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<SEC-DOCUMENT>0000950172-01-000427.txt : 20010410
<SEC-HEADER>0000950172-01-000427.hdr.sgml : 20010410
ACCESSION NUMBER:		0000950172-01-000427
CONFORMED SUBMISSION TYPE:	N-2
PUBLIC DOCUMENT COUNT:		10
FILED AS OF DATE:		20010403

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST
		CENTRAL INDEX KEY:			0001137391
		STANDARD INDUSTRIAL CLASSIFICATION:	 []

	FILING VALUES:
		FORM TYPE:		N-2
		SEC ACT:		
		SEC FILE NUMBER:	333-58228
		FILM NUMBER:		1594711

	FILING VALUES:
		FORM TYPE:		N-2
		SEC ACT:		
		SEC FILE NUMBER:	811-10331
		FILM NUMBER:		1594712

	BUSINESS ADDRESS:	
		STREET 1:		345 PARK AVE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154
		BUSINESS PHONE:		2127545567

	MAIL ADDRESS:	
		STREET 1:		345 PARK AVE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>N-2
<TEXT>


As filed with the Securities and Exchange Commission on April 3, 2001

                                      Securities Act Registration No. 333-
                                      Investment Company Registration No. 811-
- ------------------------------------------------------------------------------


                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM N-2

        REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
                       Pre-Effective Amendment No.              |_|
                       Post-Effective Amendment No.             |_|
                                   and/or
                        REGISTRATION STATEMENT UNDER
                   THE INVESTMENT COMPANY ACT OF 1940 |X|
                              AMENDMENT NO. o

                              ---------------


                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST
      (Exact Name of Registrant as Specified In Declaration of Trust)

                            100 Bellevue Parkway
                         Wilmington, Delaware 19809
                  (Address of Principal Executive Offices)

                               (888) 825-2257
            (Registrant's Telephone Number, including Area Code)

                        Laurence D. Fink, President
                BlackRock California Municipal Income Trust
                              345 Park Avenue
                          New York, New York 10154
                  (Name and Address of Agent for Service)

                              ---------------

                                 Copies to:



                          Michael K. Hoffman, Esq.
                  Skadden, Arps, Slate, Meagher & Flom LLP
                             Four Times Square
                          New York, New York 10036

                              ---------------


   Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of this Registration Statement.

<TABLE>
<CAPTION>

             CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

                                   AMOUNT BEING            PROPOSED             PROPOSED              AMOUNT OF
     TITLE OF SECURITIES            REGISTERED         MAXIMUM OFFERING      MAXIMUM AGGREGATE     REGISTRATION FEE
       BEING REGISTERED                                 PRICE PER UNIT       OFFERING PRICE(1)
- ---------------------------------------------------------------------------------------------------------------------
<S>            <C>                <C>                       <C>                 <C>                      <C>
Common Shares, $.001 par value.....100,000 shares           $15.00              $1,500,000               $375
- ---------------------------------------------------------------------------------------------------------------------
(1)Estimated solely for the purpose of calculating the registration fee.
</TABLE>

   THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.



                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST

                           CROSS REFERENCE SHEET

                            PART A - PROSPECTUS

 Items in Part A of Form N-2                Location in Prospectus
 ---------------------------                ----------------------

Item  1.  Outside Front Cover...............   Cover Page

Item  2.  Inside Front and Outside Back
              Cover Page....................   Cover Page

Item  3.  Fee Table and Synopsis............   Prospectus Summary; Summary
                                               of Trust Expenses

Item  4.  Financial Highlights..............   Not Applicable

Item  5.  Plan of Distribution..............   Cover Page; Prospectus Summary;
                                               Underwriting

Item  6.  Selling Shareholders..............   Not Applicable

Item  7.  Use of Proceeds...................   Use of Proceeds; The Trust's
                                               Investments

Item  8.  General Description of the
              Registrant....................   The Trust; The Trust's
                                               Investments; Risks; Description
                                               of Shares; Certain Provisions
                                               in the Declaration of Trust

Item  9.  Management........................   Management of the Trust;
                                               Custodian and Transfer and
                                               Dividend Disbursing Agent

Item 10.  Capital Stock, Long-Term Debt,
              and Other Securities..........   Description of Shares;
                                               Distributions; Dividend
                                               Reinvestment Plan; Certain
                                               Provisions in the
                                               Declaration of Trust;
                                               Tax Matters

Item 11.  Defaults and Arrears on Senior
              Securities....................   Not Applicable

Item 12.  Legal Proceedings.................   Legal Opinions

Item 13.  Table of Contents of the Statement
              of Additional Information.....   Table of Contents for the
                                               Statement of Additional
                                               Information



                       PART B - STATEMENT OF ADDITIONAL INFORMATION

Item 14.    Cover Page......................   Cover Page

Item 15.    Table of Contents...............   Cover Page

Item 16.    General Information
              and History...................   Not Applicable

Item 17.    Investment Objective
              and Policies..................   Investment Objective and
                                               Policies; Investment
                                               Policies and Techniques;
                                               Portfolio Transactions

Item 18.    Management......................   Management of the Trust;
                                               Portfolio Transactions

Item 19.    Control Persons and Principal
              Holders of Securities.........   Management of the Trust

Item 20.    Investment Advisory
              and Other Services............   Management of the Trust; Experts

Item 21.    Brokerage Allocation and
              Other Practices...............   Portfolio Transactions

Item 22.    Tax Status......................   Tax Matters; Distributions

Item 23.    Financial Statements............   Report of Independent Auditors


                         PART C - OTHER INFORMATION

Items 24-33 have been answered in Part C of this Registration Statement.



The information in this Prospectus is not complete and may be changed. We
may not sell these securities until the Registration Statement filed with
the Securities and Exchange Commission is effective. This Prospectus is not
an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION,  DATED APRIL 3 , 2001
PROSPECTUS

                                   SHARES

                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST


      BlackRock California Municipal Income Trust (the "Trust") is a newly
organized, non-diversified, closed-end management investment company. The
Trust's investment objective is to provide current income exempt from
regular Federal and California income taxes.

       The Trust will invest primarily in municipal bonds that pay interest
that is exempt from regular Federal and California income taxes. The Trust
will invest in municipal bonds that, in the opinion of the Trust's
investment adviser, are underrated or undervalued. Under normal market
conditions, the Trust expects to be fully invested in these tax-exempt
municipal bonds. The Trust will invest at least 80% of its total assets in
municipal bonds that at the time of investment are investment grade
quality. Investment grade quality bonds are bonds rated within the four
highest grades (Baa or BBB or better by Moody's Investor Service, Inc.,
Standard & Poors Ratings Group or Fitch IBCA, Inc.), or bonds that are
unrated but judged to be of comparable quality by the Trust's investment
adviser. The Trust may invest up to 20% of its total assets in municipal
bonds that at the time of investment are rated Ba/BB or B by Moody's, S&P
or Fitch or bonds that are unrated but judged to be of comparable quality
by the Trust's investment adviser. Bonds of below investment grade quality
are regarded as having predominately speculative characteristics with
respect to the issuer's capacity to pay interest and repay principal, and
are commonly referred to as "junk bonds." The Trust intends to invest
primarily in long-term bonds and expects bonds in its portfolio to have a
dollar weighted average maturity of 15 years or more under current market
conditions. The Trust cannot ensure that it will achieve its investment
objective.

      Because the Trust is newly organized, its shares have no history of
public trading. Shares of closed-end investment companies frequently trade
at a discount from their net asset value. This risk may be greater for
investors expecting to sell their shares in a relatively short period after
completion of the public offering. The Trust's common shares are expected
to be listed on the New York Stock Exchange under the symbol " ."

      Within approximately one to three months after completion of this
offering of common shares, the Trust intends to offer preferred shares
representing approximately 38% of the Trust's capital immediately after the
issuance of such preferred shares. There can be no assurance, however, that
preferred shares representing such percentage of the Trust's capital will
actually be issued. The use of preferred shares to leverage the common
shares can create special risks.

      This prospectus contains information you should know before
investing, including information about risks. Please read it before you
invest and keep it for future reference.

      INVESTING IN THE COMMON SHARES INVOLVES CERTAIN RISKS, WHICH ARE
DESCRIBED IN THE "RISKS" SECTION BEGINNING ON PAGE OF THIS PROSPECTUS.



                               Per Share         Total

Public Offering Price          $15.00         $
Sales Load                     $              $
Proceeds, before expenses,
to the Trust                   $              $

           The underwriters may also purchase up to an additional shares at
the public offering price within 45 days from the date of this prospectus
to cover over-allotments.

           NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

           The common shares will be ready for delivery in New York, New
York on or about May , 2001.






The date of this prospectus is May     , 2001.



                             TABLE OF CONTENTS


                                                                   Page

Prospectus Summary.................................................
Summary of Trust Expenses..........................................
The Trust..........................................................
Use of Proceeds....................................................
The Trust's Investments............................................
Preferred Shares and Leverage......................................
Risks..............................................................
Management of the Trust............................................
Net Asset Value....................................................
Distributio........................................................
Dividend Reinvestment Plan.........................................
Description of Shares..............................................
Certain Provisions in the Agreement and Declaration of Trust.......
Closed-End Trust Structure ........................................
Conversion to Open-End Trust.......................................
Repurchase of Shares ..............................................
Tax Matters........................................................
Underwritin........................................................
Custodian and Transfer and Dividend Disbursing Agent...............
Legal Opinions.....................................................
Table of Contents for the Statement of Additiona...................



           YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. THE TRUST HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THE TRUST IS NOT MAKING AN OFFER OF THESE SECURITIES
IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT
THE INFORMATION PROVIDED BY THIS PROSPECTUS IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS.


                      PRIVACY PRINCIPLES OF THE TRUST

      The Trust is committed to maintaining the privacy of stockholders and
to safeguarding their non-public personal information. The following
information is provided to help you understand what personal information
the Trust collects, how the Trust protects that information and why, in
certain cases, the Trust may share information with select other parties.

      Generally, the Trust does not receive any non-public personal
information relating to its stockholders, although certain non-public
personal information of their stockholders may become available to the
Trust. The Trust does not disclose any non-public personal information about
its stockholders or former stockholders to anyone, except as permitted by
law or as is necessary in order to service stockholder accounts (for
example, to a transfer agent or third party administrator).

      The Trust restricts access to non-public personal information about
the stockholders to employees of the Advisor with a legitimate business
need for the information. The Trust maintains physical, electronic and
procedural safeguards designed to protect the non-public personal
information of their stockholders.


                             PROSPECTUS SUMMARY

           This is only a summary. This summary may not contain all of the
information that you should consider before investing in our common shares.
You should review the more detailed information contained in this
prospectus and in the Statement of Additional Information.

THE TRUST............   BlackRock California Municipal Income Trust is a
                        newly organized, closed-end management investment
                        company. Throughout the prospectus, we refer to
                        BlackRock California Municipal Income Trust simply
                        as the "Trust" or as "we," "us" or "our." See "The
                        Trust."

THE OFFERING.........   The Trust is offering common shares of beneficial
                        interest at $15.00 per share through a group of
                        underwriters led by . The common shares of
                        beneficial interest are called "common shares" in
                        the rest of this prospectus. You must purchase at
                        least 100 common shares ($1,500). The Trust has
                        given the underwriters an option to purchase up to
                        additional common shares to cover orders in excess
                        of common shares. See "Underwriting."

INVESTMENT
OBJECTIVES...........   The Trust's investment objective is to provide
                        current income exempt from regular Federal and
                        California income taxes.

INVESTMENT
POLICIES.............   The Trust will invest primarily in municipal bonds
                        that pay interest that is exempt from regular
                        Federal and California income taxes. The Trust will
                        invest in municipal bonds that, in the opinion of
                        BlackRock Advisors, Inc. ("BlackRock Advisors" or
                        the "Adviser"), are underrated or undervalued.
                        Underrated municipal bonds are those whose ratings
                        do not, in the Adviser's opinion, reflect their
                        true creditworthiness. Undervalued municipal bonds
                        are bonds that, in the Adviser's opinion, are worth
                        more than the value assigned to them in the
                        marketplace. Under normal market conditions, the
                        Trust expects to be fully invested in these
                        tax-exempt municipal bonds. The Trust will invest
                        at least 80% of its total assets in municipal bonds
                        that at the time of investment are investment grade
                        quality. Investment grade quality bonds are bonds
                        rated within the four highest grades (Baa or BBB or
                        better by Moody's Investor Service, Inc.
                        ("Moody's"), Standard & Poors Ratings Group ("S&P")
                        or Fitch IBCA, Inc. ("Fitch")) or bonds that are
                        unrated but judged to be of comparable quality by
                        the Adviser. The Trust may invest up to 20% of its
                        total assets in municipal bonds that at the time of
                        investment are rated Ba/BB or B by Moody's, S&P or
                        Fitch or bonds that are unrated but judged to be of
                        comparable quality by the Adviser. Bonds of below
                        investment grade quality are regarded as having
                        predominately speculative characteristics with
                        respect to the issuer's capacity to pay interest
                        and repay principal, and are commonly referred to
                        as "junk bonds." The Trust intends to invest
                        primarily in long-term bonds and expects bonds in
                        its portfolio to have a dollar weighted average
                        maturity of 15 years or more under current market
                        conditions. The Trust cannot ensure that it will
                        achieve its investment objective. See "The Trust's
                        Investments."

SPECIAL TAX
CONSIDERATIONS.......   While exempt-interest dividends are excluded from
                        gross income for Federal income tax purposes, they
                        may be subject to the Federal alternative minimum
                        tax, in certain circumstances. Distributions of any
                        capital gain or other taxable income will be
                        taxable to shareholders. The Trust may not be a
                        suitable investment for investors subject to the
                        Federal alternative minimum tax or who would become
                        subject to such tax by investing in the Trust. See
                        "Tax Matters."

PROPOSED OFFERING OF
PREFERRED SHARES.....
                        Approximately one to three months after completion
                        of this offering of the common shares (subject to
                        market conditions), the Trust intends to offer
                        preferred shares of beneficial interest ("Preferred
                        Shares") that will represent approximately 38% of
                        the Trust's capital after their issuance. The
                        issuance of Preferred Shares will leverage your
                        shares. Leverage involves greater risks. The
                        Trust's leveraging strategy may not be successful.
                        See "Risks--Leverage Risk." The money the Trust
                        obtains by selling the Preferred Shares will be
                        invested in long-term municipal bonds that will
                        generally pay fixed rates of interest over the life
                        of the bond. The Preferred Shares will pay
                        adjustable rate dividends based on shorter-term
                        interest rates. The adjustment period could be as
                        short as a day or as long as a year or more. If the
                        rate of return, after the payment of applicable
                        expenses of the Trust, on the long-term bonds
                        purchased by the Trust is greater than the
                        dividends paid by the Trust on the Preferred
                        Shares, the Trust will generate more income by
                        investing the proceeds of the Preferred Shares than
                        it will need to pay dividends on the Preferred
                        Shares. If so, the excess income will be used to
                        pay higher dividends to holders of common shares.
                        However, the Trust cannot assure you that the
                        issuance of Preferred Shares will result in a
                        higher yield on your common shares. Once Preferred
                        Shares are issued, the net asset value and market
                        price of the common shares and the yield to holders
                        of common shares will be more volatile. See
                        "Preferred Shares and Leverage" and "Description of
                        Shares--Preferred Shares."

INVESTMENT ADVISER....  BlackRock Advisors, Inc. will be the Trust's
                        investment adviser. BlackRock Advisors will receive
                        an annual fee, payable monthly, in a maximum amount
                        equal to % of the average weekly value of the
                        Trust's Managed Assets. "Managed Assets" means the
                        total assets of the Trust (including any assets
                        attributable to any Preferred Shares that may be
                        outstanding) minus the sum of accrued liabilities
                        (other than debt representing financial leverage).
                        The liquidation preference of the Preferred Shares
                        is not a liability. BlackRock Advisors has
                        voluntarily agreed to waive receipt of a portion of
                        the investment management fee or other expenses of
                        the Trust in the amount of % of the average weekly
                        values of the Trust's Managed Assets for the first
                        five years of the Trust's operations (through
                        October 31, 2006), and for a declining amount for
                        an additional five years (through October 31,
                        2011). See "Management of the Trust."

DISTRIBUTIONS........   The Trust intends to distribute monthly all or a
                        portion of its net investment income to holders of
                        common shares. We expect to declare the initial
                        monthly dividend on the Trust's common shares
                        approximately 45 days after completion of this
                        offering and to pay that initial monthly dividend
                        approximately 60 to 90 days after completion of
                        this offering. Unless an election is made to
                        receive dividends in cash, shareholders will
                        automatically have all dividends and distributions
                        reinvested in common shares of the Trust purchased
                        in the open market through the Trust's Dividend
                        Reinvestment Plan. See "Dividend Reinvestment
                        Plan."

                        The Trust will distribute to holders of its common
                        shares monthly dividends of all or a portion of its
                        tax- exempt interest income after payment of
                        dividends on any Preferred Shares of the Trust
                        which may be outstanding. If the Trust realizes
                        capital gain or other taxable income, it will be
                        required to allocate such income between the common
                        shares and the Preferred Shares in proportion to
                        the total distributions paid to each class for the
                        year in which the income is realized. See
                        "Distributions" and "Preferred Shares and
                        Leverage."

LISTING..............   The common shares are expected to be approved for
                        listing on the New York Stock Exchange, subject to
                        notice of issuance under the trading or "ticker"
                        symbol " ." See "Description of Shares--Common
                        Shares."

CUSTODIAN AND
TRANSFER AND DIVIDEND
DISBURSING AGENT.....   State Street Bank and Trust Company will serve as
                        the Trust's Custodian, Transfer Agent and Dividend
                        Disbursing Agent. See "Custodian and Transfer and
                        Dividend Disbursing Agent."

MARKET PRICE OF
SHARES...............   Shares of closed-end investment companies
                        frequently trade at prices lower than their net
                        asset value. Shares of closed-end investment
                        companies like the Trust that invest predominately
                        in investment grade municipal bonds have during
                        some periods traded at prices higher than their net
                        asset value and during other periods traded at
                        prices lower than their net asset value. The Trust
                        cannot assure you that its common shares will trade
                        at a price higher than net asset value. The Trust's
                        net asset value will be reduced immediately
                        following this offering by the sales load and the
                        amount of the organization and offering expenses
                        paid by the Trust. See "Use of Proceeds." In
                        addition to net asset value, the market price of
                        the Trust's common shares may be affected by such
                        factors as dividend levels, which are in turn
                        affected by expenses; call protection for portfolio
                        securities; dividend stability; portfolio credit
                        quality; and liquidity and market supply and
                        demand. See "Preferred Shares and Leverage,"
                        "Risks," "Description of Shares" and the section of
                        the Statement of Additional Information with the
                        heading "Repurchase of Common Shares." The common
                        shares are designed primarily for long-term
                        investors, and you should not purchase common
                        shares of the Trust if you intend to sell them
                        shortly after purchase.

SPECIAL RISK
CONSIDERATIONS.......   No Operating History. The Trust is a newly
                        organized closed-end investment company with no
                        history of operations.

                        Interest Rate Risk. Generally, when market interest
                        rates fall, bond prices rise, and vice versa.
                        Interest rate risk is the risk that the municipal
                        bonds in the Trust's portfolio will decline in
                        value because of increases in market interest
                        rates. The prices of longer-term bonds fluctuate
                        more than prices of shorter-term bonds as interest
                        rates change. Because the Trust will invest
                        primarily in long-term bonds, net asset value and
                        market price per share of the common shares will
                        fluctuate more in response to changes in market
                        interest rates than if the Trust invested primarily
                        in shorter-term bonds. The Trust's use of leverage,
                        as described below, will tend to increase common
                        share interest rate risk. The Trust's interest rate
                        risk will be greater if the Trust invests in
                        residual interest municipal bonds.

                        Credit Risk. Credit risk is the risk that one or
                        more municipal bonds in the Trust's portfolio will
                        decline in price, or fail to pay interest or
                        principal when due, because the issuer of the bond
                        experiences a decline in its financial status. The
                        Trust may invest up to 20% (measured at the time of
                        investment) of its total assets in municipal bonds
                        that are rated Ba/BB or B or that are unrated but
                        judged to be of comparable quality by the Adviser.
                        The prices of these lower grade bonds are more
                        sensitive to negative developments, such as a
                        decline in the issuer's revenues or a general
                        economic downturn, than are the prices of higher
                        grade securities. Municipal bonds of below
                        investment grade quality are predominantly
                        speculative with respect to the issuer's capacity
                        to pay interest and repay principal when due, and
                        therefore involve a greater risk of default.

                        Concentration in California Issuers. The Trust's
                        policy of investing primarily in municipal
                        obligations of issuers located in California makes
                        the Trust more susceptible to adverse economic,
                        political or regulatory occurrences affecting those
                        issuers.

                        Economic Sector Risk. The Trust may invest 25% or
                        more of its total assets in municipal obligations
                        of issues in the same economic sector, such as
                        hospitals or life care facilities and
                        transportation related issues. This may make the
                        Trust more susceptible to adverse economic,
                        political or regulatory occurrences affecting a
                        particular economic sector.

                        Leverage Risk. The use of leverage through the
                        issuance of Preferred Shares creates an opportunity
                        for increased common share net income, but also
                        creates special risks for the holders of common
                        shares. The Trust's leveraging strategy may not be
                        successful. We anticipate that Preferred Shares
                        will pay adjustable rate dividends based on
                        shorter-term interest rates that would be
                        periodically reset. The Trust will invest the
                        proceeds of the Preferred Shares offering in
                        long-term, typically fixed rate, municipal bonds.
                        So long as the Trust's municipal bond portfolio
                        provides a higher rate of return, net of Trust
                        expenses, than the Preferred Share dividend rate,
                        as reset periodically, the leverage will cause the
                        holders of common shares to receive a higher
                        current rate of return than if the Trust were not
                        leveraged. If, however, long- and/or short-term
                        rates rise, the Preferred Share dividend rate could
                        exceed the rate of return on long-term bonds held
                        by the Trust that were acquired during periods of
                        generally lower interest rates, reducing return to
                        the holders of common shares. Leverage creates two
                        major types of risks for the holders of common
                        shares:

                        o     the likelihood of greater volatility of net
                              asset value and market price of the common
                              shares, because changes in the value of the
                              Trust's bond portfolio, including bonds
                              bought with the proceeds of the Preferred
                              Shares offering, are borne entirely by the
                              holders of common shares; and

                        o     the possibility either that common share
                              income will fall if the Preferred Share
                              dividend rate rises, or that common share
                              income will fluctuate because the Preferred
                              Share dividend rate varies.

                        Municipal Bond Market Risk. The amount of public
                        information available about the municipal bonds in
                        the Trust's portfolio is generally less than that
                        for corporate equities or bonds, and the investment
                        performance of the Trust may therefore be more
                        dependent on the analytical abilities of the
                        Adviser than would be a stock fund or taxable bond
                        fund. The secondary market for municipal bonds,
                        particularly the below investment grade bonds in
                        which the Trust may invest, also tends to be less
                        well-developed or liquid than many other securities
                        markets, which may adversely affect the Trust's
                        ability to sell its bonds at attractive prices.

                        The ability of municipal issuers to make timely
                        payments of interest and principal may be
                        diminished in general economic downturns and as
                        governmental cost burdens are reallocated among
                        Federal, state and local governments. In addition,
                        laws enacted in the future by Congress or state
                        legislatures or referenda could extend the time for
                        payment of principal and/or interest, or impose
                        other constraints on enforcement of such
                        obligations, or on the ability of municipalities to
                        levy taxes. Issuers of municipal bonds might seek
                        protection under the bankruptcy laws. In the event
                        of bankruptcy of such an issuer, the Trust could
                        experience delays in collecting principal and
                        interest and the Trust may not, in all
                        circumstances, be able to collect all principal and
                        interest to which it is entitled. To enforce its
                        rights in the event of a default in the payment of
                        interest or repayment of principal, or both, the
                        Trust may take possession of and manage the assets
                        securing the issuer's obligations on such
                        securities, which may increase the Trust's
                        operating expenses. Any income derived from the
                        Trust's ownership or operation of such assets may
                        not be tax- exempt.

                        Non-Diversification. The Trust has registered as a
                        "non-diversified" investment company under the
                        Investment Company Act of 1940, as amended (the
                        "Investment Company Act"). For Federal income tax
                        purposes, the Trust, with respect to up to 50% of
                        its total assets, will be able to invest more than
                        5% (but not more than 25%) of the value of its
                        total assets in the obligations of any single
                        issuer. To the extent the Trust invests a
                        relatively high percentage of its assets in the
                        obligations of a limited number of issuers, the
                        Trust may be more susceptible than a more widely
                        diversified investment company to any single
                        economic, political or regulatory occurrence.

                        Anti-takeover Provisions. The Trust's Agreement and
                        Declaration of Trust includes provisions that could
                        limit the ability of other entities or persons to
                        acquire control of the Trust or convert the Trust
                        to open-end status. These provisions could deprive
                        the holders of common shares of opportunities to
                        sell their common shares at a premium over the then
                        current market price of the common shares.


SUMMARY OF TRUST EXPENSES

           The following table assumes the issuance of Preferred Shares in
an amount equal to 38% of the Trust's capital (after their issuance), and
shows Trust expenses as a percentage of net assets attributable to common
shares.

                                                              Percentage of
                                                             Total Net Assets

Shareholder Transaction Expenses
  Sales Load Paid by You (as a percentage
   of offering price)...................................                  %
  Dividend Reinvestment Plan Fees..........                         None*


                                                            Percentage of Net
                                                            Assets Attributable
                                                             to Common Shares**

Annual Expenses
  Management Fees....................................                    %
  Fee and Expense Waiver
  Years 1-5.............................................           (     %)***
                                                                   --------

Net Management Fees...............................                       %***
Other Expenses........................................ .                 %
                                                                    ------

Total Annual Expenses.............................                         ***
                                                                    =======

- --------------------

*     You will be charged a $2.50 service charge and pay brokerage charges
      if you direct the Plan Agent to sell your common shares held in a
      dividend reinvestment account.

**    Amounts shown in the table are expressed as a percentage of assets
      attributable to common shares. Expressed as a percentage of total net
      assets, the percentages are as follows: Management Fees %; Fee and
      Expense Waiver Years 1-5 ( %)***; Net Management Fees %***; Other
      Expenses %; Total Annual Expenses %***.

***   BlackRock Advisors has voluntarily agreed to waive receipt of a
      portion of the investment management fee or other expenses of the
      Trust in the amount of % of average weekly Managed Assets for the
      first 5 years of the Trust's operations, % in year 6, % in year 7, %
      in year 8 and % in year 9. Without the waiver, "Total Net Annual
      Expenses" would be estimated to be % of average daily total net
      assets and % of average daily net assets attributable to common
      shares.

      The purpose of the table above and the example below is to help you
understand all fees and expenses that you, as a holder of common shares,
would bear directly or indirectly. The expenses shown in the table under
"Other Expenses" and "Total Annual Expenses" are based on estimated amounts
for the Trust's first year of operations and assume that the Trust issues
common shares.
See "Management of the Trust" and "Dividend Reinvestment Plan."


      The following example illustrates the expenses (including the sales
load of $ ) that you would pay on a $1,000 investment in common shares,
assuming (1) total net annual expenses of . % of net assets attributable to
common shares in years 1 through 5, increasing to % and %, in year 10 and
(2) a 5% annual return:(1)

                                    1 Year  3 Years   5 Years    10 Years(3)
                                    ------  -------   -------    -----------
Expenses Based on a Percentage
of Net Assets Attributable to
  Common Shares(2)................. $       $        $           $

- --------------------

(1)   The example should not be considered a representation of future
      expenses. The example assumes that the estimated Other Expenses set
      forth in the Annual Expenses table are accurate, that fees and
      expenses increase as described in note 3 below and that all dividends
      and distributions are reinvested at net asset value. Actual expenses
      may be greater or less than those assumed. Moreover, the Trust's
      actual rate of return may be greater or less than the hypothetical 5%
      return shown in the example.

(2)   Expressed as a percentage of total net assets the amounts would be as
      follows:

      1 Year      3 Years           5 Years           10 Years(3)
      ------      -------           -------           -----------



(3)   Assumes waiver of fees and expenses of % of average weekly Managed
      Assets in year 6, % in year 7, % in year 8, % in year 9 and % in year
      10. BlackRock Advisors has not agreed to waive any portion of its
      fees and expenses beyond , 2011.



THE TRUST

      The Trust is a recently organized, closed-end, non-diversified
management investment company registered under the Investment Company Act.
The Trust was organized as a Delaware business trust on March 30, 2001,
pursuant to an Agreement and Declaration of Trust governed by the laws of
the State of Delaware. As a newly organized entity, the Trust has no
operating history. The Trust's principal office is located at 100 Bellevue
Parkway, Wilmington, Delaware, 19809, and its telephone number is (888)
825- 2257. The Trust is designed to provide tax benefits to investors who
are residents of California for tax purposes.


                              USE OF PROCEEDS

      The net proceeds of the offering of common shares will be
approximately $ ($ if the underwriters exercise the over-allotment option
in full) after payment of the estimated organization and offering costs.
The Trust will invest the net proceeds of the offering in accordance with
the Trust's investment objective and policies as stated below. We currently
anticipate that the Trust will be able to invest substantially all of the
net proceeds in municipal bonds that meet the Trust's investment objective
and policies within three months after the completion of the offering.
Pending such investment, it is anticipated that the proceeds will be
invested in short-term, tax-exempt or taxable investment grade securities.


                          THE TRUST'S INVESTMENTS

INVESTMENT OBJECTIVE AND POLICIES

      The Trust's investment objective is to provide current income exempt
from regular Federal and California income taxes.

      The Trust will invest primarily in municipal bonds that pay interest
that is exempt from regular Federal and California income taxes. Under
normal market conditions, the Trust expects to be fully invested (at least
95% of its net assets) in such tax-exempt municipal bonds. Under normal
market conditions, the Trust will invest at least 80% of its total assets
in investment grade quality municipal bonds. Investment grade quality means
that such bonds are rated, at the time of investment, within the four
highest grades (Baa or BBB or better by Moody's, S&P or Fitch) or are
unrated but judged to be of comparable quality by the Adviser. The Trust
may invest up to 20% of its total assets in municipal bonds that are rated,
at the time of investment, Ba/BB or B by Moody's, S&P or Fitch or that are
unrated but judged to be of comparable quality by the Adviser. Bonds of
below investment grade quality (Ba/BB or below) are commonly referred to as
"junk bonds." Bonds of below investment grade quality are regarded as
having predominantly speculative characteristics with respect to the
issuer's capacity to pay interest and repay principal. These credit quality
policies apply only at the time a security is purchased, and the Trust is
not required to dispose of a security if a rating agency downgrades its
assessment of the credit characteristics of a particular issue. In
determining whether to retain or sell a security that a rating agency has
downgraded, the Adviser may consider such factors as the Adviser's
assessment of the credit quality of the issuer of the security, the price
at which the security could be sold and the rating, if any, assigned to the
security by other rating agencies. Appendix A to the Statement of
Additional Information contains a general description of Moody's, S&P's and
Fitch's ratings of municipal bonds. See "Risks" below for a general
description of the economic and credit characteristics of municipal issuers
in California. The Trust may also invest in securities of other open- or
closed-end investment companies that invest primarily in municipal bonds of
the types in which the Trust may invest directly and in tax-exempt
preferred shares that pay dividends exempt from regular Federal income tax.
Subject to the Trust's policy of investing at least 80% of its total assets
in municipal bonds exempt from California income tax, the Trust may invest
in securities that pay interest that is not exempt from California income
tax when, in the judgement of the Adviser, the return to the shareholders
after payment of applicable California income tax would be higher than the
return available from comparable securities that pay interest is, or make
other distributions that are, exempt from California income tax. See
"--Other Investment Companies," "-Tax-Exempt Preferred Shares" and
"--Initial Portfolio Composition."

      The Trust will invest in municipal bonds that, in the Adviser's
opinion, are underrated or undervalued. Underrated municipal bonds are
those whose ratings do not, in the Adviser's opinion, reflect their true
creditworthiness. Undervalued municipal bonds are bonds that, in the
opinion of the Adviser, are worth more than the value assigned to them in
the marketplace. The Adviser may at times believe that bonds associated
with a particular municipal market sector (for example, electric
utilities), or issued by a particular municipal issuer, are undervalued.
The Adviser may purchase those bonds for the Trust's portfolio because they
represent a market sector or issuer that the Adviser considers undervalued,
even if the value of those particular bonds appears to be consistent with
the value of similar bonds. Municipal bonds of particular types (for
example, hospital bonds, industrial revenue bonds or bonds issued by a
particular municipal issuer) may be undervalued because there is a
temporary excess of supply in that market sector, or because of a general
decline in the market price of municipal bonds of the market sector for
reasons that do not apply to the particular municipal bonds that are
considered undervalued. The Trust's investment in underrated or undervalued
municipal bonds will be based on the Adviser's belief that their yield is
higher than that available on bonds bearing equivalent levels of interest
rate risk, credit risk and other forms of risk, and that their prices will
ultimately rise, relative to the market, to reflect their true value. Any
capital appreciation realized by the Trust will generally result in capital
gains distributions subject to Federal capital gains taxes.

      The Trust may purchase municipal bonds that are additionally secured
by insurance, bank credit agreements or escrow accounts. The credit quality
of companies which provide these credit enhancements will affect the value
of those securities. Although the insurance feature reduces certain
financial risks, the premiums for insurance and the higher market price
paid for insured obligations may reduce the Trust's income. Insurance
generally will be obtained from insurers with a claims-paying ability rated
Aaa by Moody's or AAA by S&P or Fitch. The insurance feature does not
guarantee the market value of the insured obligations or the net asset
value of the common shares. The Trust may purchase insured bonds and may
purchase insurance for bonds in its portfolio.

      During temporary defensive periods, including the period during which
the net proceeds of this offering are being invested, and in order to keep
the Trust's cash fully invested, the Trust may invest up to 100% of its net
assets in liquid, short-term investments, including high quality,
short-term securities that may be either tax-exempt or taxable. The Trust
intends to invest in taxable short-term investments only if suitable
tax-exempt short-term investments are not available at reasonable prices
and yields. If the Trust invests in taxable short-term investments, a
portion of your dividends would be subject to regular Federal and
California income taxes.

      The Trust cannot change its investment objective without the approval
of the holders of a majority of the outstanding common shares and, once the
Preferred Shares are issued, the Preferred Shares voting together as a
single class, and of the holders of a majority of the outstanding Preferred
Shares voting as a separate class. A "majority of the outstanding", means
(1) 67% or more of the shares present at a meeting, if the holders of more
than 50% of the shares are present or represented by proxy, or (2) more
than 50% of the shares, whichever is less. See "Description of
Shares--Preferred Shares--Voting Rights" and the Statement of Additional
Information under "Description of Shares--Preferred Shares" for additional
information with respect to the voting rights of holders of Preferred
Shares.

MUNICIPAL BONDS

      General. Municipal bonds are either general obligation or revenue
bonds and typically are issued to finance public projects, such as roads or
public buildings, to pay general operating expenses or to refinance
outstanding debt. Municipal bonds may also be issued for private
activities, such as housing, medical and educational facility construction
or for privately owned industrial development and pollution control
projects. General obligation bonds are backed by the full faith and credit,
or taxing authority, of the issuer and may be repaid from any revenue
source. Revenue bonds may be repaid only from the revenues of a specific
facility or source. The Trust also may purchase municipal bonds that
represent lease obligations. These carry special risks because the issuer
of the bonds may not be obligated to appropriate money annually to make
payments under the lease. In order to reduce this risk, the Trust will only
purchase municipal bonds representing lease obligations where the Adviser
believes the issuer has a strong incentive to continue making
appropriations until maturity.

      The municipal bonds in which the Trust will invest are generally
issued by the State of California, political subdivisions of the State, and
authorities or other intermediaries of the State and such political
subdivisions and pay interest that, in the opinion of bond counsel to the
issuer, or on the basis of another authority believed by the Adviser to be
reliable, is exempt from regular Federal and California income taxes. The
Adviser will not conduct its own analysis of the tax status of the interest
paid by municipal bonds held by the Trust. The Trust may also invest in
municipal bonds issued by United States Territories (such as Puerto Rico or
Guam) that are exempt from regular Federal and California income taxes. In
addition to the types of municipal bonds described in the prospectus, the
Trust may invest in other securities that pay interest that is, or make
other distributions that are, exempt from regular Federal income tax and or
state and local personal tax, regardless of the technical structure of the
issuer of the instrument. The Trust treats all of such tax-exempt
securities as municipal bonds.

      The yields on municipal bonds are dependent on a variety of factors,
including prevailing interest rates and the condition of the general money
market and the municipal bond market, the size of a particular offering,
the maturity of the obligation and the rating of the issue. The market
value of municipal bonds will vary with changes in interest rate levels and
as a result of changing evaluations of the ability of bond issuers to meet
interest and principal payments.

