Performance

For the six months ended October 31, 2010, the Trust returned 5.85% based on market price and 7.35% based on NAV. For the same period, the closed-end
Lipper General Municipal Debt Funds (Leveraged) category posted an average return of 7.68% based on market price and 6.42% based on NAV. All returns
reflect reinvestment of dividends. The Trust's premium to NAV, which narrowed during the period, accounts for the difference between performance based on
price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust benefited from declining interest rates pushing
bond prices higher during the period. Although the Trust has a generally shorter maturity profile relative to its Lipper category, its positioning in the intermediate
range of the yield curve had a positive impact as it outperformed the longer end of the curve. Also contributing to performance was an allocation to longer
maturities in the high yield sector, which performed well. The Trust’s concentrations in health and corporate-related debt also enhanced performance as these
sectors performed well during the period. While the Trust’s holdings of pre-refunded and escrowed issues continued to provide attractive yields on a book value
basis, their shorter maturity structure limited their upward price movement in the declining interest rate environment, hindering relative performance.
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.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ The distribution is not constant and is subject to change.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, 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 10.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these securities to be of investment
grade quality. As of October 31, 2010 and April 30, 2010, the market value of these
securities was $11,556,921 representing 3% and $11,978,514 representing 3%,
respectively, of the Trust’s long-term investments.

6 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Trust Summary as of October 31, 2010

BlackRock Municipal Income Trust

Trust Overview

BlackRock Municipal Income Trust’s (BFK) (the “Trust”) investment objective is to provide current income exempt from regular federal income tax. The Trust
seeks to achieve its investment objective by investing primarily in municipal bonds exempt from federal income taxes (except that the interest may be sub-
ject to the federal alternative minimum tax). The Trust invests, under normal market conditions, at least 80% of its assets in municipal bonds that are invest-
ment grade quality 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.

Performance

For the six months ended October 31, 2010, the Trust returned 8.25% based on market price and 6.83% based on NAV. For the same period, the closed-
end Lipper General Municipal Debt Funds (Leveraged) category posted an average return of 7.68% based on market price and 6.42% based on NAV. All
returns reflect reinvestment of dividends. The Trust's premium to NAV, which widened during the period, accounts for the difference between performance
based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s outperformance relative to its
Lipper category was driven by sector allocation, particularly with respect to concentrations in health, transportation, and corporate-related debt, all of which
continued to perform well during the period. The Trust’s focus on lower quality credits had a positive impact due to the ongoing contraction of credit quality
spreads. In addition, the Trust’s modestly long portfolio duration (sensitivity to interest rates) relative to the Lipper category average proved beneficial in the
declining interest rate environment. Conversely, a concentration of holdings in longer dated issues detracted from performance as the intermediate range of
the yield curve outperformed the longer end of the curve.
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.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ A change in the distribution rate was declared on December 6, 2010. The Monthly Distribution per Common Share was increased to $0.0801. The Yield on Closing Market Price,
Current Monthly Distribution per Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not con-
stant is subject to further change in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, 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 10.

The table below summarizes the changes in the Trust’s market price and NAV per share:

 

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these securities to be of investment
grade quality. As of October 31, 2010 and April 30, 2010, the market value of these
securities was $18,900,156 representing 2% and $16,636,260 representing 2%,
respectively, of the Trust’s long-term investments.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

7

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Trust Summary as of October 31, 2010

BlackRock Pennsylvania Strategic Municipal Trust

Trust Overview

BlackRock Pennsylvania Strategic Municipal Trust’s (BPS) (the “Trust”) investment objectives are to provide current income that is exempt from regular
federal and Pennsylvania income taxes and to invest in municipal bonds that over time will perform better than the broader Pennsylvania municipal bond
market. The Trust seeks to achieve its investment objective by investing, under normal market conditions, primarily in municipal bonds exempt from federal
income taxes (except that the interest may be subject to the federal alternative minimum tax) and Pennsylvania income taxes. The Trust invests, under nor-
mal market conditions, at least 80% of its assets in municipal bonds that are investment grade quality 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.

Performance

For the six months ended October 31, 2010, the Trust returned 7.74% based on market price and 6.63% based on NAV. For the same period, the closed-
end Lipper Pennsylvania Municipal Debt Funds category posted an average return of 9.65% based on market price and 5.84% based on NAV. All returns
reflect reinvestment of dividends. The Trust's premium to NAV, which widened during the period, accounts for the difference between performance based on
price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust benefited from its duration and positioning
on the yield curve as the portfolio was constructed to benefit from declining interest rates. The tax-exempt municipal market in general benefited from the
Build America Bond Program, which alleviated supply pressure in the tax-exempt space, especially on the long end of the yield curve. The Trust’s holdings of
health and housing bonds contributed positively to performance as credit quality spreads generally tightened in these sectors during the period. Detracting
from performance was the Trust’s exposure to bonds with short call features, which did not fully benefit from the price appreciation that occurred among
bonds with longer call dates and non-callable bonds.
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.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ A change in the distribution rate was declared on December 6, 2010. The Monthly Distribution per Common Share was increased to $0.0760. The Yield on Closing Market Price,
Current Monthly Distribution per Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not con-
stant is subject to further change in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, 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 10.

 

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these securities to be of investment
grade quality. As of October 31, 2010 and April 30, 2010, the market value of these
securities was $1,799,144 representing 4% and $2,069,225 representing 5%,
respectively, of the Trust’s long-term investments.

8 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Trust Summary October 31, 2010

BlackRock Strategic Municipal Trust

Trust Overview

BlackRock Strategic Municipal Trust’s (BSD) (the “Trust”) investment objective is to provide current income that is exempt from regular federal income tax
and to invest in municipal bonds that over time will perform better than the broader municipal bond market. The Trust seeks to achieve its investment objec-
tive by investing, primarily in municipal bonds exempt from federal income taxes (except that the interest may be subject to the federal alternative minimum
tax). Under normal market conditions, the Trust expects to be fully invested (at least 95% of its net assets) in securities exempt from regular federal income
taxes. The Trust invests at least 80% of its assets in investment grade quality securities at the time of investment and, under normal market conditions, pri-
marily invests in municipal bonds with long-term maturities in order to maintain a weighted average maturity of 15 years or more. 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.

Performance

For the six months ended October 31, 2010, the Trust returned 7.48% based on market price and 6.83% based on NAV. For the same period, the closed-
end Lipper General Municipal Debt Funds (Leveraged) category posted an average return of 7.68% based on market price and 6.42% based on NAV. All
returns reflect reinvestment of dividends. The Trust moved from a discount to NAV to a premium by period end, which accounts for the difference between
performance based on price and performance based on NAV. The following discussion relates to performance based on NAV. The Trust’s outperformance
relative to its Lipper category was driven by sector allocation, particularly with respect to concentrations in health, transportation, and corporate-related
debt, all of which continued to perform well during the period. The Trust’s focus on lower quality credits had a positive impact due to the ongoing contraction
of credit quality spreads. In addition, the Trust’s modestly long portfolio duration (sensitivity to interest rates) relative to the Lipper category average proved
beneficial in the declining interest rate environment. Conversely, a concentration of holdings in longer dated issues detracted from performance as the
intermediate range of the yield curve outperformed the longer end of the curve.
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.

 

¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.
² Tax equivalent yield assumes the maximum federal tax rate of 35%.
³ A change in the distribution rate was declared on December 6, 2010. The Monthly Distribution per Common Share was increased to $0.0740. The Yield on Closing Market Price,
Current Monthly Distribution per Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not con-
stant is subject to further change in the future.
⁴ Represents Preferred Shares and TOBs as a percentage of total managed assets, which is the total assets of the Trust, including any assets attributable to Preferred Shares and
TOBs, 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 10.

 

 

 

⁵ Using the higher of S&P’s or Moody’s ratings.
⁶ The investment advisor has deemed certain of these securities to be of investment
grade quality. As of October 31, 2010 and April 30, 2010, the market value of these
securities was $2,771,205 representing 2% and $2,354,758 representing 2%,
respectively, of the Trust’s long-term investments.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

9

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The Benefits and Risks of Leveraging

The Trusts may utilize leverage to seek to enhance the yield and NAV of
their Common Shares. However, these objectives cannot be achieved in all
interest rate environments.

To leverage, all the Trusts, except for BTA, issue Preferred Shares, which pay
dividends at prevailing short-term interest rates, and invest the proceeds in
long-term municipal bonds. In general, the concept of leveraging is based
on the premise that the cost of assets to be obtained from leverage will be
based on short-term interest rates, which normally will be lower than the
income earned by each Trust on its longer-term portfolio investments. To
the extent that the total assets of each Trust (including the assets obtained
from leverage) are invested in higher-yielding portfolio investments, each
Trust’s Common Shareholders will benefit from the incremental net income.

To illustrate these concepts, assume a Trust’s Common Shares capitalization
is $100 million and it issues Preferred Shares for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are 3% and long-
term interest rates are 6%, the yield curve has a strongly positive slope. In
this case, the Trust pays dividends on the $50 million of Preferred Shares
based on the lower short-term interest rates. At the same time, the securi-
ties purchased by the Trust with assets received from Preferred Shares
issuance earn the income based on long-term interest rates. In this case,
the dividends paid to Preferred Shareholders are significantly lower than
the income earned on the Trust’s long-term investments, and therefore the
Common Shareholders are the beneficiaries of the incremental net income.