      The Trust will primarily invest in municipal bonds with long-term
maturities in order to maintain a weighted average maturity of 15 to 30
years, but the weighted average maturity of obligations held by the Trust
may be shortened, depending on market conditions.

      Special Considerations Relating to California Municipal Bonds.
Because the Trust invests primarily in a portfolio of California municipal
bonds, the Trust is more susceptible to political, economic, regulatory or
other factors affecting issuers of California municipal bonds than a fund
which does not limit its investments to such issuers. These risks include
possible legislative, state constitutional or regulatory amendments that
may affect the ability of state and local governments or regional
governmental authorities to raise money to pay principal and interest on
their municipal bonds. Economic, fiscal and budgetary conditions throughout
the state may also influence the Trust's performance.

      The following information is a summary of a more detailed description
of certain factors affecting California municipal securities which is
contained in the Trust's Statement of Additional Information. Investors
should obtain a copy of the Statement of Additional Information for the
more detailed discussion of such factors. Such information is derived from
certain official statements of the State of California published in
connection with the issuance of specific California municipal securities,
as well as from other publicly available documents. Such information has
not been independently verified by the Trust and may not apply to all
California municipal securities acquired by the Trust. The Trust assumes no
responsibility for the completeness or accuracy of such information.

      California state and local government obligations may be adversely
affected by political and economic conditions and developments within the
State of California and the nation as a whole. With respect to an
investment in the Trust, through popular initiative and legislative
activity, the ability of the State of California and its local governments
to raise money through property taxes and to increase spending has been the
subject of considerable debate and change in recent years. Various State
Constitutional amendments, for example, have been adopted which have the
effect of limiting property tax and spending increases, while legislation
has sometimes added to these limitations and has at other times sought to
reduce their impact. To date, these Constitutional, legislative and budget
developments do not appear to have severely decreased the ability of the
State and local governments to pay principal and interest on their
obligations. It can be expected that similar types of State legislation or
Constitutional proposals will continue to be introduced. The impact of
future developments in these areas is unclear.

      Fuel and energy prices in the State of California have risen sharply
in recent months. Because of capacity constraints in electric generation
and transmission, California utilities have been forced to purchase
wholesale power at high prices. While the government of California and the
Federal Energy Regulatory Commission are considering further actions to
deal with the shortcomings in California's energy market, it is not
possible to predict what the long-term impact of these developments will be
on California's economy. Such fuel and energy issues could have severe
adverse effects of the state's economy.

      Although revenue obligations of the State of California or its
political subdivisions may be payable from a specific project or source,
including lease rentals, there can be no assurance that future economic
difficulties and the resulting impact on State and local government
finances will not adversely affect the market value of the portfolio of the
Trust or the ability of the respective obligors to make timely payments of
principal and interest on such obligations.

      The value of California municipal instruments may also be affected by
general conditions in the money markets or the municipal bond markets, the
levels of Federal income tax rates, the supply of tax-exempt bonds, the
credit quality and rating of the issues and perceptions with respect to the
level of interest rates.

      There can be no assurance that there will not be a decline in
economic conditions or that particular California municipal securities in
the portfolio of the Trust will not be adversely affected by any such
changes.

      For more information, see "Factors Pertaining to California" in the
Statement of Additional Information.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

      The Trust may buy and sell municipal bonds on a when-issued basis and
may purchase or sell municipal bonds on a "forward commitment" basis. When
such transactions are negotiated, the price, which is generally expressed
in yield terms, is fixed at the time the commitment is made, but delivery
and payment for the securities takes place at a later date. This type of
transaction may involve an element of risk because no interest accrues on
the bonds prior to settlement and, because bonds are subject to market
fluctuations, the value of the bonds at the time of delivery may be less or
more than cost. A separate account of the Trust will be established with
its custodian consisting of cash, or other liquid high grade debt
securities having a market value at all times, at least equal to the amount
of the commitment.

OTHER INVESTMENT COMPANIES

      The Trust may invest up to 10% of its total assets in securities of
other open- or closed-end investment companies that invest primarily in
municipal bonds of the types in which the Trust may invest directly. The
Trust generally expects to invest in other investment companies either
during periods when it has large amounts of uninvested cash, such as the
period shortly after the Trust receives the proceeds of the offering of its
common shares or Preferred Shares, or during periods when there is a
shortage of attractive, high-yielding municipal bonds available in the
market. As a shareholder in an investment company, the Trust will bear its
ratable share of that investment company's expenses, and would remain
subject to payment of the Trust's advisory and other fees and expenses with
respect to assets so invested. Holders of common shares would therefore be
subject to duplicative expenses to the extent the Trust invests in other
investment companies. The Adviser will take expenses into account when
evaluating the investment merits of an investment in an investment company
relative to available municipal bond investments. In addition, the
securities of other investment companies may also be leveraged and will
therefore be subject to the same leverage risks to which the Trust is
subject. As described in this prospectus in the sections entitled "Risks"
and "Preferred Shares and Leverage," the net asset value and market value
of leveraged shares will be more volatile and the yield to shareholders
will tend to fluctuate more than the yield generated by unleveraged shares.
Investment companies may have investment policies that differ from those of
the Trust. In addition, to the extent the Trust invests in other investment
companies, the Trust will be dependent upon the investment and research
abilities of persons other than the Adviser. The Trust treats its
investments in such open- or closed-end investment companies as investments
in municipal bonds.

TAX-EXEMPT PREFERRED SHARES

      The Trust may also invest up to 10% of its total assets in preferred
interests of other investment funds that pay dividends that are exempt from
regular Federal income tax. Such funds in turn invest in municipal bonds
and other assets that pay interest or make distributions that are exempt
from regular Federal income tax, such as revenue bonds issued by state or
local agencies to fund the development of low-income, multi-family housing.
Investment in such tax-exempt preferred shares involves many of the same
issues as investing in other open- or closed-end investment companies as
discussed above. These investments also have additional risks, including
liquidity risk, the absence or regulation governing investment practices,
capital structure and leverage, affiliated transactions and other matters,
and concentration of investments in particular issuers or industries.
Revenue bonds issued by state or local agencies to finance the development
of low-income, multi-family housing involve special risks in addition to
those associated with municipal bonds generally, including that the
underlying properties may not generate sufficient income to pay expenses
and interest costs. Such bonds are generally non-recourse against the
property owner, may be junior to the rights of others with an interest in
the properties, may pay interest that changes based in part on the
financial performance of the property, may be prepayable without penalty
and may be used to finance the construction of housing developments which,
until completed and rented, do not generate income to pay interest.
Increases in interest rates payable on senior obligations may make it more
difficult for issuers to meet payment obligations on subordinated bonds.
The Trust will treat investments in tax exempt preferred shares as
investments in municipal bonds.

RESIDUAL INTEREST MUNICIPAL BONDS

      The Trust may invest in residual interest municipal bonds whose
interest rates bear an inverse relationship to the interest rate on another
security or the value of an index ("inverse floaters"). An investment in
inverse floaters may involve greater risk than an investment in a
fixed-rate bond. Because changes in the interest rate on the other security
or index inversely affect the residual interest paid on the inverse
floater, the value of an inverse floater is generally more volatile than
that of a fixed-rate bond. Inverse floaters have interest rate adjustment
formulas which generally reduce or, in the extreme, eliminate the interest
paid to the Trust when short-term interest rates rise, and increase the
interest paid to the Trust when short-term interest rates fall. Inverse
floaters have varying degrees of liquidity, and the market for these
securities is relatively volatile. These securities tend to underperform
the market for fixed-rate bonds in a rising interest rate environment, but
tend to outperform the market for fixed-rate bonds when interest rates
decline. Shifts in long-term interest rates may, however, alter this
tendency. Although volatile, inverse floaters typically offer the potential
for yields exceeding the yields available on fixed-rate bonds with
comparable credit quality, coupon, call provisions and maturity. These
securities usually permit the investor to convert the floating rate to a
fixed rate (normally adjusted downward), and this optional conversion
feature may provide a partial hedge against rising rates if exercised at an
opportune time. Investment in inverse floaters may amplify the effects of
the Trust's use of leverage. Should short-term interest rates rise, the
combination of the Trust's investment in inverse floaters and the use of
leverage likely will adversely affect the Trust's income and distributions
to common shareholders. The Trust does not intend initially to invest in
inverse floaters, although the Trust may do so at some point in the future.
The Trust will not invest more than 10% of its total assets in inverse
floaters.

INITIAL PORTFOLIO COMPOSITION

      If current market conditions persist, the Trust expects that
approximately 80% of its initial portfolio will consist of investment grade
quality municipal bonds, rated as such at the time of investment, meaning
that such bonds are rated by national rating agencies within the four
highest grades or are unrated but judged to be of comparable quality by the
Adviser (approximately 55% in Aaa/AAA; 15% in A; and 20% in Baa/BBB). The
Adviser generally expects to select obligations that may not be redeemed at
the option of the issuer for approximately seven to nine years from the
date of purchase by the Trust. Subject to market availability, the Adviser
currently expects to invest approximately 10% of the Trust's initial
portfolio in municipal bonds that are, at the time of investment, either
rated below investment grade or that are unrated but judged to be of
comparable quality by the Adviser. See "--Investment Objective and
Policies."


                       PREFERRED SHARES AND LEVERAGE

      Approximately one to three months after the completion of the
offering of the common shares, subject to market conditions, the Trust
intends to offer Preferred Shares representing approximately 38% of the
Trust's capital immediately after the issuance of the Preferred Shares. The
Preferred Shares will have complete priority upon distribution of assets
over the common shares. The issuance of Preferred Shares will leverage the
common shares. Leverage involves greater risks. The Trust's leveraging
strategy may not be successful. Although the timing and other terms of the
offering of Preferred Shares and the terms of the Preferred Shares will be
determined by the Trust's board of trustees, the Trust expects to invest
the proceeds of the Preferred Shares offering in long-term municipal bonds.
The Preferred Shares will pay adjustable rate dividends based on
shorter-term interest rates, which would be redetermined periodically by an
auction process. The adjustment period for Preferred Share dividends could
be as short as one day or as long as a year or more. So long as the Trust's
portfolio is invested in securities that provide a higher rate of return
than the dividend rate of the Preferred Shares, after taking expenses into
consideration, the leverage will cause you to receive a higher current rate
of return than if the Trust were not leveraged.

      Changes in the value of the Trust's bond portfolio, including bonds
bought with the proceeds of the Preferred Shares offering, will be borne
entirely by the holders of common shares. If there is a net decrease, or
increase, in the value of the Trust's investment portfolio, the leverage
will decrease, or increase (as the case may be), the net asset value per
common share to a greater extent than if the Trust were not leveraged.
During periods in which the Trust is using leverage, the fees paid to
BlackRock Advisors for advisory services will be higher than if the Trust
did not use leverage because the fees paid will be calculated on the basis
of the Trust's total assets, including the proceeds from the issuance of
Preferred Shares.

      For tax purposes, the Trust is currently required to allocate
tax-exempt interest income, net capital gain and other taxable income, if
any, between the common shares and Preferred Shares in proportion to total
distributions paid to each class for the year in which the net capital gain
or other taxable income is realized. If net capital gain or other taxable
income is allocated to Preferred Shares, instead of solely tax-exempt
income, the Trust will likely have to pay higher total dividends to
Preferred Shareholders or make special payments to Preferred Shareholders
to compensate them for the increased tax liability. This would reduce the
total amount of dividends paid to the holders of common shares, but would
increase the portion of the dividend that is tax-exempt. If the increase in
dividend payments or the special payments to Preferred Shareholders are not
entirely offset by a reduction in the tax liability of, and an increase in
the tax-exempt dividends received by, the holders of common shares, the
advantage of the Trust's leveraged structure to holders of common shares
will be reduced.

      Under the Investment Company Act, the Trust is not permitted to issue
preferred shares unless immediately after such issuance the value of the
Trust's total assets is at least 200% of the liquidation value of the
outstanding preferred shares (i.e., the liquidation value may not exceed
50% of the Trust's total assets). In addition, the Trust is not permitted
to declare any cash dividend or other distribution on its common shares
unless, at the time of such declaration, the value of the Trust's total
assets is at least 200% of such liquidation value. If Preferred Shares are
issued, the Trust intends, to the extent possible, to purchase or redeem
Preferred Shares from time to time to the extent necessary in order to
maintain coverage of any Preferred Shares of at least 200%. In addition, as
a condition to obtaining ratings on the Preferred Shares, the terms of any
Preferred Shares issued are expected to include asset coverage maintenance
provisions which will require the redemption of the Preferred Shares in the
event of non-compliance by the Trust and may also prohibit dividends and
other distributions on the common shares in such circumstances. In order to
meet redemption requirements, the Trust may have to liquidate portfolio
securities. Such liquidations and redemptions would cause the Trust to
incur related transaction costs and could result in capital losses to the
Trust. Prohibitions on dividends and other distributions on the common
shares could impair the Trust's ability to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended. If
the Trust has Preferred Shares outstanding, two of the Trust's trustees
will be elected by the holders of Preferred Shares voting separately as a
class. The remaining trustees of the Trust will be elected by holders of
common shares and Preferred Shares voting together as a single class. In
the event the Trust failed to pay dividends on Preferred Shares for two
years, holders of Preferred Shares would be entitled to elect a majority of
the trustees of the Trust.

      The Trust will be subject to certain restrictions imposed by
guidelines of one or more rating agencies that may issue ratings for
Preferred Shares issued by the Trust. These guidelines are expected to
impose asset coverage or portfolio composition requirements that are more
stringent than those imposed on the Trust by the Investment Company Act. It
is not anticipated that these covenants or guidelines will impede the
Adviser from managing the Trust's portfolio in accordance with the Trust's
investment objective and policies.

      The Trust may also borrow money as a temporary measure for
extraordinary or emergency purposes, including the payment of dividends and
the settlement of securities transactions which otherwise might require
untimely dispositions of Trust securities.

      Assuming that the Preferred Shares will represent approximately 38%
of the Trust's capital and pay dividends at an annual average rate of %,
the income generated by the Trust's portfolio (net of estimated expenses)
must exceed % in order to cover the dividend payments and other expenses
specifically related to the Preferred Shares. Of course, these numbers are
merely estimates used for illustration. Actual Preferred Share dividend
rates will vary frequently and may be significantly higher or lower than
the rate estimated above.

      The following table is furnished in response to requirements of the
Securities and Exchange Commission. It is designed to illustrate the effect
of leverage on common share total return, assuming investment portfolio
total returns (comprised of income and changes in the value of bonds held
in the Trust's portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed
investment portfolio returns are hypothetical figures and are not
necessarily indicative of the investment portfolio returns experienced or
expected to be experienced by the Trust. See "Risks" and "Preferred Shares
and Leverage."

Assumed Portfolio Total Return
(Net of Expenses)....... (10)%        (5)%         0%         5%          10%
Common Share Total Retur(     )%    (     )%    (     )%                      %
                         -----       -----       -----      ------      ------


      Unless and until Preferred Shares are issued, the common shares will
not be leveraged and this section will not apply.


                                   RISKS

      The net asset value of the common shares will fluctuate with and be
affected by, among other things, interest rate risk, credit risk,
reinvestment risk and leverage risk, and an investment in common shares
will be subject to market discount risk, inflation risk and municipal bond
market risk, each of which is more fully described below.

      Newly Organized. The Trust is a newly organized, non-diversified,
closed-end management investment company and has no operating history.

      Market Discount Risk. Shares of closed-end management investment
companies frequently trade at a discount from their net asset value. Shares
of closed-end investment companies like the Trust that invest predominantly
in investment grade municipal bonds have during some periods traded at
prices higher than their net asset value and during other periods traded at
prices lower than their net asset value. The Trust cannot assure you that
its common shares will trade at a price higher than net asset value.

      Interest Rate Risk. Interest rate risk is the risk that bonds, and
the Trust's net assets, will decline in value because of changes in
interest rates. Generally, municipal bonds will decrease in value when
interest rates rise and increase in value when interest rates decline. This
means that the net asset value of the common shares will fluctuate with
interest rate changes and the corresponding changes in the value of the
Trust's municipal bond holdings. The value of the longer-term bonds in
which the Trust generally invests fluctuates more in response to changes in
interest rates than does the value of shorter-term bonds. Because the Trust
will invest primarily in long-term bonds, the net asset value and market
price per share of the common shares will fluctuate more in response to
changes in market interest rates than if the Trust invested primarily in
shorter-term bonds. The Trust's use of leverage, as described below, will
tend to increase common share interest rate risk. The Trust's interest rate
risk will be greater if the Trust invests in residual interest municipal
bonds.

      Credit Risk. Credit risk is the risk that an issuer of a municipal
bond will become unable to meet its obligation to make interest and
principal payments. In general, lower rated municipal bonds carry a greater
degree of risk that the issuer will lose its ability to make interest and
principal payments, which could have a negative impact on the Trust's net
asset value or dividends. The Trust may invest up to 20% of its total
assets in municipal bonds that are rated Ba/BB or B by Moody's, S&P or
Fitch or that are unrated but judged to be of comparable quality by the
Trust's investment adviser. Bonds rated Ba/BB or B are regarded as having
predominately speculative characteristics with respect to the issuer's
capacity to pay interest and repay principal, and these bonds are commonly
referred to as junk bonds. These securities are subject to a greater risk
of default. The prices of these lower grade bonds are more sensitive to
negative developments, such as a decline in the issuer's revenues or a
general economic downturn, than are the prices of higher grade securities.
Lower grade securities tend to be less liquid than investment grade
securities. The market values of lower grade securities tend to be more
volatile than is the case for investment grade securities.

      State Concentration Risk. Because the Trust primarily purchases
municipal bonds issued by the State of California or county or local
government municipalities or their agencies, districts, political
subdivisions or other entities, shareholders may be exposed to additional
risks. In particular, the Trust is susceptible to political, economic or
regulatory factors affecting issuers of California municipal bonds. There
can be no assurance that California will not experience a decline in
economic conditions or that the California municipal bonds purchased by the
Trust will not be affected by such a decline.

      For a discussion of economic and other conditions in California, see
"The Trust's Investments--Municipal Bonds--Special Considerations Relating
to California Municipal Bonds."

      Municipal Bond Market Risk. Investing in the municipal bond market
involves certain risks. The amount of public information available about
the municipal bonds in the Trust's portfolio is generally less than that
for corporate equities or bonds, and the investment performance of the
Trust may therefore be more dependent on the analytical abilities of the
Adviser than would be a stock fund or taxable bond fund. The secondary
market for municipal bonds, particularly the below-investment-grade bonds
in which the Trust may invest, also tends to be less well-developed or
liquid than many other securities markets, which may adversely affect the
Trust's ability to sell its bonds at attractive prices.

      The ability of municipal issuers to make timely payments of interest
and principal may be diminished in general economic downturns and as
governmental cost burdens are reallocated among Federal, state and local
governments. In addition, laws enacted in the future by Congress or state
legislatures or referenda could extend the time for payment of principal
and/or interest, or impose other constraints on enforcement of such
obligations, or on the ability of municipalities to levy taxes. Issuers of
municipal bonds might seek protection under the bankruptcy laws. In the
event of bankruptcy of such an issuer, the Trust could experience delays in
collecting principal and interest and the Trust may not, in all
circumstances, be able to collect all principal and interest to which it is
entitled. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, the Trust may take possession
of and manage the assets securing the issuer's obligations on such
securities, which may increase the Trust's operating expenses. Any income
derived from the Trust's ownership or operation of such assets may not be
tax-exempt.

      Reinvestment Risk. Reinvestment risk is the risk that income from the
Trust's bond portfolio will decline if and when the Trust invests the
proceeds from matured, traded, prepaid or called bonds at market interest
rates that are below the portfolio's current earnings rate. A decline in
income could affect the common shares' market price or their overall
returns.

      Leverage Risk. Leverage risk is the risk associated with the issuance
of the Preferred Shares to leverage the common shares. There is no
assurance that the Trust's leveraging strategy will be successful. Once the
Preferred Shares are issued, the net asset value and market value of the
common shares will be more volatile, and the yield to the holders of common
shares will tend to fluctuate with changes in the shorter-term dividend
rates on the Preferred Shares. If the dividend rate on the Preferred Shares
approaches the net rate of return on the Trust's investment portfolio, the
benefit of leverage to the holders of the common shares would be reduced.
If the dividend rate on the Preferred Shares exceeds the net rate of return
on the Trust's portfolio, the leverage will result in a lower rate of
return to the holders of common shares than if the Trust were not
leveraged. Because the long-term bonds included in the Trust's portfolio
will typically pay fixed rates of interest while the dividend rate on the
Preferred Shares will be adjusted periodically, this could occur even when
both long-term and short-term municipal rates rise. In addition, the Trust
will pay (and the holders of common shares will bear) any costs and
expenses relating to the issuance and ongoing maintenance of the Preferred
Shares. Accordingly, the Trust cannot assure you that the issuance of
Preferred Shares will result in a higher yield or return to the holders of
the common shares.

      Similarly, any decline in the net asset value of the Trust's
investments will be borne entirely by the holders of common shares.
Therefore, if the market value of the Trust's portfolio declines, the
leverage will result in a greater decrease in net asset value to the
holders of common shares than if the Trust were not leveraged. This greater
net asset value decrease will also tend to cause a greater decline in the
market price for the common shares. The Trust might be in danger of failing
to maintain the required 200% asset coverage or of losing its ratings on
the Preferred Shares or, in an extreme case, the Trust's current investment
income might not be sufficient to meet the dividend requirements on the
Preferred Shares. In order to counteract such an event, the Trust might
need to liquidate investments in order to fund a redemption of some or all
of the Preferred Shares. Liquidation at times of low municipal bond prices
may result in capital loss and may reduce returns to the holders of common
shares.

      While the Trust may from time to time consider reducing leverage in
response to actual or anticipated changes in interest rates in an effort to
mitigate the increased volatility of current income and net asset value
associated with leverage, there can be no assurance that the Trust will
actually reduce leverage in the future or that any reduction, if
undertaken, will benefit the holders of common shares. Changes in the
future direction of interest rates are very difficult to predict
accurately. If the Trust were to reduce leverage based on a prediction
about future changes to interest rates, and that prediction turns out to be
incorrect, the reduction in leverage would likely operate to reduce the
income and/or total returns to holders of common shares relative to the
circumstance where the Trust had not reduced leverage. The Trust may decide
that this risk outweighs the likelihood of achieving the desired reduction
to volatility in income and share price if the prediction were to turn out
to be correct, and determine not to reduce leverage as described above.

      The Trust may invest in the securities of other investment companies.
Such securities may also be leveraged and will therefore be subject to the
leverage risks described above. This additional leverage may in certain
market conditions reduce the net asset value of the Trust's common shares
and the returns to the holders of common shares.

      Inflation Risk. Inflation risk is the risk that the value of assets
or income from investment will be worth less in the future as inflation
decreases the value of money. As inflation increases, the real value of the
common shares and distributions on those shares can decline. In addition,
during any periods of rising inflation, Preferred Share dividend rates
would likely increase, which would tend to further reduce returns to the
holders of common shares.

      Economic Sector Risk. The Trust may invest 25% or more of its total
assets in municipal obligations of issuers in the same economic sector,
including without limitation the following: lease rental obligations of
state and local authorities; obligations dependent on annual appropriations
by a state's legislature for payment; obligations of state and local
housing finance authorities, municipal utilities systems or public housing
authorities; obligations of hospitals or life care facilities; or
industrial development or pollution control bonds issued for electric
utility systems, steel companies, paper companies or other purposes. This
may make the Trust more susceptible to adverse economic, political, or
regulatory occurrences affecting a particular economic sector. For example,
health care related issuers are susceptible to Medicare, Medicaid and other
third party payor reimbursement policies, and national and state health
care legislation. As concentration increases, so does the potential for
fluctuation in the net asset value of the Trust's common shares.

      Non-Diversification. The Trust has registered as a "non-diversified"
investment company under the Investment Company Act. For Federal income tax
purposes, the Trust, with respect to up to 50% of its total assets, will be
able to invest more than 5% (but not more than 25%) of the value of its
total assets in the obligations of any single issuer. To the extent the
Trust invests a relatively high percentage of its assets in the obligations
of a limited number of issuers, the Trust may be more susceptible than a
more widely diversified investment company to any single economic,
political or regulatory occurrence.


                          MANAGEMENT OF THE TRUST

TRUSTEES AND OFFICERS

      The board of trustees is responsible for the overall management of
the Trust, including supervision of the duties performed by BlackRock
Advisors. There are eight trustees of the Trust. Two of the trustees are
"interested persons" (as defined in the Investment Company Act). The name
and business address of the trustee and officers of the Trust and their
principal occupations and other affiliations during the past five years are
set forth under "Management of the Trust" in the statement of additional
information.

INVESTMENT ADVISER

      BlackRock Advisors, Inc. acts as the Trust's investment manager.
BlackRock Advisors is a wholly-owned subsidiary of BlackRock, Inc., which
is one of the largest publicly traded investment management firms in the
United States with $204 billion of assets under management as of December
31, 2001. BlackRock Advisors manages assets on behalf of more than 3,300
institutions and 200,000 individuals worldwide, including nine of the ten
largest companies in the U.S. as determined by Fortune Magazine, through a
variety of equity, fixed income, liquidity and alternative investment
separate accounts and mutual funds, including the company's flagship fund
families, BlackRock Funds and BlackRock Provident Institutional Funds. In
addition, the company provides risk management and technology services to a
growing number of institutional investors under the BlackRock Solutions
name. Clients are served from the company's headquarters in New York City,
as well as offices in Wilmington, DE, Edinburgh, Scotland and Tokyo, Japan.
BlackRock, Inc. is a member of The PNC Financial Services Group, Inc.
("PNC"), one of the largest diversified financial services organizations in
the United States, and is majority-owned by PNC and by BlackRock employees.

      Investment Philosophy. BlackRock Advisors' investment decision-making
process for the municipal bond sector is subject to the same discipline,
oversight and investment philosophy that the firm applies to other sectors
of the fixed income market.

      BlackRock Advisors uses a relative value strategy that evaluates the
trade-off between risk and return to seek to achieve the Trust's investment
objective of generating high income. This strategy is combined with
disciplined risk control techniques and applied in sector, sub-sector and
individual security selection decisions. BlackRock Advisors extensive
personnel and technology resources are the key drivers of the investment
philosophy.

      BlackRock Advisors' Municipal Bond Team. BlackRock Advisors uses a
team approach to managing municipal portfolios. BlackRock Advisors believes
that this approach offers substantial benefits over one that is dependent
on the market wisdom or investment expertise of only a few individuals.

      BlackRock Advisors' municipal bond team includes four portfolio
managers and five credit research analysts. The team is led by Kevin
Klingert, a senior portfolio manager and head of municipal bonds at
BlackRock Advisors, which he joined in 1991, and a member of BlackRock
Advisor's Investment Strategy Group. Mr. Klingert has primary
responsibility for managing client portfolios with a special emphasis on
municipal bonds. The portfolio management team also includes Craig Kasap,
James McGinley and F. Howard Downs, who each serve as Vice President and
Portfolio Manager at BlackRock Advisors. Mr. Kasap and Mr. McGinley are
also members of BlackRock Advisor's Investment Strategy Group. Prior to
joining BlackRock Advisors in 1997, Mr. Kasap spent three years as a
municipal bond trader with Keystone Investments in Boston where he was
involved in formulating the firm's municipal bond investment strategies.
Prior to joining BlackRock Advisors in 1999, Mr. McGinley was Vice
President of Municipal Trading and Manager of the Municipal Strategy Group
with Prudential Securities. Prior to joining BlackRock Advisors in 1999,
Mr. Downs was a Vice President and 1990 founding member of William E. Simon
and Sons, Municipal Securities responsible for institutional sales.

      BlackRock Advisors' municipal bond portfolio managers are responsible
for 39 municipal bond portfolios, valued at approximately $7.2 billion,
plus approximately an additional $2.8 billion in municipal bonds held
across portfolios with broader investment mandates. The team is responsible
for portfolios with a variety of investment objectives and constraints,
including national funds, state-specific funds, and indexed portfolios.
Currently, the team manages 13 closed-end municipal funds with over $3.5
billion in assets as of December 31, 2001.

      BlackRock Advisors' Investment Process. BlackRock Advisors has
in-depth expertise in the fixed income market. BlackRock Advisors applies
the same risk-controlled, active sector rotation style to the management
process for all of its fixed income portfolios. BlackRock Advisors believes
that it is unique in its integration of taxable and municipal bond
specialists. Both taxable and municipal bond portfolio managers share the
same trading floor and interact frequently for determining the firm's
overall investment strategy. This interaction allows each portfolio manager
to access the combined experience and expertise of the entire portfolio
management group at BlackRock Advisors.

      BlackRock Advisors' portfolio management process emphasizes research
and analysis of specific sectors and securities, not interest rate
speculation. BlackRock Advisors believes that market-timing strategies can
be highly volatile and potentially produce inconsistent results. Instead,
BlackRock Advisors thinks that value over the long-term is best achieved
through a risk-controlled approach, focusing on sector allocation, security
selection and yield curve management.

      In the municipal market, BlackRock Advisors believes one of the most
important determinants of value is supply and demand. BlackRock Advisors'
ability to monitor investor flows and frequency and seasonality of issuance
is helpful in anticipating the supply and demand on sectors. BlackRock
Advisors believes that breadth and expertise of its municipal bond team
allows it to anticipate issuance flows, forecast which sectors are likely
to have the most supply and plan its investment strategy accordingly.

      BlackRock Advisors also believes that over the long-term, intense
credit analysis will add incremental value and avoid significant relative
performance impairments. The municipal credit team is led by Susan Heide,
Ph.D., who has been with BlackRock Advisors since 1993 and is a managing
director responsible for municipal credit research. She co-heads the Credit
Committee and Credit Research, and is assisted by four municipal research
analysts. The group averages over 11 years of experience in municipal
credit research.

      BlackRock Advisors' approach to credit risk incorporates a
combination of sector-based top-down macro-analysis of industry sectors to
determine relative weightings with a name-specific (issuer-specific)
bottom-up detailed credit analysis of issuers and structures. The
sector-based approach focuses on rotating into sectors that are undervalued
and exiting sectors when fundamentals or technicals become unattractive.
The name-specific approach focuses on identifying special opportunities
where the market undervalues a credit, and devoting concentrated resources
to research the credit and monitor the position. BlackRock Advisors'
analytic process focuses on anticipating change in credit trends before
market recognition. Credit research is a critical, independent element of
BlackRock Advisors' municipal process.

INVESTMENT MANAGEMENT AGREEMENT

      Pursuant to an investment management agreement between BlackRock
Advisors and the Trust, the Trust has agreed to pay for the investment
advisory services and facilities provided by BlackRock Advisors a fee
payable monthly in arrears at an annual rate equal to % of the average
weekly value of the Trust's Managed Assets (the "management fee"). The
Trust will reimburse BlackRock Advisors for all out-of-pocket expenses
BlackRock Advisors incurs in connection with performing administrative
services for the Trust. In addition, with the approval of the Board of
Trustees, a pro rata portion of the salaries, bonuses, health insurance,
retirement benefits and similar employment costs for the time spent on
Trust operations (other than the provision of services required under the
investment management agreement) of all personnel employed by BlackRock
Advisors who devote substantial time to Trust operations or the operations
of other investment companies advised by the Trust may be reimbursed to
BlackRock Advisors. Managed Assets are the total assets of the Trust minus
the sum of accrued liabilities (other than indebtedness attributable to
leverage). This means that during periods in which the Trust is using
leverage, the fee paid to BlackRock Advisors will be higher than if the
Trust did not use leverage because the fee is calculated as a percentage of
the Trust's Managed Assets, including those purchased with leverage.

      In addition to the fee of BlackRock Advisors, the Trust pays all
other costs and expenses of its operations, including compensation of its
trustees (other than those affiliated with BlackRock Advisors), custodian,
transfer and dividend disbursing expenses, legal fees, rating agency fees,
expenses of independent auditors, expenses of repurchasing shares, expenses
of preparing, printing and distributing shareholder reports, notices, proxy
statements and reports to governmental agencies, and taxes, if any.

      For the first nine years of the Trust's operation, BlackRock Advisors
has undertaken to waive its investment advisory fee payable by the Trust
fees and expenses in the amounts, and for the time periods, set forth
below:
                                              Percentage Waived
                                             (as a percentage Year
                                               Ending of average
                                      ,        Managed Assets)
             -------------------------        ----------------

                2001............                   %
                2002............                   %
                2003............                   %
                2004............                   %
                2005............                   %
                2006............                   %
                2007............                   %
                2008............                   %
                2009............                   %
                2010............                   %
                2011............                   %
- --------------------

* From the commencement of operations.

      BlackRock Advisors has not undertaken to waive any portion of the
Trust's fees and expenses beyond , 2011 or after termination of the
investment management agreement.


                              NET ASSET VALUE

      The net asset value of the common shares of the Trust will be
computed based upon the value of the Trust's portfolio securities and other
assets. Net asset value per common share will be determined as of the close
of the regular trading session on the New York Stock Exchange no less
frequently than the last Friday of each week. The Trust calculates net
asset value per common share by subtracting the Trust's liabilities
(including accrued expenses, dividends payable and any borrowings of the
Trust) and the liquidation value of any outstanding shares of preferred
stock of the Trust from the Trust's total assets (the value of the
securities the Trust holds plus cash or other assets, including interest
accrued but not yet received) and dividing the result by the total number
of common shares of the Trust outstanding.

      The Trust values its fixed income securities by using market
quotations, prices provided by market makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics in accordance with procedures established by the board of
trustees of the Trust. A substantial portion of the Trust's fixed income
investments will be valued utilizing one or more pricing services approved
by the Trust's board of trustees. Debt securities having a remaining
maturity of 60 days or less when purchased and debt securities originally
purchased with maturities in excess of 60 days but which currently have
maturities of 60 days or less are valued at cost adjusted for amortization
of premiums and accretion of discounts. Any securities or other assets for
which current market quotations are not readily available are valued at
their fair value as determined in good faith under procedures established
by and under the general supervision and responsibility of the Trust's
board of trustees.


DISTRIBUTIONS

      The Trust will distribute to holders of its common shares monthly
dividends of all or a portion of its tax-exempt interest income after
payment of dividends on any Preferred Shares of the Trust which may be
outstanding. It is expected that the initial monthly dividend on shares of
the Trust's common shares will be declared approximately 45 days and paid
approximately 60 to 90 days after completion of this offering. The Trust
expects that all or a portion of any capital gain and other taxable income
will be distributed once annually.

      Various factors will affect the level of the Trust's income,
including the asset mix, the amount of leverage utilized by the Trust and
the effects thereof and the Trust's use of hedging. To permit the Trust to
maintain a more stable monthly distribution, the Trust may from
time-to-time distribute less than the entire amount of tax-exempt interest
income earned in a particular period. The undistributed tax-exempt interest
income would be available to supplement future distributions. As a result,
the distributions paid by the Trust for any particular monthly period may
be more or less than the amount of tax-exempt interest income actually
earned by the Trust during the period. Undistributed tax-exempt interest
income will add to the Trust's net asset value and, correspondingly,
distributions from undistributed tax-exempt interest income will deduct
from the Trust's net asset value. Shareholders will automatically have all
dividends and distributions reinvested in common shares of the Trust issued
by the Trust or purchased in the open market in accordance with the Trust's
Dividend Reinvestment Plan unless an election is made to receive cash. See
"Dividend Reinvestment Plan".


                         DIVIDEND REINVESTMENT PLAN

      Unless you elect to receive cash, all dividend declared for your
common shares of the Trust will be automatically reinvested by State Street
Bank and Trust Company, agent for shareholders in administering the Trust's
Dividend Reinvestment Plan (the "Plan Agent"), in additional shares of the
Trust. If you elect not to participate in the Dividend Reinvestment Plan
you will receive all dividends in cash paid by check mailed directly to you
(or, if the shares are held in street or other nominee name, then to such
nominee) by State Street Bank and Trust Company, as dividend disbursing
agent. You may elect not to participate in the Dividend Reinvestment Plan
and to receive all dividends in cash by sending written instructions to
State Street Bank and Trust Company, as dividend disbursing agent, at the
address set forth below. Participation in the Dividend Reinvestment Plan is
completely voluntary and may be terminated or resumed at any time without
penalty by written notice if received by the Plan Agent not less than ten
days prior to any dividend record date; otherwise such termination will be
effective with respect to any subsequently declared dividend or
distribution.