If short-term interest rates rise, narrowing the differential between short-
term and long-term interest rates, the incremental net income pickup on
the Common Shares will be reduced or eliminated completely. Furthermore,
if prevailing short-term interest rates rise above long-term interest rates of
6%, the yield curve has a negative slope. In this case, the Trust pays divi-
dends on the higher short-term interest rates whereas the Trust’s total port-
folio earns income based on lower long-term interest rates.

Furthermore, the value of a Trust’s 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 redemp-
tion value of the Trust’s Preferred Shares does not fluctuate in relation to
interest rates. As a result, changes in interest rates can influence the Trust’s
NAV positively or negatively in addition to the impact on Trust performance
from leverage from Preferred Shares discussed above.

The Trusts may also leverage their assets through the use of tender option
bond (“TOB”) programs, as described in Note 1 of the Notes to Financial
Statements. TOB investments generally will provide the Trusts with economic
benefits in periods of declining short-term interest rates, but expose the
Trusts to risks during periods of rising short-term interest rates similar to

those associated with Preferred Shares issued by the Trusts, as described
above. Additionally, fluctuations in the market value of municipal bonds
deposited into the TOB trust may adversely affect each Trust’s NAVs per
share.

The use of leverage may enhance opportunities for increased income to the
Trusts and Common Shareholders, but as described above, it also creates
risks as short- or long-term interest rates fluctuate. Leverage also will gen-
erally cause greater changes in the Trusts’ NAV, market price and dividend
rate than a comparable portfolio without leverage. If the income derived
from securities purchased with assets received from leverage exceeds the
cost of leverage, the Trusts’ net income will be greater than if leverage had
not been used. Conversely, if the income from the securities purchased is
not sufficient to cover the cost of leverage, each Trust’s net income will be
less than if leverage had not been used, and therefore the amount avail-
able for distribution to Common Shareholders will be reduced. Each Trust
may be required to sell portfolio securities at inopportune times or at dis-
tressed 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 a Trust to incur losses. The use of leverage may limit each
Trust’s ability to invest in certain types of securities or use certain types of
hedging strategies, such as in the case of certain restrictions imposed by
ratings agencies that rate Preferred Shares issued by the Trusts. Each Trust
will incur expenses in connection with the use of leverage, all of which
are borne by Common Shareholders and may reduce income to the
Common Shares.

Under the Investment Company Act of 1940, the Trusts are permitted to
issue Preferred Shares in an amount of up to 50% of their total managed
assets at the time of issuance. Under normal circumstances, each Trust
anticipates that the total economic leverage from Preferred Shares and/or
TOBs will not exceed 50% of its total managed assets at the time such
leverage is incurred. As of October 31, 2010, the Trusts had economic
leverage from Preferred Shares and/or TOBs as a percentage of their total
managed assets as follows:

 

Derivative Financial Instruments

The Trusts may invest in various derivative instruments, including finan-
cial futures contracts, as specified in Note 2 of the Notes to Financial
Statements, which may constitute forms of economic leverage. Such instru-
ments are used to obtain exposure to a market without owning or taking
physical custody of securities or to hedge market and/or interest rate risks.
Such derivative instruments involve risks, including the imperfect correlation
between the value of a derivative instrument and the underlying asset or
illiquidity of the derivative instrument. The Trusts’ ability to successfully use
a derivative instrument depends on the investment advisor’s ability to accu-

rately predict pertinent market movements, which cannot be assured. The
use of derivative instruments may result in losses greater than if they had
not been used, may require the Trusts to sell or purchase portfolio invest-
ments at inopportune times or for distressed values, may limit the amount
of appreciation the Trusts can realize on an investment, may result in lower
dividends paid to shareholders or may cause the Trusts to hold an invest-
ment that they might otherwise sell. The Trusts’ investments in these instru-
ments are discussed in detail in the Notes to Financial Statements.

10 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Schedule of Investments October 31, 2010 (Unaudited)

BlackRock Investment Quality Municipal Trust Inc. (BKN)
(Percentages shown are based on Net Assets)

 

 

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

11

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Schedule of Investments (continued)

BlackRock Investment Quality Municipal Trust Inc. (BKN)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

12 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (continued)

BlackRock Investment Quality Municipal Trust Inc. (BKN)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

13

---

Schedule of Investments (continued)

BlackRock Investment Quality Municipal Trust Inc. (BKN)

(Percentages shown are based on Net Assets)

 

 

* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2010, as computed for federal income tax purposes, were as follows:

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) Represents a step-up bond that pays an initial coupon rate for the first period and
then a higher coupon rate for the following periods. Rate shown reflects the current
yield as of report date.
(c) US 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.

See Notes to Financial Statements.

14 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (concluded)

BlackRock Investment Quality Municipal Trust Inc. (BKN)

(d) When-issued security. Unsettled when-issued transactions were as follows:

 

(e) Security is collateralized by Municipal or US Treasury obligations.
(f) Issuer filed for bankruptcy and/or is in default of interest payments.
(g) Non-income producing security.
(h) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(i) Security represents a beneficial interest in a trust. The collateral deposited into the
trust is federally tax-exempt revenue bonds issued by various state or local govern-
ments, or their respective agencies or authorities. The security is subject to remarket-
ing prior to its stated maturity.
(j) Variable rate security. Rate shown is as of report date.
(k) Securities represent bonds transferred to a tender option bond trust in exchange
for which the Trust acquired residual interest certificates. These securities serve
as collateral in a financing transaction. See Note 1 of the Notes to Financial
Statements for details of municipal bonds transferred to tender option bond trusts.
(l) Investments in companies considered to be an affiliate of the Trust during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of October 31, 2010 in deter-
mining the fair valuation of the Trust’s investments:

 

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

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

15

---

Schedule of Investments October 31, 2010 (Unaudited)

BlackRock Long-Term Municipal Advantage Trust (BTA)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

16 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (continued)

BlackRock Long-Term Municipal Advantage Trust (BTA)

(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

17

---

Schedule of Investments (continued)

BlackRock Long-Term Municipal Advantage Trust (BTA)

(Percentages shown are based on Net Assets)

 

 

* The cost and unrealized appreciation (depreciation) of investments as of October 31,
2010, as computed for federal income tax purposes, were as follows:

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) Issuer filed for bankruptcy and/or is in default of interest payments.
(c) Non-income producing security.
(d) Variable rate security. Rate shown is as of report date.
(e) Securities represent bonds transferred to a tender option bond trust in exchange
for which the Trust acquired residual interest certificates. These securities serve
as collateral in a financing transaction. See Note 1 of the Notes to Financial
Statements for details of municipal bonds transferred to tender option bond trusts.
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(g) Investments in companies considered to be an affiliate of the Trust during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
as amended, were as follows:

 

(h) Represents the current yield as of report date.

See Notes to Financial Statements.

18 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (concluded)

BlackRock Long-Term Municipal Advantage Trust (BTA)

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of October 31, 2010 in deter-
mining the fair valuation of the Trust’s investments:

 

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

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

19

---

Schedule of Investments October 31, 2010 (Unaudited)

BlackRock Municipal 2020 Term Trust (BKK)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

20 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (continued)

BlackRock Municipal 2020 Term Trust (BKK)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

21

---

Schedule of Investments (continued)

BlackRock Municipal 2020 Term Trust (BKK)
(Percentages shown are based on Net Assets)

 

 

* The cost and unrealized appreciation (depreciation) of investments as of October 31,
2010, as computed for federal income tax purposes, were as follows:

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) US 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) Issuer filed for bankruptcy and/or is in default of interest payments.
(d) Non-income producing security.
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(f) Security represents a beneficial interest in a trust. The collateral deposited into the
trust is federally tax-exempt revenue bonds issued by various state or local govern-
ments, or their respective agencies or authorities. The security is subject to remarket-
ing prior to its stated maturity.
(g) Security is perpetual in nature and has no stated maturity date.
(h) Variable rate security. Rate shown is as of report date.
(i) Securities represent bonds transferred to a tender option bond trust in exchange
for which the Trust acquired residual interest certificates. These securities serve
as collateral in a financing transaction. See Note 1 of the Notes to Financial
Statements for details of municipal bonds transferred to tender option bond trusts.
(j) Investments in companies considered to be an affiliate of the Trust during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
as amended, were as follows:

 

(k) Represents the current yield as of report date.

See Notes to Financial Statements.