      The Plan Agent will open an account for each common shareholder under
the Plan in the same name in which such the common shareholder's common
shares are registered. Whenever the Trust declares a dividend payable in
cash, non-participants in the Plan will receive cash and participants in
the Plan will receive the equivalent in common shares. The common shares
will be acquired by the Plan Agent for the participants' accounts,
depending upon the circumstances described below, either (i) through
receipt of additional unissued but authorized common shares from the Trust
("newly issued common shares") or (ii) by purchase of outstanding common
shares on the open market ("open-market purchases") on the New York Stock
Exchange (the "NYSE"), or elsewhere. If, on the record date for any
dividend, the net asset value per common share is equal to or less than the
market price per common share, the Plan Agent will invest the dividend
amount in newly issued common shares on behalf of the participants. The
number of newly issued common shares to be credited to each participant's
account will be determined by dividing the dollar amount of the dividend by
the net asset value per common share on the date the common shares are
issued. If, on the record date for any dividend, the net asset value per
common share is greater than the market value, the Plan Agent will invest
the dividend amount in common shares acquired on behalf of the participants
in open-market purchases. In the event of a market discount on the record
date for any dividend, the Plan Agent will have until the last business day
before the next date on which the common shares trade on an "ex-dividend"
basis or 30 days after the record date for such dividend, whichever is
sooner, to invest the dividend amount in common shares acquired in
open-market purchases. It is contemplated that the Trust will pay monthly
income dividends. Therefore, the period during which open-market purchases
can be made will exist only from the record date of each dividend through
the date before the next "ex-dividend" date which typically will be
approximately ten days. If, before the Plan Agent has completed its
open-market purchases, the market price of common share exceeds the net
asset value per common share, the average per common share purchase price
paid by the Plan Agent may exceed the net asset value of the common shares,
resulting in the acquisition of fewer common shares than if the dividend
had been paid in newly issued common shares on the dividend record date.
Because of the foregoing difficulty with respect to open market purchases,
the Plan provides that if the Plan Agent is unable to invest the full
dividend amount in open market purchases during the purchase period or if
the market discount shifts to a market premium during the purchase period,
the Plan Agent may cease making open-market purchases and may invest the
uninvested portion of the dividend amount in newly issued common shares at
the net asset value per common share at the close of business on the last
purchase date.

      The Plan Agent maintains all shareholders' accounts in the Dividend
Reinvestment Plan and furnishes written confirmation of all transactions in
the accounts, including information needed by shareholders for tax records.
Common shares in the account of each Dividend Reinvestment Plan participant
will be held by the Plan Agent on behalf of the Dividend Reinvestment Plan
participant, and each shareholder proxy will include those shares purchased
or received pursuant to the Dividend Reinvestment Plan. The Plan Agent will
forward all proxy solicitation materials to participants and vote proxies
for shares held under the Dividend Reinvestment Plan in accordance with the
instructions of the participants.

      In the case of shareholders such as banks, brokers or nominees which
hold shares for others who are the beneficial owners, the Plan Agent will
administer the Dividend Reinvestment Plan on the basis of the number of
common shares certified from time to time by the record shareholder's name
and held for the account of beneficial owners who are to participate in the
Dividend Reinvestment Plan.

      There will be no brokerage charges with respect to common shares
issued directly by the Trust. However, each participant will pay a pro rata
share of brokerage commissions incurred in connection with open-market
purchases. The automatic reinvestment of dividends will not relieve
participants of any Federal, state or local income tax that may be payable
(or required to be withheld) on such dividends. See "Tax Matters."

      Experience under the Dividend Reinvestment Plan may indicate that
changes are desirable. Accordingly, the Trust reserves the right to amend
or terminate the Dividend Reinvestment Plan. There is no direct service
charge to participants in the Dividend Reinvestment Plan; however, the
Trust reserves the right to amend the Dividend Reinvestment Plan to include
a service charge payable by the participants.

      All correspondence concerning the Dividend Reinvestment Plan should
be directed to the Plan Agent at 225 Franklin Street, Boston, MA 02110.


                           DESCRIPTION OF SHARES

COMMON SHARES

      The Trust is an unincorporated business trust organized under the
laws of Delaware pursuant to an Agreement and Declaration of Trust dated as
of March 30, 2001. The Trust is authorized to issue an unlimited number of
common shares of beneficial interest, par value $.001 per share. Each
common share has one vote and, when issued and paid for in accordance with
the terms of this offering, will be fully paid and non-assessable. Whenever
Preferred Shares are outstanding, the holders of common shares will not be
entitled to receive any distributions from the Trust unless all accrued
dividends on Preferred Shares have been paid, and unless asset coverage (as
defined in the Investment Company Act) with respect to Preferred Shares
would be at least 200% after giving effect to the distributions. See
"--Preferred Shares" below. All common shares are equal as to dividends,
assets and voting privileges and have no conversion, preemptive or other
subscription rights. The Trust will send annual and semi-annual reports,
including financial statements, to all holders of its shares.

      The Trust has no present intention of offering any additional shares
other than the Preferred Shares and Common Shares issued under the Trust's
Dividend Reinvestment Plan. Any additional offerings of shares will require
approval by the Trust's board of trustees. Any additional offering of
common shares will be subject to the requirements of the Investment Company
Act, which requires that shares may not be issued at a price below the then
current net asset value, exclusive of sales load, except in connection with
an offering to existing holders of common shares or with the consent of a
majority of the Trust's outstanding voting securities.

      The Trust intends to apply for listing of the common shares on the
New York Stock Exchange under the symbol " ."

      The Trust's net asset value per share generally increases when
interest rates decline, and decreases when interest rates rise, and these
changes are likely to be greater because the Trust intends to have a
leveraged capital structure. Net asset value will be reduced immediately
following the offering of common shares by the amount of the sales load and
organization and offering expenses paid by the Trust. See "Use of
Proceeds."

      Unlike open-end funds, closed-end funds like the Trust do not
continuously offer shares and do not provide daily redemptions. Rather, if
a shareholder determines to buy additional common shares or sell shares
already held, the shareholder may do so by trading on the New York Stock
Exchange through a broker or otherwise. Shares of closed-end investment
companies frequently trade on an exchange at prices lower than net asset
value. Shares of closed-end investment companies like the Trust that invest
predominately in investment grade municipal bonds have during some periods
traded at prices higher than net asset value and during other periods have
traded at prices lower than net asset value. Because the market value of
the common shares may be influenced by such factors as dividend levels,
which are in turn affected by expenses; call protection; dividend
stability; portfolio credit quality; net asset value; relative demand for
and supply of such shares in the market; general market and economic
conditions; and other factors beyond the control of the Trust, the Trust
cannot assure you that common shares will trade at a price equal to or
higher than net asset value in the future. The common shares are designed
primarily for long-term investors, and you should not purchase the common
shares if you intend to sell them soon after purchase. See "Preferred
Shares and Leverage" and the statement of additional information under
"Repurchase of Common Shares."

PREFERRED SHARES

      The Agreement and Declaration of Trust provides that the Trust's
board of trustees may authorize and issue preferred shares with rights as
determined by the board of trustees, by action by the board of trustees
without the approval of the holders of the common shares. Holders of common
shares have no preemptive right to purchase any preferred shares that might
be issued.

      The Trust's board of trustees has indicated its intention to
authorize an offering of preferred shares, representing approximately 38%
of the Trust's total assets immediately after the preferred shares are
issued, within approximately one to three months after completion of this
offering of common shares, subject to market conditions and to the board of
trustees' continuing belief that leveraging the Trust's capital structure
through the issuance of preferred shares (the "Preferred Shares") is likely
to achieve the potential benefits to the holders of common shares described
in this prospectus. The Trust may conduct other offerings of Preferred
Shares in the future subject to the same percentage restriction, after
giving effect to previously issued Preferred Shares. The board of trustees
also reserves the right to change the foregoing percentage limitation and
may issue Preferred Shares to the extent that the aggregate liquidation
preference of all outstanding Preferred Shares does not exceed 50% of the
value of the Trust's total assets. We cannot assure you, however, that any
Preferred Shares will be issued. Although the terms of any Preferred
Shares, including dividend rate, liquidation preference and redemption
provisions, will be determined by the board of trustees, subject to
applicable law and the Agreement and Declaration of Trust, it is likely
that the Preferred Shares will be structured to carry a relatively
short-term dividend rate reflecting interest rates on short-term tax-exempt
debt securities, by providing for the periodic redetermination of the
dividend rate at relatively short intervals through an auction, remarketing
or other procedure. The Trust also believes that it is likely that the
liquidation preference, voting rights and redemption provisions of the
Preferred Shares will be similar to those stated below.

      Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Trust, the holders of
Preferred Shares will be entitled to receive a preferential liquidating
distribution, which is expected to equal the original purchase price per
share plus accrued and unpaid dividends, whether or not declared, before
any distribution of assets is made to holders of common shares. After
payment of the full amount of the liquidating distribution to which they
are entitled, the holders of Preferred Shares will not be entitled to any
further participation in any distribution of assets by the Trust.

      Voting Rights. The Investment Company Act requires that the holders
of any Preferred Shares, voting separately as a single class, have the
right to elect at least two trustees at all times. In addition, subject to
the prior rights, if any, of the holders of any other class of senior
securities outstanding, the holders of any Preferred Shares have the right
to elect a majority of the trustees of the Trust at any time two years'
dividends on any Preferred Shares are unpaid. The Investment Company Act
also requires that, in addition to any 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 (1) adopt any plan of reorganization that would adversely
affect the Preferred Shares, and (2) take any action requiring a vote of
security holders under Section 13(a) of the Investment Company Act,
including, among other things, changes in the Trust's subclassification as
a closed-end investment company or changes in its fundamental investment
restrictions. See "Conversion to Open-End Trust." As a result of these
voting rights, the Trust's ability to take any such actions may be impeded
to the extent that there are any Preferred Shares outstanding. The board of
trustees presently intends that, except as otherwise indicated in this
prospectus and except as otherwise required by applicable law, holders of
Preferred Shares will have equal voting rights with holders of shares of
common shares (one vote per share, unless otherwise required by the
Investment Company Act), and will vote together with holders of common
shares as a single class.

      It is presently required that in connection with the election of the
Trust's trustees, on and after issuance of any Preferred Shares, the
holders of all outstanding Preferred Shares, voting as a separate class,
would be entitled to elect two trustees of the Trust, and the remaining
trustees would be elected by holders of common shares and Preferred Shares,
voting together as a single class.

      The affirmative vote of the holders of a majority of the outstanding
Preferred Shares, voting as a separate class, will be required to amend,
alter or repeal any of the preferences, rights or powers of holders of
Preferred Shares so as to affect materially and adversely such preferences,
rights, or powers, or increase or decrease the number of Preferred Shares.
The class vote of holders of Preferred Shares described above will in each
case be in addition to any other vote required to authorize the action in
question.

      Redemption, Purchase and Sale of Preferred Shares by the Trust. The
terms of the Preferred Shares are expected to provide that (1) they are
redeemable by the Trust in whole or in part at the original purchase price
per share plus accrued dividends per share, (2) the Trust may tender for or
purchase Preferred Shares and (3) the Trust may subsequently resell any
shares so tendered for or purchased. Any redemption or purchase of
Preferred Shares by the Trust will reduce the leverage applicable to the
common shares, while any resale of shares by the Trust will increase that
leverage.

      The discussion above describes the present intention of the board of
trustees with respect to an offering of Preferred Shares. If the board of
trustees determines to proceed with such an offering, the terms of the
Preferred Shares may be the same as, or different from, the terms described
above, subject to applicable law and the Trust's Agreement and Declaration
of Trust. The board of trustees, without the approval of the holders of
common shares, may authorize an offering of Preferred Shares or may
determine not to authorize such an offering, and may fix the terms of the
Preferred Shares to be offered.


        CERTAIN PROVISIONS IN THE AGREEMENT AND DECLARATION OF TRUST

ANTI-TAKEOVER PROVISIONS

      The Agreement and Declaration of Trust includes provisions that could
have the effect of limiting the ability of other entities or persons to
acquire control of the Trust or to change the composition of its board of
trustees. This could have the effect of depriving shareholders of an
opportunity to sell their shares at a premium over prevailing market prices
by discouraging a third party from seeking to obtain control over the
Trust, which attempts could have the effect of increasing the expenses of
the Trust and disrupting the normal operation of the Trust. The board of
trustees is divided into three classes, with the terms of one class
expiring at each annual meeting of shareholders. At each annual meeting,
one class of trustees is elected to a three-year term. This provision could
delay for up to two years the replacement of a majority of the board of
trustees. A trustee may be removed from office by the action of two-thirds
of the remaining trustees or by a vote of the holders of at least
two-thirds of the shares.

      In addition, the Trust's Agreement and Declaration of Trust requires
the favorable vote of the holders of at least 75% of the outstanding shares
of each class of the Trust, voting as a class, then entitled to vote to
approve, adopt or authorize certain transactions with five
percent-or-greater holders of a class of shares and their associates,
unless two-thirds of the board of trustees by resolution has approved a
memorandum of understanding with such holders, in which case normal voting
requirements would be in effect. For purposes of these provisions, a five
percent-or-greater holder of a class of shares (a "Principal Shareholder")
refers to any person who, whether directly or indirectly and whether alone
or together with its affiliates and associates, beneficially owns 5% or
more of the outstanding shares of any class of shares of beneficial
interest of the Trust. The transactions subject to these special approval
requirements are:

      o     the merger or consolidation of the Trust or any subsidiary of
            the Trust with or into any Principal Shareholder;

      o     the issuance of any securities of the Trust to any Principal
            Shareholder for cash, except pursuant to the Dividend
            Reinvestment Plan;

      o     the sale, lease or exchange of all or any substantial part of
            the assets of the Trust to any Principal Shareholder, except
            assets having an aggregate fair market value of less than
            $1,000,000, aggregating for the purpose of such computation all
            assets sold, leased or exchanged in any series of similar
            transactions within a twelve-month period; or

      o     the sale, lease or exchange to the Trust or any subsidiary of
            the Trust, of any assets of any Principal Shareholder, except
            assets having an aggregate fair market value of less than
            $1,000,000, aggregating for purposes of such computation all
            assets sold, leased or exchanged in any series of similar
            transactions within a twelve-month period.

      The board of trustees has determined that provisions with respect to
the board of trustees and the 75% voting requirements described above, and
the requirements relating to conversion to an open-end trust described
below, which voting requirements are greater than the minimum requirements
under Delaware law or the Investment Company Act, are in the best interest
of shareholders generally. Reference should be made to the Agreement and
Declaration of Trust on file with the Securities and Exchange Commission
for the full text of these provisions.


CLOSED-END TRUST STRUCTURE

      The Trust is a newly-organized, non-diversified management investment
company (commonly referred to as a closed-end fund). Closed-end funds
differ from open-end funds (which are generally referred to as mutual
funds) in that closed-end funds generally list their shares for trading on
a stock exchange and do not redeem their shares at the request of the
shareholder. This means that if you wish to sell your shares of a
closed-end fund you must trade them on the market like any other stock at
the prevailing market price at that time. In a mutual fund, if the
shareholder wishes to sell shares of the fund, the mutual fund will redeem
or buy back the shares at "net asset value." Also, mutual funds generally
offer new shares on a continuous basis to new investors, and closed-end
funds generally do not. The continuous inflows and outflows of assets in a
mutual fund can make it difficult to manage the fund's investments. By
comparison, closed-end funds are generally able to stay more fully invested
in securities that are consistent with their investment objectives, and
also have greater flexibility to make certain types of investments, and to
use certain investment strategies, such as financial leverage and
investments in illiquid securities.

      Shares of closed-end funds frequently trade at a discount to their
net asset value. Because of this possibility and the recognition that any
such discount may not be in the interest of shareholders, the Trust's board
of trustees might consider from time to time engaging in open market
repurchases, tender offers for shares at net asset value or other programs
intended to reduce the discount. We cannot guarantee or assure, however,
that the Trust's board of trustees will decide to engage in any of these
actions. Nor is there any guarantee or assurance that such actions, if
undertaken, would result in the shares trading at a price equal or close to
net asset value per share. The board of trustees might also consider
converting the Trust to an open-end mutual fund, which would also require a
vote of the shareholders of the Trust.


CONVERSION TO OPEN-END INVESTMENT COMPANY

      The Trust may be converted to an open-end investment company at any
time by an amendment to the Agreement and Declaration of Trust. The
Agreement and Declaration of Trust provides that such an amendment must be
approved by the affirmative vote of a majority of trustees then in office
and by the holders of two-thirds of the Trust's outstanding shares,
including any Preferred Shares, entitled to vote on the matter, voting as a
single class (or a majority of such shares if the amendment previously was
approved, adopted or authorized by at least two-thirds of the total number
of trustees) and, assuming the Trust has issued Preferred Shares, by the
affirmative vote of a majority of Preferred Shares, voting as a separate
class. Such a vote also would satisfy a separate requirement in the
Investment Company Act that the change be approved by the shareholders. If
approved in the foregoing manner, conversion of the Trust could not occur
until 90 days after the shareholders' meeting at which such conversion was
approved and would also require at least 30 days' prior notice to all
shareholders. Conversion of the Trust to an open-end investment company
would require the redemption of any outstanding Preferred Shares, which
could eliminate or alter the leveraged capital structure of the Trust with
respect to the shares. Following any such conversion, it is also possible
that certain of the Trust's investment policies and strategies would have
to be modified to assure sufficient portfolio liquidity. In the event of
conversion, the common shares would cease to be listed on the New York
Stock Exchange or other national securities exchanges or market systems.
Shareholders of an open-end investment company may require the company to
redeem their shares at any time, except in certain circumstances as
authorized by or under the Investment Company Act, at their net asset
value, less such redemption charge, if any, as might be in effect at the
time of a redemption. The Trust expects to pay all such redemption requests
in cash, but intends to reserve the right to pay redemption requests in a
combination of cash or securities. If such partial payment in securities
were made, investors may incur brokerage costs in converting such
securities to cash. If the Trust were converted to an open-end fund, it is
likely that new shares would be sold at net asset value plus a sales load.
The board of trustees believes, however, that the closed-end structure is
desirable in light of the Trust's investment objective and policies.
Therefore, you should assume that it is not likely that the board of
trustees would vote to convert the Trust to an open-end fund.


REPURCHASE OF SHARES

      Shares of closed-end investment companies often trade at a discount
to their net asset values, and the Trust's common shares may also trade at
a discount to their net asset value, although it is possible that they may
trade at a premium above net asset value. The market price of the Trust's
common shares will be determined by such factors as relative demand for and
supply of such common shares in the market, the Trust's net asset value,
general market and economic conditions and other factors beyond the control
of the Trust. See "Net Asset Value." Although the Trust's common
shareholders will not have the right to redeem their common shares, the
Trust may take action to repurchase common shares in the open market or
make tender offers for its common shares at their net asset value. This may
have the effect of reducing any market discount from net asset value.

      There is no assurance that, if action is undertaken to repurchase or
tender for common shares, such action will result in the common shares'
trading at a price which approximates their net asset value. Although share
repurchases and tenders could have a favorable effect on the market price
of the Trust's common shares, you should be aware that the acquisition of
common shares by the Trust will decrease the total assets of the Trust and,
therefore, may have the effect of increasing the Trust's expense ratio. Any
share repurchases or tender offers will be made in accordance with
requirements of the Securities Exchange Act of 1934 and the Investment
Company Act.


                                TAX MATTERS

FEDERAL INCOME TAX MATTERS

      The discussion below and in the statement of additional information
provides general tax information related to an investment in the common
shares. Because tax laws are complex and often change, you should consult
your tax adviser about the tax consequences of an investment in the Trust.

      The Trust primarily invests in municipal bonds from issuers in
California or in municipal bonds whose income is otherwise exempt from
regular Federal income tax. Consequently, the regular monthly dividends you
receive will be exempt from regular Federal income taxes. A portion of
these dividends, however, may be subject to the Federal alternative minimum
tax.

      Although the Trust does not seek to realize taxable income or capital
gains, the Trust may realize and distribute taxable income or capital gains
from time to time as a result of the Trust's normal investment activities.
The Trust will distribute at least annually any taxable income or realized
capital gains. Distributions of net short-term gains are taxable as
ordinary income.

Distributions of net long-term capital gains are taxable to you as
long-term capital gains regardless of how long you have owned your common
shares. Dividends will not qualify for a dividends received deduction
generally available to corporate shareholders.

      Each year, you will receive a year-end statement that describes the
tax status of dividends paid to you during the preceding year, including
the source of investment income by state and the portion of income that is
subject to the Federal alternative minimum tax. You will receive this
statement from the firm where you purchased your common shares if you hold
your investment in street name; the Trust will send you this statement if
you hold your shares in registered form.

      The tax status of your dividends is not affected by whether you
reinvest your dividends or receive them in cash.

      In order to avoid corporate taxation of its earnings and to pay
tax-exempt dividends, the Trust must meet certain requirements that govern
the Trust's sources of income, diversification of assets and distribution
of earnings to shareholders. The Trust intends to meet these requirements.
If the Trust failed to do so, the Trust would be required to pay corporate
taxes on its earnings and all of your distributions would be taxable as
ordinary income. In particular, in order for the Trust to pay tax-exempt
dividends, at least 50% of the value of the Trust's total assets must
consist of tax-exempt obligations. The Trust intends to meet this
requirement. If the Trust failed to do so, it would not be able to pay
tax-exempt dividends and your distributions attributable to interest
received by the Trust from any source would be taxable as ordinary income.

      The Trust may be required to withhold 31% of certain of your
dividends if you have not provided the Trust with your correct taxpayer
identification number (if you are an individual normally your Social
Security number), or if you are otherwise subject to back-up withholding.
If you receive Social Security benefits, you should be aware that tax-free
income is taken into account in calculating the amount of these benefits
that may be subject to Federal income tax. If you borrow money to buy Trust
shares, you may not deduct the interest on that loan. Under Federal income
tax rules, Trust shares may be treated as having been bought with borrowed
money even if the purchase of the Trust shares cannot be traced directly to
borrowed money.

      If you are subject to the Federal alternative minimum tax, a portion
of your regular monthly dividends may be taxable.

CALIFORNIA TAX MATTERS

      Under existing California income tax law, if at the close of each
quarter of the Trust's taxable year at least 50% of the value of its total
assets consists of obligations that, when held by individuals, pay interest
that is exempt from tax under California law, shareholders of the Trust who
are subject to the California personal income tax will not be subject to
such tax on distributions with respect to their shares of the Trust to the
extent that such distributions are attributable to such tax-exempt interest
from such obligations (less expenses applicable thereto). If such
distributions are received by a corporation subject to the California
franchise tax, however, the distributions will be includable in its gross
income for purposes of determining its California franchise tax.
Corporations subject to the California corporate income tax may be subject
to such taxes with respect to distributions from the Trust. Under
California personal property tax law, securities owned by the Trust and any
interest thereon are exempt from such personal property tax.

      Generally, any proceeds paid to the Trust under an insurance policy
which represent matured interest on defaulted obligations should be exempt
from California personal income tax if, and to the same extent that, such
interest would have been exempt if paid by the issuer of such defaulted
obligations. California tax laws substantially incorporate those provisions
of the Code governing the treatment of regulated investment companies.

      The state tax discussion set forth above is for general information
only. Prospective investors should consult their own tax advisers regarding
the specific state tax consequences of holding and disposing of shares of
the Trust as well as the effects of Federal, local and foreign tax law and
any proposed tax law changes.

      See "California Tax Matters" in the Statement of Additional
Information for additional state tax information.


                                UNDERWRITING

      The underwriters named below (the "Underwriters"), acting through as
representatives (the "Representatives), have agreed, subject to the terms
and conditions of a Purchase Agreement with the Trust and the Adviser, to
purchase common shares from the Trust. The Underwriters are committed to
purchase all of such shares if any are purchased.

                                                       Number
Name                                                 of Shares



                                                     ----------
  Total......................................



      The Representatives have advised the Trust that the Underwriters
propose initially to offer some of the common shares to the public at the
public offering price set forth on the cover page of this prospectus and
some of the common shares to certain dealers at the public offering price
less a concession not in excess of $0. per common share. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $0.
per common share on sales to certain other dealers. If all of the common
shares are not sold at the initial offering price, the representatives may
change the public offering price and other selling terms. Investors must
pay for any common shares purchased on or before May , 2001.

      The Trust has granted the Underwriters an option, exercisable for 45
days after the date hereof, to purchase up to additional common shares to
cover over-allotments, if any, at the initial offering price.

      The Underwriters may engage in certain transactions that stabilize
the price of the common shares. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of
the common shares.

      If the Underwriters create a short position in the common shares in
connection with the offering, i.e., if they sell more common shares than
are set forth on the cover page of this prospectus, the Underwriters may
reduce that short position by purchasing common shares in the open market.
The Underwriters also may elect to reduce any short position by exercising
all or part of the over-allotment option described above.

      The Underwriters also may impose a penalty bid on certain selling
group members. This means that if the Underwriters purchase common shares
in the open market to reduce the Underwriters' short position or to
stabilize the price of the common shares, they may reclaim the amount of
the selling concession from the selling group members who sold those common
shares as part of the offering.

      In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. The imposition of
a penalty bid might also have an effect on the price of a security to the
extent that it were to discourage resales of the security.

      Neither the Trust nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the shares of common
stock. In addition, neither the Trust nor any Underwriter makes any
representation that any Underwriter will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.

      The Trust and the Adviser have agreed that, for a period of 180 days
from the date of this prospectus, they will not, without the prior written
consent of the Representatives, on behalf of the Underwriters, dispose of
or hedge any common shares or any securities convertible into or
exchangeable for common shares. The Representatives in their sole
discretion may release any of the securities subject to these agreements at
any time without notice.

      Prior to this offering, there has been no public market for the
common shares. The Trust plans to apply to list its common shares on the
NYSE or another national securities exchange. In order to meet the
requirements for listing, the Underwriter has undertaken to sell lots of
100 or more shares to a minimum of 2,000 beneficial owners.

      The Purchase Agreement provides that it may be terminated in the
absolute discretion of the Representatives without liability on the part of
any Underwriter to the Trust, or BlackRock Advisors by notice to the Trust
or BlackRock Advisors if, prior to delivery of and payment for the common
shares, (1) trading in the common shares or securities generally on the New
York Stock Exchange, American Stock Exchange, Nasdaq National Market or the
Nasdaq Stock Market shall have been suspended or materially limited, (2)
additional material governmental restrictions not in force on the date of
the underwriting agreement have been imposed upon trading in securities
generally or a general moratorium on commercial banking activities in New
York shall have been declared by either Federal or state authorities or (3)
any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, occurs, the effect of which is such as to make it, in the
judgment of the representatives, impracticable or inadvisable to commence
or continue the offering of the common shares at the offering price to the
public set forth on the cover page of the prospectus or to enforce
contracts for the resale of the common shares by the Underwriters.

      The Trust and the Adviser have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933.

      The Trust anticipates that from time to time the Representatives and
certain other Underwriters may act as brokers or dealers in connection with
the execution of the Trust's portfolio transactions after they have ceased
to be Underwriters and, subject to certain restrictions, may act as brokers
while they are Underwriters.


            CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

      State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, will act as the Trust's Custodian, Transfer Agent and
Dividend Disbursing Agent. The Custodian may employ sub-custodians outside
the U.S. approved by the board of trustees in accordance with regulations
under the Investment Company Act.


                               LEGAL OPINIONS

      Certain legal matters in connection with the common shares will be
passed upon for the Trust by Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York and for the underwriters by , New York, New York.



                         TABLE OF CONTENTS FOR THE
                    STATEMENT OF ADDITIONAL INFORMATION

                                                                           Page

Use of Proceeds   ...........................................................B-
Investment Objective and Policies............................................B-
Investment Policies and Techniques...........................................B-
Other Investment Policies and Techniques.....................................B-
Management of the Trust......................................................B-
Portfolio Transactions and Brokerage.........................................B-
Description of Shares........................................................B-
Repurchase of Common Shares..................................................B-
Tax Matters..................................................................B-
Performance Related and Comparative Information..............................B-
Experts......................................................................B-
Additional Information.......................................................B-
Report of Independent Auditors...............................................B-
Financial Statements.........................................................B-
Ratings of Investments (Appendix A)..........................................A-
Taxable Equivalent Yield Table (Appendix B)..................................B-
General Characteristics and Risks of Hedging Strategies (Appendix C).........C-


You should rely only on the information contained in this prospectus. The
Trust has not authorized anyone to provide you with different information.
The Trust is not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information provided
by this prospectus is accurate as of any date other than the date on the
front of this prospectus.



                                   Shares




                            BLACKROCK CALIFORNIA
                           MUNICIPAL INCOME TRUST



Common Shares







                                 PROSPECTUS

                                 May , 2001



SUBJECT TO COMPLETION, DATED APRIL 3, 2001

                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST

                    STATEMENT OF ADDITIONAL INFORMATION

      BlackRock California Municipal Income Trust (the "Trust") is a newly
organized, closed-end, non-diversified management investment company. This
Statement of Additional Information relating to common shares does not
constitute a prospectus, but should be read in conjunction with the
prospectus relating thereto dated May , 2001. This Statement of Additional
Information does not include all information that a prospective investor
should consider before purchasing common shares, and investors should
obtain and read the prospectus prior to purchasing such shares. A copy of
the prospectus may be obtained without charge by calling (888) 825-2257.
You may also obtain a copy of the prospectus on the Securities and Exchange
Commission's web site (http://www.sec.gov). Capitalized terms used but not
defined in this statement of additional information have the meanings
ascribed to them in the prospectus.


                             TABLE OF CONTENTS

                                                                           Page

Use of Proceeds .............................................................B-
Investment Objective and Policies............................................B-
Investment Policies and Techniques...........................................B-
Other Investment Policies and Techniques.....................................B-
Management of the Trust......................................................B-
Portfolio Transactions and Brokerage.........................................B-
Description of Shares........................................................B-
Repurchase of Common Shares..................................................B-
Tax Matters..................................................................B-
Performance Related and Comparative Information..............................B-
Experts......................................................................B-
Additional Information.......................................................B-
Report of Independent Auditors...............................................B-
Financial Statements.........................................................B-
Ratings of Investments (Appendix A)..........................................A-
Taxable Equivalent Yield Table (Appendix B)..................................B-
General Characteristics and Risks of Hedging Strategies (Appendix C).........C-


This Statement of Additional Information is dated May      , 2001.



                              USE OF PROCEEDS

      Pending investment in municipal bonds that meet the Trust's
investment objective and policies the net proceeds of the offering will be
invested in high quality, short-term tax-exempt money market securities or
in high quality municipal bonds with relatively low volatility (such as
pre-refunded and intermediate-term bonds), to the extent such securities
are available. If necessary to invest fully the net proceeds of the
offering immediately, the Trust may also purchase, as temporary
investments, short-term taxable investments of the type described under
"Investment Policies and Techniques--Investment in Municipal
Bonds--Portfolio Investments," the income on which is subject to regular
Federal and California income taxes and securities of other open- or
closed-end investment companies that invest primarily in municipal bonds of
the type in which the Trust may invest directly.


                     INVESTMENT OBJECTIVE AND POLICIES

      The Trust has not established any limit on the percentage of its
portfolio that may be invested in municipal bonds subject to the
alternative minimum tax provisions of Federal tax law, and the Trust
expects that a substantial portion of the income it produces will be
includable in alternative minimum taxable income. Common shares therefore
would not ordinarily be a suitable investment for investors who are subject
to the Federal alternative minimum tax or who would become subject to such
tax by purchasing common shares. The suitability of an investment in common
shares will depend upon a comparison of the after-tax yield likely to be
provided from the Trust with that from comparable tax-exempt investments
not subject to the alternative minimum tax, and from comparable fully
taxable investments, in light of each such investor's tax position. Special
considerations apply to corporate investors. See "Tax Matters."

INVESTMENT RESTRICTIONS

      Except as described below, the Trust, as a fundamental policy, may
not, without the approval, if any, of the holders of a majority of the
outstanding common shares and Preferred Shares voting together as a single
class, and of the holders of a majority of the outstanding Preferred Shares
voting as a separate class:

      (1)         invest 25% or more of the value of its total assets in
                  any one industry provided that this limitation does not
                  apply to municipal bonds other than those municipal bonds
                  backed only by assets and revenues of non-governmental
                  users;

      (2)         issue senior securities or borrow money other than as
                  permitted by the Investment Company Act or pledge its
                  assets other than to secure such issuances or in
                  connection with hedging transactions, short sales, when-
                  issued and forward commitment transactions and similar
                  investment strategies;

      (3)         make loans of money or property to any person, except
                  through loans of portfolio securities, the purchase of
                  fixed income securities consistent with the Trust's
                  investment objective and policies or the entry into of
                  repurchase agreements;

      (4)         underwrite the securities of other issuers, except to the
                  extent that in connection with the disposition of
                  portfolio securities or the sale of its own securities
                  the Trust may be deemed to be an underwriter;

      (5)         purchase or sell real estate or interests therein other
                  than municipal bonds secured by real estate or interests
                  therein; provided that the Trust may hold and sell any
                  real estate acquired in connection with its investment in
                  portfolio securities; or

      (6)         purchase or sell commodities or commodity contracts for
                  any purposes except as, and to the extent, permitted by
                  applicable law without the Trust becoming subject to
                  registration with the Commodities Futures Trading
                  Commission as a commodity pool.


      When used with respect to particular shares of the Trust, "majority
of the outstanding" means (i) 67% or more of the shares present at a
meeting, if the holders of more than 50% of the shares are present or
represented by proxy, or (ii) more than 50% of the shares, whichever is
less.

      For purposes of applying the limitation set forth in subparagraph (1)
above, securities of the U.S. Government, its agencies, or
instrumentalities, and securities backed by the credit of a governmental
entity are not considered to represent industries. However, obligations
backed only by the assets and revenues of non-governmental users may for
this purpose be deemed to be issued by such non-governmental users. Thus,
the 25% limitation would apply to such obligations. It is nonetheless
possible that the Trust may invest more than 25% of its total assets in a
broader economic sector of the market for municipal obligations, such as
revenue obligations of hospitals and other health care facilities or
electrical utility revenue obligations. The Trust reserves the right to
invest more than 25% of its assets in industrial development bonds and
private activity securities.

      For the purpose of applying the limitation set forth in subparagraph
(1) above, a non-governmental issuer shall be deemed the sole issuer of a
security when its assets and revenues are separate from other governmental
entities and its securities are backed only by its assets and revenues.
Similarly, in the case of a non-governmental issuer, such as an industrial
corporation or a privately owned or operated hospital, if the security is
backed only by the assets and revenues of the non-governmental issuer, then
such non-governmental issuer would be deemed to be the sole issuer. Where a
security is also backed by the enforceable obligation of a superior or
unrelated governmental or other entity (other than a bond insurer), it
shall also be included in the computation of securities owned that are
issued by such governmental or other entity. Where a security is guaranteed
by a governmental entity or some other facility, such as a bank guarantee
or letter of credit, such a guarantee or letter of credit would be
considered a separate security and would be treated as an issue of such
government, other entity or bank. When a municipal bond is insured by bond
insurance, it shall not be considered a security that is issued or
guaranteed by the insurer; instead, the issuer of such municipal bond will
be determined in accordance with the principles set forth above. The
foregoing restrictions do not limit the percentage of the Trust's assets
that may be invested in municipal bonds insured by any given insurer.

      Under the Investment Company Act of 1940, the Trust may invest only
up to 10% of its total assets in the aggregate in shares of other
investment companies and only up to 5% of its total assets in any one
investment company, provided the investment does not represent more than 3%
of the voting stock of the acquired investment company at the time such
shares are purchased. As a shareholder in any investment company, the Trust
will bear its ratable share of that investment company's expenses, and
would remain subject to payment of the Trust's, advisory fees and expenses
with respect to assets so invested. Holders of common shares would
therefore be subject to duplicative expenses to the extent the Trust
invests in other investment companies. In addition, the securities of other
investment companies may also be leveraged and will therefore be subject to
the same leverage risks described herein and in the prospectus. As
described in the prospectus in the section entitled "Risks", the net asset
value and market value of leveraged shares will be more volatile and the
yield to shareholders will tend to fluctuate more than the yield generated
by unleveraged shares.

      In addition to the foregoing fundamental investment policies, the
Trust is also subject to the following non-fundamental restrictions and
policies, which may be changed by the board of trustees. The Trust may not:

      (1)         Make any short sale of securities except in conformity
                  with applicable laws, rules and regulations and unless,
                  giving effect to such sale, the market value of all
                  securities sold short does not exceed 25% of the value of
                  the Trust's total assets and the Trust's aggregate short
                  sales of a particular class of securities does not exceed
                  25% of the then outstanding securities of that class. The
                  Trust may also make short sales "against the box" without
                  respect to such limitations. In this type of short sale,
                  at the time of the sale, the Trust owns or has the
                  immediate and unconditional right to acquire at no
                  additional cost the identical security.

      (2)         Purchase securities of open-end or closed-end investment
                  companies except in compliance with the Investment
                  Company Act or any exemptive relief obtained thereunder.

      (3)         Purchase securities of companies for the purpose of
                  exercising control.


      The restrictions and other limitations set forth above will apply
only at the time of purchase of securities and will not be considered
violated unless an excess or deficiency occurs or exists immediately after
and as a result of an acquisition of securities. In addition, to comply
with Federal tax requirements for qualification as a "regulated investment
company," the Trust's investments will be limited in a manner such that at
the close of each quarter of each fiscal year, (a) no more than 25% of the
Trust's total assets are invested in the securities of a single issuer and
(b) with regard to at least 50% of the Trust's total assets, no more than
5% of its total assets are invested in the securities of a single issuer.
These tax-related limitations may be changed by the Trustees to the extent
appropriate in light of changes to applicable tax requirements.