22 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (concluded)

BlackRock Municipal 2020 Term Trust (BKK)

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of October 31, 2010 in deter-
mining the fair valuation of the Trust’s investments:

 

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

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

23

---

Schedule of Investments October 31, 2010 (Unaudited)

BlackRock Municipal Income Trust (BFK)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

24 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (continued)

BlackRock Municipal Income Trust (BFK)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

25

---

Schedule of Investments (continued)

BlackRock Municipal Income Trust (BFK)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

26 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (concluded)

BlackRock Municipal Income Trust (BFK)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of October 31,

2010, as computed for federal income tax purposes, were as follows:

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) US 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) Issuer filed for bankruptcy and/or is in default of interest payments.
(d) Non-income producing security.
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(f) Security represents a beneficial interest in a trust. The collateral deposited into the
trust is federally tax-exempt revenue bonds issued by various state or local govern-
ments, or their respective agencies or authorities. The security is subject to remarket-
ing prior to its stated maturity.
(g) Variable rate security. Rate shown is as of report date.
(h) Securities represent bonds transferred to a tender option bond trust in exchange
for which the Trust acquired residual interest certificates. These securities serve
as collateral in a financing transaction. See Note 1 of the Notes to Financial
Statements for details of municipal bonds transferred to tender option bond trusts.
(i) Investments in companies considered to be an affiliate of the Trust during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

 

(j) Represents the current yield as of report date.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of October 31, 2010 in deter-
mining the fair valuation of the Trust’s investments:

 

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

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

27

---

Schedule of Investments October 31, 2010 (Unaudited)

BlackRock Pennsylvania Strategic Municipal Trust (BPS)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

28 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (continued)

BlackRock Pennsylvania Strategic Municipal Trust (BPS)

(Percentages shown are based on Net Assets)

 

 

* The cost and unrealized appreciation (depreciation) of investments as of October 31,
2010, as computed for federal income tax purposes, were as follows:

 

(a) Variable rate security. Rate shown is as of report date.
(b) When-issued security. Unsettled when-issued transactions were as follows:

 

(c) US 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.
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(e) Security represents a beneficial interest in a trust. The collateral deposited into
the trust is federally tax-exempt revenue bonds issued by various state or local
governments, or their respective agencies or authorities. The security is subject to
remarketing prior to its stated maturity.
(f) Securities represent bonds transferred to a tender option bond trust in exchange
for which the Trust acquired residual interest certificates. These securities serve
as collateral in a financing transaction. See Note 1 of the Notes to Financial
Statements for details of municipal bonds transferred to tender option bond trusts.

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

29

---

Schedule of Investments (concluded)

BlackRock Pennsylvania Strategic Municipal Trust (BPS)

(g) Investments in companies considered to be an affiliate of the Trust during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
as amended, were as follows:

 

(h) Represents the current yield as of report date.

• For Trust compliance purposes, the Trust’s sector classifications refer to any one
or more of the sector sub-classifications used by one or more widely recognized
market indexes or ratings group indexes, and/or as defined by Trust management.
This definition may not apply for purposes of this report, which may combine such
sector sub-classifications for reporting ease.
• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of October 31, 2010 in deter-
mining the fair valuation of the Trust’s investments:

 

See Notes to Financial Statements.

30 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments October 31, 2010 (Unaudited)

BlackRock Strategic Municipal Trust (BSD)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

31

---

Schedule of Investments (continued)

BlackRock Strategic Municipal Trust (BSD)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

32 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

Schedule of Investments (continued)

BlackRock Strategic Municipal Trust (BSD)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

33

---

Schedule of Investments (concluded)

BlackRock Strategic Municipal Trust (BSD)

 

* The cost and unrealized appreciation (depreciation) of investments as of October 31,
2010, as computed for federal income tax purposes, were as follows:

 

(a) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(b) US 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) Issuer filed for bankruptcy and/or is in default of interest payments.
(d) Non-income producing security.
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(f) Security represents a beneficial interest in a trust. The collateral deposited into
the trust is federally tax-exempt revenue bonds issued by various state or local
governments, or their respective agencies or authorities. The security is subject to
remarketing prior to its stated maturity.
(g) Variable rate security. Rate shown is as of report date.
(h) Securities represent bonds transferred to a tender option bond trust in exchange
for which the Trust acquired residual interest certificates. These securities serve
as collateral in a financing transaction. See Note 1 of the Notes to Financial
Statements for details of municipal bonds transferred to tender option bond trusts.
(i) Investments in companies considered to be an affiliate of the Trust during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
as amended, were as follows:

 

(j) Represents the current yield as of report date.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments, which are as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Trust’s own assumptions used in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Trust’s policy regarding valuation of investments and other significant
accounting policies, please refer to Note 1 of the Notes to Financial Statements.
The following table summarizes the inputs used as of October 31, 2010 in deter-
mining the fair valuation of the Trust’s investments:

 

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

See Notes to Financial Statements.

34 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

35

---

 

See Notes to Financial Statements.

36 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

37

---

 

See Notes to Financial Statements.

38 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

 

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

39

---

 

¹ Based on average shares outstanding.
² Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized.
⁶ Interest expense and fees related to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

40 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

 

¹ Commencement of operations.
² Net asset value, beginning of period, reflects a deduction of $0.675 per sales charge from the initial offering price of $15.00 per share.
³ Based on average shares outstanding.
⁴ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁵ Aggregate total investment return.
⁶ Annualized.
⁷ Interest expense and fees related to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

41

---

 

¹ Based on average shares outstanding.
² Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized.
⁶ Interest expense and fees related to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

42 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

 

¹ Based on average shares outstanding.
² Amount is less than $(0.01) per share.
³ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁴ Aggregate total investment return.
⁵ Do not reflect the effect of dividends to Preferred Shareholders.
⁶ Annualized.
⁷ Interest expense and fees related to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

43

---

 

¹ Based on average shares outstanding.
² Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized. Certain expenses incurred during the period January 1, 2009 to April 30, 2009 have been included in the ratio but not annualized. If these expenses were annualized,
the annualized ratio of total expenses, total expenses after fees waived and before fees paid indirectly, total expenses after fees waived and paid indirectly, total expenses after fees
waived and paid indirectly and excluding interest expense and fees, net investment income and net investment income to Common Shareholders would have been 1.91%, 1.89%,
1.89%, 1.89%, 7.09% and 6.53%, respectively.
⁶ Interest expense and fees related to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

44 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

---

 

¹ Based on average shares outstanding.
² Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable,
total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
³ Aggregate total investment return.
⁴ Do not reflect the effect of dividends to Preferred Shareholders.
⁵ Annualized. Certain expenses incurred during the period January 1, 2009 to April 30, 2009 have been included in the ratio but not annualized. If these expenses were annualized,
the annualized ratio of total expenses, total expenses after fees waived and before fees paid indirectly, total expenses after fees waived and paid indirectly, total expenses after fees
waived and paid indirectly and excluding interest expense and fees, net investment income and net investment income to Common Shareholders would have been 1.91%, 1.89%,
1.89%, 1.89%, 7.09% and 6.53%, respectively.
⁶ Interest expense and fees related to tender option bond trusts. See Note 1 of the Notes to Financial Statements for details of municipal bonds transferred to tender option
bond trusts.

See Notes to Financial Statements.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

45

---

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Investment Quality Municipal Trust Inc. (“BKN”) is organized
as a Maryland corporation. BlackRock Long-Term Municipal Advantage
Trust (“BTA”), BlackRock Municipal 2020 Term Trust (“BKK”), BlackRock
Municipal Income Trust (“BFK”), BlackRock Pennsylvania Strategic
Municipal Trust (“BPS”) and BlackRock Strategic Municipal Trust (“BSD”)
(collectively, together with BKN, the “Trusts” or individually as the “Trust”)
are organized as Delaware statutory trusts. BKN, BKK, BFK and BSD are
registered under the Investment Company Act of 1940, as amended (the
“1940 Act”), as diversified, closed-end management investment compa-
nies. BTA and BPS are registered under the 1940 Act as non-diversified,
closed-end management investment companies. The Trusts’ financial
statements are prepared in conformity with accounting principles generally
accepted in the United States of America (“US GAAP”), which may require
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The Board of Directors and the Board of
Trustees of the Trusts are referred to throughout this report as the “Board
of Trustees” or the “Board”. The Trusts determine and make available for
publication the net asset values of their Common Shares on a daily basis.

The following is a summary of significant accounting policies followed by
the Trusts:

Valuation: The Trusts fair value their financial instruments at market value
using independent dealers or pricing services under policies approved by
the Board. Municipal investments (including commitments to purchase
such investments on a “when-issued” basis) are valued on the basis of
prices provided by dealers or pricing services. In determining the value of
a particular investment, pricing services may use certain information with
respect to transactions in such investments, quotations from dealers, pric-
ing matrixes, market transactions in comparable investments and informa-
tion with respect to various relationships between investments. Financial
futures contracts traded on exchanges are valued at their last sale price.
Short-term securities with remaining maturities of 60 days or less may
be valued at amortized cost, which approximates fair value. Investments
in open-end investment companies are valued at net asset value each
business day.

In the event that application of these methods of valuation results in a
price for an investment which is deemed not to be representative of the
market value of such investment or is not available, the investment will be
valued in accordance with a policy approved by the Board as reflecting
fair value (“Fair Value Assets”). When determining the price for Fair Value
Assets, the investment advisor and/or the sub-advisor seeks to determine
the price that each Trust might reasonably expect to receive from the cur-
rent sale of that asset in an arm’s-length transaction. Fair value determina-
tions shall be based upon all available factors that the investment advisor
and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is
subsequently reported to the Board or a committee thereof.