      The Trust intends to apply for ratings for the Preferred Shares from
Moody's and/or S&P. In order to obtain and maintain the required ratings,
the Trust will be required to comply with investment quality,
diversification and other guidelines established by Moody's or S&P. Such
guidelines will likely be more restrictive than the restrictions set forth
above. The Trust does not anticipate that such guidelines would have a
material adverse effect on the Trust's holders of common shares or its
ability to achieve its investment objective. The Trust presently
anticipates that any Preferred Shares that it intends to issue would be
initially given the highest ratings by Moody's (Aaa) or by S&P (AAA), but
no assurance can be given that such ratings will be obtained. No minimum
rating is required for the issuance of Preferred Shares by the Trust.
Moody's and S&P receive fees in connection with their ratings issuances.


                     INVESTMENT POLICIES AND TECHNIQUES

      The following information supplements the discussion of the Trust's
investment objective, policies and techniques that are described in the
prospectus.

PORTFOLIO INVESTMENTS

      The Trust will primarily in a portfolio of investment grade municipal
bonds that are exempt from regular Federal and California income taxes.

      Issuers of bonds rated Ba/BB or B are regarded as having current
capacity to make principal and interest payments but are subject to
business, financial or economic conditions which could adversely affect
such payment capacity. Municipal bonds rated Baa or BBB are considered
"investment grade" securities; municipal bonds rated Baa are considered
medium grade obligations which lack outstanding investment characteristics
and have speculative characteristics, while municipal bonds rated BBB are
regarded as having adequate capacity to pay principal and interest.
Municipal bonds rated AAA in which the Trust may invest may have been so
rated on the basis of the existence of insurance guaranteeing the timely
payment, when due, of all principal and interest. Municipal bonds rated
below investment grade quality are obligations of issuers that are
considered predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal according to the terms of the
obligation and, therefore, carry greater investment risk, including the
possibility of issuer default and bankruptcy and increased market price
volatility. Municipal bonds rated below investment grade tend to be less
marketable than higher-quality bonds because the market for them is less
broad. The market for unrated municipal bonds is even narrower. During
periods of thin trading in these markets, the spread between bid and asked
prices is likely to increase significantly and the Trust may have greater
difficulty selling its portfolio securities. The Trust will be more
dependent on the Adviser's research and analysis when investing in these
securities.

      A general description of Moody's, S&P's and Fitch's ratings of
municipal bonds is set forth in Appendix A hereto. The ratings of Moody's,
S&P and Fitch represent their opinions as to the quality of the municipal
bonds they rate. It should be emphasized, however, that ratings are general
and are not absolute standards of quality. Consequently, municipal bonds
with the same maturity, coupon and rating may have different yields while
obligations of the same maturity and coupon with different ratings may have
the same yield.

      The Trust will primarily invest in municipal bonds with long-term
maturities in order to maintain a weighted average maturity of 15-30 years,
but the average weighted maturity may be shortened from time to time
depending on market conditions. As a result, the Trust's portfolio at any
given time may include both long-term and intermediate-term municipal
bonds. Moreover, during temporary defensive periods (e.g., times when, in
the Adviser's opinion, temporary imbalances of supply and demand or other
temporary dislocations in the tax-exempt bond market adversely affect the
price at which long-term or intermediate-term municipal bonds are
available), and in order to keep cash on hand fully invested, including the
period during which the net proceeds of the offering are being invested,
the Trust may invest any percentage of its assets in short-term investments
including high quality, short-term securities which may be either
tax-exempt or taxable and securities of other open- or closed-end
investment companies that invest primarily in municipal bonds of the type
in which the Trust may invest directly. The Trust intends to invest in
taxable short-term investments only in the event that suitable tax-exempt
temporary investments are not available at reasonable prices and yields.
Tax-exempt temporary investments include various obligations issued by
state and local governmental issuers, such as tax-exempt notes (bond
anticipation notes, tax anticipation notes and revenue anticipation notes
or other such municipal bonds maturing in three years or less from the date
of issuance) and municipal commercial paper. The Trust will invest only in
taxable temporary investments which are U.S. Government securities or
securities rated within the highest grade by Moody's, S&P or Fitch, and
which mature within one year from the date of purchase or carry a variable
or floating rate of interest. See Appendix A for a general description of
Moody's, S&P's and Fitch's ratings of securities in such categories.
Taxable temporary investments of the Trust may include certificates of
deposit issued by U.S. banks with assets of at least $1 billion, or
commercial paper or corporate notes, bonds or debentures with a remaining
maturity of one year or less, or repurchase agreements. See "Other
Investment Policies and Techniques--Repurchase Agreements." To the extent
the Trust invests in taxable investments, the Trust will not at such times
be in a position to achieve its investment objective of tax-exempt income.

      The foregoing policies as to ratings of portfolio investments will
apply only at the time of the purchase of a security, and the Trust will
not be required to dispose of securities in the event Moody's, S&P or Fitch
downgrades its assessment of the credit characteristics of a particular
issuer.

      Also included within the general category of municipal bonds
described in the prospectus are participations in lease obligations or
installment purchase contract obligations (hereinafter collectively called
"Municipal Lease Obligations") of municipal authorities or entities.
Although a Municipal Lease Obligation does not constitute a general
obligation of the municipality for which the municipality's taxing power is
pledged, a Municipal Lease Obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the payments
due under the Municipal Lease Obligation. However, certain Municipal Lease
Obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase
payments in future years unless money is appropriated for such purpose on a
yearly basis. In the case of a "non-appropriation" lease, the Trust's
ability to recover under the lease in the event of non-appropriation or
default will be limited solely to the repossession of the leased property,
without recourse to the general credit of the lessee, and disposition or
releasing of the property might prove difficult. In order to reduce this
risk, the Trust will only purchase Municipal Lease Obligations where the
Adviser believes the issuer has a strong incentive to continue making
appropriations until maturity.

      Obligations of issuers of municipal bonds are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights
and remedies of creditors, such as the Bankruptcy Reform Act of 1978. In
addition, the obligations of such issuers may become subject to the laws
enacted in the future by Congress, state legislatures or referenda
extending the time for payment of principal or interest, or both, or
imposing other constraints upon enforcement of such obligations or upon
municipalities to levy taxes. There is also the possibility that, as a
result of legislation or other conditions, the power or ability of any
issuer to pay, when due, the principal of and interest on its municipal
bonds may be materially affected.

      In addition to the types of municipal bonds described in the
prospectus, the Trust may invest in other securities that pay interest that
is, or make other distributions that are, exempt from regular Federal
income tax and or state and local personal tax, regardless of the technical
structure of the issuer of the instrument. The Trust treats all of such
tax-exempt securities as municipal bonds.

SHORT-TERM TAXABLE FIXED-INCOME SECURITIES

      For temporary defensive purposes or to keep cash on hand fully
invested, the Trust may invest up to 100% of its total assets in cash
equivalents and short-term taxable fixed-income securities, although the
Trust intends to invest in taxable short-term investments only in the event
that suitable tax-exempt short-term investments are not available at
reasonable prices and yields. Short-term taxable fixed income investments
are defined to include, without limitation, the following:

      (1)         U.S. government securities, including bills, notes and
                  bonds differing as to maturity and rates of interest that
                  are either issued or guaranteed by the U.S. Treasury or
                  by U.S. government agencies or instrumentalities. U.S.
                  government agency securities include securities issued by
                  (a) the Federal Housing Administration, Farmers Home
                  Administration, Export-Import Bank of the United States,
                  Small Business Administration, and the Government
                  National Mortgage Association, whose securities are
                  supported by the full faith and credit of the United
                  States; (b) the Federal Home Loan Banks, Federal
                  Intermediate Credit Banks, and the Tennessee Valley
                  Authority, whose securities are supported by the right of
                  the agency to borrow from the U.S. Treasury; (c) the
                  Federal National Mortgage Association, whose securities
                  are supported by the discretionary authority of the U.S.
                  government to purchase certain obligations of the agency
                  or instrumentality; and (d) the Student Loan Marketing
                  Association, whose securities are supported only by its
                  credit. While the U.S. government provides financial
                  support to such U.S. government-sponsored agencies or
                  instrumentalities, no assurance can be given that it
                  always will do so since it is not so obligated by law.
                  The U.S. government, its agencies, and instrumentalities
                  do not guarantee the market value of their securities.
                  Consequently, the value of such securities may fluctuate.

      (2)         Certificates of Deposit issued against funds deposited in
                  a bank or a savings and loan association. Such
                  certificates are for a definite period of time, earn a
                  specified rate of return, and are normally negotiable.
                  The issuer of a certificate of deposit agrees to pay the
                  amount deposited plus interest to the bearer of the
                  certificate on the date specified thereon. Certificates
                  of deposit purchased by the Trust may not be fully
                  insured by the FDIC.

      (3)         Repurchase agreements, which involve purchases of debt
                  securities. At the time the Trust purchases securities
                  pursuant to a repurchase agreement, it simultaneously
                  agrees to resell and redeliver such securities to the
                  seller, who also simultaneously agrees to buy back the
                  securities at a fixed price and time. This assures a
                  predetermined yield for the Trust during its holding
                  period, since the resale price is always greater than the
                  purchase price and reflects an agreed-upon market rate.
                  Such actions afford an opportunity for the Trust to
                  invest temporarily available cash. The Trust may enter
                  into repurchase agreements only with respect to
                  obligations of the U.S. government, its agencies or
                  instrumentalities; certificates of deposit; or bankers'
                  acceptances in which the Trust may invest. Repurchase
                  agreements may be considered loans to the seller,
                  collateralized by the underlying securities. The risk to
                  the Trust is limited to the ability of the seller to pay
                  the agreed-upon sum on the repurchase date; in the event
                  of default, the repurchase agreement provides that the
                  Trust is entitled to sell the underlying collateral. If
                  the value of the collateral declines after the agreement
                  is entered into, and if the seller defaults under a
                  repurchase agreement when the value of the underlying
                  collateral is less than the repurchase price, the Trust
                  could incur a loss of both principal and interest. The
                  Adviser monitors the value of the collateral at the time
                  the action is entered into and at all times during the
                  term of the repurchase agreement. The Adviser does so in
                  an effort to determine that the value of the collateral
                  always equals or exceeds the agreed-upon repurchase price
                  to be paid to the Trust. If the seller were to be subject
                  to a Federal bankruptcy proceeding, the ability of the
                  Trust to liquidate the collateral could be delayed or
                  impaired because of certain provisions of the bankruptcy
                  laws.

      (4)         Commercial paper, which consists of short-term unsecured
                  promissory notes, including variable rate master demand
                  notes issued by corporations to finance their current
                  operations. Master demand notes are direct lending
                  arrangements between the Trust and a corporation. There
                  is no secondary market for such notes. However, they are
                  redeemable by the Trust at any time. The Adviser will
                  consider the financial condition of the corporation
                  (e.g., earning power, cash flow, and other liquidity
                  ratios) and will continuously monitor the corporation's
                  ability to meet all of its financial obligations, because
                  the Trust's liquidity might be impaired if the
                  corporation were unable to pay principal and interest on
                  demand. Investments in commercial paper will be limited
                  to commercial paper rated in the highest categories by a
                  major rating agency and which mature within one year of
                  the date of purchase or carry a variable or floating rate
                  of interest.


SHORT-TERM TAX-EXEMPT FIXED INCOME SECURITIES

      Short-term tax-exempt fixed income securities are securities that are
exempt from regular Federal income tax and mature within three years or
less from the date of issuance. Short-term tax-exempt fixed income
securities are defined to include, without limitation, the following:

      Bond Anticipation Notes ("BANs") are usually general obligations of
state and local governmental issuers which are sold to obtain interim
financing for projects that will eventually be funded through the sale of
long-term debt obligations or bonds. The ability of an issuer to meet its
obligations on its BANs is primarily dependent on the issuer's access to
the long-term municipal bond market and the likelihood that the proceeds of
such bond sales will be used to pay the principal and interest on the BANs.

      Tax Anticipation Notes ("TANs") are issued by state and local
governments to finance the current operations of such governments.
Repayment is generally to be derived from specific future tax revenues.
TANs are usually general obligations of the issuer. A weakness in an
issuer's capacity to raise taxes due to, among other things, a decline in
its tax base or a rise in delinquencies, could adversely affect the
issuer's ability to meet its obligations on outstanding TANs.

      Revenue Anticipation Notes ("RANs") are issued by governments or
governmental bodies with the expectation that future revenues from a
designated source will be used to repay the notes. In general, they also
constitute general obligations of the issuer. A decline in the receipt of
projected revenues, such as anticipated revenues from another level of
government, could adversely affect an issuer's ability to meet its
obligations on outstanding RANs. In addition, the possibility that the
revenues would, when received, be used to meet other obligations could
affect the ability of the issuer to pay the principal and interest on RANs.

      Construction Loan Notes are issued to provide construction financing
for specific projects. Frequently, these notes are redeemed with funds
obtained from the Federal Housing Administration.

      Bank Notes are notes issued by local government bodies and agencies
as those described above to commercial banks as evidence of borrowings. The
purposes for which the notes are issued are varied but they are frequently
issued to meet short-term working capital or capital-project needs. These
notes may have risks similar to the risks associated with TANs and RANs.

      Tax-Exempt Commercial Paper ("municipal paper") represents very
short-term unsecured, negotiable promissory notes, issued by states,
municipalities and their agencies. Payment of principal and interest on
issues of municipal paper may be made from various sources, to the extent
the funds are available therefrom. Maturities on municipal paper generally
will be shorter than the maturities of TANs, BANs or RANs. There is a
limited secondary market for issues of Municipal Paper.

      Certain municipal bonds may carry variable or floating rates of
interest whereby the rate of interest is not fixed but varies with changes
in specified market rates or indices, such as a bank prime rate or
tax-exempt money market indices.

      While the various types of notes described above as a group represent
the major portion of the tax-exempt note market, other types of notes are
available in the marketplace and the Trust may invest in such other types
of notes to the extent permitted under its investment objective, policies
and limitations. Such notes may be issued for different purposes and may be
secured differently from those mentioned above.

FACTORS PERTAINING TO CALIFORNIA

      As described in the Prospectus, except during temporary periods, the
Trust will invest primarily in California municipal bonds. The portfolio of
the Trust may include securities issued by the State of California (the
"State"), by its various public bodies (the "Agencies") and/or by other
municipal entities located within the State (securities of all such
entities are referred to herein as "California municipal securities"). In
addition, the specific California municipal bonds in which the Trust will
invest will change from time to time. The Trust is therefore susceptible to
political, economic, regulatory or other factors affecting issuers of
California municipal bonds. The following information constitutes only a
brief summary of a number of the complex factors which may impact issuers
of California municipal bonds and does not purport to be a complete or
exhaustive description of all adverse conditions to which issuers of
California municipal bonds may be subject. Such information is derived from
official statements utilized in connection with the issuance of California
municipal bonds, as well as from other publicly available documents. Such
information has not been independently verified by the Trust, and the Trust
assumes no responsibility for the completeness or accuracy of such
information. The summary below does not include all of the information
pertaining to the budget, receipts and disbursements of the State of
California that would ordinarily be included in various public documents
issued thereby, such as an Official Statement prepared in connection with
the issuance of general obligation bonds of the State of California. Such
an Official Statement, together with any updates or supplements thereto,
may generally be obtained upon request to the Budget Office of the State of
California.

      State Indebtedness. The Treasurer of the State is responsible for the
sale of debt obligations of the State and its various authorities and
agencies. The State has always paid the principal of and interest on its
general obligation bonds, general obligation commercial paper,
lease-purchase debt and short-term obligations, including revenue
anticipation notes and revenue anticipation warrants, when due.

      Capital Facilities Financing. The State Constitution prohibits the
creation of general obligation indebtedness of the State unless a bond law
is approved by a majority of the electorate voting at a general election or
a direct primary. General obligation bond acts provide that debt service on
general obligation bonds shall be appropriated annually from the State's
General Fund and all debt service on general obligation bonds is paid from
the General Fund. Under the State Constitution, debt service on general
obligation bonds is the second charge to the General Fund after the
application of moneys in the General Fund to the support of the public
school system and public institutions of higher education. Certain general
obligation bond programs receive revenues from sources other than the sale
of bonds or the investment of bond proceeds.

      As of October 1, 2000, the State had outstanding $21,474,186,000
aggregate principal amount of long-term general obligation bonds, and
unused voter authorizations for the future issuance of $13,965,749,000 of
long-term general obligation bonds. This latter figure consists of
$6,322,434,000 of authorized commercial paper notes, described below (of
which $1,025,147,707 was outstanding), which has not yet been refunded by
general obligation bonds, and $7,643,315,000 of other authorized but
unissued general obligation debt.

      The General Obligation Bond Law permits the State to issue as
variable rate indebtedness up to 20% of the aggregate amount of long-term
general obligation bonds outstanding. As of October 1, 2000, there was no
variable rate indebtedness outstanding; however, the State plans to issue
such indebtedness in the future.

      At the March 7, 2000 election, voters approved four bond acts,
totaling $4.470 billion in new authorizations and rejected one bond act for
$220 million. One bond authorization, totaling $500 million, for veterans'
housing, was approved on the November 7, 2000 ballot.

      Pursuant to legislation enacted in 1995, voter approved general
obligation indebtedness may be issued either as long-term bonds, or, for
some but not all bond acts, as commercial paper notes. Commercial paper
notes may be renewed or may be refunded by the issuance of long-term bonds.
The State issues long-term general obligation bonds from time to time to
retire its general obligation commercial paper notes. Pursuant to the terms
of the bank credit agreement presently in effect supporting the general
obligation commercial paper program, not more than $1.5 billion of general
obligation commercial paper notes may be outstanding at any time; this
amount may be increased or decreased in the future. Commercial paper notes
are deemed issued upon authorization by the respective Finance Committees,
whether or not such notes are actually issued. As of October 1, 2000 the
Finance Committees had authorized the issuance of up to $6,322,434,000 of
commercial paper notes; as of that date $1,025,147,707 aggregate principal
amount of general obligation commercial paper notes was outstanding.

      In addition to general obligation bonds, the State builds and
acquires capital facilities through the use of lease-purchase borrowing.
Under these arrangements, the State Public Works Board, another State or
local agency or a joint powers authority issues bonds to pay for the
construction of facilities such as office buildings, university buildings
or correctional institutions. These facilities are leased to a State agency
or the University of California under a long-term lease which provides the
source of payment of the debt service on the lease-purchase bonds. In some
cases, there is not a separate bond issue, but a trustee directly creates
certificates of participation in the State's lease obligation, which are
marketed to investors. Under applicable court decisions, such lease
arrangements do not constitute the creation of "indebtedness" within the
meaning of the Constitutional provisions which require voter approval. For
purposes of this section, "lease-purchase debt" or "lease-purchase
financing" means principally bonds or certificates of participation for
capital facilities where the rental payments providing the security are a
direct or indirect charge against the General Fund and also includes
revenue bonds for a State energy efficiency program secured by payments
made by various State agencies under energy service contracts. Certain of
the lease-purchase financings are supported by special funds rather than
the General Fund. The State had $6,577,055,414 General Fund-supported
lease-purchase debt outstanding at October 1, 2000. The State Public Works
Board, which is authorized to sell lease revenue bonds, had $2,355,808,000
authorized and unissued as of October 1, 2000.

      Certain State agencies and authorities issue revenue obligations for
which the General Fund has no liability. Revenue bonds represent
obligations payable from State revenue-producing enterprises and projects,
which are not payable from the General Fund, and conduit obligations
payable only from revenues paid by private users of facilities financed by
the revenue bonds. The enterprises and projects include transportation
projects, various public works projects, public and private educational
facilities (including the California State University and University of
California systems), housing, health facilities and pollution control
facilities. There are 17 agencies and authorities authorized to issue
revenue obligations (excluding lease-purchase debt). State agencies and
authorities had $27,337,545,457 aggregate principal amount of revenue bonds
and notes which are non-recourse to the General Fund outstanding as of June
30, 2000.

      State Finances and the Budget Process. The State's fiscal year begins
on July 1 and ends on June 30. The State operates on a budget basis, using
a modified accrual system of accounting, with revenues credited in the
period in which they are measurable and available and expenditures debited
in the period in which the corresponding liabilities are incurred.

      The annual budget is proposed by the Governor by January 10 of each
year for the next fiscal year (the "Governor's Budget"). Under state law,
the annual proposed Governor's Budget cannot provide for projected
expenditures in excess of projected revenues and balances available from
prior fiscal years. Following the submission of the Governor's Budget, the
Legislature takes up the proposal.

      Under the State Constitution, money may be drawn from the Treasury
only through an appropriation made by law. The primary source of the annual
expenditure authorizations is the Budget Act as approved by the Legislature
and signed by the Governor. The Budget Act must be approved by a two-thirds
majority vote of each House of the Legislature. The Governor may reduce or
eliminate specific line items in the Budget Act or any other appropriations
bill without vetoing the entire bill. Such individual line-item vetoes are
subject to override by a two-thirds majority vote of each House of the
Legislature.

      Appropriations also may be included in legislation other than the
Budget Act. Bills containing appropriations (except for K- 14 education)
must be approved by a two-thirds majority vote in each House of the
Legislature and be signed by the Governor. Bills containing K-14 education
appropriations only require a simple majority vote. Continuing
appropriations, available without regard to fiscal year, may also be
provided by statute or the State Constitution. There is litigation pending
concerning the validity of such continuing appropriations.

      Funds necessary to meet an appropriation need not be in the State
Treasury at the time such appropriation is enacted, revenues may be
appropriated in anticipation of their receipt.

      The moneys of the State are segregated into the General Fund and over
900 special funds, including bond, trust and pension funds. The General
Fund consists of revenues received by the State Treasury and not required
by law to be credited to any other fund, as well as earnings from the
investment of state moneys not allocable to another fund. The General Fund
is the principal operating fund for the majority of governmental activities
and is the depository of most of the major revenue sources of the State.
The General Fund may be expended as a consequence of appropriation measures
enacted by the Legislature and approved by the Governor, as well as
appropriations pursuant to various constitutional authorizations and
initiative statutes.

      The Special Fund for Economic Uncertainties ("SFEU") is funded with
General Fund revenues and was established to protect the State from
unforeseen revenue reductions and/or unanticipated expenditure increases.
Amounts in the SFEU may be transferred by the State Controller as necessary
to meet cash needs of the General Fund. The State Controller is required to
return moneys so transferred without payment of interest as soon as there
are sufficient moneys in the General Fund.

      In the 2000 Budget Act, signed on June 30, 2000, the Department of
Finance projected the SFEU will have a balance of $1.781 billion at June
30, 2001. The SFEU projection reflects the enactment of the Budget Act on
June 30, 2000. This figure is based on the latest projections of revenues
and expenditures, existing statutory requirements, and additional
legislation introduced and passed by the Legislature may impact the reserve
amount.

      Local Governments. The primary units of local government in
California are the counties, ranging in population from 1,200 in Alpine
County to over 9,900,000 in Los Angeles County. Counties are responsible
for the provision of many basic services, including indigent health care,
welfare, jails and public safety in unincorporated areas. There are also
475 incorporated cities, and thousands of special districts formed for
education, utility and other services. The fiscal condition of local
governments has been constrained since the enactment of "Proposition 13" in
1978, which reduced and limited the future growth of property taxes and
limited the ability of local governments to impose "special taxes" (those
devoted to a specific purpose) without two-thirds voter approval. Counties,
in particular, have had fewer options to raise revenues than many other
local government entities, and have been required to maintain many
services.

      In the aftermath of Proposition 13, the State provided aid to local
governments from the General Fund to make up some of the loss of property
tax moneys, including taking over the principal responsibility for funding
K-12 schools and community colleges. During the recession, the Legislature
eliminated most of the remaining components of post-Proposition 13 aid to
local government entities other than K-14 education districts by requiring
cities and counties to transfer some of their property tax revenues to
school districts. However, the Legislature also provided additional funding
sources (such as sales taxes) and reduced certain mandates for local
services. Since then the State has also provided additional funding to
counties and cities through such programs as health and welfare
realignment, welfare reform, trial court restructuring, the Citizens'
Option for Public Safety (COPs) program supporting local public safety
departments, and various other measures.

      The 2000 Budget Act provides significant assistance to local
governments, including a $200 million set aside for one-time discretionary
funding to local governments, $121.3 million for the COPs program to
support local front-line law enforcement, sheriffs' departments for jail
construction and operations, and district attorneys for prosecution, $75
million for technology funding for local law enforcement, $400 million for
deferred maintenance of local streets and roads, and hundreds of millions
of dollars in assistance in the areas of mental health, social services,
environmental protection, and public safety. In addition, legislation was
enacted in 1999 to provide approximately $35.8 million annual relief to
cities based on 1997-98 costs of jail booking and processing fees paid to
counties.

      Historically, funding for the State's trial court system was divided
between the State and the counties. In 1997, legislation consolidated the
trial court funding at the State level in order to streamline the operation
of the courts, provide a dedicated revenue source, and relieve fiscal
pressure on the counties. Since then, the county general purpose
contribution for court operations was reduced by $386 million and cities
are retaining $62 million in fine and penalty revenue previously remitted
to the State. The General Fund reimbursed the $448 million revenue loss to
the Trail Court Trust Fund.

      The entire statewide welfare system has been changed in response to
the change in Federal welfare law enacted in 1996. Under the CalWORKs
program, counties are given flexibility to develop their own plans,
consistent with State law, to implement the program and to administer many
of its elements, and their costs for administrative and supportive services
are capped at the 1996-97 levels. Counties are also given financial
incentives if, at the individual county level or statewide, the CalWORKs
program produces savings associated with specified standards. Counties will
still be required to provide "general assistance" aid to certain persons
who cannot obtain welfare from other programs.

      In 1996, voters approved Proposition 218, entitled the "Right to Vote
on Taxes Act," which incorporates new Articles XIII C and XIII D into the
California Constitution. These new provisions place limitations on the
ability of local government agencies to impose or raise various taxes,
fees, charges and assessments without voter approval. Certain "general
taxes" imposed after January 1, 1995, must be approved by voters in order
to remain in effect. In addition, Article XIII C clarifies the right of
local voters to reduce taxes, fees, assessments or charges through local
initiatives. There are a number of ambiguities concerning the Proposition
and its impact on local governments and their bonded debt which will
require interpretation by the courts or the Legislature. Proposition 218
does not affect the State or its ability to levy or collect taxes.

      State Appropriations Limit. The State is subject to an annual
appropriations limit imposed by Article XIII B of the State Constitution
(the "Appropriations Limit"). The Appropriations Limit does not restrict
appropriations to pay debt service on voter- authorized bonds.

      Article XIII B prohibits the State from spending "appropriations
subject to limitation" in excess of the Appropriations Limit.
"Appropriations subject to limitation," with respect to the State, are
authorizations to spend "proceeds of taxes," which consist of tax revenues,
and certain other funds, including proceeds from regulatory licenses, user
charges or other fees to the extent that such proceeds exceed "the cost
reasonably borne by that entity in providing the regulation, product or
service," but "proceeds of taxes" exclude most state subventions to local
governments, tax refunds and some benefit payments such as unemployment
insurance. No limit is imposed on appropriations of funds which are not
"proceeds of taxes," such as reasonable user charges or fees and certain
other non-tax funds.

      Not included in the Appropriations Limit are appropriations for the
debt service costs of bonds existing or authorized by January 1, 1979, or
subsequently authorized by the voters, appropriations required to comply
with mandates of courts or the Federal government, appropriations for
qualified capital outlay projects, appropriations of revenues derived from
any increase in gasoline taxes and motor vehicle weight fees above January
1, 1990 levels, and appropriation of certain special taxes imposed by
initiative (e.g., cigarette and tobacco taxes). The Appropriations Limit
may also be exceeded in cases of emergency.

      The State's Appropriations Limit in each year is based on the limit
for the prior year, adjusted annually for changes in state per capital
personal income and changes in population, and adjusted, when applicable,
for any transfer of financial responsibility of providing services to or
from another unit of government or any transfer of the financial source for
the provisions of services from tax proceeds to non tax proceeds. The
measurement of change in population is a blended average of statewide
overall population growth, and change in attendance at local school and
community college ("K-14") districts. The Appropriations Limit is tested
over consecutive two-year periods. Any excess of the aggregate "proceeds of
taxes" received over such two-year period above the combined Appropriations
Limits for those two years is divided equally between transfers to K-14
districts and refunds to taxpayers.

      The Legislature has enacted legislation to implement Article XIII B
which defines certain terms used in Article XIII B and sets forth the
methods for determining the Appropriations Limit. California Government
Code Section 7912 requires an estimate of the Appropriations Limit to be
included in the Governor's Budget, and thereafter to be subject to the
budget process and established in the Budget Act.

      Proposition 98. On November 8, 1988, voters of the State approved
Proposition 98, a combined initiative constitutional amendment and statute
called the "Classroom Instructional Improvement and Accountability Act."
Proposition 98 changed State funding of public education below the
university level and the operation of the State Appropriations Limit,
primarily by guaranteeing K-14 schools a minimum share of General Fund
revenues. Under Proposition 98 (as modified by Proposition 111, which was
enacted on June 5, 1990), K-14 schools are guaranteed the greater of (a) in
general, a fixed percent of General Fund revenues ("Test 1"), (b) the
amount appropriated to K-14 schools in the prior year, adjusted for changes
in the cost of living (measured as in Article XIII B by reference to State
per capita personal income) and enrollment ("Test 2"), or (c) a third test,
which would replace Test 2 in any year when the percentage growth in per
capita General Fund revenues from the prior year plus one half of one
percent is less than the percentage growth in State per capita personal
income ("Test 3"). Under Test 3, schools would receive the amount
appropriated in the prior year adjusted for changes in enrollment and per
capita General Fund revenues, plus an additional small adjustment factor.
If Test 3 is used in any year, the difference between Test 3 and Test 2
would become a "credit" to schools which would be the basis of payments in
future years when per capital General Fund revenue growth exceeds per
capita personal income growth. Legislation adopted prior to the end of the
1988-89 Fiscal Year, implementing Proposition 98, determined the K-14
schools' funding guarantee under Test 1 to be 40.3 percent of the General
Fund tax revenues, based on 1986-87 appropriations. However, that percent
has been adjusted to approximately 35 percent to account for a subsequent
redirection of local property taxes, since such redirection directly
affects the share of General Fund revenues to schools.

      Proposition 98 permits the Legislature by two-thirds vote of both
houses, with the Governor's concurrence, to suspend the K-14 schools'
minimum funding formula for a one-year period. Proposition 98 also contains
provisions transferring certain State tax revenues in excess of the Article
XIII B limit to K-14 schools.

      In 1992, a lawsuit was filed, called California Teachers' Association
v. Gould, which challenged the validity of these off- budget loans. The
settlement of this case, finalized in July, 1996, provides, among other
things, that both the State and K-14 schools share in the repayment of
prior years' emergency loans to schools. Of the total $1.76 billion in
loans, the State is repaying $935 million by forgiveness of the amount
owed, while schools will repay $825 million. The State share of the
repayment will be reflected as an appropriation above the current
Proposition 98 base calculation. The schools' share of the repayment will
count as appropriations that count toward satisfying the Proposition 98
guarantee, of from "below" the current base. Repayments are spread over the
eight-year period of 1994-95 through 2001-02 to mitigate any adverse fiscal
impact.

      Tobacco Litigation. In 1998, the State signed a settlement agreement
with the four major cigarette manufacturers. The State agreed to drop its
lawsuit and not to sue in the future. Tobacco manufacturers agreed to
billions of dollars in payments and restrictions in marketing activities.
Under the settlement, the companies agreed to pay California governments
approximately $25 billion over a period of 25 years. Beyond 2025, payments
of approximately $1 billion per year will continue in perpetuity. Under the
settlement, half of the moneys will be paid to the State and half to local
governments (all counties and the cities of San Diego, Los Angeles, San
Francisco and San Jose). The 2000 Budget Act includes the receipt of $388
million of settlement money to the General Fund in fiscal 2000-01.

      The specific amount to be received by State and local governments is
subject to adjustment. Detail in the settlement agreement allow reduction
of the companies' payments for decreases in cigarette sales and certain
types of Federal legislation. Settlement payments can increase due to
inflation or increases in cigarette sales. The "first annual" payment,
received in April 2000, was 12 percent lower than the base settlement
amount due to reduced sales. Future payment estimates have been reduced by
a similar percentage. If any of the companies goes into bankruptcy, the
State could seek to terminate the agreement with respect to those companies
filing bankruptcy actions thereby reinstating all claims against those
companies. The State may then pursue those claims in the bankruptcy
litigation, or as otherwise provided by law. Also, several parties have
brought a lawsuit challenging the settlement and seeking damages.

      Fuel and Energy Concerns. Fuel and energy prices have risen sharply
in recent months. Because of capacity constraints in electric generation
and transmission, California utilities have been forced to purchase
wholesale power at high prices. Under current deregulation rules for the
electric industry enacted in 1996, two of the State's large investor-owned
utility ("IOU") companies are not allowed to charge customers the full
cost, while rates in a third IOU's service area were cut back after rising
sharply to cover wholesale costs. Legislation was enacted to streamline the
process for siting new power plants, but it will be several years until a
significant number of new suppliers will enter the California market. While
the Administration, the Legislature, the State Public Utilities Commission
and the Federal Energy Regulatory Commission all are considering further
actions to deal with the shortcomings in the State's deregulated energy
market, it is not possible to predict at this time what the long-term
impact of these developments will be on California's economy. Such fuel and
energy issues could have severe adverse effects upon the State's economy.

      2000-2001 Fiscal Year Budget. On January 10, 2000, Governor Davis
released his proposed budget for fiscal year 2000-01. The 2000-01
Governor's Budget ("2000 Governor's Budget") generally reflected an
estimate that General Fund revenues for fiscal year 1999 Budget Act. Even
these positive estimates proved to be greatly understated as continuing
economic growth and stock market gains resulted in a surge of revenues. The
Administration estimated in the 2000 May Revision that General Fund
revenues would total $70.9 billion in 1999-2000, and $73.8 billion in
2000-01, a two-year increase of $12.3 billion above the 2000 Governor's
Budget revenues estimates. The latest estimates for 1999-2000 are even
higher, with revenues now estimated at $71.2 billion.

      The 2000 Budget Act was signed by the Governor on June 30, 2000, the
second consecutive year the State's Budget was enacted on time. The
spending plan assumes General Fund revenues and transfers of $73.9 billion,
an increase of 3.8 percent above the estimates for 1999-2000. The 2000
Budget Act appropriates $78.8 billion from the General Fund, an increase of
17.3 percent over 1999-2000, and reflects the use of $5.5 billion from the
Special Fund for Economic Uncertainties. In order not to place undue
pressure on future budget years, about $7.0 billion of the increased
spending in 2000-01 will be for one-time expenditures and investments.

      The Department of Finance estimates the SFEU will have a balance of
$1.781 billion at June 30, 2001. In addition, the Governor held back $500
million as a set-aside for litigation costs. If this amount is not fully
expended during fiscal year 2000-01, the balance will increase the SFEU.
The Governor vetoed just over $1 billion in General Fund and Special Fund
appropriations from the 2000 Budget Act, in order to achieve the budget
reserve. Because of the State's Strong Cash position, the Administration
announced that it would not undertake a revenue anticipation note borrowing
in 2000-01.

DURATION MANAGEMENT AND OTHER MANAGEMENT TECHNIQUES

      The Trust may use a variety of other investment management techniques
and instruments. The Trust may purchase and sell futures contracts, enter
into various interest rate transactions and may purchase and sell
exchange-listed and over-the-counter put and call options on securities,
financial indices and futures contracts (collectively, "Additional
Investment Management Techniques"). These Additional Investment Management
Techniques may be used for duration management and other risk management to
attempt to protect against possible changes in the market value of the
Trust's portfolio resulting from trends in the debt securities markets and
changes in interest rates, to protect the Trust's unrealized gains in the
value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to establish a position in the
securities markets as a temporary substitute for purchasing particular
securities and to enhance income or gain. There is no particular strategy
that requires use of one technique rather than another as the decision to
use any particular strategy or instrument is a function of market
conditions and the composition of the portfolio. The Additional Investment
Management Techniques are described below. The ability of the Trust to use
them successfully will depend on the Adviser's ability to predict pertinent
market movements as well as sufficient correlation among the instruments,
which cannot be assured. Inasmuch as any obligations of the Trust that
arise from the use of Additional Investment Management Techniques will be
covered by segregated liquid high grade assets or offsetting transactions,
the Trust and the Adviser believe such obligations do not constitute senior
securities and, accordingly, will not treat them as being subject to its
borrowing restrictions. Commodity options and futures contracts regulated
by the Commodity Futures Trading Commission (the "CFTC") have specific
margin requirements described below and are not treated as senior
securities. The use of certain Additional Investment Management Techniques
may give rise to taxable income and have certain other consequences. See
"Tax Matters".

      Interest Rate Transactions. The Trust may enter into interest rate
swaps and the purchase or sale of interest rate caps and floors. The Trust
expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio as a duration
management technique or to protect against any increase in the price of
securities the Trust anticipates purchasing at a later date. The Trust will
ordinarily use these transactions as a hedge or for duration or risk
management although it is permitted to enter into them to enhance income or
gain. The Trust will not sell interest rate caps or floors that it does not
own. Interest rate swaps involve the exchange by the Trust with another
party of their respective commitments to pay or receive interest, e.g., an
exchange of floating rate payments for fixed rate payments with respect to
a notional amount of principal. The purchase of an interest rate cap
entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate cap. The
purchase of an interest rate floor entitles the purchaser, to the extent
that a specified index falls below a predetermined interest rate, to
receive payments of interest on a notional principal amount from the party
selling such interest rate floor.

      The Trust may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, and will usually enter into
interest rate swaps on a net basis, i.e., the two payment streams are
netted out, with the Trust receiving or paying, as the case may be, only
the net amount of the two payments on the payment dates. The Trust will
accrue the net amount of the excess, if any, of the Trust's obligations
over its entitlements with respect to each interest rate swap on a daily
basis and will segregate with a custodian an amount of cash or liquid high
grade securities having an aggregate net asset value at all times at least
equal to the accrued excess. The Trust will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in the highest
rating category of at least one nationally recognized statistical rating
organization at the time of entering into such transaction. If there is a
default by the other party to such a transaction, the Trust will have
contractual remedies pursuant to the agreements related to the transaction.

      Futures Contracts and Options on Futures Contracts. The Trust may
also enter into contracts for the purchase or sale for future delivery
("futures contracts") of debt securities, aggregates of debt securities or
indices or prices thereof, other financial indices and U.S. government debt
securities or options on the above. The Trust will ordinarily engage in
such transactions only for bona fide hedging, risk management (including
duration management) and other portfolio management purposes. However, the
Trust is also permitted to enter into such transactions for non-hedging
purposes to enhance income or gain, in accordance with the rules and
regulations of the CFTC, which currently provide that no such transaction
may be entered into if at such time more than 5% of the Trust's net assets
would be posted as initial margin and premiums with respect to such
non-hedging transactions.

      Calls on Securities Indices and Futures Contracts. The Trust may sell
or purchase call options ("calls") on municipal bonds and indices based
upon the prices of future contracts and debt securities that are traded on
U.S. and foreign securities exchanges and in the over-the-counter markets.
A call gives the purchaser of the option the right to buy, and obligates
the seller to sell, the underlying security, futures contract or index at
the exercise price at any time or at a specified time during the option
period. All such calls sold by the Trust must be "covered" as long as the
call is outstanding (i.e., the Trust must own the securities or futures
contract subject to the call or other securities acceptable for applicable
escrow requirements). A call sold by the Trust exposes the Trust during the
term of the option to possible loss of opportunity to realize appreciation
in the market price of the underlying security, index or futures contract
and may require the Trust to hold a security of futures contract which it
might otherwise have sold. The purchase of a call gives the Trust the right
to buy a security, futures contract or index at a fixed price. Calls on
futures on municipal bonds must also be covered by deliverable securities
or the futures contract or by liquid high grade debt securities segregated
to satisfy the Trust's obligations pursuant to such instruments.

      Puts on Securities, Indices and Futures Contracts. The Trust may
purchase put options ("puts") that relate to municipal bonds (whether or
not it holds such securities in its portfolio), indices or futures
contracts. The Trust may also sell puts on municipal bonds, indices or
futures contracts on such securities if the Trust's contingent obligations
on such puts are secured by segregated assets consisting of cash or liquid
high grade debt securities having a value not less than the exercise price.
The Trust will not sell puts if, as a result, more than 50% of the Trust's
assets would be required to cover its potential obligations under its
hedging and other investment transactions. In selling puts, there is a risk
that the Trust may be required to buy the underlying security at a price
higher than the current market price.

      Municipal Market Data Rate Locks. The Trust may purchase and sell
Municipal Market Data Rate Locks ("MMD Rate Locks"). An MMD Rate Lock
permits the Trust to lock in a specified municipal interest rate for a
portion of its portfolio to preserve a return on a particular investment or
a portion of its portfolio as a duration management technique or to protect
against any increase in the price of securities to be purchased at a later
date. The Trust will ordinarily use these transactions as a hedge or for
duration or risk management although it is permitted to enter into them to
enhance income or gain. An MMD Rate Lock is a contract between the Trust
and an MMD Rate Lock provider pursuant to which the parties agree to make
payments to each other on a notional amount, contingent upon whether the
Municipal Market Data AAA General Obligation Scale is above or below a
specified level on the expiration date of the contract. For example, if the
Trust buys an MMD Rate Lock and the Municipal Market Data AAA General
Obligation Scale is below the specified level on the expiration date, the
counterparty to the contract will make a payment to the Trust equal to the
specified level minus the actual level, multiplied by the notional amount
of the contract. If the Municipal Market Data AAA General Obligation Scale
is above the specified level on the expiration date, the Trust will make a
payment to the counterparty equal to the actual level minus the specified
level multiplied by the notional amount of the contract. In entering into
MMD Rate Locks, there is a risk that municipal yields will move in the
direction opposite of the direction anticipated by the Trust. The Trust
will not enter into MMD Rate Locks if, as a result, more than 50% of its
assets would be required to cover its potential obligations under its
hedging and other investment transactions.

      Appendix C contains further information about the characteristics,
risks and possible benefits of Additional Investment Management Techniques
and the Trust's other policies and limitations (which are not fundamental
policies) relating to investment in futures contracts and options. The
principal risks relating to the use of futures contracts and other
Additional Investment Management Techniques are: (a) less than perfect
correlation between the prices of the instrument and the market value of
the securities in the Trust's portfolio; (b) possible lack of a liquid
secondary market for closing out a position in such instruments; (c) losses
resulting from interest rate or other market movements not anticipated by
the adviser; and (d) the obligation to meet additional variation margin or
other payment requirements, all of which could result in the Trust being in
a worse position than if such techniques had not been used.

      Certain provisions of the Internal Revenue Code of 1986 may restrict
or affect the ability of the Trust to engage in Additional Investment
Management Techniques. See "Tax Matters".

SHORT SALES

      The Trust may make short sales of municipal bonds. A short sale is a
transaction in which the Trust sells a security it does not own in
anticipation that the market price of that security will decline. The Trust
may make short sales to hedge positions, for duration and risk management,
in order to maintain portfolio flexibility or to enhance income or gain.

      When the Trust makes a short sale, it must borrow the security sold
short and deliver it to the broker-dealer through which it made the short
sale as collateral for its obligation to deliver the security upon
conclusion of the sale. The Trust may have to pay a fee to borrow
particular securities and is often obligated to pay over any payments
received on such borrowed securities.

      The Trust's obligation to replace the borrowed security will be
secured by collateral deposited with the broker-dealer, usually cash, U.S.
government securities or other high grade liquid securities. The Trust will
also be required to segregate similar collateral with its custodian to the
extent, if any, necessary so that the aggregate collateral value is at all
times at least equal to the current market value of the security sold
short. Depending on arrangements made with the broker-dealer from which it
borrowed the security regarding payment over of any payments received by
the Trust on such security, the Trust may not receive any payments
(including interest) on its collateral deposited with such broker-dealer.

      If the price of the security sold short increases between the time of
the short sale and the time the Trust replaces the borrowed security, the
Trust will incur a loss; conversely, if the price declines, the Trust will
realize a gain. Any gain will be decreased, and any loss increased, by the
transaction costs described above. Although the Trust's gain is limited to
the price at which it sold the security short, its potential loss is
theoretically unlimited.

      The Trust will not make a short sale if, after giving effect to such
sale, the market value of all securities sold short exceeds 25% of the
value of its total assets or the Trust's aggregate short sales of a
particular class of securities exceeds 25% of the outstanding securities of
that class. The Trust may also make short sales "against the box" without
respect to such limitations. In this type of short sale, at the time of the
sale, the Trust owns or has the immediate and unconditional right to
acquire at no additional cost the identical security.

                  OTHER INVESTMENT POLICIES AND TECHNIQUES

RESTRICTED AND ILLIQUID SECURITIES

      Certain of the Trust's investments may be illiquid. Illiquid
securities are subject to legal or contractual restrictions on disposition
or lack an established secondary trading market. The sale of restricted and
illiquid securities often requires more time and results in higher
brokerage charges or dealer discounts and other selling expenses than does
the sale of securities eligible for trading on national securities
exchanges or in the over-the-counter markets. Restricted securities may
sell at a price lower than similar securities that are not subject to
restrictions on resale.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

      The Trust may purchase municipal bonds on a "when-issued" basis and
may purchase or sell municipal bonds on a "forward commitment" basis. When
such transactions are negotiated, the price, which is generally expressed
in yield terms, is fixed at the time the commitment is made, but delivery
and payment for the securities take place at a later date. When-issued
securities and forward commitments may be sold prior to the settlement
date, but the Trust will enter into when-issued and forward commitments
only with the intention of actually receiving or delivering the securities,
as the case may be. If the Trust disposes of the right to acquire a when-
issued security prior to its acquisition or disposes of its right to
deliver or receive against a forward commitment, it can incur a gain or
loss. At the time the Trust entered into a transaction on a when-issued or
forward commitment basis, it will segregate with its custodian cash or
other liquid high grade debt securities with a value not less than the
value of the when-issued or forward commitment securities. The value of
these assets will be monitored daily to ensure that their marked to market
value will at all times equal or exceed the corresponding obligations of
the Trust. There is always a risk that the securities may not be delivered
and that the Trust may incur a loss. Settlements in the ordinary course,
which typically occur monthly for mortgage-related securities, are not
treated by the Trust as when-issued or forward commitment transactions and
accordingly are not subject to the foregoing restrictions.

BORROWING

      Although it has no present intention of doing so, the Trust reserves
the rights to borrow funds to the extent permitted as described under the
caption "Investment Objective and Policies--Investment Limitations". The
proceeds of borrowings may be used for any valid purpose including, without
limitation, liquidity, investing and repurchases of shares of the Trust.
Borrowing is a form of leverage and, in that respect, entails risks
comparable to those associated with the issuance of Preferred Shares.

REVERSE REPURCHASE AGREEMENTS

      The Trust may enter into reverse repurchase agreements with respect
to its portfolio investments subject to the investment restrictions set
forth herein. Reverse repurchase agreements involve the sale of securities
held by the Trust with an agreement by the Trust to repurchase the
securities at an agreed upon price, date and interest payment. At the time
the Trust enters into a reverse repurchase agreement, it may establish and
maintain a segregated account with the custodian containing liquid
instruments having a value not less than the repurchase price (including
accrued interest). If the Trust establishes and maintains such a segregated
account, a reverse repurchase agreement will not be considered a borrowing
by the Trust; however, under circumstances in which the Trust does not
establish and maintain such a segregated account, such reverse repurchase
agreement will be considered a borrowing for the purpose of the Trust's
limitation on borrowings. The use by the Trust of reverse repurchase
agreements involves many of the same risks of leverage since the proceeds
derived from such reverse repurchase agreements may be invested in
additional securities. Reverse repurchase agreements involve the risk that
the market value of the securities acquired in connection with the reverse
repurchase agreement may decline below the price of the securities the
Trust has sold but is obligated to repurchase. Also, reverse repurchase
agreements involve the risk that the market value of the securities
retained in lieu of sale by the Trust in connection with the reverse
repurchase agreement may decline price.

      If the buyer of securities under a reverse repurchase agreement files
for bankruptcy or becomes insolvent, such buyer or its trustee or receiver
may receive an extension of time to determine whether to enforce the
Trust's obligation to repurchase the securities, and the Trust's use of the
proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision. Also, the Trust would bear the risk of loss to the
extent that the proceeds of the reverse repurchase agreement are less than
the value of the securities subject to such agreement.

REPURCHASE AGREEMENTS

      As temporary investments, the Trust may invest in repurchase
agreements. A repurchase agreement is a contractual agreement whereby the
seller of securities (U.S. Government securities or municipal bonds) agrees
to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed-upon repurchase price determines the
yield during the Trust's holding period. Repurchase agreements are
considered to be loans collateralized by the underlying security that is
the subject of the repurchase contract. Income generated from transactions
in repurchase agreements will be taxable. See "Tax Matters" for information
relating to the allocation of taxable income between common shares and
Preferred Shares, if any. The Trust will only enter into repurchase
agreements with registered securities dealers or domestic banks that, in
the opinion of the Adviser, present minimal credit risk. The risk to the
Trust is limited to the ability of the issuer to pay the agreed-upon
repurchase price on the delivery date; however, although the value of the
underlying collateral at the time the transaction is entered into always
equals or exceeds the agreed-upon repurchase price, if the value of the
collateral declines there is a risk of loss of both principal and interest.
In the event of default, the collateral may be sold but the Trust might
incur a loss if the value of the collateral declines, and might incur
disposition costs or experience delays in connection with liquidating the
collateral. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, realization upon the collateral by
the Trust may be delayed or limited. The Adviser will monitor the value of
the collateral at the time the transaction is entered into and at all times
subsequent during the term of the repurchase agreement in an effort to
determine that such value always equals or exceeds the agreed-upon
repurchase price. In the event the value of the collateral declines below
the repurchase price, the Adviser will demand additional collateral from
the issuer to increase the value of the collateral to at least that of the
repurchase price, including interest.

ZERO COUPON BONDS

      The Trust may invest in zero coupon bonds. A zero coupon bond is a
bond that does not pay interest for its entire life. The market prices of
zero coupon bonds are affected to a greater extent by changes in prevailing
levels of interest rates and thereby tend to be more volatile in price than
securities that pay interest periodically. In addition, because the Trust
accrues income with respect to these securities prior to the receipt of
such interest, it may have to dispose of portfolio securities under
disadvantageous circumstances in order to obtain cash needed to pay income
dividends in amounts necessary to avoid unfavorable tax consequences.

LENDING OF SECURITIES

      The Trust may lend its portfolio securities to brokers, dealers and
other financial institutions which meet the creditworthiness standards
established by the board of trustees of the Trust ("Qualified
Institutions"). By lending its portfolio securities, the Trust attempts to
increase its income through the receipt of interest on the loan. Any gain
or loss in the market price of the securities loaned that may occur during
the term of the loan will be for the account of the Trust. The Trust may
lend its portfolio securities so long as the terms and the structure of
such loans are not inconsistent with the requirements of the Investment
Company Act, which currently require that (a) the borrower pledge and
maintain with the Trust collateral consisting of cash, a letter of credit
issued by a domestic U.S. bank, or securities issued or guaranteed by the
U.S. government having a value at all times not less than 100% of the value
of the securities loaned, (b) the borrower add to such collateral whenever
the price of the securities loaned rises (i.e., the value of the loan is
"marked to the market" on a daily basis), (c) the loan be made subject to
termination by the Trust at any time and (d) the Trust receive reasonable
interest on the loan (which may include the Trust's investing any cash
collateral in interest bearing short-term investments), any distributions
on the loaned securities and any increase in their market value. The Trust
will not lend portfolio securities if, as a result, the aggregate value of
such loans exceeds 33 1/3% of the value of the Trust's total assets
(including such loans). Loan arrangements made by the Trust will comply
with all other applicable regulatory requirements, including the rules of
the New York Stock Exchange. All relevant facts and circumstances,
including the creditworthiness of the Qualified Institution, will be
monitored by the Adviser, and will be considered in making decisions with
respect to lending of securities, subject to review by the Trust's board of
trustees.

      The Trust may pay reasonable negotiated fees in connection with
loaned securities, so long as such fees are set forth in a written contract
and approved by the Trust's board of trustees. In addition, voting rights
may pass with the loaned securities, but if a material event were to occur
affecting such a loan, the loan must be called and the securities voted.


                          MANAGEMENT OF THE TRUST

INVESTMENT MANAGEMENT AGREEMENT

      Although BlackRock Advisors intends to devote such time and effort to
the business of the Trust as is reasonably necessary to perform its duties
to the Trust, the services of BlackRock Advisors are not exclusive and
BlackRock Advisors provides similar services to other investment companies
and other clients and may engage in other activities.

      The Investment Management Agreement also provides that in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations thereunder, BlackRock Advisors is not liable to the
Trust or any of the Trust's shareholders for any act or omission by
BlackRock Advisors in the supervision or management of its respective
investment activities or for any loss sustained by the Trust or the Trust's
shareholders and provides for indemnification by the Trust of BlackRock
Advisors, its directors, officers, employees, agents and control persons
for liabilities incurred by them in connection with their services to the
Trust, subject to certain limitations and conditions.

      The Investment Management Agreement was approved by the Trust's board
of trustees, on , 2001, including a majority of the trustees who are not
parties to the agreement or interested persons of any such party (as such
term is defined in the Investment Company Act). The Investment Management
Agreement was approved by the sole common shareholder of the Trust on
     , 2001. The Investment Management Agreement will continue in effect
for a period of two years from its effective date, and if not sooner
terminated, will continue in effect for successive periods of 12 months
thereafter, provided that each continuance is specifically approved at
least annually by both (1) the vote of a majority of the Trust's board of
trustees or the vote of a majority of the outstanding voting securities of
the Trust (as such term is defined in the Investment Company Act) and (2)
by the vote of a majority of the trustees who are not parties to such
Agreement or interested persons (as such term is defined in the Investment
Company Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval. The Investment Management Agreement may
be terminated as a whole at any time by the Trust, without the payment of
any penalty, upon the vote of a majority of the Trust's board of trustees
or a majority of the outstanding voting securities of the Trust or by
BlackRock Advisors, on 60 days' written notice by either party to the
other. The Investment Management Agreement will terminate automatically in
the event of its assignment (as such term is defined in the Investment
Company Act and the rules thereunder).

TRUSTEES AND OFFICERS

      The officers of the Trust manage its day to day operations. The
officers are directly responsible to the Trust's board of trustees which
sets broad policies for the Trust and chooses its officers. Initially,
Laurence D. Fink will serve as the sole trustee and as President, Chief
Executive Officer and Chief Financial Officer of the Trust. The following
is a list of his present positions and principal occupations during the
last five years. The Trust anticipates that the board of trustees will be
expanded to eight people prior to commencement of the initial public
offering. The Trust's initial sole trustee is an interested person (as
defined in the Investment Company Act). The business address of the Trust,
the initial sole trustee, BlackRock Advisors and its board members and
officers is 100 Bellevue Parkway, Wilmington, Delaware, 19809. The trustee
listed below is either trustee or director of other closed-end funds in
which BlackRock Advisors acts as investment adviser.




                                         PRINCIPAL OCCUPATION DURING THE
NAME AND ADDRESS           TITLE     PAST-FIVE-YEARS-AND-OTHER-AFFILIATIONS
- ---------------------- ------------  ------------------------------------
Laurence D. Fink*        Trustee,         Director, Chairman and Chief
Age:  48                President,        Executive Officer of
                           Chief          BlackRock, Inc. since its
                         Executive        formation in 1998 and of
                        Officer and       BlackRock, Inc.'s predecessor
                           Chief          entities since 1988. Chairman
                         Financial        of the Management Committee
                          Officer         and Co-chair of the
                                          Investment Strategy Group of
                                          BlackRock, Inc. Formerly,
                                          Managing Director of the
                                          First Boston Corporation,
                                          Member of its Management
                                          Committee, Co-head of its
                                          Taxable Fixed Income Division
                                          and Head of its Mortgage and
                                          Real Estate Products Group.
                                          Currently, Chairman of the
                                          Board of each of the
                                          closed-end Trusts in which
                                          BlackRock Advisors, Inc. acts
                                          as investment advisor,
                                          President, Treasurer and a
                                          Trustee of the BlackRock
                                          Funds, Chairman of the Board
                                          and Director of Anthracite
                                          Capital, Inc., a Director of
                                          BlackRock's offshore funds
                                          and alternative products and
                                          Chairman of the Board of
                                          Nomura BlackRock Asset
                                          Management Co., Ltd.
                                          Currently, Vice Chairman of
                                          the Board of Trustees of
                                          Mount Sinai- New York
                                          University Medical Center and
                                          Health System and a Member of
                                          the Board of Phoenix House.
                                          Formerly, a Director of VIMRx
                                          Pharmaceuticals, Inc. and
                                          Innovir Laboratories, Inc.




      Prior to this offering, all of the outstanding shares of the Trust
were owned by BlackRock Advisors.

      The fees and expenses of the Independent Trustees of the Trust are
paid by the Trust. The Trustees who are members of the BlackRock
organization receive no compensation from the Trust. During the year ended
December 31, 2001, the Independent Trustees/Directors earned the
compensation set forth below in their capacities as trustees/directors of
the funds in the BlackRock Family of Funds. It is estimated that the
Independent Trustees will receive from the Trust the amounts set forth
below for the Trust's fiscal year ending .


                                                 ESTIMATED TOTAL COMPENSATION
                            ESTIMATED              FROM THE TRUST AND FUND
 NAME OF BOARD MEMBER  COMPENSATION FROM TRUST  COMPLEX PAID TO BOARD MEMBER(1)
- -------------------------------------------------------------------------------
                       $                         $
                       $                         $
                       $                         $
                       $                         $
                       $                         $
                       $                         $
- ------------

(1)   Represents the total compensation earned by such persons during the
      calendar year ended December 31, 2001 from the twenty-two closed-end
      funds advised by the Advisor (the "Fund Complex"). One of these
      funds, BlackRock Target Term Trust terminated on December 29, 2000.

(2)   Of this amount, deferred respectively, pursuant to the Fund Complex's
      deferred compensation plan (described below).


(3)   At a meeting of the Boards of Directors held on August 24, 2000, was
      appointed "lead director" for each Board of Trustees/Directors in the
      Fund Complex. For his services as lead trustee/director, will be
      compensated in the amount of per annum by the Fund Complex to be
      allocated among the funds in the Fund Complex based on each fund's
      relative net assets.

(4)   Of this amount, deferred respectively, pursuant to the funds'
      deferred compensation plan (as described below).

      Each Independent Trustee/Director receives an annual fee calculated
as follows: (i) $6,000 from each fund in the Fund Complex and (ii) $1,500
for each meeting of each board in the Fund Complex attended by such
Independent Trustee/Director. The total annual aggregate compensation for
each Independent Trustee/Director is capped at $160,000 per annum. In the
event that the $160,000 cap is met with respect to an Independent
Trustee/Director, the amount of the Independent Trustee/Director's fee
borne by each fund in the Fund Complex is reduced by reference to the net
assets of the Trust relative to the other funds in the Fund Complex. In
addition, the attendance fees of each Independent Trustee/Director of the
funds are reduced proportionately, based on each respective fund's net
assets, so that the aggregate per meeting fee for all meetings of the
boards of trustees/directors of the funds held on a single day does not
exceed $20,000 for any Trustee/Director.

CODES OF ETHICS

      The Trust, the Adviser and the Trust's principal underwriter have
adopted codes of ethics under Rule 17j-1 of the Investment Company Act of
1940. These codes permit personnel subject to the codes to invest in
securities, including securities that may be purchased or held by the
Trust.

PORTFOLIO TRANSACTIONS AND BROKERAGE

      The Adviser is responsible for decisions to buy and sell securities
for the Trust, the selection of brokers and dealers to effect the
transactions and the negotiation of prices and any brokerage commissions.
The securities in which the Trust invests are traded principally in the
over-the-counter market. In the over-the-counter market, securities are
generally traded on a "net" basis with dealers acting as principal for
their own accounts without a stated commission, although price of the
security usually includes a mark- up to the dealer. Securities purchased in
underwritten offerings generally include, in the price, a fixed amount of
compensation for the manager(s), underwriter(s) and dealer(s). The Trust
may also purchase certain money market instruments directly from an issuer,
in which case no commissions or discounts are paid. Purchases and sales of
debt securities on a stock exchange are effected through brokers who charge
a commission for their services.

      The Adviser is responsible for effecting securities transactions of
the Trust and will do so in a manner deemed fair and reasonable to
shareholders of the Trust and not according to any formula. The Adviser's
primary considerations in selecting the manner of executing securities
transactions for the Trust will be prompt execution of orders, the size and
breadth of the market for the security, the reliability, integrity and
financial condition and execution capability of the firm, the size of the
difficulty in executing the order, and the best net price. There are many
instances when, in the judgment of the Adviser, more than one firm can
offer comparable execution services. In selecting among such firms,
consideration is given to those firms which supply research and other
services in addition to execution services consideration may also be given
to the sale of shares of the Trust. However, it is not the policy of the
Adviser, absent special circumstances, to pay higher commissions to a firm
because it has supplied such research or other services.

      The Adviser is able to fulfill its obligations to furnish a
continuous investment program to the Trust without receiving such
information from brokers; however, it considers access to such information
to be an important element of financial management. Although such
information is considered useful, its value is not determinable, as it must
be reviewed and assimilated by the Adviser, and does not reduce The
Adviser's normal research activities in rendering investment advice under
the Investment Management Agreement. It is possible that the Adviser's
expenses could be materially increased if it attempted to purchase this
type of information or generate it through its own staff.

      One or more of the other investment companies or accounts which the
Adviser manages may own from time to time some of the same investments as
the Trust. Investment decisions for the Trust are made independently from
those of such other investment companies or accounts; however, from time to
time, the same investment decision may be made for more than one company or
account. When two or more companies or accounts seek to purchase or sell
the same securities, the securities actually purchased or sold will be
allocated among the companies and accounts on a good faith equitable basis
by the Adviser in its discretion in accordance with the accounts' various
investment objectives. In some cases, this system may adversely affect the
price or size of the position obtainable for the Trust. In other cases,
however, the ability of the Trust to participate in volume transactions may
produce better execution for the Trust. It is the opinion of the Trust's
board of trustees that this advantage, when combined with the other
benefits available due to the Adviser's organization, outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.

      Although the Investment Management Agreement contains no restrictions
on portfolio turnover, it is not the Trust's policy to engage in
transactions with the objective of seeking profits from short-term trading.
It is expected that the annual portfolio turnover rate of the Trust will be
approximately 100% excluding securities having a maturity of one year or
less. Because it is difficult to predict accurately portfolio turnover
rates, actual turnover may be higher or lower. Higher portfolio turnover
results in increased Trust expenses, including brokerage commissions,
dealer mark-ups and other transaction costs on the sale of securities and
on the reinvestment in other securities.


                           DESCRIPTION OF SHARES

COMMON SHARES

      The Trust intends to hold annual meetings of shareholders so long as
the common shares are listed on a national securities exchange and such
meetings are required as a condition to such listing.

PREFERRED SHARES

      Although the terms of the Preferred Shares, including their dividend
rate, voting rights, liquidation preference and redemption provisions, will
be determined by the board of trustees (subject to applicable law and the
Trust's Agreement and Declaration of Trust) when it authorizes a Preferred
Shares offering, the Trust currently expects that the preference on
distributions, liquidation preference, voting rights and redemption
provisions of the Preferred Shares will likely be as stated in the
prospectus.

      If the board of trustees determines to proceed with an offering of
Preferred Shares, the terms of the Preferred Shares may be the same as, or
different from, the terms described in the prospectus, subject to
applicable law and the Trust's Agreement and Declaration of Trust. The
board of trustees, without the approval of the holders of common shares,
may authorize an offering of Preferred Shares or may determine not to
authorize such an offering, and may fix the terms of the preferred shares
to be offered.


                        REPURCHASE OF COMMON SHARES

      The Trust is a closed-end investment company and as such its
shareholders will not have the right to cause the Trust to redeem their
shares. Instead, the Trust's common shares will trade in the open market at
a price that will be a function of several factors, including dividend
levels (which are in turn affected by expenses), net asset value, call
protection, price, dividend stability, relative demand for and supply of
such shares in the market, general market and economic conditions and other
factors. Because shares of a closed-end investment company may frequently
trade at prices lower than net asset value, the Trust's board of trustees
consider action that might be taken to reduce or eliminate any material
discount from net asset value in respect of common shares, which may
include the repurchase of such shares in the open market or in private
transactions, the making of a tender offer for such shares at net asset
value, or the conversion of the Trust to an open-end investment company.
The board of trustees may not decide to take any of these actions. In
addition, there can be no assurance that share repurchases or tender
offers, if undertaken, will reduce market discount.

      Notwithstanding the foregoing, at any time when the Trust's Preferred
Shares are outstanding, the Trust may not purchase, redeem or otherwise
acquire any of its common shares unless (1) all accrued Preferred Shares
dividends have been paid and (2) at the time of such purchase, redemption
or acquisition, the net asset value of the Trust's portfolio (determined
after deducting the acquisition price of the common shares) is at least
200% of the liquidation value of the outstanding Preferred Shares (expected
to equal the original purchase price per share plus any accrued and unpaid
dividends thereon). The staff of the Securities and Exchange Commission
currently requires that any tender offer made by a closed-end investment
company for its shares must be at a price equal to the net asset value of
such shares on the close of business on the last day of the tender offer.
Any service fees incurred in connection with any tender offer made by the
Trust will be borne by the Trust and will not reduce the stated
consideration to be paid to tendering shareholders.

      Subject to its investment limitations, the Trust may borrow to
finance the repurchase of shares or to make a tender offer. Interest on any
borrowings to finance share repurchase transactions or the accumulation of
cash by the Trust in anticipation of share repurchases or tenders will
reduce the Trust's net income. Any share repurchase, tender offer or
borrowing that might be approved by the Trust's board of trustees would
have to comply with the Securities Exchange Act of 1934, as amended, and
the Investment Company Act and the rules and regulations under each of
those Acts.

      Although the decision to take action in response to a discount from
net asset value will be made by the board of trustees at the time it
considers such issue, it is the board's present policy, which may be
changed by the board of trustees, not to authorize repurchases of common
shares or a tender offer for such shares if (1) such transactions, if
consummated, would (a) result in the delisting of the common shares from
the New York Stock Exchange, or (b) impair the Trust's status as a
regulated investment company under the Internal Revenue Code of 1986 (which
would make the Trust a taxable entity, causing the Trust's income to be
taxed at the corporate level in addition to the taxation of shareholders
who receive dividends from the Trust) or as a registered closed-end
investment company under the Investment Company Act; (2) the Trust would
not be able to liquidate portfolio securities in an orderly manner and
consistent with the Trust's investment objective and policies in order to
repurchase shares; or (3) there is, in the board's judgment, any (a)
material legal action or proceeding instituted or threatened challenging
such transactions or otherwise materially adversely affecting the Trust,
(b) general suspension of or limitation on prices for trading securities on
the New York Stock Exchange, (c) declaration of a banking moratorium by
Federal or state authorities or any suspension of payment by United States
or New York banks, (d) material limitation affecting the Trust or the
issuers of its portfolio securities by Federal or state authorities on the
extension of credit by lending institutions or on the exchange of foreign
currency, (e) commencement of war, armed hostilities or other international
or national calamity directly or indirectly involving the United States, or
(f) other event or condition which would have a material adverse effect
(including any adverse tax effect) on the Trust or its shareholders if
shares were repurchased. The board of trustees may in the future modify
these conditions in light of experience.

      The repurchase by the Trust of its shares at prices below net asset
value will result in an increase in the net asset value of those shares
that remain outstanding. However, there can be no assurance that share
repurchases or tenders at or below net asset value will result in the
Trust's shares trading at a price equal to their net asset value.
Nevertheless, the fact that the Trust's shares may be the subject of
repurchase or tender offers at net asset value from time to time, or that
the Trust may be converted to an open-end company, may reduce any spread
between market price and net asset value that might otherwise exist.

      In addition, a purchase by the Trust of its common shares will
decrease the Trust's total assets which would likely have the effect of
increasing the Trust's expense ratio. Any purchase by the Trust of its
common shares at a time when Preferred Shares are outstanding will increase
the leverage applicable to the outstanding common shares then remaining.

      Before deciding whether to take any action if the common shares trade
below net asset value, the Trust's board of trustees would likely consider
all relevant factors, including the extent and duration of the discount,
the liquidity of the Trust's portfolio, the impact of any action that might
be taken on the Trust or its shareholders and market considerations. Based
on these considerations, even if the Trust's shares should trade at a
discount, the board of trustees may determine that, in the interest of the
Trust and its shareholders, no action should be taken.


                                TAX MATTERS

FEDERAL INCOME TAX MATTERS

      The following discussion of Federal income tax matters is based upon
the advice of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to
the Trust.

      The Trust intends to qualify under Subchapter M of the Internal
Revenue Code of 1986, as amended, for tax treatment as a regulated
investment company. In order to qualify as a regulated investment company,
the Trust must satisfy certain requirements relating to the source of its
income, diversification of its assets, and distributions of its income to
its shareholders. First, the Trust must derive at least 90% of its annual
gross income (including tax-exempt interest) from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies, or other income
(including but not limited to gains from options and futures) derived with
respect to its business of investing in such stock, securities or
currencies (the "90% gross income test"). Second, the Trust must diversify
its holdings so that, at the close of each quarter of its taxable year, (i)
at least 50% of the value of its total assets is comprised of cash, cash
items, United States Government securities, securities of other regulated
investment companies and other securities limited in respect of any one
issuer to an amount not greater in value than 5% of the value of the
Trust's total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the
total assets is invested in the securities of any one issuer (other than
United States Government securities and securities of other regulated
investment companies) or two or more issuers controlled by the Trust and
engaged in the same, similar or related trades or business.

      As a regulated investment company, the Trust will not be subject to
Federal income tax in any taxable year for which it distributes at least
90% of the sum of (i) its "investment company taxable income" (which
includes dividends, taxable interest, taxable original issue discount and
market discount income, income from securities lending, net short-term
capital gain in excess of long-term capital loss, and any other taxable
income other than "net capital gain" (as defined below) and is reduced by
deductible expenses) and (ii) its net tax-exempt interest (the excess of
its gross tax-exempt interest income over certain disallowed deductions).
The Trust may retain for investment its net capital gain (which consists of
the excess of its net long-term capital gain over its net short-term
capital loss). However, if the Trust retains any net capital gain or any
investment company taxable income, it will be subject to tax at regular
corporate rates on the amount retained. If the Trust retains any net
capital gain, it may designate the retained amount as undistributed capital
gains in a notice to its holders of common shares who, if subject to
Federal income tax on long-term capital gains, (i) will be required to
include in income for Federal income tax purposes, as long-term capital
gain, their share of such undistributed amount and (ii) will be entitled to
credit their proportionate shares of the tax paid by the Trust against
their Federal income tax liabilities, if any, and to claim refunds to the
extent the credit exceeds such liabilities. For Federal income tax
purposes, the tax basis of shares owned by a holder of common shares of the
Trust will be increased by an amount equal under current law to the
difference between the amount of undistributed capital gains included in
the holders of common shares' gross income and the tax deemed paid by the
holders of common shares under clause (ii) of the preceding sentence. The
Trust intends to distribute at least annually to its shareholders all or
substantially all of its net tax-exempt interest and any investment company
taxable income and net capital gain.

      Treasury regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain,
i.e., the excess of net long-term capital gain over net short-term capital
loss for any taxable year, to elect (unless it has made a taxable year
election for excise tax purposes as discussed below) to treat all or part
of any net capital loss, any net long-term capital loss or any net foreign
currency loss incurred after October 31 as if it had been incurred in the
succeeding year.

      Distributions by the Trust of investment company taxable income if
any, will be taxable to shareholders as ordinary income whether received in
cash or additional shares. Net long-term capital gains realized by the
Trust and distributed to shareholders in cash or additional shares will be
taxable to shareholders as long-term capital gains regardless of the length
of time investors have owned shares of the Trust. Distributions by the
Trust that do not constitute ordinary income dividends or capital gain
dividends will be treated as a return of capital to the extent of (and in
reduction of) the shareholders' tax basis in his or her shares. Any excess
will be treated as gain from the sale of his or her shares, as discussed
below.

      If the Trust engages in hedging transactions involving financial
futures and options, these transactions will be subject to special tax
rules, the effect of which may be to accelerate income to the Trust, defer
the Trust's losses, cause adjustments in the holding periods of the Trust's
securities, convert long-term capital gains into short-term capital gains
and convert short-term capital losses into long-term capital losses. These
rules could therefore affect the amount, timing and character of
distributions to holders of common shares.

      Prior to purchasing shares in the Trust, an investor should carefully
consider the impact of dividends which are expected to be or have been
declared, but not paid. Any dividend declared shortly after a purchase of
such shares prior to the record date will have the effect of reducing the
per share net asset value by the per share amount of the dividend.

      Although dividends generally will be treated as distributed when
paid, dividends declared in October, November or December, payable to
holders of common shares of record on a specified date in one of those
months and paid during the following January, will be treated as having
been distributed by the Trust (and received by the holder of common shares)
on December 31.

      Federal tax law imposes an alternative minimum tax with respect to
both corporations and individuals based on certain items of tax preference.
To the extent the Trust receives income treated as tax preference items for
purposes of the alternative minimum tax, a portion of the dividends paid by
it, although otherwise exempt from Federal income tax, will be taxable to
holders of common shares to the extent that their tax liability is
determined under the alternative minimum tax. The Trust will annually
supply holders of common shares with reports indicating the amount and
nature of all income distributed to them as well as the percentage of Trust
income attributable to tax preference items subject to the alternative
minimum tax.