Forward Commitments and When-Issued Delayed Delivery Securities: The
Trusts may purchase securities on a when-issued basis and may purchase
or sell securities on a forward commitment basis. Settlement of such trans-
actions normally occurs within a month or more after the purchase or sale

commitment is made. The Trusts may purchase securities under such
conditions with the intention of actually acquiring them, but may enter
into a separate agreement to sell the securities before the settlement date.
Since the value of securities purchased may fluctuate prior to settlement,
the Trusts may be required to pay more at settlement than the security
is worth. In addition, the purchaser is not entitled to any of the interest
earned prior to settlement. When purchasing a security on a delayed deliv-
ery basis, the Trusts assume the rights and risks of ownership of the secu-
rity, including the risk of price and yield fluctuations. In the event of default
by the counterparty, the Trusts’ maximum amount of loss is the unrealized
appreciation of unsettled when-issued transactions, which is shown on the
Schedules of Investments, if any.

Municipal Bonds Transferred to Tender Option Bond Trusts: The Trusts
leverage their assets through the use of tender option bond trusts (“TOBs”).
A TOB is established by a third party sponsor forming a special purpose
entity, into which one or more funds, or an agent on behalf of the funds,
transfers municipal bonds. Other funds managed by the investment advisor
may also contribute municipal bonds to a TOB into which a Trust has con-
tributed bonds. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates (“TOB Residuals”), which are generally issued to
the participating funds that made the transfer. The TOB Residuals held by a
Trust include the right of a Trust (1) to cause the holders of a proportional
share of the short-term floating rate certificates to tender their certificates
at par, including during instances of a rise in short-term interest rates, and
(2) to transfer, within seven days, a corresponding share of the municipal
bonds from the TOB to a Trust. The TOB may also be terminated without the
consent of a Trust upon the occurrence of certain events as defined in the
TOB agreements. Such termination events may include the bankruptcy or
default of the municipal bond, a substantial downgrade in credit quality of
the municipal bond, the inability of the TOB to obtain quarterly or annual
renewal of the liquidity support agreement, a substantial decline in market
value of the municipal bond or the inability to remarket the short-term
floating rate certificates to third party investors. During the six months
ended October 31, 2010, no TOBs have been terminated without the
consent of the Trusts.

The cash received by the TOB from the sale of the short-term floating rate
certificates, less transaction expenses, is paid to a Trust, which typically
invests the cash in additional municipal bonds. Each Trust’s transfer of the
municipal bonds to a TOB is accounted for as a secured borrowing, there-
fore the municipal bonds deposited into a TOB are presented in the Trusts’
Schedules of Investments and the proceeds from the issuance of the
short-term floating rate certificates are shown as trust certificates in the
Statements of Assets and Liabilities.

Interest income, including amortization and accretion of premiums and
discounts, from the underlying municipal bonds is recorded by the Trusts
on an accrual basis. Interest expense incurred on the secured borrowing
and other expenses related to remarketing, administration and trustee
services to a TOB are shown as interest expense and fees in the
Statements of Operations. The short-term floating rate certificates have
interest rates that generally reset weekly and their holders have the option
to tender certificates to the TOB for redemption at par at each reset date.

46 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Notes to Financial Statements (continued)

At October 31, 2010, the aggregate value of the underlying municipal
bonds transferred to TOBs, the related liability for trust certificates and the
range of interest rates on the liability for trust certificates were as follows:

 

For the six months ended October 31, 2010, the Trusts’ average trust
certificates outstanding and the daily weighted average interest rate,
including fees, were as follows:

 

Should short-term interest rates rise, the Trusts’ investments in TOBs
may adversely affect the Trusts’ net investment income and dividends to
Common Shareholders. Also, fluctuations in the market value of municipal
bonds deposited into the TOB may adversely affect the Trusts’ net asset
values per share.

Zero-Coupon Bonds: The Trusts may invest in zero-coupon bonds, which
are normally issued at a significant discount from face value and do not
provide for periodic interest payments. Zero-coupon bonds may experience
greater volatility in market value than similar maturity debt obligations
which provide for regular interest payments.

Segregation and Collateralization: In cases in which the 1940 Act and
the interpretive positions of the Securities and Exchange Commission
(“SEC”) require that the Trusts either deliver collateral or segregate assets
in connection with certain investments (e.g., financial futures contracts)
the Trusts will, consistent with SEC rules and/or certain interpretive letters
issued by the SEC, segregate collateral or designate on their books and
records cash or other liquid securities having a market value at least equal
to the amount that would otherwise be required to be physically segre-
gated. Furthermore, based on requirements and agreements with certain
exchanges and third party broker-dealers, each party has requirements to
deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: For financial reporting
purposes, investment transactions are recorded on the dates the trans-
actions are entered into (the trade dates). Realized gains and losses
on investment transactions are determined on the identified cost basis.
Dividend income is recorded on the ex-dividend dates. Interest income,

including amortization and accretion of premiums and discounts on
debt securities, is recognized on the accrual basis. Consent fees are
compensation for agreeing to changes in the terms of debt instruments
and are included in interest income in the Statements of Operations.

Dividends and Distributions: Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates. The amount and timing of dividends and distribu-
tions are determined in accordance with federal income tax regulations,
which may differ from US GAAP. Dividends and distributions to Preferred
Shareholders are accrued and determined as described in Note 7.

Income Taxes: It is each Trust’s policy to comply with the requirements of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no federal income tax provision
is required.

Each Trust files US federal and various state and local tax returns. No
income tax returns are currently under examination. The statute of limita-
tions on the Trusts’ US federal tax returns remains open for the year
ended April 30, 2010, the period ended April 30, 2009 and the preceding
two taxable years of the respective Trust. The statutes of limitations on the
Trusts’ state and local tax returns may remain open for an additional year
depending upon the jurisdiction. There are no uncertain tax positions that
require recognition of a tax liability.

Deferred Compensation and BlackRock Closed-End Share Equivalent
Investment Plan: Under the deferred compensation plan approved by each
Trust’s Board, non-interested Trustees (“Independent Trustees”) may defer
a portion of their annual complex-wide compensation. Deferred amounts
earn an approximate return as though equivalent dollar amounts had
been invested in common shares of certain other BlackRock Closed-End
Funds selected by the Independent Trustees. This has approximately the
same economic effect for the Independent Trustees as if the Independent
Trustees had invested the deferred amounts directly in certain other
BlackRock Closed-End Funds.

The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of each
Trust. Each Trust may, however, elect to invest in common shares of certain
other BlackRock Closed-End Funds selected by the Independent Trustees in
order to match its deferred compensation obligations. Investments to cover
each Trust’s deferred compensation liability, if any, are included in other
assets in the Statements of Assets and Liabilities. Dividends and distribu-
tions from the BlackRock Closed-End Fund investments under the plan are
included in income — affiliated in the Statements of Operations.

Other: Expenses directly related to a Trust are charged to that Trust. Other
operating expenses shared by several funds are pro rated among those
funds on the basis of relative net assets or other appropriate methods.
The Trusts have an arrangement with the custodian whereby fees may be
reduced by credits earned on uninvested cash balances, which if applica-
ble are shown as fees paid indirectly in the Statements of Operations. The
custodian imposes fees on overdrawn cash balances, which can be offset
by accumulated credits earned or may result in additional custody charges.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

47

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Notes to Financial Statements (continued)

2. Derivative Financial Instruments:

The Trusts engage in various portfolio investment strategies using derivative
contracts both to increase the returns of the Trusts and to economically
hedge, or protect, their exposure to certain risks such as interest rate risk.
These contracts may be transacted on an exchange.

Losses may arise if the value of the contract decreases due to an unfavor-
able change in the market rates or values of the underlying instrument or
if the counterparty does not perform under the contract. Counterparty risk
related to exchange-traded financial futures contracts is minimal because
of the protection against defaults provided by the exchange on which these
contracts trade.

Financial Futures Contracts: The Trusts purchase or sell financial futures
contracts and options on financial futures contracts to gain exposure to,
or economically hedge against, changes in interest rates (interest rate risk).
Financial futures contracts are contracts for delayed delivery of securities
or currencies at a specific future date and at a specific price or yield.
Pursuant to the contract, the Trusts agree to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as margin variation and are
recognized by the Trusts as unrealized gains or losses. When the contract
is closed, the Trusts record a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value
at the time it was closed. The use of financial futures transactions involves
the risk of an imperfect correlation in the movements in the price of
financial futures contracts, interest rates and the underlying assets.

Derivative Instruments Categorized by Risk Exposure:

 

* As of October 31, 2010, there were no financial futures contracts outstanding.

For the six months ended October 31, 2010, the average quarterly balance
of outstanding derivative financial instruments was as follows:

 

3. Investment Advisory Agreement and Other Transactions
with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America
Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest
stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership
structure, PNC is an affiliate of the Trusts for 1940 Act purposes, but BAC
and Barclays are not.

Each Trust entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the “Manager”), the Trusts’ investment advisor, an indirect,
wholly owned subsidiary of BlackRock, to provide investment advisory and
administration services. The Manager is responsible for the management
of each Trust’s portfolio and provides the necessary personnel, facilities,
equipment and certain other services necessary to the operations of each
Trust. For such services, each Trust pays the Manager a monthly fee at the
following annual rates of each Trust’s average weekly net assets as follows:

 

Average weekly net assets for all of the Trusts, except BTA, is the average
weekly value of each Trust’s total assets minus the sum of its accrued
liabilities. For BTA, average weekly net assets is the average weekly value
of the Trust’s total assets minus the sum of its total liabilities.