      The Trust intends to invest in sufficient tax-exempt municipal bonds
to permit payment of "tax-exempt dividends" (as defined in the Internal
Revenue Code of 1986, as amended). Except as provided below,
exempt-interest dividends paid to holders of common shares are not
includable in the holder's gross income for Federal income tax purposes.

      Interest on certain "private-activity bonds" is an item of tax
preference subject to the alternative minimum tax on individuals and
corporations. The Trust may invest a portion of its assets in municipal
bonds subject to this provision so that a portion of its exempt-interest
dividends is an item of tax preference to the extent such dividends
represent interest received from these private- activity bonds.
Accordingly, investment in the Trust could cause a holder of common shares
to be subject to, or result in an increased liability under, the
alternative minimum tax.

      Exempt-interest dividends are included in determining what portion,
if any, of a person's social security and railroad retirement benefits will
be includable in gross income subject to Federal income tax.

      Although exempt-interest dividends generally may be treated by
holders of common shares as items of interest excluded from their gross
income, each holder is advised to consult his tax adviser with respect to
whether exempt-interest dividends retain their exclusion if the shareholder
would be treated as a "substantial user," or a "related person" of a
substantial user, of the facilities financed with respect to any of the
tax-exempt obligations held by the Trust. "Substantial user" is defined
under the Treasury Regulations to include a non-exempt person who regularly
uses in his trade or business a part of the facilities financed with the
tax- exempt obligations and whose gross revenues derived from such
facilities exceed 5% of the useable area of the facilities or from whom the
facilities or a part thereof were specifically constructed, reconstructed
or acquired. "Related persons" include certain natural persons, affiliated
corporations, a partnership and its partners and an S corporation and its
shareholders.

      For corporations, alternative minimum taxable income is increased by
75% of the difference between an alternative measure of income ("adjusted
current earnings") and the amount otherwise determined to be the
alternative minimum taxable income. Interest on municipal bonds, and
therefore all exempt-interest dividends received from the Trust, are
included in calculating adjusted current earnings.

      The redemption or exchange of common shares normally will result in
capital gain or loss to the holders of common shares. Generally, a
shareholder's gain or loss will be long-term gain or loss if the shares
have been held for more than one year. Present law taxes both long- and
short-term capital gains of corporations at the rates applicable to
ordinary income. For non-corporate taxpayers, however, net capital gains
will be taxed at a maximum rate of 20%, while short-term capital gains and
other ordinary income will be taxed at a maximum rate of 39.6%. Because of
the limitations on itemized deductions and the deduction for personal
exemptions applicable to higher income taxpayers, the effective tax rate
may be higher in certain circumstances.

      All or a portion of a sales charge paid in purchasing common shares
cannot be taken into account for purposes of determining gain or loss on
the redemption or exchange of such shares within 90 days after their
purchase to the extent common shares or shares of another fund are
subsequently acquired without payment of a sales charge pursuant to the
reinvestment or exchange privilege. Any disregarded portion of such charge
will result in an increase in the shareholder's tax basis in the shares
subsequently acquired. In addition, no loss will be allowed on the
redemption or exchange of common shares if the shareholder purchases other
shares of the Trust (whether through reinvestment of distributions or
otherwise) or the shareholder acquires or enters into a contract or option
to acquire securities that are substantially identical to shares of the
Trust within a period of 61 days beginning 30 days before and ending 30
days after such redemption or exchange. If disallowed, the loss will be
reflected in an adjustment to the basis of the shares acquired. Further,
any losses realized on the sale or exchange of common shares held for six
months or less will be disallowed to the extent of any exempt-interest
dividends received with respect to such common shares and, if not
disallowed, such losses will be treated as long-term capital losses to the
extent of any capital gain dividends received with respect to such common
shares.

      In order to avoid a 4% Federal excise tax, the Trust must distribute
or be deemed to have distributed by December 31 of each calendar year at
least 98% of its taxable ordinary income for such year, at least 98% of the
excess of its realized capital gains over its realized capital losses
(generally computed on the basis of the one-year period ending on October
31 of such year) and 100% of any taxable ordinary income and any excess of
realized capital gains over realized capital losses for the prior year that
was not distributed during such year and on which the Trust paid no Federal
income tax. For purposes of the excise tax, a regulated investment company
may reduce its capital gain net income (but not below its net capital gain)
by the amount of any net ordinary loss for the calendar year. The Trust
intends to make timely distributions in compliance with these requirements
and consequently it is anticipated that it generally will not be required
to pay the excise tax.

      If in any year the Trust should fail to qualify under Subchapter M
for tax treatment as a regulated investment company, the Trust would incur
a regular corporate Federal income tax upon its income for that year, and
distributions to its shareholders would be taxable to shareholders as
ordinary dividend income for Federal income tax purposes to the extent of
the Trust's earnings and profits.

      The Trust is required in certain circumstances to withhold 31% of
taxable dividends and certain other payments paid to non-corporate
shareholders who have not furnished to the Trust their correct taxpayer
identification number (in the case of individuals, their Social Security
number) and certain certifications, or who are otherwise subject to backup
withholding.

      The foregoing is a general and abbreviated summary of the provisions
of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations presently in effect as they directly govern the taxation of the
Trust and its shareholders. For complete provisions, reference should be
made to the pertinent Code sections and Treasury Regulations. The Code and
the Treasury Regulations are subject to change by legislative or
administrative action, and any such change may be retroactive with respect
to Trust transactions. Holders of common shares are advised to consult
their own tax advisers for more detailed information concerning the Federal
taxation of the Trust and the income tax consequences to its holders of
common shares.

     See Appendix B for additional information on California taxation.


              PERFORMANCE RELATED AND COMPARATIVE INFORMATION

      California municipal bonds can provide double tax-free income (exempt
from both regular Federal and state income taxes) for investors who are
residents of California for tax purposes. Because the Trust expects that a
substantial portion of its investments will pay interest that is taxable
under the Federal alternative minimum tax, the Trust may not be a suitable
investment for shareholders that are subject to the Federal alternative
minimum tax.

      The Trust may quote certain performance-related information and may
compare certain aspects of its portfolio and structure to other
substantially similar closed-end funds as categorized by Lipper, Inc.
("Lipper"), Morningstar Inc. or other independent services. Comparison of
the Trust to an alternative investment should be made with consideration of
differences in features and expected performance. The Trust may obtain data
from sources or reporting services, such as Bloomberg Financial
("Bloomberg") and Lipper, that the Trust believes to be generally accurate.

      Past performance is not indicative of future results. At the time
common shareholders sell their shares, they may be worth more or less than
their original investment.


                                  EXPERTS

      The Statement of Net Assets of the Trust as of May   , 2001 appearing
in this statement of additional information has been audited by    ,
independent auditors, as set forth in their report thereon appearing
elsewhere herein, and is included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing, located
at   , provides accounting and auditing services to the Trust.

                           ADDITIONAL INFORMATION

      A Registration Statement on Form N-2, including amendments thereto,
relating to the shares offered hereby, has been filed by the Trust with the
Securities and Exchange Commission (the "Commission"), Washington, D.C. The
prospectus and this statement of additional information do not contain all
of the information set forth in the Registration Statement, including any
exhibits and schedules thereto. For further information with respect to the
Trust and the shares offered hereby, reference is made to the Registration
Statement. Statements contained in the prospectus and this statement of
additional information as to the contents of any contract or other document
referred to are not necessarily complete and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference. A copy of the Registration Statement may be
inspected without charge at the Commission's principal office in
Washington, D.C., and copies of all or any part thereof may be obtained
from the Commission upon the payment of certain fees prescribed by the
Commission.

                       REPORT OF INDEPENDENT AUDITORS

The Board of Trustees of BlackRock California Municipal Income Trust

      We have audited the accompanying statement of net assets of BlackRock
California Municipal Income Trust (the "Trust") as of , 2001. This
statement of net assets is the responsibility of the Trust's management.
Our responsibility is to express an opinion on this statement of net assets
based on our audit.

      We conducted our audit in accordance with generally accepted
accounting standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the statement of net
assets is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statement of net assets. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of net assets presentation. We believe
that our audit provides a reasonable basis for our opinion.

      In our opinion, the statement of net assets referred to above
presents fairly, in all material respects, the financial position of the
Trust at , 2001, in conformity with generally accepted accounting
principles.


                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST

                          STATEMENT OF NET ASSETS
                                   , 2001


ASSETS:
      Cash........................................................$100,000
                                                                  --------

NET ASSETS........................................................$100,000
                                                                  --------

NET ASSETS REPRESENTS:
 Cumulative Preferred Shares, $.001 par value; unlimited number of
   shares authorized, no shares outstanding.......................
 Common Shares, $.001 par value; unlimited number of shares
   authorized,shares outstanding..................................
 Paid-in surplus..................................................
                                                                  --------
                                                                  $100,000

Net asset value per Common Share outstanding ($100,000 divided
by __________ Common Shares outstanding)..........................$

NOTES

                                 APPENDIX A

RATINGS OF INVESTMENTS

      Standard & Poor's Corporation--A brief description of the applicable
Standard & Poor's Corporation ("S&P") rating symbols and their meanings (as
published by S&P) follows:

Long Term Debt

      An S&P corporate or municipal debt rating is a current assessment of
the creditworthiness of an obligor with respect to a specific obligation.
This assessment may take into consideration obligors such as guarantors,
insurers, or lessees.

      The debt rating is not a recommendation to purchase, sell, or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.

      The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any rating and may, on occasion, rely
on unaudited financial information. The ratings may be changed, suspended,
or withdrawn as a result of changes in, or unavailability of, such
information, or based on other circumstances.

      The ratings are based, in varying degrees, on the following
considerations:

      1.    Likelihood of default--capacity and willingness of the obligor
            as to the timely payment of interest and repayment of principal
            in accordance with the terms of the obligation;

      2.    Nature of and provisions of the obligation;

      3.    Protection afforded by, and relative position of, the
            obligation in the event of bankruptcy, reorganization, or other
            arrangement under the laws of bankruptcy and other laws
            affecting creditors' rights.

Investment Grade

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA    Debt rated "AA" has a very strong capacity to pay interest and repay
      principal and differs from the highest rated issues only in small
      degree.

A     Debt rated "A" has a strong capacity to pay interest and repay
      principal although it is somewhat more susceptible to the adverse
      effects of changes in circumstances and economic conditions than debt
      in higher rated categories.

BBB   Debt rated "BBB" is regarded as having an adequate capacity to pay
      interest and repay principal. Whereas it normally exhibits adequate
      protection parameters, adverse economic conditions or changing
      circumstances are more likely to lead to a weakened capacity to pay
      interest and repay principal for debt in this category than in higher
      rated categories.

Speculative Grade Rating

Debt rated "BB", "B", "CCC", "CC" and "C" is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest. While such debt will likely have some
quality and protective characteristics these are outweighed by major
uncertainties or major exposures to adverse conditions.

BB    Debt rated "BB" has less near-term vulnerability to default than
      other speculative issues. However, it faces major ongoing
      uncertainties or exposure to adverse business, financial, or economic
      conditions which could lead to inadequate capacity to
      meet timely interest and principal payments. The "BB" rating category
      is also used for debt subordinated to senior debt that is assigned an
      actual or implied "BBB--" rating.

B     Debt rated "B" has a greater vulnerability to default but currently
      has the capacity to meet interest payments and principal repayments.
      Adverse business, financial, or economic conditions will likely
      impair capacity or willingness to pay interest and repay principal.
      The "B" rating category is also used for debt subordinated to senior
      debt that is assigned an actual or implied "BB" or "BB--" rating.

CCC   Debt rated "CCC" has a currently identifiable vulnerability to
      default, and is dependent upon favorable business, financial, and
      economic conditions to meet timely payment of interest and repayment
      of principal. In the event of adverse business, financial, or
      economic conditions, it is not likely to have the capacity to pay
      interest and repay principal.

      The "CCC" rating category is also used for debt subordinated to
      senior debt that is assigned an actual or implied "B" or "B--"
      rating.

CC    The rating "CC" typically is applied to debt subordinated to senior
      debt that is assigned an actual or implied "CCC" debt rating.

C     The rating "C" typically is applied to debt subordinated to senior
      debt which is assigned an actual or implied "CCC--" debt rating. The
      "C" rating may be used to cover a situation where a bankruptcy
      petition has been filed, but debt service payments are continued.

CI    The rating "CI" is reserved for income bonds on which no interest is
      being paid.

D     Debt rated "D" is in payment default. The "D" rating category is used
      when interest payments or principal payments are not made on the date
      due even if the applicable grace period has not expired, unless S&P
      believes that such payments will be made during such grace period.
      The "D" rating also will be used upon the filing of a bankruptcy
      petition if debt service payments are jeopardized.

Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.

Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project financed by the debt being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon failure of, such
completion. The investor should exercise judgment with respect to such
likelihood and risk.

L     The letter "L" indicates that the rating pertains to the principal
      amount of those bonds to the extent that the underlying deposit
      collateral is Federally insured by the Federal Savings & Loan
      Insurance Corp. or the Federal Deposit Insurance Corp.* and interest
      is adequately collateralized. In the case of certificates of deposit
      the letter "L" indicates that the deposit, combined with other
      deposits being held in the same right and capacity will be honored
      for principal and accrued pre-default interest up to the Federal
      insurance limits within 30 days after closing of the insured
      institution or, in the event that the deposit is assumed by a
      successor insured institution, upon maturity.

*     Continuance of the rating is contingent upon S&P's receipt of an
      executed copy f the escrow agreement or closing documentation
      confirming investments and cash flow.

NR    Indicates no rating has been requested, that there is insufficient
      information on which to base a rating, or that S&P does not rate a
      particular type of obligation as a matter of policy.

Municipal Notes

An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note
rating. Notes maturing beyond 3 years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:

      --    Amortization schedule (the larger the final maturity relative
            to other maturities, the more likely it will be treated as a
            note).

      --    Source of payment (the more dependent the issue is on the
            market for its refinancing, the more likely it will be treated
            as a note).

Note rating symbols are as follows:

SP-1  Very strong or strong capacity to pay principal and interest. Those
      issues determined to possess overwhelming safety characteristics will
      be given a plus (+) designation.

SP-2 Satisfactory capacity to pay principal and interest.

SP-3 Speculative capacity to pay principal and interest.

A note rating is not a recommendation to purchase, sell, or hold a security
inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished
to S&P by the issuer or obtained by S&P from other sources it considers
reliable. S&P does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may
be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information or based on other circumstances.

Commercial Paper

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365
days.

Ratings are graded into several categories, ranging from "A-1" for the
highest quality obligations to "D" for the lowest. These categories are as
follows:

A-1   This highest category indicates that the degree of safety regarding
      timely payment is strong. Those issues determined to possess
      extremely strong safety characteristics are denoted with a plus sign
      (+) designation.

A-2   Capacity for timely payment on issues with this designation is
      satisfactory. However, the relative degree of safety is not as high
      as for issues designated "A-1."

A-3   Issues carrying this designation have adequate capacity for timely
      payment. They are, however, somewhat more vulnerable to the adverse
      effects of changes in circumstances than obligations carrying the
      higher designations.

B Issues rated "B" are regarded as having only speculative capacity for
timely payment.

C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D     Debt rated "D" is in payment default. The "D" rating category is used
      when interest payments or principal payments are not made on the date
      due, even if the applicable grace period has not expired, unless S&P
      believes that such payments will be made during such grace period.

A commercial rating is not a recommendation to purchase, sell, or hold a
security inasmuch as it does not comment as to market price or suitability
for a particular investor. The ratings are based on current information
furnished to S&P by the issuer or obtained by S&P from other sources it
considers reliable. S&P does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended, or withdrawn as a result of changes in
or unavailability of such information or based on other circumstances.

      Moody's Investors Service, Inc.--A brief description of the
applicable Moody's Investors Service, Inc. ("Moody's") rating symbols and
their meanings (as published by Moody's) follows:

Municipal Bonds

Aaa   Bonds which are rated Aaa are judged to be of the best quality. They
      carry the smallest degree of investment risk and are generally
      referred to as "gilt edge." Interest payments are protected by a
      large or by an exceptionally stable margin and principal is secure.
      While the various protective elements are likely to change, such
      changes as can be visualized are most unlikely to impair the
      fundamentally strong position of such issues.

Aa    Bonds which are rated Aa are judged to be of high quality by all
      standards. Together with the Aaa group they comprise what are
      generally known as high grade bonds. They are rated lower than the
      best bonds because margins of protection may not be as large as in
      Aaa securities or fluctuation of protective elements may be of
      greater amplitude or there may be other elements present which make
      the long-term risks appear somewhat larger than in Aaa securities.

A     Bonds which are rated A possess many favorable investment attributes
      and are to be considered as upper medium grade obligations. Factors
      giving security to principal and interest are considered adequate,
      but elements may be present which suggest a susceptibility to
      impairment sometime in the future.

Baa   Bonds which are rated Baa are considered as medium grade obligations,
      i.e., they are neither highly protected nor poorly secured. Interest
      payments and principal security appear adequate for the present but
      certain protective elements may be lacking or may be
      characteristically unreliable over any great length of time. Such
      bonds lack outstanding investment characteristics and in fact have
      speculative characteristics as well.

Ba    Bonds which are rated Ba are judged to have speculative elements;
      their future cannot be considered as well assured. Often the
      protection of interest and principal payments may be very moderate
      and thereby not well safeguarded during both good and bad times over
      the future. Uncertainty of position characterizes bonds in this
      class.

B     Bonds which are rated B generally lack characteristics of the
      desirable investment. Assurance of interest and principal payments or
      of maintenance of other terms of the contract over any long period of
      time may be small.

Caa   Bonds which are rated Caa are of poor standing. Such issues may be in
      default or there may be present elements of danger with respect to
      principal or interest.

Ca    Bonds which are rated Ca represent obligations which are speculative
      in a high degree. Such issues are often in default or have other
      marked shortcomings.

C     Bonds which are rated C are the lowest rated class of bonds, and
      issues so rated can be regarded as having extremely poor prospects of
      ever attaining any real investment standing.

Con(...)    Bonds for which the security depends upon the completion of
            some act or the fulfillment of some condition are rated
            conditionally. These are bonds secured by (a) earnings of
            projects under construction, (b) earnings of projects
            unseasoned in operation experience, (c) rentals which begin
            when facilities are completed, or (d) payments to which some
            other limiting condition attaches. Parenthetical rating denotes
            probable credit stature upon completion of construction or
            elimination of basis of condition.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
      category from Aa to B in the public finance sectors. The modifier 1
      indicates that the issuer is in the higher end of its letter rating
      category; the modifier 2 indicates a mid-range ranking; the modifier
      3 indicates that the issuer is in the lower end of the letter ranking
      category.


Short-Term Loans

MIG         1/VMIG 1This designation denotes best quality. There is present
            strong protection by established cash flows, superior liquidity
            support or demonstrated broadbased access to the market for
            refinancing.

MIG         2/VMIG 2This designation denotes high quality. Margins of
            protection are ample although not so large as in the preceding
            group.

MIG         3/VMIG 3This designation denotes favorable quality. All
            security elements are accounted for but there is lacking the
            undeniable strength of the preceding grades. Liquidity and cash
            flow protection may be narrow and market access for refinancing
            is likely to be less well-established.

MIG         4/VMIG 4This designation denotes adequate quality. Protection
            commonly regarded as required of an investment security is
            present and although not distinctly or predominantly
            speculative, there is specific risk.

S.G.        This designation denotes speculative quality. Debt instruments
            in this category lack margins of protection.

Commercial Paper

Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:

      -- Leading market positions in well-established industries.

      -- High rates of return on funds employed.

      -- Conservative capitalization structures with moderate reliance on
         debt and ample asset protection.

      -- Broad margins in earnings coverage of fixed financial charges and
         high internal cash generation.

      -- Well-established access to a range of financial markets and
         assured sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirement for
relatively high financial leverage. Adequate alternate liquidity is
maintained.

Issuers rated Not Prime do not fall within any of the Prime rating
categories.

      Fitch IBCA, Inc.--A brief description of the applicable Fitch IBCA,
Inc. ("Fitch") ratings symbols and meanings (as published by Fitch)
follows:

Long-Term Credit Ratings

Investment Grade

AAA   Highest credit quality. 'AAA' ratings denote the lowest expectation
      of credit risk. They are assigned only in case of exceptionally
      strong capacity for timely payment of financial commitments. This
      capacity is highly unlikely to be adversely affected by foreseeable
      events.

AA    Very high credit quality. 'AA' ratings denote a very low expectation
      of credit risk. They indicate very strong capacity for timely payment
      of financial commitments. This capacity is not significantly
      vulnerable to foreseeable events.

A     High credit quality. 'A' ratings denote a low expectation of credit
      risk. The capacity for timely payment of financial commitments is
      considered strong. This capacity may, nevertheless, be more
      vulnerable to changes in circumstances or in economic conditions than
      is the case for higher ratings.

BBB   Good credit quality. 'BBB' ratings indicate that there is currently a
      low expectation of credit risk. The capacity for timely payment of
      financial commitments is considered adequate, but adverse changes in
      circumstances and in economic conditions are more likely to impair
      this capacity. This is the lowest investment-grade category.


Speculative Grade

BB                Speculative. 'BB' ratings indicate that there is a
                  possibility of credit risk developing, particularly as
                  the result of adverse economic change over time; however,
                  business or financial alternatives may be available to
                  allow financial commitments to be met. Securities rated
                  in this category are not investment grade.

B                 Highly speculative. 'B' ratings indicate that significant
                  credit risk is present, but a limited margin of safety
                  remains. Financial commitments are currently being met;
                  however, capacity for continued payment is contingent
                  upon a sustained, favorable business and economic
                  environment.

CCC,              CC, C High default risk. Default is a real possibility.
                  Capacity for meeting financial commitments is solely
                  reliant upon sustained, favorable business or economic
                  developments. A 'CC' rating indicates that default of
                  some kind appears probable. 'C' ratings signal imminent
                  default.

DDD,              DD, and D Default. The ratings of obligations in this
                  category are based on their prospects for achieving
                  partial or full recovery in a reorganization or
                  liquidation of the obligor. While expected recovery
                  values are highly speculative and cannot be estimated
                  with any precision, the following serve as general
                  guidelines. 'DDD' obligations have the highest potential
                  for recovery, around 90%-100% of outstanding amounts and
                  accrued interest. 'DD' indicates potential recoveries in
                  the range of 50%-90%, and 'D' the lowest recovery
                  potential, i.e., below 50%.

                  Entities rated in this category have defaulted on some or
                  all of their obligations. Entities rated 'DDD' have the
                  highest prospect for resumption of performance or
                  continued operation with or without a formal
                  reorganization process. Entities rated 'DD' and 'D' are
                  generally undergoing a formal reorganization or
                  liquidation process; those rated 'DD' are likely to
                  satisfy a higher portion of their outstanding
                  obligations, while entities rated 'D' have a poor
                  prospect for repaying all obligations.

Short-Term Credit Ratings

A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and
thus places greater emphasis on the liquidity necessary to meet financial
commitments in a timely manner.

F1    Highest credit quality. Indicates the strongest capacity for timely
      payment of financial commitments; may have an added "+" to denote any
      exceptionally strong credit feature.

F2    Good credit quality. A satisfactory capacity for timely payment of
      financial commitments, but the margin of safety is not as great as in
      the case of the higher ratings.

F3    Fair credit quality. The capacity for timely payment of financial
      commitments is adequate; however, near-term adverse changes could
      result in a reduction to non-investment grade.

B     Speculative. Minimal capacity for timely payment of financial
      commitments, plus vulnerability to near-term adverse changes in
      financial and economic conditions.

C     High default risk. Default is a real possibility. Capacity for
      meeting financial commitments is solely reliant upon a sustained,
      favorable business and economic environment.

D     Default.  Denotes actual or imminent payment default.

Notes:

"+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the 'AAA' long-term
rating category, to categories below 'CCC', or to short-term ratings other
than 'F1'.

'NR' indicates that Fitch IBCA does not rate the issuer or issue in
question.

'Withdrawn': A rating is withdrawn when Fitch IBCA deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.

Rating alert: Ratings are placed on Rating alert to notify investors that
there is a reasonable probability of a rating change and the likely
direction of such change. These are designated as "Positive", indicating a
potential upgrade, "Negative", for a potential downgrade, or "Evolving", if
ratings may be raised, lowered or maintained. Rating alert is typically
resolved over a relatively short period.


                                 APPENDIX B

                       TAXABLE EQUIVALENT YIELD TABLE

The taxable equivalent yield is the current yield you would need to earn on
a taxable investment in order to equal a stated tax-free yield on a
municipal investment. To assist you to more easily compare municipal
investments like the Trust with taxable alternative investments, the table
below presents the taxable equivalent yields for a range of hypothetical
tax-free yields and tax rates:

<TABLE>
<CAPTION>

                                      CALIFORNIA

                              FEDERAL
SINGLE RETURN                  TAX    STATE TAX COMBINED TAX
6.50%           JOINT RETURN  BRACKET  BRACKET*    BRACKET*   4.00%  4.50% 5.00% 5.50% 6.00%
 ............    ............. .......  ......... ............ .....  ....  ....   .....  .....

<S><C>  <C>     <C> <C>      <C>         <C>       <C>        <C>    <C>   <C>   <C>   <C>
$  0-27,050     $ 0-45,200   15.00% 00   6.00%     020.10%    5.01%  5.63% 6.26% 6.88% 7.51%
   8.14%

27,050-65,550   45,200-109,25028.00%     9.30%      34.70%    6.13%  6.89% 7.66% 8.42% 9.19%
9.95%

65,550-136,750  109,250-166-5031.00%     9.30%      37.40%    6.39%  7.19% 7.99% 8.79% 9.58%
10.38%

136,750-297,350 166,500-297,3536.00%     9.30%      42.00%    6.90%  7.75% 8.62% 9.48% 10.34%
11.21%

Over 297,350    Over 297,350  39.60%     9.30%      45.20%    7.30%  8.21% 9.12% 10.04%10.95%
11.86%

</TABLE>


SINGLE RETURN      7.00%     7.50%     8.00%    8.50%     9.00%
 ...............   .......   .......   .......  ........   ......
$  0-27,050        8.76%     9.39%    10.01%    10.64%    11.26%
27,050-65,550     10.72%    11.49%    12.25%    13.02%    13.78%
65,550-136,750    11.18%    11.98%    12.78%    13.58%    14.38%
136,750-297,350   12.07%    12.93%    13.79%    14.66%    15.52%
Over 297,350      12.77%    13.69%    14.60%    15.51%    16.42%



 ............... . .......

*The State tax brackets are those for 2000. The 2001 brackets will be
adjusted to take into account changes in the California Consumer Price
Index. These adjustments have not yet been released. Please note that the
table does not reflect (i) any Federal or state limitations on the amounts
of allowable itemized deductions, phase-outs of personal or dependent
exemption credits or other allowable credits, (ii) any local taxes imposed,
or (iii) any taxes other than personal income taxes. The table assumes that
Federal taxable income is equal to state income subject to tax, and in
cases where more than one state rate falls within a Federal bracket, the
highest state rate corresponding to the highest income within that Federal
bracket is used.



                                 APPENDIX C

                     GENERAL CHARACTERISTICS AND RISKS
                          OF HEDGING TRANSACTIONS

      In order to manage the risk of its securities portfolio, including
management, or to enhance income or gain as described in the prospectus,
the Trust will engage in Additional Investment Management Techniques. The
Trust will engage in such activities in the Adviser's discretion, and may
not necessarily be engaging in such activities when movements in interest
rates that could affect the value of the assets of the Trust occur. The
Trust's ability to pursue certain of these strategies may be limited by
applicable regulations of the CFTC. Certain Additional Investment
Management Techniques may give rise to taxable income.

PUT AND CALL OPTIONS ON SECURITIES AND INDICES

      The Trust may purchase and sell put and call options on securities
and indices. A put option gives the purchaser of the option the right to
sell and the writer the obligation to buy the underlying security at the
exercise price during the option period. The Trust may also purchase and
sell options on bond indices ("index options"). Index options are similar
to options on securities except that, rather than taking or making delivery
of securities underlying the option at a specified price upon exercise, an
index option gives the holder the right to receive cash upon exercise of
the option if the level of the bond index upon which the option is based is
greater, in the case of a call, or less, in the case of a put, than the
exercise price of the option. The purchase of a put option on a debt
security could protect the Trust's holdings in a security or a number of
securities against a substantial decline in the market value. A call option
gives the purchaser of the option the right to buy and the seller the
obligation to sell the underlying security or index at the exercise price
during the option period or for a specified period prior to a fixed date.
The purchase of a call option on a security could protect the Trust against
an increase in the price of a security that it intended to purchase in the
future. In the case of either put or call options that it has purchased, if
the option expires without being sold or exercised, the Trust will
experience a loss in the amount of the option premium plus any related
commissions. When the Trust sells put and call options, it receives a
premium as the seller of the option. The premium that the Trust receives
for selling the option will serve as a partial hedge, in the amount of the
option premium, against changes in the value of the securities in its
portfolio. During the term of the option, however, a covered call seller
has, in return for the premium on the option, given up the opportunity for
capital appreciation above the exercise price of the option if the value of
the underlying security increases, but has retained the risk of loss should
the price of the underlying security decline. Conversely, a secured put
seller retains the risk of loss should the market value of the underlying
security decline below the exercise price of the option, less the premium
received on the sale of the option. The Trust is authorized to purchase and
sell exchange listed options and over-the-counter options ("OTC Options")
which are privately negotiated with the counterparty. Listed options are
issued by the Options Clearing Corporation ("OCC") which guarantees the
performance of the obligations of the parties to such options.

      The Trust's ability to close out its position as a purchaser or
seller of an exchange-listed put or call option is dependent upon the
existence of a liquid secondary market on option exchanges. Among the
possible reasons for the absence of a liquid secondary market on an
exchange are: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities; (iv) interruption of
the normal operations on an exchange; (v) inadequacy of the facilities of
an exchange or OCC to handle current trading volume; or (vi) a decision by
one or more exchanges to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market
on that exchange (or in that class or series of options) would cease to
exist, although outstanding options on that exchange that had been listed
by the OCC as a result of trades on that exchange would generally continue
to be exercisable in accordance with their terms. OTC options are purchased
from or sold to dealers, financial institutions or other counterparties
which have entered into direct agreements with the Trust. With OTC Options,
such variables as expiration date, exercise price and premium will be
agreed upon between the Trust and the counterparty, without the
intermediation of a third party such as the OCC. If the counterparty fails
to make or take delivery of the securities underlying an option it has
written, or otherwise settle the transaction in accordance with the terms
of that option as written, the Trust would lose the premium paid for the
option as well as any anticipated benefit of the transaction. As the Trust
must rely on the credit quality of the counterparty rather than the
guarantee of the OCC, it will only enter into OTC options with
counterparties with the highest long- term credit ratings, and with primary
United States government securities dealers recognized by the Federal
Reserve Bank of New York.

      The hours of trading for options on debt securities may not conform
to the hours during which the underlying securities are traded. To the
extent that the option markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

FUTURES CONTRACTS AND RELATED OPTIONS

      Characteristics. The Trust may sell financial futures contracts or
purchase put and call options on such futures as a hedge against
anticipated interest rate changes or other market movements. The sale of a
futures contract creates an obligation by the Trust, as seller, to deliver
the specific type of financial instrument called for in the contract at a
specified future time for a specified price. Options on futures contracts
are similar to options on securities except that an option on a futures
contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract (a long position if the option is a
call and a short position if the option is a put).

      Margin Requirements. At the time a futures contract is purchased or
sold, the Trust must allocate cash or securities as a deposit payment
("initial margin"). It is expected that the initial margin that the Trust
will pay may range from approximately 1% to approximately 5% of the value
of the securities or commodities underlying the contract. In certain
circumstances, however, such as periods of high volatility, the Trust may
be required by an exchange to increase the level of its initial margin
payment. Additionally, initial margin requirements may be increased
generally in the future by regulatory action. An outstanding futures
contract is valued daily and the payment in case of "variation margin" may
be required, a process known as "marking to the market." Transactions in
listed options and futures are usually settled by entering into an
offsetting transaction, and are subject to the risk that the position may
not be able to be closed if no offsetting transaction can be arranged.

      Limitations on Use of Futures and Options on Futures. The Trust's use
of futures and options on futures will in all cases be consistent with
applicable regulatory requirements and in particular the rules and
regulations of the CFTC. Under such regulations the Trust currently may
enter into such transactions without limit for bona fide hedging purposes,
including risk management and duration management and other portfolio
strategies. The Trust may also engage in transactions in futures contracts
or related options for non-hedging purposes to enhance income or gain
provided that the Trust will not enter into a futures contract or related
option (except for closing transactions) for purposes other than bona fide
hedging, or risk management including duration management if, immediately
thereafter, the sum of the amount of its initial deposits and premiums on
open contracts and options would exceed 5% of the Trust's liquidation
value, i.e., net assets (taken at current value); provided, however, that
in the case of an option that is in-the- money at the time of the purchase,
the in-the-money amount may be excluded in calculating the 5% limitation.
Also, when required, a segregated account of cash equivalents will be
maintained and marked to market on a daily basis in an amount equal to the
market value of the contract. The Trust reserves the right to comply with
such different standard as may be established from time to time by CFTC
rules and regulations with respect to the purchase or sale of futures
contracts or options thereon.

      Segregation and Cover Requirements. Futures contracts, interest rate
swaps, caps, floors and collars, short sales, reverse repurchase agreements
and dollar rolls, and listed or OTC options on securities, indices and
futures contracts sold by the Trust are generally subject to segregation
and coverage requirements of either the CFTC or the SEC, with the result
that, if the Trust does not hold the security or futures contract
underlying the instrument, the Trust will be required to segregate on an
ongoing basis with its custodian, cash, U.S. government securities, or
other liquid high grade debt obligations in an amount at least equal to the
Trust's obligations with respect to such instruments. Such amounts
fluctuate as the obligations increase or decrease. The segregation
requirement can result in the Trust maintaining securities positions it
would otherwise liquidate, segregating assets at a time when it might be
disadvantageous to do so or otherwise restrict portfolio management.

      Additional Investment Management Techniques present certain risks.
With respect to hedging and risk management, the variable degree of
correlation between price movements of hedging instruments and price
movements in the position being hedged creates the possibility that losses
on the hedge may be greater than gains in the value of the Trust's
position. The same is true for such instruments entered into for income or
gain. In addition, certain instruments and markets may not be liquid in all
circumstances. As a result, in volatile markets, the Trust may not be able
to close out a transaction without incurring losses substantially greater
than the initial deposit. Although the contemplated use of these
instruments predominantly for hedging should tend to minimize the risk of
loss due to a decline in the value of the position, at the same time they
tend to limit any potential gain which might result from an increase in the
value of such position. The ability of the Trust to successfully utilize
Additional Investment Management Techniques will depend on the Adviser's
ability to predict pertinent market movements and sufficient correlations,
which cannot be assured. Finally, the daily deposit requirements in futures
contracts that the Trust has sold create an ongoing greater potential
financial risk than do options transactions, where the exposure is limited
to the cost of the initial premium. Losses due to the use of Additional
Investment Management Techniques will reduce net asset value.



PART C

OTHER INFORMATION
Item 24.  Financial Statements and Exhibits

(1)   Financial Statements
      Part A - Report of Independent Accountants.**
      Statement of Assets and Liabilities.**

      Part B - None.

(2)   Exhibits

      (a)        Agreement and Declaration of Trust.*
      (b)        By-Laws.*
      (c)        Inapplicable.
      (d)        Form of Specimen Certificate.**
      (e)        Form of Dividend Reinvestment Plan.*
      (f)        Inapplicable.
      (g)        Form of Investment Management Agreement.*
      (h)        Form of Purchase Agreement.**
      (i)        Form of Deferred Compensation Plan for Independent Trustees.**
      (j)        Form of Custodian Agreement.*
      (k)(1)     Form of Expense Reimbursement Agreement.*
      (k)(2)     Form of Transfer Agency Agreement.**
      (l)        Opinion and Consent of Counsel to the Trust.**
      (m)        Inapplicable.
      (n)        Consent of Independent Public Accountants.**
      (o)        Inapplicable.
      (p)        Form of Initial Subscription Agreement.*
      (q)        Inapplicable.
      (r)(1)     Code of Ethics of Trust.*
      (r)(2)     Code of Ethics of Adviser.*

- -----------

*   Filed herewith.
**   To be filed by amendment.

Item 25.  Marketing Arrangements

      Reference is made to the Form of Purchase Agreement for the
Registrant's shares of beneficial interest to be filed by amendment to this
registration statement.

Item 26.  Other Expenses of Issuance and Distribution

      The following table sets forth the estimated expenses to be incurred
in connection with the offering described in this registration statement:

      Registration fees...........................................   $  *
      New York Stock Exchange listing fee.........................      *
      Printing (other than certificates)..........................      *
      Engraving and printing certificates.........................      *
      Fees and expenses of qualification under
        state securities laws (excluding fees
        of counsel)...............................................      *
      Accounting fees and expenses................................      *
      Legal fees and expenses.....................................      *
      NASD fee....................................................      *
      Miscellaneous...............................................      *

            Total.................................................   $  *


*     To be furnished by amendment.

Item 27.  Persons Controlled by or under Common Control with the Registrant

      Prior to March 30, 2001 the Registrant had no existence.

Item 28.  Number of Holders of Shares

                                                         Number of
Title of class                                        Record Holders

Shares of Beneficial Interest                                0

Item 29.  Indemnification

Article V of the Registrant's Agreement and Declaration of Trust provides
as follows:

      Section 5.1. No Shareholder of the Trust shall be subject in such
capacity to any personal liability whatsoever to any Person in connection
with Trust property or the acts, obligations or affairs of the Trust.
Shareholders shall have the same limitation of personal liability as is
extended to stockholders of a private corporation for profit incorporated
under the general corporation law of the State of Delaware. No Trustee or
officer of the Trust shall be subject in such capacity to any personal
liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the
Trust, save only liability to the Trust or its Shareholders arising from
bad faith, willful misfeasance, gross negligence (negligence in the case of
those Trustees or officers who are directors, officers or employees of the
Trust's investment advisor ("Affiliated Indemnitees")) or reckless
disregard for his duty to such person; and, subject to the foregoing
exception, all such persons shall look solely to the Trust property for
satisfaction of claims of any nature arising in connection with the affairs
of the Trust. If any shareholder, trustee or officer, as such, of the
Trust, is made a party to any suit or proceeding to enforce any such
liability, subject to the foregoing exception, he shall not, on account
thereof, be held to any personal liability.

      Section 5.2. a. The Trust hereby agrees to indemnify the Trustees and
officers of the Trust (each such person being an "indemnitee") against any
liabilities and expenses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable counsel
fees reasonably incurred by such indemnitee in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative body in which
he may be or may have been involved as a party or otherwise or with which
he may be or may have been threatened, while acting in any capacity set
forth above in this Section 5.2 by reason of his having acted in any such
capacity, except with respect to any matter as to which he shall not have
acted in good faith in the reasonable belief that his action was in the
best interest of the Trust or, in the case of any criminal proceeding, as
to which he shall have had reasonable cause to believe that the conduct was
unlawful, provided, however, that no indemnitee shall be indemnified
hereunder against any liability to any person or any expense of such
indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith,
(iii) gross negligence (negligence in the case of Affiliated Indemnitees),
or (iv) reckless disregard of the duties involved in the conduct of his
position (the conduct referred to in such clauses (i) through (iv) being
sometimes referred to herein as "disabling conduct"). Notwithstanding the
foregoing, with respect to any action, suit or other proceeding voluntarily
prosecuted by any indemnitee as plaintiff, indemnification shall be
mandatory only if the prosecution of such action, suit or other proceeding
by such indemnitee was authorized by a majority of the Trustees.

                  b. Notwithstanding the foregoing, no indemnification
shall be made hereunder unless there has been a determination (i) by a
final decision on the merits by a court or other body of competent
jurisdiction before whom the issue of entitlement to indemnification
hereunder was brought that such indemnitee is entitled to indemnification
hereunder or, (ii) in the absence of such a decision, by (1) a majority
vote of a quorum of those trustees who are neither "interested persons" of
the (as defined in Section 2(a)(19) of the Investment Company Act) nor
parties to the proceeding ("Disinterested Non-Party Trustees"), that the
indemnitee is entitled to indemnification hereunder, or (2) if such quorum
is not obtainable or even if obtainable, if such majority so directs,
independent legal counsel in a written opinion conclude that the indemnitee
should be entitled to indemnification hereunder. All determinations to make
advance payments in connection with the expense of defending any proceeding
shall be authorized and made in accordance with the immediately succeeding
paragraph (c) below.

                  c. The Trust shall make advance payments in connection
with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Trust receives a written
affirmation by the indemnitee of the indemnitee's good faith belief that
the standards of conduct necessary for indemnification have been met and a
written undertaking to reimburse the Trust unless it is subsequently
determined that he is entitled to such indemnification and if a majority of
the Trustees determine that the applicable standards of conduct necessary
for indemnification appear to have been met. In addition, at least one of
the following conditions must be met: (i) the indemnitee shall provide
adequate security for his undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the Disinterested Non-Party Trustees, or if a
majority vote of such quorum so direct, independent legal counsel in a
written opinion, shall conclude, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is substantial
reason to believe that the indemnitee ultimately will be found entitled to
indemnification.

                  d. The rights accruing to any indemnitee under these
provisions shall not exclude any other right to which he may be lawfully
entitled.

                  e. Subject to any limitations provided by the Investment
Company Act and this Declaration, the Trust shall have the power and
authority to indemnify other Persons providing services to the Trust to the
full extent provided by law as if the Trust were a corporation organized
under the Delaware General Corporation Law provided that such
indemnification has been approved by a majority of the Trustees.

      Insofar as indemnification for liabilities arising under the Act, may
be permitted to Trustees, officers and controlling persons of the Trust,
pursuant to the foregoing provisions or otherwise, the Trust has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue. Reference is made to Article of the
underwriting agreement attached as Exhibit , which is incorporated herein
by reference.

Item 30.  Business and Other Connections of Investment Adviser

                  Not Applicable

Item 31.  Location of Accounts and Records

      The Registrant's accounts, books and other documents are currently
located at the offices of the Registrant, c/o BlackRock Advisors, Inc., 100
Bellevue Parkway, Wilmington, Delaware 19809, and at the offices of State
Street Bank and Trust Company, the Registrant's Custodian, Transfer Agent
and Dividend Disbursing Agent.

Item 32.  Management Services

                  Not Applicable

Item 33.  Undertakings

      (1) The Registrant hereby undertakes to suspend the offering of its
units until it amends its prospectus if (a) subsequent to the effective
date of its registration statement, the net asset value declines more than
10 percent from its net asset value as of the effective date of the
Registration Statement or (b) the net asset value increases to an amount
greater than its net proceeds as stated in the prospectus.

      (2) The Registrant hereby undertakes that (i) for the purpose of
determining any liability under the 1933 Act, the information omitted from
the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant under Rule 497(h) under the 1933 Act shall be deemed to be part
of this registration statement as of the time it was declared effective;
(ii) for the purpose of determining any liability under the 1933 Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed to
be the initial bona fide offering thereof.

      (3)   Not applicable

      (4)   Not applicable

      (5) (a) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted form the form of prospectus
filed as part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant under Rule 497
(h) under the Securities Act of 1933 shall be deemed to be part of the
Registration Statement as of the time it was declared effective.

            (b) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering thereof.

      (6) The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery within two business days
of receipt of a written or oral request, any Statement of Additional
Information.



                                SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York,
on the 3rd day of April, 2001.

                                        /s/ Laurence D. Fink
                                        ------------------------
                                        Laurence D. Fink
                                        President

          Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities set forth below on the 3rd day of April, 2001.

Name                       Title

/s/ Laurence D. Fink
- ----------------------
Laurence D. Fink           Initial Sole Trustee, Principal Executive Officer
                           and Principal Financial and Accounting Officer





      INDEX TO EXHIBITS

(a)    Agreement and Declaration of Trust.
(b)    By-Laws.
(e)    Form of Dividend Reinvestment Plan.
(g)    Form of Investment Management Agreement.
(j)    Form of Custodian Agreement.
(k)(1) Form of Expense Reimbursement Agreement
(p)    Form of Initial Subscription Agreement.
(r)(1) Code of Ethics of Trust
(r)(2) Code of Ethics of Adviser

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EXHIBIT (A)
<TEXT>

                                                               Exhibit (a)



                            BLACKROCK CALIFORNIA
                           MUNICIPAL INCOME TRUST


                     AGREEMENT AND DECLARATION OF TRUST
















                                DATED AS OF
                               MARCH 30, 2001










                          TABLE OF CONTENTS

ARTICLE I

        The Trust
            1.1  Name...............................................2
            1.2  Definitions........................................2

ARTICLE II

        Trustees

            2.1  Number and Qualification...........................4
            2.2  Term and Election..................................4
            2.3  Resignation and Removal............................5
            2.4  Vacancies..........................................6
            2.5  Meetings...........................................6
            2.6  Officers...........................................7

ARTICLE III

        Powers and Duties of Trustees
            3.1  General............................................8
            3.2  Investments........................................8
            3.3  Legal Title........................................9
            3.4  Issuance and Repurchase of Shares..................9
            3.5  Borrow Money or Utilize Leverage...................9
            3.6  Delegation; Committees............................10
            3.7  Collection and Payment............................10
            3.8  Expenses..........................................11
            3.9  By-Laws...........................................11
            3.10  Miscellaneous Powers.............................11
            3.11  Further Powers...................................12
            3.12  Trustee Action by Written Consent................13

ARTICLE IV

        Advisory, Management and Distribution Arrangements

            4.1  Advisory and Management Arrangements..............13
            4.2  Distribution Arrangements.........................13
            4.3  Parties to Contract...............................14

ARTICLE V

        Limitations of Liability
        and Indemnification

            5.1  No Personal Liability of Shareholders,
                 Trustees, etc.....................................15
            5.2  Mandatory Indemnification.........................15
            5.3  No Bond Required of Trustees......................17
            5.4  No Duty of Investigation; Notice in Trust
                 Instruments, etc..................................18
            5.5  Reliance on Experts, etc..........................18
            5.6  Indemnification of Shareholders...................19

ARTICLE VI

        Shares of Beneficial Interest

            6.1  Beneficial Interest...............................19
            6.2  Other Securities..................................19
            6.3  Rights of Shareholders............................20
            6.4  Trust Only........................................20
            6.5  Issuance of Shares................................21
            6.6  Register of Shares................................21
            6.7  Transfer Agent and Registrar......................22
            6.8  Transfer of Shares................................22
            6.9  Notices...........................................22

ARTICLE VII

        Custodians

            7.1  Appointment and Duties............................23
            7.2  Central Certificate System........................24

ARTICLE VIII

        Redemption

            8.1  Redemptions.......................................24
            8.2  Disclosure of Holding.............................24

ARTICLE IX

        Determination of Net Asset Value
          Net Income and Distributions

            9.1  Net Asset Value...................................25
            9.2  Distributions to Shareholders.....................25
            9.3  Power to Modify Foregoing Procedures..............26

ARTICLE X

        Shareholders

            10.1  Meetings of Shareholders.........................27
            10.2  Voting...........................................27
            10.3  Notice of Meeting and Record Date................28
            10.4  Quorum and Required Vote.........................28
            10.5  Proxies, etc.....................................29
            10.6  Reports..........................................29
            10.7  Inspection of Records............................30
            10.8  Shareholder Action by Written Consent............30

ARTICLE XI

        Duration:  Termination of Trust;
            Amendment; Mergers, Etc.

            11.1  Duration.........................................30
            11.2  Termination......................................31
            11.3  Amendment Procedure..............................32
            11.4  Merger, Consolidation and Sale of sets...........33
            11.5  Incorporation....................................33
            11.6  Conversion.......................................34
            11.7  Certain Transactions.............................35

ARTICLE XII

        Miscellaneous

            12.1  Filing...........................................37
            12.2  Resident Agent...................................38
            12.3  Governing Law....................................38
            12.4  Counterparts.....................................39
            12.5  Reliance by Third Parties........................39
            12.6  Provisions in Conflict with Law or Regulation....39



             BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST


                 AGREEMENT AND DECLARATION OF TRUST



            AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made as
of the 30th day of March, 2001, by the Trustee hereunder, and by the
holders of shares of beneficial interest issued hereunder as hereinafter
provided.

            WHEREAS, this Trust has been formed to carry on
business as set forth more particularly hereinafter;

            WHEREAS, this Trust is authorized to issue an unlimited number
of its shares of beneficial interest all in accordance with the provisions
hereinafter set forth;

            WHEREAS, the Trustees have agreed to manage all property coming
into their hands as Trustees of a Delaware business trust in accordance
with the provisions hereinafter set forth; and

            WHEREAS, the parties hereto intend that the Trust created by
this Declaration and the Certificate of Trust filed with the Secretary of
State of the State of Delaware on March 30, 2001 shall constitute a
business trust under the Delaware Business Trust Act and that this
Declaration shall constitute the governing instrument of such business
trust.

            NOW, THEREFORE, the Trustees hereby declare that they will hold
all cash, securities, and other assets which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the benefit of the
holders from time to time of shares of beneficial interest in this Trust as
hereinafter set forth.


                              ARTICLE I

                              The Trust

            1.1 Name. This Trust shall be known as the "BlackRock
California Municipal Income Trust" and the Trustees shall conduct the
business of the Trust under that name or any other name or names as they
may from time to time determine.

            1.2 Definitions. As used in this Declaration, the following
terms shall have the following meanings:

            The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person" and "Principal Underwriter" shall have the meanings
given them in the 1940 Act.

            "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time by the Trustees.

            "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.

            "Commission" shall mean the Securities and Exchange Commission.

            "Declaration" shall mean this Agreement and Declaration of
Trust, as amended or amended and restated from time to time.

            "Delaware Business Trust Statute" shall mean the provisions of
the Delaware Business Trust Act, 12 Del. C.ss.3801, et. seq., as such Act
may be amended from time to time.

            "Fundamental Policies" shall mean the investment policies and
restrictions as set forth from time to time in any Prospectus or contained
in any current Registration Statement of the Trust filed with the
Commission or as otherwise adopted by the Trustees and the Shareholders in
accordance with the requirements of the 1940 Act and designated as
fundamental policies therein as they may be amended in accordance with the
requirements of the 1940 Act.

            "Majority Shareholder Vote" shall mean a vote of a majority of
the outstanding voting securities (as such term is defined in the 1940 Act)
of the Trust.

            "Person" shall mean and include individuals, corporations,
partnerships, trusts, limited liability companies, associations, joint
ventures and other entities, whether or not legal entities, and governments
and agencies and political subdivisions thereof.

            "Prospectus" shall mean the currently effective Prospectus of
the Trust, if any, under the Securities Act of 1933, as amended.

            "Shareholders" shall mean as of any particular time the holders
of record of outstanding Shares of the Trust, at such time.

            "Shares" shall mean the transferable units of beneficial
interest into which the beneficial interest in the Trust shall be divided
from time to time and includes fractions of Shares as well as whole Shares.
In addition, Shares also means any preferred shares or preferred units of
beneficial interest which may be issued from time to time, as described
herein. All references to Shares shall be deemed to be Shares of any or all
series or classes as the context may require.

            "Trust" shall mean the trust established by this Declaration,
as amended from time to time, inclusive of each such amendment.

            "Trustees" shall mean the signatory to this Declaration, so
long as he or she shall continue in office in accordance with the terms
hereof, and all other persons who at the time in question have been duly
elected or appointed and have qualified as trustees in accordance with the
provisions hereof and are then in office.

            "Trust Property" shall mean as of any particular time any and
all property, real or personal, tangible or intangible, which at such time
is owned or held by or for the account of the Trust or the Trustees in such
capacity.

            The "1940 Act" refers to the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder and exemptions granted
therefrom, as amended from time to time.


                             ARTICLE II

                              Trustees

            2.1 Number and Qualification. Prior to a public offering of
Shares there may be a sole Trustee. Thereafter, the number of Trustees
shall be no less than three or more than fifteen, provided, however, that
the number of Trustees may be increased or decreased by a written
instrument signed by a majority of the Trustees then in office. No
reduction in the number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term. An individual
nominated as a Trustee shall be at least 21 years of age and not older than
80 years of age at the time of nomination and not under legal disability.
Trustees need not own Shares and may succeed themselves in office.

            2.2 Term and Election. The Board of Trustees shall be divided
into three classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total
number of trustees constituting the entire Board of Trustees. Within the
limits above specified, the number of the Trustees in each class shall be
determined by resolution of the Board of Trustees. The term of office of
all of the Trustees shall expire on the date of the first annual or special
meeting of Shareholders following the effective date of the Registration
Statement relating to the Shares under the Securities Act of 1933, as
amended. The term of office of the first class shall expire on the date of
the second annual meeting of Shareholders or special meeting in lieu
thereof. The term of office of the second class shall expire on the date of
the third annual meeting of Shareholders or special meeting in lieu
thereof. The term of office of the third class shall expire on the date of
the fourth annual meeting of Shareholders or special meeting in lieu
thereof. Upon expiration of the term of office of each class as set forth
above, the number of Trustees in such class, as determined by the Board of
Trustees, shall be elected for a term expiring on the date of the third
annual meeting of Shareholders or special meeting in lieu thereof following
such expiration to succeed the Trustees whose terms of office expire. The
Trustees shall be elected at an annual meeting of the Shareholders or
special meeting in lieu thereof called for that purpose, except as provided
in Section 2.3 of this Article and each Trustee elected shall hold office
until his or her successor shall have been elected and shall have
qualified.

            2.3 Resignation and Removal. Any of the Trustees may resign
their trust (without need for prior or subsequent accounting) by an
instrument in writing signed by such Trustee and delivered or mailed to the
Chairman, if any, the President or the Secretary and such resignation shall
be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the
aggregate number of Trustees after such removal shall not be less than the
minimum number required by Section 2.1 hereof) by the action of two-thirds
of the remaining Trustees or the holders of two thirds of the Shares. Upon
the resignation or removal of a Trustee, each such resigning or removed
Trustee shall execute and deliver such documents as the remaining Trustees
shall require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property held in the name of such resigning or removed
Trustee. Upon the incapacity or death of any Trustee, such Trustee's legal
representative shall execute and deliver on such Trustee's behalf such
documents as the remaining Trustees shall require as provided in the
preceding sentence.

            2.4 Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation,
bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office, or removal, of a Trustee. Whenever a vacancy in the
Board of Trustees shall occur, the remaining Trustees may fill such vacancy
by appointing an individual having the qualifications described in this
Article by a written instrument signed by a majority of the Trustees then
in office or by election by the Shareholders, or may leave such vacancy
unfilled or may reduce the number of Trustees (provided the aggregate
number of Trustees after such reduction shall not be less than the minimum
number required by Section 2.1 hereof). Any vacancy created by an increase
in Trustees may be filled by the appointment of an individual having the
qualifications described in this Article made by a written instrument
signed by a majority of the Trustees then in office or by election by the
Shareholders. No vacancy shall operate to annul this Declaration or to
revoke any existing agency created pursuant to the terms of this
Declaration. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided herein, the Trustees in office,
regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by
this Declaration.

            2.5 Meetings. Meetings of the Trustees shall be held from time
to time upon the call of the Chairman, if any, the President, the Secretary
or any two Trustees. Regular meetings of the Trustees may be held without
call or notice at a time and place fixed by the By-Laws or by resolution of
the Trustees. Notice of any other meeting shall be mailed not less than 48
hours before the meeting or otherwise actually delivered orally or in
writing not less than 24 hours before the meeting, but may be waived in
writing by any Trustee either before or after such meeting. The attendance
of a Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Trustee attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting
has not been properly called or convened. The Trustees may act with or
without a meeting. A quorum for all meetings of the Trustees shall be a
majority of the Trustees. Unless provided otherwise in this Declaration,
any action of the Trustees may be taken at a meeting by vote of a majority
of the Trustees present (a quorum being present) or without a meeting by
written consent of a majority of the Trustees.

            Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all
meetings of any such committee shall be a majority of the members thereof.
Unless provided otherwise in this Declaration, any action of any such
committee may be taken at a meeting by vote of a majority of the members
present (a quorum being present) or without a meeting by written consent of
a majority of the members.

            With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons in any action to be taken
may be counted for quorum purposes under this Section and shall be entitled
to vote to the extent not prohibited by the 1940 Act.

            All or any one or more Trustees may participate in a meeting of
the Trustees or any committee thereof by means of a conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other; participation in a
meeting pursuant to any such communications system shall constitute
presence in person at such meeting.

            2.6 Officers. The Trustees shall elect a President, a Secretary
and a Treasurer and may elect a Chairman who shall serve at the pleasure of
the Trustees or until their successors are elected. The Trustees may elect
or appoint or may authorize the Chairman, if any, or President to appoint
such other officers or agents with such powers as the Trustees may deem to
be advisable. A Chairman shall, and the President, Secretary and Treasurer
may, but need not, be a Trustee.


                             ARTICLE III

                    Powers and Duties of Trustees

            3.1 General. The Trustees shall owe to the Trust and its
Shareholders the same fiduciary duties as owed by directors of corporations
to such corporations and their stockholders under the general corporation
law of the State of Delaware. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust
Property and business in their own right, but with such powers of
delegation as may be permitted by this Declaration. The Trustees may
perform such acts as in their sole discretion are proper for conducting the
business of the Trust. The enumeration of any specific power herein shall
not be construed as limiting the aforesaid power. Such powers of the
Trustees may be exercised without order of or resort to any court.

            3.2 Investments. The Trustees shall have power, subject to the
Fundamental Policies in effect from time to time with respect to the Trust
to:

                  (a) manage, conduct, operate and carry on the business of an
investment company;

                  (b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise deal in or dispose of any and all sorts of
property, tangible or intangible, including but not limited to securities
of any type whatsoever, whether equity or non-equity, of any issuer,
evidences of indebtedness of any person and any other rights, interests,
instruments or property of any sort and to exercise any and all rights,
powers and privileges of ownership or interest in respect of any and all
such investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto,
with power to designate one or more Persons to exercise any of said rights,
powers and privileges in respect of any of said investments. The Trustees
shall not be limited by any law limiting the investments which may be made
by fiduciaries.

            3.3 Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust, or in the
name of any other Person as nominee, custodian or pledgee, on such terms as
the Trustees may determine, provided that the interest of the Trust therein
is appropriately protected.

            The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon his due election and qualification. Upon the ceasing of any
person to be a Trustee for any reason, such person shall automatically
cease to have any right, title or interest in any of the Trust Property,
and the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.

            3.4 Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares,
including Shares in fractional denominations, and, subject to the more
detailed provisions set forth in Articles VIII and IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares
any funds or property whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the State of Delaware
governing business corporations.

            3.5 Borrow Money or Utilize Leverage. Subject to the
Fundamental Policies in effect from time to time with respect to the Trust,
the Trustees shall have the power to borrow money or otherwise obtain
credit or utilize leverage to the maximum extent permitted by law or
regulation as such may be needed from time to time and to secure the same
by mortgaging, pledging or otherwise subjecting as security the assets of
the Trust, including the lending of portfolio securities, and to endorse,
guarantee, or undertake the performance of any obligation, contract or
engagement of any other person, firm, association or corporation.

            3.6 Delegation; Committees. The Trustees shall have the power,
consistent with their continuing exclusive authority over the management of
the Trust and the Trust Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Trustees or otherwise as the Trustees may deem
expedient, to at least the same extent as such delegation is permitted to
directors of a Delaware business corporation and is permitted by the 1940
Act, as well as any further delegations the Trustees may determine to be
desirable, expedient or necessary in order to effect the purpose hereof.
The Trustees may designate an executive committee which shall have all
authority of the entire Board of Trustees except such committee cannot
declare dividends and cannot authorize removal of a trustee or any merger,
consolidation or sale of substantially all of the assets of the Trust.

            3.7 Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property or the Trust, the Trustees or any officer,
employee or agent of the Trust; to prosecute, defend, compromise or abandon
any claims relating to the Trust Property or the Trust, or the Trustees or
any officer, employee or agent of the Trust; to foreclose any security
interest securing any obligations, by virtue of which any property is owed
to the Trust; and to enter into releases, agreements and other instruments.
Except to the extent required for a Delaware business corporation, the
Shareholders shall have no power to vote as to whether or not a court
action, legal proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders.

            3.8 Expenses. The Trustees shall have power to incur and pay
out of the assets or income of the Trust any expenses which in the opinion
of the Trustees are necessary or incidental to carry out any of the
purposes of this Declaration, and the business of the Trust, and to pay
reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees. The Trustees may pay themselves such compensation
for special services, including legal, underwriting, syndicating and
brokerage services, as they in good faith may deem reasonable and
reimbursement for expenses reasonably incurred by themselves on behalf of
the Trust. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or
arrears, for charges of distribution, of the custodian or transfer,
Shareholder servicing or similar agent, a pro rata amount as defined from
time to time by the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends or distributions owed such
Shareholder and/or by reducing the number of shares in the account of such
Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such
Shareholder.

            3.9 By-Laws. The Trustees may adopt and from time to time amend
or repeal the By-Laws for the conduct of the business of the Trust.

            3.10 Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust; (b) enter into
joint ventures, partnerships and any other combinations or associations;
(c) purchase, and pay for out of Trust Property, insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisors, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding
any such position or by reason of any action taken or omitted by any such
Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust; (e) make donations, irrespective of
benefit to the Trust, for charitable, religious, educational, scientific,
civic or similar purposes; (f) to the extent permitted by law, indemnify
any Person with whom the Trust has dealings, including without limitation
any advisor, administrator, manager, transfer agent, custodian, distributor
or selected dealer, or any other person as the Trustees may see fit to such
extent as the Trustees shall determine; (g) guarantee indebtedness or
contractual obligations of others; (h) determine and change the fiscal year
of the Trust and the method in which its accounts shall be kept; (i)
notwithstanding the Fundamental Policies of the Trust, convert the Trust to
a master-feeder structure; provided, however, the Trust obtains the
approval of shareholders holding at least a majority of the Trust's Shares
present at a meeting of Shareholders at which a quorum is present and (j)
adopt a seal for the Trust but the absence of such seal shall not impair
the validity of any instrument executed on behalf of the Trust.

            3.11 Further Powers. The Trustees shall have the power to
conduct the business of the Trust and carry on its operations in any and
all of its branches and maintain offices both within and without the State
of Delaware, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the
United States of America and of foreign governments, and to do all such
other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust although
such things are not herein specifically mentioned. Any determination as to
what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees. The
Trustees will not be required to obtain any court order to deal with the
Trust Property.

            3.12 Trustee Action by Written Consent. Any action which may be
taken by Trustees by vote may be taken without a meeting if the number of
Trustees required for approval of such action at a meeting of Trustees
consent to the action in writing and the written consents are filed with
the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Trustees.


                                 ARTICLE IV

             Advisory, Management and Distribution Arrangements

            4.1 Advisory and Management Arrangements. Subject to the
requirements of applicable law as in effect from time to time, the Trustees
may in their discretion from time to time enter into advisory,
administration or management contracts whereby the other party to any such
contract shall undertake to furnish the Trustees such advisory,
administrative and management services, with respect to the Trust as the
Trustees shall from time to time consider desirable and all upon such terms
and conditions as the Trustees may in their discretion determine.
Notwithstanding any provisions of this Declaration, the Trustees may
authorize any advisor, administrator or manager (subject to such general or
specific instructions as the Trustees may from time to time adopt) to
effect investment transactions with respect to the assets on behalf of the
Trustees to the full extent of the power of the Trustees to effect such
transactions or may authorize any officer, employee or Trustee to effect
such transactions pursuant to recommendations of any such advisor,
administrator or manager (and all without further action by the Trustees).
Any such investment transaction shall be deemed to have been authorized by
all of the Trustees.

            4.2 Distribution Arrangements. Subject to compliance with the
1940 Act, the Trustees may retain underwriters and/or placement agents to
sell Trust Shares. The Trustees may in their discretion from time to time
enter into one or more contracts, providing for the sale of the Shares of
the Trust, whereby the Trust may either agree to sell such Shares to the
other party to the contract or appoint such other party its sales agent for
such Shares. In either case, the contract shall be on such terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article IV or the By-Laws; and
such contract may also provide for the repurchase or sale of Shares of the
Trust by such other party as principal or as agent of the Trust and may
provide that such other party may enter into selected dealer agreements
with registered securities dealers and brokers and servicing and similar
agreements with persons who are not registered securities dealers to
further the purposes of the distribution or repurchase of the Shares of the
Trust.

            4.3 Parties to Contract. Any contract of the character
described in Sections 4.1 and 4.2 of this Article IV or in Article VII
hereof may be entered into with any Person, although one or more of the
Trustees, officers or employees of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no
such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any Person holding such
relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable
for any profit realized directly or indirectly therefrom, provided that the
contract when entered into was reasonable and fair and not inconsistent
with the provisions of this Article IV or the By-Laws. The same Person may
be the other party to contracts entered into pursuant to Sections 4.1 and
4.2 above or Article VII, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.3.


                                 ARTICLE V

                          Limitations of Liability
                            and Indemnification

            5.1 No Personal Liability of Shareholders, Trustees, etc. No
Shareholder of the Trust shall be subject in such capacity to any personal
liability whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. Shareholders shall have the same
limitation of personal liability as is extended to stockholders of a
private corporation for profit incorporated under the general corporation
law of the State of Delaware. No Trustee or officer of the Trust shall be
subject in such capacity to any personal liability whatsoever to any
Person, other than the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only liability to the Trust or
its Shareholders arising from bad faith, willful misfeasance, gross
negligence (negligence in the case of those Trustees or officers who are
directors, officers or employees of the Trust's investment advisor
("Affiliated Indemnitees")) or reckless disregard for his duty to such
Person; and, subject to the foregoing exception, all such Persons shall
look solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee or officer, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability, subject to the foregoing
exception, he shall not, on account thereof, be held to any personal
liability.

            5.2 Mandatory Indemnification. (a) The Trust hereby agrees to
indemnify the Trustees and officers of the Trust (each such person being an
"indemnitee") against any liabilities and expenses, including amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
reasonable counsel fees reasonably incurred by such indemnitee in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative
or investigative body in which he may be or may have been involved as a
party or otherwise or with which he may be or may have been threatened,
while acting in any capacity set forth above in this Section 5.2 by reason
of his having acted in any such capacity, except with respect to any matter
as to which he shall not have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust or, in the case of
any criminal proceeding, as to which he shall have had reasonable cause to
believe that the conduct was unlawful, provided, however, that no
indemnitee shall be indemnified hereunder against any liability to any
person or any expense of such indemnitee arising by reason of (i) willful
misfeasance, (ii) bad faith, (iii) gross negligence (negligence in the case
of Affiliated Indemnitees), or (iv) reckless disregard of the duties
involved in the conduct of his position (the conduct referred to in such
clauses (i) through (iv) being sometimes referred to herein as "disabling
conduct"). Notwithstanding the foregoing, with respect to any action, suit
or other proceeding voluntarily prosecuted by any indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of such action,
suit or other proceeding by such indemnitee was authorized by a majority of
the Trustees.

                  (b) Notwithstanding the foregoing, no indemnification
shall be made hereunder unless there has been a determination (i) by a
final decision on the merits by a court or other body of competent
jurisdiction before whom the issue of entitlement to indemnification
hereunder was brought that such indemnitee is entitled to indemnification
hereunder or, (ii) in the absence of such a decision, by (1) a majority
vote of a quorum of those Trustees who are neither "interested persons" of
the Trust (as defined in Section 2(a)(19) of the 1940 Act) nor parties to
the proceeding ("Disinterested Non-Party Trustees"), that the indemnitee is
entitled to indemnification hereunder, or (2) if such quorum is not
obtainable or even if obtainable, if such majority so directs, independent
legal counsel in a written opinion conclude that the indemnitee should be
entitled to indemnification hereunder. All determinations to make advance
payments in connection with the expense of defending any proceeding shall
be authorized and made in accordance with the immediately succeeding
paragraph (c) below.

                  (c) The Trust shall make advance payments in connection with
the expenses of defending any action with respect to which indemnification
might be sought hereunder if the Trust receives a written affirmation by
the indemnitee of the indemnitee's good faith belief that the standards of
conduct necessary for indemnification have been met and a written
undertaking to reimburse the Trust unless it is subsequently determined
that he is entitled to such indemnification and if a majority of the
Trustees determine that the applicable standards of conduct necessary for
indemnification appear to have been met. In addition, at least one of the
following conditions must be met: (i) the indemnitee shall provide adequate
security for his undertaking, (ii) the Trust shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of a
quorum of the Disinterested Non-Party Trustees, or if a majority vote of
such quorum so direct, independent legal counsel in a written opinion,
shall conclude, based on a review of readily available facts (as opposed to
a full trial-type inquiry), that there is substantial reason to believe
that the indemnitee ultimately will be found entitled to indemnification.

                  (d) The rights accruing to any indemnitee under these
provisions shall not exclude any other right to which he may be lawfully
entitled.

                  (e) Subject to any limitations provided by the 1940 Act
and this Declaration, the Trust shall have the power and authority to
indemnify other Persons providing services to the Trust to the full extent
provided by law as if the Trust were a corporation organized under the
Delaware General Corporation Law provided that such indemnification has
been approved by a majority of the Trustees.

            5.3 No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or other security for the performance of any of
his duties hereunder.

            5.4 No Duty of Investigation; Notice in Trust Instruments, etc.
No purchaser, lender, transfer agent or other person dealing with the
Trustees or with any officer, employee or agent of the Trust shall be bound
to make any inquiry concerning the validity of any transaction purporting
to be made by the Trustees or by said officer, employee or agent or be
liable for the application of money or property paid, loaned, or delivered
to or on the order of the Trustees or of said officer, employee or agent.
Every obligation, contract, undertaking, instrument, certificate, Share,
other security of the Trust, and every other act or thing whatsoever
executed in connection with the Trust shall be conclusively taken to have
been executed or done by the executors thereof only in their capacity as
Trustees under this Declaration or in their capacity as officers, employees
or agents of the Trust. Every written obligation, contract, undertaking,
instrument, certificate, Share, other security of the Trust made or issued
by the Trustees or by any officers, employees or agents of the Trust in
their capacity as such, shall contain an appropriate recital to the effect
that the Shareholders, Trustees, officers, employees or agents of the Trust
shall not personally be bound by or liable thereunder, nor shall resort be
had to their private property for the satisfaction of any obligation or
claim thereunder, and appropriate references shall be made therein to this
Declaration, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any of the Trustees, Shareholders, officers,
employees or agents of the Trust. The Trustees may maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to
cover possible tort liability, and such other insurance as the Trustees in
their sole judgment shall deem advisable or is required by the 1940 Act.

            5.5 Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of its duties, be fully and
completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or
other records of the Trust, upon an opinion of counsel, or upon reports
made to the Trust by any of the Trust's officers or employees or by any
advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by
the Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.

            5.6 Indemnification of Shareholders. If any Shareholder or
former Shareholder shall be held personally liable solely by reason of its
being or having been a Shareholder and not because of its acts or omissions
or for some other reason, the Shareholder or former Shareholder (or its
heirs, executors, administrators or other legal representatives or in the
case of any entity, its general successor) shall be entitled out of the
assets belonging to the Trust to be held harmless from and indemnified to
the maximum extent permitted by law against all loss and expense arising
from such liability. The Trust shall, upon request by such Shareholder,
assume the defense of any claim made against such Shareholder for any act
or obligation of the Trust and satisfy any judgment thereon from the assets
of the Trust.

                                 ARTICLE VI

                       Shares of Beneficial Interest

            6.1 Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into an unlimited number of transferable shares
of beneficial interest, par value $.001 per share. All Shares issued in
accordance with the terms hereof, including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall
be fully paid and, except as provided in the last sentence of Section 3.8,
nonassessable when the consideration determined by the Trustees (if any)
therefor shall have been received by the Trust.

            6.2 Other Securities. The Trustees may authorize and issue such
other securities as they determine to be necessary, desirable or
appropriate including preferred interests, debt securities or other senior
securities subject to the Fundamental Policies and the requirements of the
1940 Act. To the extent that the Trustees authorize and issue preferred
shares they are hereby authorized and empowered to amend or supplement this
Declaration as is necessary or appropriate to comply with the requirements
of the 1940 Act relating to such securities or as required to issue such
securities by rating agencies or other persons, all without the approval of
Shareholders. Any such supplement or amendment shall be filed as is
necessary. The Trustees are also authorized to take such actions and retain
such persons as they see fit to offer and sell such securities.

            6.3 Rights of Shareholders. The Shares shall be personal
property giving only the rights in this Declaration specifically set forth.
The ownership of the Trust Property of every description and the right to
conduct any business herein before described are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no
right to call for any partition or division of any property, profits,
rights or interests of the Trust nor can they be called upon to share or
assume any losses of the Trust or, subject to the right of the Trustees to
charge certain expenses directly to Shareholders, as provided in the last
sentence of Section 3.8, suffer an assessment of any kind by virtue of
their ownership of Shares. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights (except as
specified in this Section 6.3, in Section 11.4 or as specified by the
Trustees when creating the Shares, as in preferred shares).

            6.4 Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees
to create a general partnership, limited partnership, joint stock
association, corporation, bailment or any form of legal relationship other
than a trust. Nothing in this Declaration shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or
members of a joint stock association.

            6.5 Issuance of Shares. The Trustees, in their discretion, may
from time to time without vote of the Shareholders issue Shares including
preferred shares that may have been established pursuant to Section 6.2, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times, and on
such terms as the Trustees may determine, and may in such manner acquire
other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses. The
Trustees may from time to time divide or combine the Shares into a greater
or lesser number without thereby changing the proportionate beneficial
interest in such Shares. Issuances and redemptions of Shares may be made in
whole Shares and/or l/l,000ths of a Share or multiples thereof as the
Trustees may determine in such fractions thereof.