The Manager voluntarily agreed to waive a portion of its investment
advisory fees or other expenses as a percentage of its average daily
net assets as follows:

 

For the six months October 31, 2010, the Manager waived the following
amounts, which are included in fees waived by advisor in the Statements
of Operations:

 

The Manager voluntarily agreed to waive its investment advisory fees by
the amount of investment advisory fees each Trust pays to the Manager
indirectly through its investment in affiliated money market funds, however
the Manager does not waive its investment advisory fees by the amount
of investment advisory fees paid through each Trust’s investment in other
affiliated investment companies, if any. These amounts are shown as,
or included in, fees waived by advisor in the Statements of Operations.
For the six months ended October 31, 2010, the amounts waived were
as follows:

48 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Notes to Financial Statements (continued)

 

The Manager entered into a sub-advisory agreement with BlackRock
Financial Management, Inc. (“BFM”), an affiliate of the Manager. The
Manager pays BFM for services it provides, a monthly fee that is a percent-
age of the investment advisory fees paid by each Trust to the Manager.

BKN has an Administration Agreement with the Manager. The administration
fee paid to the Manager is computed at an annual rate of 0.15% of the
Trust’s average weekly total assets minus the sum of its accrued liabilities.

For the six months ended October 31, 2010, the Trusts reimbursed the
manager for certain accounting services, which are included in accounting
services in the Statements of Operatons. The reimbursements were
as follows:

 

Certain officers and/or trustees of the Trusts are officers and/or directors of
BlackRock or its affiliates. The Trusts reimburse the Manager for compensa-
tion paid to the Trusts’ Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short-term securities, for the
six months ended October 31, 2010, were as follows:

 

5. Capital Loss Carryforward:

As of April 30, 2010, the Trusts had capital loss carryforwards available to
offset future realized capital gains through the indicated expiration dates:

 

 

6. Concentration, Market and Credit Risk:

BKN, BTA, BKK, BFK and BPS invest a substantial amount of their assets
in issuers located in a single state or limited number of states. Please see
the Schedules of Investments for concentration in specific states.

Many municipalities insure repayment of their bonds, which may reduce
the potential for loss due to credit risk. The market value of these bonds
may fluctuate for other reasons, including market perception of the value
of such insurance, and there is no guarantee that the insurer will meet
its obligation.

In the normal course of business, the Trusts invest in securities and
enter into transactions where risks exist due to fluctuations in the market
(market risk) or failure of the issuer of a security to meet all its obligations
(issuer credit risk). The value of securities held by the Trusts may decline in
response to certain events, including those directly involving the issuers
whose securities are owned by the Trusts; conditions affecting the general
economy; overall market changes; local, regional or global political, social
or economic instability; and currency and interest rate and price fluctua-
tions. Similar to issuer credit risk, the Trusts may be exposed to counter-
party credit risk, or the risk that an entity with which the Trusts have
unsettled or open transactions may fail to or be unable to perform on its
commitments. The Trusts manage counterparty credit risk by entering into
transactions only with counterparties that they believe have the financial
resources to honor their obligations and by monitoring the financial stability
of those counterparties. Financial assets, which potentially expose the
Trusts to market, issuer and counterparty credit risks, consist principally of
financial instruments and receivables due from counterparties. The extent
of the Trusts’ exposure to market, issuer and counterparty credit risks with
respect to these financial assets is generally approximated by their value
recorded in the Trusts’ Statements of Assets and Liabilities, less any collat-
eral held by the Trusts.

As of October 31, 2010, BKN, BPS and BSD invested a significant portion
of its assets in the Health sector. Changes in economic conditions affecting
the Health sector would have a greater impact on the Trusts and could
affect the value, income and/or liquidity of positions in such securities.

7. Capital Share Transactions:

BKK, BFK, BPS and BSD are authorized to issue an unlimited number of
shares, including Preferred Shares, par value $0.001 per share, all of which
were initially classified as Common Shares. BKN is authorized to issue 200
million shares including Preferred Shares, all of which were initially classi-
fied as Common Shares, par value $0.01 per share. BTA is authorized
to issue an unlimited number of Common Shares, par value $0.001 per
share. BTA is also allowed to issue Preferred Shares but has not done so.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

49

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Notes to Financial Statements (continued)

The Board is authorized, however, to reclassify any unissued shares without
approval of Common Shareholders.

Common Shares

At October 31, 2010, the shares owned by an affiliate of the Manager of
the Trusts were as follows:

 

For the periods shown, shares issued and outstanding increased by the
following amounts as a result of dividend reinvestment:

 

Shares issued and outstanding remained constant for BKK for the six
months ended October 31, 2010 and the year ended April 30, 2010.

Preferred Shares

The Preferred Shares are redeemable at the option of each Trust, in whole
or in part, on any dividend payment date at their liquidation preference
per share plus any accumulated and unpaid dividends whether or not
declared. The Preferred Shares are also subject to mandatory redemption
at their liquidation preference plus any accumulated and unpaid dividends,
whether or not declared, if certain requirements relating to the composition
of the assets and liabilities of a Trust, as set forth in each Trust’s Articles of
Supplementary/Statement of Preference (the “Governing Instrument”) are
not satisfied.

From time to time in the future, each Trust may effect repurchases of its
Preferred Shares at prices below their liquidation preference as agreed
upon by the Trust and seller. Each Trust also may redeem its Preferred
Shares from time to time as provided in the applicable Governing
Instrument. Each Trust intends to effect such redemptions and/or repur-
chases to the extent necessary to maintain applicable asset coverage
requirements or for such other reasons as the Board may determine.

The holders of Preferred Shares have voting rights equal to the holders of
Common Shares (one vote per share) and will vote together with holders
of Common Shares (one vote per share) as a single class. However, the
holders of Preferred Shares, voting as a separate class, are also entitled
to elect two Trustees for each Trust. In addition, the 1940 Act requires that
along with approval by shareholders that might otherwise be required, the
approval of the holders of a majority of any outstanding Preferred Shares,
voting separately as a class would be required to (a) adopt any plan of
reorganization that would adversely affect the Preferred Shares, (b) change
a Trust’s sub-classification as a closed-end investment company or change
its fundamental investment restrictions or (c) change its business so as to
cease to be an investment company.

BKN, BKK, BFK, BPS and BSD had the following series of Preferred Shares
outstanding, effective yields and reset frequency as of October 31, 2010:

 

Dividends on seven-day and 28-day Preferred Shares are cumulative at
a rate which is reset every seven or 28 days, respectively, based on the
results of an auction. If the Preferred Shares fail to clear the auction on
an auction date, each Trust is required to pay the maximum applicable
rate on the Preferred Shares to holders of such shares for successive divi-
dend periods until such time as the shares are successfully auctioned. The
maximum applicable rate on all series of Preferred Shares is the higher of
110% of the AA commercial paper rate or 110% of 90% of the Kenny S&P
30-day High Grade Index rate divided by 1.00 minus the marginal tax rate.
The low, high and average dividend rates on the Preferred Shares for each
Trust for the period were as follows:

 

Since February 13, 2008, the Preferred Shares of the Trusts failed to
clear any of their auctions. As a result, the Preferred Shares dividend rates
were reset to the maximum applicable rate, which ranged from 0.35% to
0.49% for the six months ended October 31, 2010. A failed auction is
not an event of default for the Trusts but it has a negative impact on the
liquidity of Preferred Shares. A failed auction occurs when there are more
sellers of a Trust’s auction rate preferred shares than buyers. A successful
auction for the Trusts’ Preferred Shares may not occur for some time, if
ever, and even if liquidity does resume, Preferred Shareholders may not
have the ability to sell the Preferred Shares at their liquidation preference.

The Trusts may not declare dividends or make other distributions on
Common Shares or purchase any such shares if, at the time of the declara-
tion, distribution or purchase, asset coverage with respect to the outstand-
ing Preferred Shares is less than 200%.

50 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Notes to Financial Statements (concluded)

The Trusts pay commissions of 0.25% on the aggregate principal amount
of all shares that successfully clear their auctions and 0.15% on the
aggregate principal amount of all shares that fail to clear their auctions.
Certain broker dealers have individually agreed to reduce commissions for
failed auctions.

During the year ended April 30, 2010, BKN, BFK, BPS and BSD
announced the following redemptions of Preferred Shares at a price of
$25,000 per share plus any accrued and unpaid dividends through the
redemption date:

 

The Trusts financed the Preferred Share redemptions with cash received
from TOB transactions.

Preferred Shares issued and outstanding remained constant for the six
months ended October 31, 2010.

8. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the
Trusts’ financial statements was completed through the date the financial
statements were issued and the following items were noted:

Each Trust paid a net investment income dividend on December 1, 2010 to
Common Shareholders of record on November 15, 2010 as follows:

 

Each Fund paid a net investment income dividend on December 31, 2010
to Common Shareholders of record on December 15, 2010 as follows:

 

The dividends declared on Preferred Shares for the period November 1,
2010 to November 30, 2010 were as follows:

 

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

51

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors and the Board of Trustees, as the case may be
(each, a “Board,” and, collectively, the "Boards," and the members of
which are referred to as "Board Members") of each of BlackRock
Investment Quality Municipal Trust, Inc. (“BKN”), BlackRock Long-Term
Municipal Advantage Trust (“BTA”), BlackRock Municipal 2020 Term
Trust (“BKK”), BlackRock Municipal Income Trust (“BFK”), BlackRock
Pennsylvania Strategic Municipal Trust (“BPS”) and BlackRock Strategic
Municipal Trust (“BSD,” and together with BKN, BTA, BKK, BFK and BPS,
each a “Fund,” and, collectively, the “Funds”) met on April 8, 2010 and
May 13 — 14, 2010 to consider the approval of each Fund’s invest-
ment advisory agreement (collectively, the “Advisory Agreements”) with
BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor.
The Boards also considered the approval of the sub-advisory agreement
(collectively, the “Sub-Advisory Agreements”) between the Manager and
BlackRock Financial Management, Inc. (the “Sub-Advisor”), with respect to
each Fund. The Manager and the Sub-Advisor are referred to herein as
“BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements
are referred to herein as the “Agreements.”

Activities and Composition of the Board

The Board of each Fund consists of ten individuals, eight of whom are not
“interested persons” of the Funds as defined in the Investment Company
Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The
Board Members are responsible for the oversight of the operations of
each Fund and perform the various duties imposed on the directors of
investment companies by the 1940 Act. The Independent Board Members
have retained independent legal counsel to assist them in connection
with their duties. The Chairman of each Board is an Independent Board
Member. Each Board has established five standing committees: an Audit
Committee, a Governance and Nominating Committee, a Compliance
Committee, a Performance Oversight Committee and an Executive
Committee, each of which is composed of Independent Board Members
(except for the Executive Committee, which also has one interested Board
Member) and is chaired by an Independent Board Member. The Board
of each of BSD, BKN, BKK, BFK and BPS also has two ad hoc committees,
the Joint Product Pricing Committee, which consists of Independent
Board Members and the directors/trustees of the boards of certain other
BlackRock-managed funds, who are not “interested persons” of their
respective funds, and the Ad Hoc Committee on Auction Market Preferred
Shares. The Board of BTA has one ad hoc committee, the Joint Product
Pricing Committee.

The Agreements

Pursuant to the 1940 Act, the Boards are required to consider the continu-
ation of the Agreements on an annual basis. In connection with this
process, the Boards assessed, among other things, the nature, scope
and quality of the services provided to the Funds by the personnel of
BlackRock and its affiliates, including investment management, administra-
tive and shareholder services, oversight of fund accounting and custody,
marketing services and assistance in meeting applicable legal and
regulatory requirements.

From time to time throughout the year, Boards, acting directly and through
their committees, considered at each of their meetings factors that are
relevant to their annual consideration of the renewal of the Agreements,
including the services and support provided by BlackRock to the Funds
and their shareholders. Among the matters the Boards considered were:
(a) investment performance for one-, three- and five-year periods, as appli-
cable, against peer funds, and applicable benchmarks, if any, as well as
senior management's and portfolio managers’ analysis of the reasons for
any over performance or underperformance against a Fund’s peers and/or
benchmark, as applicable; (b) fees, including advisory, administration for
BKN, and other amounts paid to BlackRock and its affiliates by each Fund
for services such as call center and fund accounting; (c) each Fund’s oper-
ating expenses; (d) the resources devoted to and compliance reports relat-
ing to each Fund’s investment objective, policies and restrictions; (e) each
Fund’s compliance with its Code of Ethics and compliance policies and
procedures; (f) the nature, cost and character of non-investment manage-
ment services provided by BlackRock and its affiliates; (g) BlackRock’s and
other service providers’ internal controls; (h) BlackRock’s implementation of
the proxy voting policies approved by the Boards; (i) execution quality of
portfolio transactions; (j) BlackRock’s implementation of each Fund’s valu-
ation and liquidity procedures; (k) an analysis of contractual and actual
management fees for products with similar investment objectives across
the open-end fund, closed-end fund and institutional account product
channels, as applicable; and (l) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 8, 2010 meeting, the Boards
requested and each received materials specifically relating to the
Agreements. The Boards are engaged in a process with BlackRock to peri-
odically review the nature and scope of the information provided to better
assist their deliberations. The materials provided in connection with the
April meeting included (a) information independently compiled and pre-
pared by Lipper, Inc. (“Lipper”) on Fund fees and expenses, and the invest-
ment performance of each Fund as compared with a peer group of funds
as determined by Lipper, and in the case of BKN, BTA, BFK and BSD, a
customized peer group selected by BlackRock (collectively, “Peers”); (b)
information on the profitability of the Agreements to BlackRock and a dis-
cussion of fall-out benefits to BlackRock and its affiliates and significant
shareholders; (c) a general analysis provided by BlackRock concerning
investment advisory fees charged to other clients, such as institutional
clients and open-end funds, under similar investment mandates; (d) the
impact of economies of scale; (e) a summary of aggregate amounts paid
by each Fund to BlackRock and (f) if applicable, a comparison of manage-
ment fees to similar BlackRock closed-end funds, as classified by Lipper.

At an in-person meeting held on April 8, 2010, the Boards reviewed materi-
als relating to their consideration of the Agreements. As a result of the dis-
cussions that occurred during the April 8, 2010 meeting, the Boards
presented BlackRock with questions and requests for additional informa-
tion and BlackRock responded to these requests with additional written
information in advance of the May 13 — 14, 2010 Board meeting.

52 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

At an in-person meeting held on May 13 — 14, 2010, each Board, includ-
ing its Independent Board Members, unanimously approved the continua-
tion of the Advisory Agreement between the Manager and its respective
Fund and the Sub-Advisory Agreement between the Manager and the Sub-
Advisor with respect to its respective Fund, each for a one-year term end-
ing June 30, 2011. In approving the continuation of the Agreements, the
Boards considered: (a) the nature, extent and quality of the services pro-
vided by BlackRock; (b) the investment performance of each Fund and
BlackRock; (c) the advisory fee and the cost of the services and profits to
be realized by BlackRock and its affiliates from their relationship with each
Fund; (d) economies of scale; and (e) other factors deemed relevant by
the Board Members.

The Boards also considered other matters they deemed important to the
approval process, such as services related to the valuation and pricing of
each Fund’s portfolio holdings, direct and indirect benefits to BlackRock
and its affiliates and significant shareholders from their relationship with
each Fund and advice from independent legal counsel with respect to the
review process and materials submitted for the Boards’ review. The Boards
noted the willingness of BlackRock personnel to engage in open, candid
discussions with the Boards. The Boards did not identify any particular
information as controlling, and each Board Member may have attributed
different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The
Boards, including the Independent Board Members, reviewed the nature,
extent and quality of services provided by BlackRock, including the invest-
ment advisory services and the resulting performance of each Fund.
Throughout the year, the Boards compared each Fund’s performance to the
performance of a comparable group of closed-end funds, and the perform-
ance of a relevant benchmark, if any. The Boards met with BlackRock’s sen-
ior management personnel responsible for investment operations, including
the senior investment officers. The Boards also reviewed the materials pro-
vided by each Fund’s portfolio management team discussing each Fund’s
performance and each Fund’s investment objective, strategies and outlook.

The Boards considered, among other factors, the number, education and
experience of BlackRock’s investment personnel generally and each Fund’s
portfolio management team, investments by portfolio managers in the
funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s
use of technology, BlackRock’s commitment to compliance, BlackRock's
credit analysis capabilities, BlackRock's risk analysis capabilities and
BlackRock’s approach to training and retaining portfolio managers and
other research, advisory and management personnel. The Boards also
reviewed a general description of BlackRock’s compensation structure with
respect to each Fund’s portfolio management team and BlackRock’s ability
to attract and retain high-quality talent.

In addition to advisory services, the Boards considered the quality of the
administrative and non-investment advisory services provided to each
Fund. BlackRock and its affiliates and significant shareholders provide
each Fund with certain administrative and other services (in addition to
any such services provided to each Fund by third parties) and officers
and other personnel as are necessary for the operations of each Fund. In

addition to investment advisory services, BlackRock and its affiliates pro-
vide each Fund with other services, including (i) preparing disclosure docu-
ments, such as the prospectus and the statement of additional information
in connection with the initial public offering and periodic shareholder
reports; (ii) preparing communications with analysts to support secondary
market trading of each Fund; (iii) assisting with daily accounting and pric-
ing; (iv) preparing periodic filings with regulators and stock exchanges;

(v) overseeing and coordinating the activities of other service providers;
(vi) organizing Board meetings and preparing the materials for such Board

meetings; (vii) providing legal and compliance support; and (viii) perform-
ing other administrative functions necessary for the operation of each
Fund, such as tax reporting, fulfilling regulatory filing requirements, and
call center services. The Boards reviewed the structure and duties of
BlackRock’s fund administration, accounting, legal and compliance depart-
ments and considered BlackRock’s policies and procedures for assuring
compliance with applicable laws and regulations.

B. The Investment Performance of the Funds and BlackRock: The Boards,
including the Independent Board Members, also reviewed and considered
the performance history of each Fund. In preparation for the April 8, 2010
meeting, the Boards were provided with reports, independently prepared by
Lipper, which included a comprehensive analysis of each Fund’s perform-
ance. The Boards also reviewed a narrative and statistical analysis of the
Lipper data that was prepared by BlackRock, which analyzed various fac-
tors that affect Lipper’s rankings. In connection with their reviews, the
Boards received and reviewed information regarding the investment per-
formance of each Fund as compared to a representative group of similar
funds as determined by Lipper and to all funds in each Fund’s applicable
Lipper category, and in the case of BKN, BTA, BFK and BSD, a customized
peer group selected by BlackRock. The Boards were provided with a
description of the methodology used by Lipper to select peer funds. The
Boards regularly review the performance of each Fund throughout the year.

The Boards of BKN, BFK and BSD noted that, in general, BKN, BFK and
BSD performed better than their respective Peers in that each Fund's per-
formance was at or above the median of its Customized Lipper Peer Group
Composite in each of the one-, three- and five-year periods reported.

The Board of BPS noted that, in general, BPS performed better than
its Peers in that BPS’s performance was at or above the median of its
Lipper Performance Composite in each of the one-, three- and five-year
periods reported.

The Board of BKK noted that BKK performed below the median of its
Lipper Performance Composite in the one- and three-year periods reported,
but that BKK performed better than or equal to the median of its Lipper
Performance Composite in the five-year period reported. The Board of BKK
and BlackRock reviewed the reasons for BKK’s underperformance during
the one- and three-year periods compared with its Peers. The Board of BKK
was informed that, among other things, BKK has a targeted maturity, and
as such is managed to achieve the specific maturity goal.

The Board of BTA noted that BTA performed below the median of its
Customized Lipper Peer Group Composite in the three-year and since-

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

53

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

inception periods reported, but that BTA performed better than or equal to
the median of its Customized Lipper Peer Group Composite in the one-year
period reported. The Board of BTA and BlackRock reviewed the reasons for
BTA’s underperformance during the three-year and since-inception periods
compared with its Peers. The Board of BTA was informed that, among other
things, BTA’s emphasis on longer dated, lower quality bonds coupled with a
leverage structure that relied on highly levered TOBs proved disadvanta-
geous in an environment where the yield curve steepened, credit spreads
widened and leverage was forced to unwind.

The Board of BTA and BlackRock discussed BlackRock’s strategy for
improving BTA’s performance and BlackRock’s commitment to providing the
resources necessary to assist BTA’s portfolio managers and to improve
BTA's performance.

The Boards noted that BlackRock has made changes to the organization of
the overall fixed income group management structure designed to result in
a strengthened leadership team with clearer accountability.

C. Consideration of the Advisory Fees and the Cost of the Services
and Profits to be Realized by BlackRock and its Affiliates from their
Relationship with the Funds: The Boards, including the Independent Board
Members, reviewed each Fund’s contractual advisory fee rate compared
with the other funds in its Lipper category. The Boards also compared
each Fund’s total expenses, as well as actual management fees, to those
of other funds in its Lipper category. The Boards considered the services
provided and the fees charged by BlackRock to other types of clients
with similar investment mandates, including separately managed
institutional accounts.

The Boards received and reviewed statements relating to BlackRock’s
financial condition and profitability with respect to the services it provided
each Fund. The Boards were also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by BlackRock for
services provided to each Fund. The Boards reviewed BlackRock’s prof-
itability with respect to each Fund and other funds the Boards currently
oversee for the year ended December 31, 2009 compared to available
aggregate profitability data provided for the year ended December 31,
2008. The Boards reviewed BlackRock’s profitability with respect to other
fund complexes managed by the Manager and/or its affiliates. The Boards
reviewed BlackRock’s assumptions and methodology of allocating
expenses in the profitability analysis, noting the inherent limitations in allo-
cating costs among various advisory products. The Boards recognized that
profitability may be affected by numerous factors including, among other
things, fee waivers and expense reimbursements by the Manager, the types
of funds managed, expense allocations and business mix, and the difficulty
of comparing profitability as a result of those factors.

The Boards noted that, in general, individual fund or product line profitabil-
ity of other advisors is not publicly available. Nevertheless, to the extent
such information was available, the Boards considered BlackRock’s overall
operating margin, in general, compared to the operating margin for leading
investment management firms whose operations include advising closed-
end funds, among other product types. That data indicates that operating
margins for BlackRock with respect to its registered funds are generally

consistent with margins earned by similarly situated publicly traded
competitors. In addition, the Boards considered, among other things, cer-
tain third party data comparing BlackRock’s operating margin with that of
other publicly-traded asset management firms. That third party data indi-
cates that larger asset bases do not, in themselves, translate to higher
profit margins.

In addition, the Boards considered the cost of the services provided to
each Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating
to the management and distribution of each Fund and the other funds
advised by BlackRock and its affiliates. As part of their analysis, the Boards
reviewed BlackRock’s methodology in allocating its costs to the manage-
ment of each Fund. The Boards also considered whether BlackRock has the
financial resources necessary to attract and retain high quality investment
management personnel to perform its obligations under the Agreements
and to continue to provide the high quality of services that is expected by
the Boards.

The Boards of BKN, BKK, BPS and BSD noted that each of their respective
Funds’ contractual management fee rate was lower than or equal to the
median contractual management fee rate paid by the Fund's Peers, in
each case, before taking into account any expense reimbursements or
fee waivers.

The Board of BFK noted that BFK’s contractual management fee rate was
above the median contractual management fee rate paid by BFK’s Peers, in
each case, before taking into account any expense reimbursements or fee
waivers. The Board of BFK also noted, however, that BFK’s contractual man-
agement fee rate was reasonable relative to the median contractual man-
agement fee rate paid by BFK’s peers.

The Board of BTA noted that BTA’s contractual management fee rate was
above the median contractual management fee rate paid by BTA’s Peers, in
each case, before taking into account any expense reimbursements or fee
waivers. The Board of BTA also noted, however, that BTA’s actual manage-
ment fee rate, after giving effect to any expense reimbursements or fee
waivers by BlackRock, was lower than or equal to the median actual man-
agement fee rate paid by BTA’s Peers, after giving effect to any expense
reimbursements or fee waivers.

D. Economies of Scale: The Boards, including the Independent Board
Members, considered the extent to which economies of scale might be
realized as the assets of each Fund increase. The Boards also considered
the extent to which each Fund benefits from such economies and whether
there should be changes in the advisory fee rate or structure in order to
enable each Fund to participate in these economies of scale, for example
through the use of breakpoints in the advisory fee based upon the asset
level of each Fund.

The Boards noted that most closed-end fund complexes do not have fund
level breakpoints because closed-end funds generally do not experience
substantial growth after the initial public offering and each fund is man-
aged independently consistent with its own investment objectives. The
Boards noted that only one closed-end fund in the Fund Complex has

54 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)

breakpoints in its fee structure. Information provided by Lipper also
revealed that only one closed-end fund complex with total closed-end
fund nets assets exceeding $10 billion, as of December 31, 2009, used a
complex level breakpoint structure.

E. Other Factors Deemed Relevant by the Board Members: The Boards,
including the Independent Board Members, also took into account other
ancillary or “fall-out” benefits that BlackRock or its affiliates and significant
shareholders may derive from their respective relationships with the Funds,
both tangible and intangible, such as BlackRock’s ability to leverage its
investment professionals who manage other portfolios, an increase in
BlackRock’s profile in the investment advisory community, and the engage-
ment of BlackRock’s affiliates and significant shareholders as service
providers to the Funds, including for administrative and distribution serv-
ices. The Boards also considered BlackRock’s overall operations and its
efforts to expand the scale of, and improve the quality of, its operations.
The Boards also noted that BlackRock may use and benefit from third
party research obtained by soft dollars generated by certain mutual fund
transactions to assist in managing all or a number of its other client
accounts. The Boards further noted that BlackRock completed the acquisi-
tion of a complex of exchange-traded funds (“ETFs”) on December 1,
2009, and that BlackRock’s funds may invest in such ETFs without any off-
set against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Boards also
received information regarding BlackRock’s brokerage and soft dollar prac-
tices. The Boards received reports from BlackRock which included informa-
tion on brokerage commissions and trade execution practices throughout
the year.

The Boards noted the competitive nature of the closed-end fund market-
place, and that shareholders are able to sell their respective Fund shares
in the secondary market if they believe that the Fund’s fees and expenses
are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

Each Board, including its Independent Board Members, unanimously
approved the continuation of the Advisory Agreement between the Manager
and its respective Fund for a one-year term ending June 30, 2011 and
the Sub-Advisory Agreement between the Manager and the Sub-Advisor,
with respect to its respective Fund, for a one-year term ending June 30,
2011. As part of its approval, each Board considered the discussions of
BlackRock’s fee structure, as it applies to its respective Fund, being con-
ducted by the ad hoc Joint Product Pricing Committee. Based upon its
evaluation of all of the aforementioned factors in their totality, each Board,
including its Independent Board Members, was satisfied that the terms of
the Agreements were fair and reasonable and in the best interest of its
respective Fund and its shareholders. In arriving at a decision to approve
the Agreements, none of the Boards identified any single factor or group of
factors as all-important or controlling, but considered all factors together,
and different Board Members may have attributed different weights to the

various factors considered. The Independent Board Members were also
assisted by the advice of independent legal counsel in making this deter-
mination. The contractual fee arrangements for each Fund reflect the
results of several years of review by the Board Members and predecessor
Board Members, and discussions between such Board Members (and
predecessor Board Members) and BlackRock. Certain aspects of the
arrangements may be the subject of more attention in some years than in
others, and the Board Members’ conclusions may be based in part on their
consideration of these arrangements in prior years.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

55

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Officers and Trustees

Richard E. Cavanagh, Chairman of the Board and Trustee
Karen P. Robards, Vice Chair of the Board, Chair of the Audit Committee
and Trustee
Richard S. Davis, Trustee
Frank J. Fabozzi, Trustee and Member of the Audit Committee
Kathleen F. Feldstein, Trustee
James T. Flynn, Trustee and Member of the Audit Committee
Henry Gabbay, Trustee
Jerold B. Harris, Trustee

R. Glenn Hubbard, Trustee
W. Carl Kester, Trustee and Member of the Audit Committee

Anne Ackerley, President and Chief Executive Officer
Brendan Kyne, Vice President
Neal Andrews, Chief Financial Officer
Jay Fife, Treasurer
Brian Kindelan, Chief Compliance Officer
Howard Surloff, Secretary

Investment Advisor
BlackRock Advisors, LLC
Wilmington, DE 19809

Sub-Advisor
BlackRock Financial Management, Inc.
New York, NY 10022

Custodian
State Street Bank and Trust Company
Boston, MA 02111

Transfer Agent
Common Shares:
Computershare Trust Company, N.A.
Providence, RI 02940

Auction Agent
Preferred Shares:
The Bank of New York Mellon
New York, NY 10286

Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540

Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
New York, NY 10036

Address of the Trusts
100 Bellevue Parkway
Wilmington, DE 19809

56 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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Additional Information

Proxy Results

The Annual Meeting of Shareholders was held on September 2, 2010 for shareholders of record on July 6, 2010, to elect trustee nominees for each Trust.
There were no broker non-votes with regard to any non-routine matter for any of the Trusts.

 

For the Trusts listed above, Trustees whose term of office continued after the Annual Meeting of Shareholders because they were not up for election are Richard S. Davis, Frank J.
Fabozzi, James T. Flynn, R. Glenn Hubbard, W. Carl Kester and Karen P. Robards.

Dividend Policy

The Trusts’ dividend policy is to distribute all or a portion of their net invest-
ment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Trusts
may at times pay out less than the entire amount of net investment income
earned in any particular month and may at times in any particularmonth
pay out such accumulated but undistributed income in addition to net

investment income earned in that month. As a result, the dividends
paid by the Trusts for any particular month may be more or less than the
amount of net investment income earned by the Trusts during such month.
The Trusts’ current accumulated but undistributed net investment income,
if any, is disclosed in the Statements of Assets and Liabilities, which com-
prises part of the financial information included in this report.

General Information

On July 29, 2010, the Manager announced that a derivative complaint
had been filed by shareholders of BSD and BFK in the Supreme Court of
the State of New York, New York County on July 27, 2010. The complaint
names the Manager, BlackRock, Inc. and certain of the trustees, officers
and portfolio managers of BSD and BFK (collectively, the “Defendants”)
as defendants. The complaint alleges, among other things, that the
Defendants breached fiduciary duties owed to BSD and BFK and each
of their Common Shareholders by redeeming Preferred Shares at their
liquidation preference. The complaint seeks unspecified damages for losses
purportedly suffered by BSD and BFK as a result of the prior redemptions
and injuctive relief preventing BSD and BFK from redeeming Preferred
Shares at their liquidation preference in the future. The Defendants believe
that the claims asserted in the complaint are without merit and intend to
vigorously defend themselves in the litigation.

Electronic Delivery

Electronic copies of most financial reports are available on the Trusts’ web-
sites or shareholders can sign up for e-mail notifications of quarterly state-
ments, annual and semi-annual reports by enrolling in the Trusts’ electronic
delivery program.

Shareholders Who Hold Accounts with Investment Advisors, Banks
or Brokerages:

Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.

SEMI-ANNUAL REPORT

OCTOBER 31, 2010

57

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Additional Information (concluded)

General Information (concluded)

Householding

The Trusts will mail only one copy of shareholder documents, including
annual and semi-annual reports and proxy statements, to shareholders
with multiple accounts at the same address. This practice is commonly
called “householding” and is intended to reduce expenses and eliminate
duplicate mailings of shareholder documents. Mailings of your shareholder
documents may be householded indefinitely unless you instruct us other-
wise. If you do not want the mailing of these documents to be combined
with those for other members of your household, please
call (800) 441-7762.

Availability of Quarterly Portfolio Schedule of Investments

Each Trust files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (“SEC”) for the first and third quar-
ters of each fiscal year on Form N-Q. The Trusts’ Forms N-Q are available on
the SEC’s website at http://www.sec.gov and may also be reviewed and
copied at the SEC’s Public Reference Room in Washington, DC. Information
on the operation of the Public Reference Room may be obtained by calling
(800) SEC-0330. Each Trust’s Forms N-Q may also be obtained upon
request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Trusts use to
determine how to vote proxies relating to portfolio securities is avail-
able (1) without charge, upon request, by calling (800) 441-7762;
(2) at http://www.blackrock.com; and (3) on the SEC’s website at
http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Trusts voted proxies relating to securities
held in the Trusts’ portfolios during the most recent 12-month period
ended June 30 is available upon request and without charge
(1) at http://www.blackrock.com or by calling (800) 441-7762 and
(2) on the SEC’s website at http://www.sec.gov.

Availability of Trust Updates

BlackRock will update performance and certain other data for the Trusts
on a monthly basis on its website in the “Closed-end Funds” section of
http://www.blackrock.com. Investors and others are advised to periodically
check the website for updated performance information and the release of
other material information about the Trusts.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and for-
mer fund investors and individual clients (collectively, “Clients”) and to
safeguarding their non-public personal information. The following infor-
mation is provided to help you understand what personal information
BlackRock collects, how we protect that information and why in certain
cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and
about you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on applica-
tions, forms or other documents; (ii) information about your transactions
with us, our affiliates, or others; (iii) information we receive from a consumer
reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-
public personal information about its Clients, except as permitted by law
or as is necessary to respond to regulatory requests or to service Client
accounts. These non-affiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.

We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services
that may be of interest to you. In addition, BlackRock restricts access
to non-public personal information about its Clients to those BlackRock
employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed
to protect the non-public personal information of its Clients, including pro-
cedures relating to the proper storage and disposal of such information.

58 SEMI-ANNUAL REPORT

OCTOBER 31, 2010

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This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be considered a

representation of future performance. Certain Trusts have leveraged their Common Shares, which creates risks for Common Shareholders, including

the likelihood of greater volatility of net asset value and market price of the Common Shares and the risk that fluctuations in the short-term dividend

rates of the Preferred Shares, currently set at the maximum reset rate as a result of failed auctions, may reduce the Common Shares’ yield.

Statements and other information herein are as dated and are subject to change.

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Item 2 – Code of Ethics – Not Applicable to this semi-annual report

Item 3 – Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 – Principal Accountant Fees and Services – Not Applicable to this semi-annual report

Item 5 – Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

Item 6 – Investments
(a) The registrant’s Schedule of Investments is included as part of the Report to
Stockholders filed under Item 1 of this form.
(b) Not Applicable due to no such divestments during the semi-annual period covered since
the previous Form N-CSR filing.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies – Not Applicable to this semi-annual report

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not Applicable to
this semi-annual report

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers – Not Applicable

Item 10 – Submission of Matters to a Vote of Security Holders – On October 25, 2010, the Board of
Trustees of the Fund amended and restated in its entirety the bylaws of the Fund (the
"Amended and Restated Bylaws"). The Amended and Restated Bylaws were deemed
effective as of October 28, 2010 and set forth, among other things, the processes and
procedures that shareholders of the Fund must follow, and specifies additional information
that shareholders of the Fund must provide, when proposing trustee nominations at any
annual meeting or special meeting in lieu of an annual meeting or other business to be
considered at an annual meeting or special meeting.

Item 11 – Controls and Procedures

11(a) – The registrant’s principal executive and principal financial officers or persons performing
similar functions have concluded that the registrant’s disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the
“1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the
evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act
and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

11(b) – There were no changes in the registrant’s internal control over financial reporting (as
defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected, or are reasonably likely to
materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits attached hereto

12(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

12(a)(2) – Certifications – Attached hereto

12(a)(3) – Not Applicable

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12(b) – Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

BlackRock Municipal Income Trust

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer (principal executive officer) of
BlackRock Municipal Income Trust

Date: December 22, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

By: /s/ Anne F. Ackerley
Anne F. Ackerley
Chief Executive Officer (principal executive officer) of
BlackRock Municipal Income Trust

Date: December 22, 2010

By: /s/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Municipal Income Trust

Date: December 22, 2010

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