            6.6 Register of Shares. A register shall be kept at the offices
of the Trust or any transfer agent duly appointed by the Trustees under the
direction of the Trustees which shall contain the names and addresses of
the Shareholders and the number of Shares held by them respectively and a
record of all transfers thereof. Separate registers shall be established
and maintained for each class. Each such register shall be conclusive as to
who are the holders of the Shares of the applicable class and who shall be
entitled to receive dividends or distributions or otherwise to exercise or
enjoy the rights of Shareholders. No Shareholder shall be entitled to
receive payment of any dividend or distribution, nor to have notice given
to him as herein provided, until he has given his address to a transfer
agent or such other officer or agent of the Trustees as shall keep the
register for entry thereon. It is not contemplated that certificates will
be issued for the Shares; however, the Trustees, in their discretion, may
authorize the issuance of share certificates and promulgate appropriate
fees therefore and rules and regulations as to their use.

            6.7 Transfer Agent and Registrar. The Trustees shall have power
to employ a transfer agent or transfer agents, and a registrar or
registrars, with respect to the Shares. The transfer agent or transfer
agents may keep the applicable register and record therein, the original
issues and transfers, if any, of the said Shares. Any such transfer agents
and/or registrars shall perform the duties usually performed by transfer
agents and registrars of certificates of stock in a corporation, as
modified by the Trustees.

            6.8 Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by its agent
thereto duly authorized in writing, upon delivery to the Trustees or a
transfer agent of the Trust of a duly executed instrument of transfer,
together with such evidence of the genuineness of each such execution and
authorization and of other matters as may reasonably be required. Upon such
delivery the transfer shall be recorded on the applicable register of the
Trust. Until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereof and neither the
Trustees nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed
transfer.

            Any person becoming entitled to any Shares in consequence of
the death, bankruptcy, or incompetence of any Shareholder, or otherwise by
operation of law, shall be recorded on the applicable register of Shares as
the holder of such Shares upon production of the proper evidence thereof to
the Trustees or a transfer agent of the Trust, but until such record is
made, the Shareholder of record shall be deemed to be the holder of such
for all purposes hereof, and neither the Trustees nor any transfer agent or
registrar nor any officer or agent of the Trust shall be affected by any
notice of such death, bankruptcy or incompetence, or other operation of
law.

            6.9 Notices. Any and all notices to which any Shareholder
hereunder may be entitled and any and all communications shall be deemed
duly served or given if mailed, postage prepaid, addressed to any
Shareholder of record at his last known address as recorded on the
applicable register of the Trust.


                             ARTICLE VII

                             Custodians

            7.1 Appointment and Duties. The Trustees shall at all times
employ a custodian or custodians, meeting the qualifications for custodians
for portfolio securities of investment companies contained in the 1940 Act,
as custodian with respect to the assets of the Trust. Any custodian shall
have authority as agent of the Trust with respect to which it is acting as
determined by the custodian agreement or agreements, but subject to such
restrictions, limitations and other requirements, if any, as may be
contained in the By-Laws of the Trust and the 1940 Act:

            (1)  to hold the securities owned by the Trust
      and deliver the same upon written order;

            (2)  to receive any receipt for any moneys due
      to the Trust and deposit the same in its own banking
      department (if a bank) or elsewhere as the Trustees
      may direct;

            (3)  to disburse such funds upon orders or
      vouchers;

            (4)  if authorized by the Trustees, to keep the
      books and accounts of the Trust and furnish clerical
      and accounting services; and

            (5)  if authorized to do so by the Trustees, to
      compute the net income or net asset value of the
      Trust;

all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.

            The Trustees may also authorize each custodian to employ one or
more sub-custodians from time to time to perform such of the acts and
services of the custodian and upon such terms and conditions, as may be
agreed upon between the custodian and such sub-custodian and approved by
the Trustees, provided that in every case such sub- custodian shall meet
the qualifications for custodians contained in the 1940 Act.

            7.2 Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct
the custodian to deposit all or any part of the securities owned by the
Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association
registered with the Commission under the Securities Exchange Act of 1934,
or such other Person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act, pursuant to which system all securities of
any particular class of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall
be subject to withdrawal only upon the order of the Trust.


                                ARTICLE VIII

                                 Redemption

            8.1 Redemptions. The Shares of the Trust are not redeemable by
the holders.

            8.2 Disclosure of Holding. The holders of Shares or other
securities of the Trust shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of
Shares or other securities of the Trust as the Trustees deem necessary to
comply with the provisions of the Code, or to comply with the requirements
of any other taxing or regulatory authority.


                                 ARTICLE IX

                      Determination of Net Asset Value
                        Net Income and Distributions

            9.1 Net Asset Value. The net asset value of each outstanding
Share of the Trust shall be determined at such time or times on such days
as the Trustees may determine, in accordance with the 1940 Act. The method
of determination of net asset value shall be determined by the Trustees and
shall be as set forth in the Prospectus or as may otherwise be determined
by the Trustees. The power and duty to make the net asset value
calculations may be delegated by the Trustees and shall be as generally set
forth in the Prospectus or as may otherwise be determined by the Trustees.

            9.2  Distributions to Shareholders.

                  (a) The Trustees shall from time to time distribute
ratably among the Shareholders such proportion of the net profits, surplus
(including paid-in surplus), capital, or assets held by the Trustees as
they may deem proper. Such distribution may be made in cash or property
(including without limitation any type of obligations of the Trust or any
assets thereof) or any combination thereof, and the Trustees may distribute
ratably among the Shareholders additional Shares in such manner, at such
times, and on such terms as the Trustees may deem proper.

                  (b) In the event the Trust has outstanding more than one
class of Shares, the Trustees shall from time to time distribute ratably
among each class of Shareholders of the Trust such proportion of the net
profits, surplus (including paid-in surplus), capital or assets
attributable to such class held by the Trustees as they may deem proper or
as may otherwise be determined in the instrument creating such class of
Shares, and the Trustees may distribute ratably among the Shareholders of
each class of the Trust additional Shares of such class in such manner, at
such times, and on such terms as the Trustees may deem proper. Such
distributions to one class need not be ratable with respect to
distributions to Shares of any other class of the Trust.

                  (c) Distributions pursuant to this Section 9.2 may be among
the Shareholders of record at the time of declaring a distribution or among the
Shareholders of record at such later date as the Trustees shall determine
and specify at the time of declaration.

                  (d) The Trustees may always retain from the net profits
such amount as they may deem necessary to pay the debts or expenses of the
Trust or to meet obligations of the Trust, or as they otherwise may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business.

                  (e) Inasmuch as the computation of net income and gains
for Federal income tax purposes may vary from the computation thereof on
the books, the above provisions shall be interpreted to give the Trustees
the power in their discretion to distribute for any fiscal year as ordinary
dividends and as capital gains distributions, respectively, additional
amounts sufficient to enable the Trust to avoid or reduce liability for
taxes.

            9.3 Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article IX, the Trustees may prescribe,
in their absolute discretion except as may be required by the 1940 Act,
such other bases and times for determining the per share asset value of the
Trust's Shares or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable for any reason,
including to enable the Trust to comply with any provision of the 1940 Act,
or any securities association registered under the Securities Exchange Act
of 1934, or any order of exemption issued by the Commission, all as in
effect now or hereafter amended or modified.


                                 ARTICLE X

                                Shareholders

            10.1 Meetings of Shareholders. The Trust shall hold annual
meetings of the Shareholders. A special meeting of Shareholders may be
called at any time by a majority of the Trustees and shall be called by any
Trustee for any proper purpose upon written request of Shareholders of the
Trust holding in the aggregate not less than 51% of the outstanding Shares
of the Trust or class having voting rights, such request specifying the
purpose or purposes for which such meeting is to be called. Any shareholder
meeting, including a Special Meeting, shall be held within or without the
State of Delaware on such day and at such time as the Trustees shall
designate.

            10.2 Voting. Shareholders shall have no power to vote on any
matter except matters on which a vote of Shareholders is required by
applicable law, this Declaration or resolution of the Trustees. Any matter
required to be submitted to Shareholders and affecting one or more classes
shall require separate approval by the required vote of Shareholders of
each affected class; provided, however, that to the extent required by the
1940 Act, there shall be no separate class votes on the election or removal
of Trustees, the selection of auditors for the Trust, approval of any
agreement or contract entered into by the Trust, approval of conversion of
the Trust to a master-feeder structure or any action to liquidate or
dissolve the Trust. Shareholders of a particular class shall not be
entitled to vote on any matter that affects only one or more other classes.
There shall be no cumulative voting in the election or removal of Trustees.
The Trustees shall cause each matter required or permitted to be voted upon
at a meeting or by written consent of Shareholders to be submitted to a
vote of all classes of outstanding Shares entitled to vote thereon, unless
the 1940 Act or other applicable law or regulations require that the
actions of the Shareholders be taken by a separate vote of one or more
classes, or the Trustees determine that any matter to be submitted to a
vote of Shareholders affects only the rights or interests of one or more
(but not all) classes of outstanding Shares, in which case only the
Shareholders of the class or classes so affected shall be entitled to vote
thereon.

            10.3 Notice of Meeting and Record Date. Notice of all meetings
of Shareholders, stating the time, place and purposes of the meeting, shall
be given by the Trustees by mail to each Shareholder of record entitled to
vote thereat at its registered address, mailed at least 10 days before the
meeting or otherwise in compliance with applicable law. Only the business
stated in the notice of the meeting shall be considered at such meeting.
Any adjourned meeting may be held as adjourned one or more times without
further notice not later than 130 days after the record date. For the
purposes of determining the Shareholders who are entitled to notice of and
to vote at any meeting the Trustees may, without closing the transfer
books, fix a date not more than 100 days prior to the date of such meeting
of Shareholders as a record date for the determination of the Persons to be
treated as Shareholders of record for such purposes.

            10.4  Quorum and Required Vote.

                  (a) The holders of a majority of outstanding Shares of
the Trust present in person or by proxy shall constitute a quorum at any
meeting of the Shareholders for purposes of conducting business on which a
vote of Shareholders of the Trust is being taken. The holders of a majority
of outstanding Shares of a class present in person or by proxy shall
constitute a quorum at any meeting of the Shareholders of such class for
purposes of conducting business on which a vote of Shareholders of such
class is being taken.

                  (b) Subject to any provision of applicable law requiring
greater or lesser votes, this Declaration or resolution of the Trustees
specifying a greater or lesser vote requirement for the transaction of any
item of business at any meeting of Shareholders, (i) the affirmative vote
of a majority of the Shares present in person or represented by proxy and
entitled to vote on the subject matter shall be the act of the Shareholders
with respect to such matter, and (ii) where a separate vote of any class is
required on any matter, the affirmative vote of a majority of the Shares of
such class present in person or represented by proxy at the meeting shall
be the act of the Shareholders of such class with respect to such matter.

            10.5 Proxies, etc. At any meeting of Shareholders, any holder
of Shares entitled to vote thereat may vote by properly executed proxy,
provided that no proxy shall be voted at any meeting unless it shall have
been placed on file with the Secretary, or with such other officer or agent
of the Trust as the Secretary may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of one or
more Trustees or one or more of the officers or employees of the Trust.
Only Shareholders of record shall be entitled to vote. Each full Share
shall be entitled to one vote and fractional Shares shall be entitled to a
vote of such fraction. When any Share is held jointly by several persons,
any one of them may vote at any meeting in person or by proxy in respect of
such Share, but if more than one of them shall be present at such meeting
in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of
a Shareholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person of
unsound mind, and subject to guardianship or to the legal control of any
other person as regards the charge or management of such Share, he may vote
by his guardian or such other person appointed or having such control, and
such vote may be given in person or by proxy.

            10.6 Reports. The Trustees shall cause to be prepared at least
annually and more frequently to the extent and in the form required by law,
regulation or any exchange on which Trust Shares are listed a report of
operations containing a balance sheet and statement of income and
undistributed income of the Trust prepared in conformity with generally
accepted accounting principles and an opinion of an independent public
accountant on such financial statements. Copies of such reports shall be
mailed to all Shareholders of record within the time required by the 1940
Act, and in any event within a reasonable period preceding the meeting of
Shareholders. The Trustees shall, in addition, furnish to the Shareholders
at least semi-annually to the extent required by law, interim reports
containing an unaudited balance sheet of the Trust as of the end of such
period and an unaudited statement of income and surplus for the period from
the beginning of the current fiscal year to the end of such period.

            10.7 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Delaware business corporation.

            10.8 Shareholder Action by Written Consent. Any action which
may be taken by Shareholders by vote may be taken without a meeting if the
holders entitled to vote thereon of the proportion of Shares required for
approval of such action at a meeting of Shareholders pursuant to Section
10.4 consent to the action in writing and the written consents are filed
with the records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.


                             ARTICLE XI

                  Duration:  Termination of Trust;
                      Amendment; Mergers, Etc.

            11.1 Duration. Subject to possible termination in accordance
with the provisions of Section 11.2 hereof, the Trust created hereby shall
have perpetual existence.

            11.2  Termination.

                  (a) The Trust may be dissolved, after two thirds of the
Trustees have approved a resolution therefor, upon approval by a majority
of all the Shareholders voting as one class. Upon the dissolution of the
Trust:

                        (i)  The Trust shall carry on no business
      except for the purpose of winding up its affairs.

                        (ii) The Trustees shall proceed to wind up the
      affairs of the Trust and all of the powers of the Trustees under this
      Declaration shall continue until the affairs of the Trust shall have
      been wound up, including the power to fulfill or discharge the
      contracts of the Trust, collect its assets, sell, convey, assign,
      exchange, merger where the Trust is not the survivor, transfer or
      otherwise dispose of all or any part of the remaining Trust Property
      to one or more Persons at public or private sale for consideration
      which may consist in whole or in part in cash, securities or other
      property of any kind, discharge or pay its liabilities, and do all
      other acts appropriate to liquidate its business; provided that any
      sale, conveyance, assignment, exchange, merger in which the Trust is
      not the survivor, transfer or other disposition of all or
      substantially all the Trust Property of the Trust shall require
      approval of the principal terms of the transaction and the nature and
      amount of the consideration by Shareholders with the same vote as
      required to open-end the Trust.

                        (iii) After paying or adequately providing for the
      payment of all liabilities, and upon receipt of such releases,
      indemnities and refunding agreements, as they deem necessary for
      their protection, the Trustees may distribute the remaining Trust
      Property, in cash or in kind or partly each, among the Shareholders
      according to their respective rights.

                  (b) After the winding up and termination of the Trust and
distribution to the Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination and shall
execute and file a certificate of cancellation with the Secretary of State
of the State of Delaware. Upon termination of the Trust, the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder,
and the rights and interests of all Shareholders shall thereupon cease.

            11.3  Amendment Procedure.

                  (a) Except as provided in subsection (b) of this Section
11.3, this Declaration may be amended, after a majority of the Trustees
have approved a resolution therefor, by the affirmative vote of the holders
of not less than a majority of the affected Shares. The Trustees also may
amend this Declaration without any vote of Shareholders to divide the
Shares of the Trust into one or more classes or additional classes, to
change the name of the Trust or any class, to make any change that does not
adversely affect the relative rights or preferences of any Shareholder, as
they may deem necessary, to conform this Declaration to the requirements of
the 1940 Act or any other applicable federal laws or regulations including
pursuant to Section 6.2 or the requirements of the regulated investment
company provisions of the Code, but the Trustees shall not be liable for
failing to do so.

                  (b) No amendment may be made to this Section 11.3 or
which would change any rights with respect to any Shares of the Trust by
reducing the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto, except
with the vote of the holders of two-thirds of the Shares of the Trust.
Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders.

                  (c) An amendment duly adopted by the requisite vote of
the Board of Trustees and, if required, the Shareholders as aforesaid,
shall become effective at the time of such adoption or at such other time
as may be designated by the Board of Trustees or Shareholders, as the case
may be. A certification in recordable form signed by a majority of the
Trustees setting forth an amendment and reciting that it was duly adopted
by the Trustees and, if required, the Shareholders as aforesaid, or a copy
of the Declaration, as amended, in recordable form, and executed by a
majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust or at such other time designated
by the Board.

            Notwithstanding any other provision hereof, until such time as
a Registration Statement under the Securities Act of 1933, as amended,
covering the first public offering of Shares of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees or by an instrument
signed by a majority of the Trustees.

            11.4 Merger, Consolidation and Sale of Assets. The Trust may
merge or consolidate with any other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all
of the Trust Property or the property, including its good will, upon such
terms and conditions and for such consideration when and as authorized by
two-thirds of the Trustees and approved by a majority vote of the affected
Shareholders and any such merger, consolidation, sale, lease or exchange
shall be determined for all purposes to have been accomplished under and
pursuant to the statutes of the State of Delaware.

            11.5 Incorporation. Upon approval by Shareholders, the Trustees
may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust,
partnership, association or other organization to take over all of the
Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer
the Trust Property to any such corporation, trust, limited liability
company, association or organization in exchange for the shares or
securities thereof, or otherwise, and to lend money to, subscribe for the
shares or securities of, and enter into any contracts with any such
corporation, trust, limited liability company, partnership, association or
organization, or any corporation, partnership, trust, limited liability
company, association or organization in which the Trust holds or is about
to acquire shares or any other interests. The Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any
such corporation, trust, limited liability company, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to
organize or assist in organizing one or more corporations, trusts, limited
liability companies, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organizations or entities.

            11.6 Conversion. (a) The Trust may be converted at any time
from a "closed-end company" to an "open-end company" as those terms are
defined by the 1940 Act, upon the approval of such a proposal, together
with the necessary amendments to this Declaration to permit such a
conversion, by a majority of the Trustees then in office and by the holders
of not less than two-thirds (66-2/3%) of the Trust's outstanding Shares
entitled to vote, except that if such proposal is recommended by two-
thirds of the total number of Trustees then in office, such proposal may be
adopted by a Majority Shareholder Vote. From time to time, the Trustees may
consider recommending to the Shareholders a proposal to convert the Trust
from a "closed-end company" to an "open-end company." Upon the
recommendation and subsequent adoption of such a proposal and the necessary
amendments to this Declaration to permit such a conversion of the Trust's
outstanding Shares entitled to vote, the Trust shall, upon complying with
any requirements of the 1940 Act and state law, become an "open-end"
investment company. Such affirmative vote or consent shall be in addition
to the vote or consent of the holders of the Shares otherwise required by
law, or any agreement between the Trust and any national securities
exchange.

                  (b) The Trust may be converted at any time to a
master-feeder structure, upon the approval of such a proposal, together
with the necessary amendments to this Declaration to permit such a
conversion, by a majority of the Trustees then in office and by the holders
of not less than a majority of the Trust's outstanding Shares entitled to
vote. From time to time, the Trustees may consider recommending to the
Shareholders a proposal to convert the Trust to a master- feeder structure.
Upon the recommendation and subsequent adoption of such a proposal and the
necessary amendments to this Declaration to permit such a conversion of the
Trust's outstanding Shares entitled to vote, the Trust shall, upon
complying with any requirements of the 1940 Act and state law, convert to a
master-feeder structure.

            11.7 Certain Transactions. (a) Notwithstanding any other
provision of this Declaration and subject to the exceptions provided in
paragraph (d) of this Section, the types of transactions described in
paragraph (c) of this Section shall require the affirmative vote or consent
of the holders of seventy- five percent (75%) of the Shares of each class
outstanding and entitled to vote, voting as a class, when a Principal
Shareholder (as defined in paragraph (b) of this Section) is a party to the
transaction. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by
the terms of any class or series of preferred stock, whether now or
hereafter authorized, or any agreement between the Trust and any national
securities exchange.

            (b) The term "Principal Shareholder" shall mean any
corporation, Person or other entity which is the beneficial owner, directly
or indirectly, of five percent (5%) or more of the outstanding Shares and
shall include any affiliate or associate, as such terms are defined in
clause (ii) below, of a Principal Shareholder. For the purposes of this
Section, in addition to the Shares which a corporation, Person or other
entity beneficially owns directly, (a) any corporation, Person or other
entity shall be deemed to be the beneficial owner of any Shares (i) which
it has the right to acquire pursuant to any agreement or upon exercise of
conversion rights or warrants, or otherwise (but excluding share options
granted by the Trust) or (ii) which are beneficially owned, directly or
indirectly (including Shares deemed owned through application of clause (i)
above), by any other corporation, Person or entity with which its
"affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of Shares, or which is its "affiliate" or "associate" as those
terms are defined in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, and (b) the outstanding Shares shall
include Shares deemed owned through application of clauses (i) and (ii)
above but shall not include any other Shares which may be issuable pursuant
to any agreement, or upon exercise of conversion rights or warrants, or
otherwise.

            (c) This Section shall apply to the following transactions:

           (i) The merger or consolidation of the Trust or any subsidiary
of the Trust with or into any Principal Shareholder.

           (ii) The issuance of any securities of the Trust to any
Principal Shareholder for cash(other than pursuant to any automatic
dividend reinvestment plan).

          (iii) The sale, lease or exchange of all or any substantial part
of the assets of the Trust to any Principal Shareholder (except assets
having an aggregate fair market value of less than $1,000,000, aggregating
for the purpose of such computation all assets sold, leased or exchanged in
any series of similar transactions within a twelve-month period.)

           (iv) The sale, lease or exchange to the Trust or any subsidiary
thereof, in exchange for securities of the Trust of any assets of any
Principal Shareholder (except assets having an aggregate fair market value
of less than $1,000,000, aggregating for the purposes of such computation
all assets sold, leased or exchanged in any series of similar transactions
within a twelve-month period).

            (d) The provisions of this Section shall not be applicable to
(i) any of the transactions described in paragraph (c) of this Section if
two-thirds of the Board of Trustees of the Trust shall by resolution have
approved a memorandum of understanding with such Principal Shareholder with
respect to and substantially consistent with such transaction, or (ii) any
such transaction with any corporation of which a majority of the
outstanding shares of all classes of a stock normally entitled to vote in
elections of directors is owned of record or beneficially by the Trust and
its subsidiaries.

            (e) The Board of Trustees shall have the power and duty to
determine for the purposes of this Section on the basis of information
known to the Trust whether (i) a corporation, person or entity beneficially
owns five percent (5%) or more of the outstanding Shares, (ii) a
corporation, person or entity is an "affiliate" or "associate" (as defined
above) of another, (iii) the assets being acquired or leased to or by the
Trust or any subsidiary thereof constitute a substantial part of the assets
of the Trust and have an aggregate fair market value of less than
$1,000,000, and (iv) the memorandum of understanding referred to in
paragraph (d) hereof is substantially consistent with the transaction
covered thereby. Any such determination shall be conclusive and binding for
all purposes of this Section.


                             ARTICLE XII

                            Miscellaneous

            12.1 Filing. (a) This Declaration and any amendment hereto
shall be filed in such places as may be required or as the Trustees deem
appropriate. Each amendment shall be accompanied by a certificate signed
and acknowledged by a Trustee stating that such action was duly taken in a
manner provided herein, and shall, upon insertion in the Trust's minute
book, be conclusive evidence of all amendments contained therein. A
restated Declaration, containing the original Declaration and all
amendments theretofore made, may be executed from time to time by a
majority of the Trustees and shall, upon insertion in the Trust's minute
book, be conclusive evidence of all amendments contained therein and may
thereafter be referred to in lieu of the original Declaration and the
various amendments thereto.

            (b) The Trustees hereby authorize and direct a Certificate of
Trust, in the form attached hereto as Exhibit A, to be executed and filed
with the Office of the Secretary of State of the State of Delaware in
accordance with the Delaware Business Trust Act.

            12.2 Resident Agent. The Trust shall maintain a resident agent
in the State of Delaware, which agent shall initially be The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 The Trustees
may designate a successor resident agent, provided, however, that such
appointment shall not become effective until written notice thereof is
delivered to the office of the Secretary of the State.

            12.3 Governing Law. This Declaration is executed by the
Trustees and delivered in the State of Delaware and with reference to the
laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to laws of said State and reference shall be specifically made to
the business corporation law of the State of Delaware as to the
construction of matters not specifically covered herein or as to which an
ambiguity exists, although such law shall not be viewed as limiting the
powers otherwise granted to the Trustees hereunder and any ambiguity shall
be viewed in favor of such powers.

            12.4 Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such original
counterpart.

            12.5 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the name of the Trust, (c) the due authorization of the
execution of any instrument or writing, (d) the form of any vote passed at
a meeting of Trustees or Shareholders, (e) the fact that the number of
Trustees or Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (f) the form of
any By Laws adopted by or the identity of any officers elected by the
Trustees, or (g) the existence of any fact or facts which in any manner
relate to the affairs of the Trust, shall be conclusive evidence as to the
matters so certified in favor of any person dealing with the Trustees and
their successors.

            12.6  Provisions in Conflict with Law or Regulation.

                  (a) The provisions of this Declaration are severable, and
if the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable
laws and regulations, the conflicting provision shall be deemed never to
have constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior
to such determination.

                  (b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction
and shall not in any manner affect such provision in any other jurisdiction
or any other provision of this Declaration in any jurisdiction.


            IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.


                                    /s/ Laurence D. Fink
                                    __________________________________
                                    Laurence D. Fink
                                    Sole Trustee



                                                                  Exhibit A

                        CERTIFICATE OF TRUST
                                 OF
             BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST

            This Certificate of Trust of BlackRock California Municipal
Income Trust (the "Trust"), dated March 30, 2001, is being duly executed
and filed by Laurence D. Fink, as sole trustee (the "Sole Trustee"), to
form a business trust under the Delaware Business Trust Act (12 Del. C.
Section 3801, et seq.).

            1. Name. The name of the business trust formed hereby is
BlackRock California Municipal Income Trust.

            2. Registered Office; Registered Agent. The business address of
the registered office of the Trust in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street in the City of Wilmington,
19801. The name of the Trust's registered agent at such address is The
Corporation Trust Company.

            3. Address of Sole Trustee. The business address of the Sole
Trustee is 345 Park Avenue, New York, New York, 10154.

            4. Effective Date. This Certificate of Trust shall be effective
upon the date and time of filing.

            5. Investment Company. The Trust will become an investment
company registered under the Investment Company Act of 1940, as amended.

              IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Trust as of the date first above-written.


                                    By: /s/ Laurence D. Fink
                                       __________________________________
                                       Laurence D. Fink
                                       Sole Trustee


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EXHIBIT (B)
<TEXT>


                                                              Exhibit (b)



                               BY-LAWS


                                 OF

             BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST








                          TABLE OF CONTENTS

                                                                  Page

ARTICLE I - Shareholder Meetings....................................1
      1.1  Chairman.................................................1
      1.2  Proxies; Voting..........................................1
      1.3  Fixing Record Dates......................................1
      1.4  Inspectors of Election...................................1
      1.5  Records at Shareholder Meetings..........................2

ARTICLE II - Trustees...............................................3
      2.1  Annual and Regular Meetings..............................3
      2.2  Chairman; Records........................................3

ARTICLE III - Officers..............................................3
      3.1  Officers of the Trust....................................3
      3.2  Election and Tenure......................................3
      3.3  Removal of Officers......................................4
      3.4  Bonds and Surety.........................................4
      3.5  Chairman, President, and Vice Presidents.................4
      3.6  Secretary................................................5
      3.7  Treasurer................................................5
      3.8  Other Officers and Duties................................6

ARTICLE IV - Miscellaneous..........................................6
      4.1  Depositories.............................................6
      4.2  Signatures...............................................7
      4.3  Seal.....................................................7

ARTICLE V - Stock Transfers.........................................7
      5.1  Transfer Agents, Registrars and the Like.................7
      5.2  Transfer of Shares.......................................7
      5.3  Registered Shareholders..................................8

ARTICLE VI - Amendment of By-Laws...................................8
      6.1  Amendment and Repeal of By-Laws..........................8




                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST

                                  BY-LAWS


            These By-Laws are made and adopted pursuant to Section 3.9 of
the Agreement and Declaration of Trust establishing BlackRock California
Municipal Income Trust dated as of March 30, 2001, as from time to time
amended (hereinafter called the "Declaration"). All words and terms
capitalized in these By-Laws shall have the meaning or meanings set forth
for such words or terms in the Declaration.


                                 ARTICLE II

                            Shareholder Meetings

            2.2 Chairman. The Chairman, if any, shall act as chairman at
all meetings of the Shareholders; in the Chairman's absence, the Trustee or
Trustees present at each meeting may elect a temporary chairman for the
meeting, who may be one of themselves.

            2.4 Proxies; Voting. Shareholders may vote either in person or
by duly executed proxy and each full share represented at the meeting shall
have one vote, all as provided in Article 10 of the Declaration.

            2.6 Fixing Record Dates. For the purpose of determining the
Shareholders who are entitled to notice of or to vote or act at any
meeting, including any adjournment thereof, or who are entitled to
participate in any dividends, or for any other proper purpose, the Trustees
may from time to time, without closing the transfer books, fix a record
date in the manner provided in Section 10.3 of the Declaration. If the
Trustees do not prior to any meeting of Shareholders so fix a record date
or close the transfer books, then the date of mailing notice of the meeting
or the date upon which the dividend resolution is adopted, as the case may
be, shall be the record date.

            2.8 Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the Chairman, if any, of any meeting of Shareholders may, and on
the request of any Shareholder or Shareholder proxy shall, appoint
Inspectors of Election of the meeting. The number of Inspectors of Election
shall be either one or three. If appointed at the meeting on the request of
one or more Shareholders or proxies, a majority of Shares present shall
determine whether one or three Inspectors of Election are to be appointed,
but failure to allow such determination by the Shareholders shall not
affect the validity of the appointment of Inspectors of Election. In case
any person appointed as Inspector of Election fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the
Trustees in advance of the convening of the meeting or at the meeting by
the person acting as chairman. The Inspectors of Election shall determine
the number of Shares outstanding, the Shares represented at the meeting,
the existence of a quorum, the authenticity, validity and effect of
proxies, shall receive votes, ballots or consents, shall hear and determine
all challenges and questions in any way arising in connection with the
right to vote, shall count and tabulate all votes or consents, determine
the results, and do such other acts as may be proper to conduct the
election or vote with fairness to all Shareholders. If there are three
Inspectors of Election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. On
request of the Chairman, if any, of the meeting, or of any Shareholder or
Shareholder proxy, the Inspectors of Election shall make a report in
writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.

            2.10 Records at Shareholder Meetings. At each meeting of the
Shareholders, there shall be made available for inspection at a convenient
time and place during normal business hours, if requested by Shareholders,
the minutes of the last previous Annual or Special Meeting of Shareholders
of the Trust and a list of the Shareholders of the Trust, as of the record
date of the meeting or the date of closing of transfer books, as the case
may be. Such list of Shareholders shall contain the name and the address of
each Shareholder in alphabetical order and the number of Shares owned by
such Shareholder. Shareholders shall have such other rights and procedures
of inspection of the books and records of the Trust as are granted to
shareholders of a Delaware business corporation.


                                 ARTICLE IV

                                  Trustees

            4.2 Annual and Regular Meetings. Meetings of the Trustees shall
be held from time to time upon the call of the Chairman, if any, the
President, the Secretary or any two Trustees. Regular meetings of the
Trustees may be held without call or notice and shall generally be held
quarterly. Neither the business to be transacted at, nor the purpose of,
any meeting of the Board of Trustees need be stated in the notice or waiver
of notice of such meeting, and no notice need be given of action proposed
to be taken by unanimous written consent.

            4.4 Chairman; Records. The Chairman, if any, shall act as
chairman at all meetings of the Trustees; in absence of a chairman, the
Trustees present shall elect one of their number to act as temporary
chairman. The results of all actions taken at a meeting of the Trustees, or
by unanimous written consent of the Trustees, shall be recorded by the
person appointed by the Board of Trustees as the meeting secretary.


                                 ARTICLE VI

                                  Officers

            6.2 Officers of the Trust. The officers of the Trust shall
consist of a Chairman, if any, a President, a Secretary, a Treasurer and
such other officers or assistant officers as may be elected or authorized
by the Trustees. Any two or more of the offices may be held by the same
Person, except that the same person may not be both President and
Secretary. The Chairman, if any, shall be a Trustee, but no other officer
of the Trust need be a Trustee.

            6.4 Election and Tenure. At the initial organization meeting,
the Trustees shall elect the Chairman, if any, President, Secretary,
Treasurer and such other officers as the Trustees shall deem necessary or
appropriate in order to carry out the business of the Trust. Such officers
shall serve at the pleasure of the Trustees or until their successors have
been duly elected and qualified. The Trustees may fill any vacancy in
office or add any additional officers at any time.

            6.6 Removal of Officers. Any officer may be removed at any
time, with or without cause, by action of a majority of the Trustees. This
provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of
action which any officer may have as a result of removal in breach of a
contract of employment. Any officer may resign at any time by notice in
writing signed by such officer and delivered or mailed to the Chairman, if
any, President, or Secretary, and such resignation shall take effect
immediately upon receipt by the Chairman, if any, President, or Secretary,
or at a later date according to the terms of such notice in writing.

            6.8 Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of such officer's duties
in such amount and with such sureties as the Trustees may determine.

            6.10 Chairman, President, and Vice Presidents. The Chairman, if
any, shall, if present, preside at all meetings of the Shareholders and of
the Trustees and shall exercise and perform such other powers and duties as
may be from time to time assigned to such person by the Trustees. Subject
to such supervisory powers, if any, as may be given by the Trustees to the
Chairman, if any, the President shall be the chief executive officer of the
Trust and, subject to the control of the Trustees, shall have general
supervision, direction and control of the business of the Trust and of its
employees and shall exercise such general powers of management as are
usually vested in the office of President of a corporation. Subject to
direction of the Trustees, the Chairman, if any, and the President shall
each have power in the name and on behalf of the Trust to execute any and
all loans, documents, contracts, agreements, deeds, mortgages, registration
statements, applications, requests, filings and other instruments in
writing, and to employ and discharge employees and agents of the Trust.
Unless otherwise directed by the Trustees, the Chairman, if any, and the
President shall each have full authority and power, on behalf of all of the
Trustees, to attend and to act and to vote, on behalf of the Trust at any
meetings of business organizations in which the Trust holds an interest, or
to confer such powers upon any other persons, by executing any proxies duly
authorizing such persons. The Chairman, if any, and the President shall
have such further authorities and duties as the Trustees shall from time to
time determine. In the absence or disability of the President, the
Vice-Presidents in order of their rank as fixed by the Trustees or, if more
than one and not ranked, the Vice-President designated by the Trustees,
shall perform all of the duties of the President, and when so acting shall
have all the powers of and be subject to all of the restrictions upon the
President. Subject to the direction of the Trustees, and of the President,
each Vice-President shall have the power in the name and on behalf of the
Trust to execute any and all instruments in writing, and, in addition,
shall have such other duties and powers as shall be designated from time to
time by the Trustees or by the President.

            6.12 Secretary. The Secretary shall maintain the minutes of all
meetings of, and record all votes of, Shareholders, Trustees and the
Executive Committee, if any. The Secretary shall be custodian of the seal
of the Trust, if any, and the Secretary (and any other person so authorized
by the Trustees) shall affix the seal, or if permitted, facsimile thereof,
to any instrument executed by the Trust which would be sealed by a Delaware
business corporation executing the same or a similar instrument and shall
attest the seal and the signature or signatures of the officer or officers
executing such instrument on behalf of the Trust. The Secretary shall also
perform any other duties commonly incident to such office in a Delaware
business corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.

            6.14 Treasurer. Except as otherwise directed by the Trustees,
the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees
and of the President all powers and duties normally incident to the office.
The Treasurer may endorse for deposit or collection all notes, checks and
other instruments payable to the Trust or to its order. The Treasurer shall
deposit all funds of the Trust in such depositories as the Trustees shall
designate. The Treasurer shall be responsible for such disbursement of the
funds of the Trust as may be ordered by the Trustees or the President. The
Treasurer shall keep accurate account of the books of the Trust's
transactions which shall be the property of the Trust, and which together
with all other property of the Trust in the Treasurer's possession, shall
be subject at all times to the inspection and control of the Trustees.
Unless the Trustees shall otherwise determine, the Treasurer shall be the
principal accounting officer of the Trust and shall also be the principal
financial officer of the Trust. The Treasurer shall have such other duties
and authorities as the Trustees shall from time to time determine.
Notwithstanding anything to the contrary herein contained, the Trustees may
authorize any adviser, administrator, manager or transfer agent to maintain
bank accounts and deposit and disburse funds of any series of the Trust on
behalf of such series.

            6.16 Other Officers and Duties. The Trustees may elect such
other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of
the Trust. Assistant officers shall act generally in the absence of the
officer whom they assist and shall assist that officer in the duties of the
office. Each officer, employee and agent of the Trust shall have such other
duties and authority as may be conferred upon such person by the Trustees
or delegated to such person by the President.


                                ARTICLE VIII

                               Miscellaneous

            8.2 Depositories. In accordance with Section 7.1 of the
Declaration, the funds of the Trust shall be deposited in such custodians
as the Trustees shall designate and shall be drawn out on checks, drafts or
other orders signed by such officer, officers, agent or agents (including
the adviser, administrator or manager), as the Trustees may from time to
time authorize.

            8.4 Signatures. All contracts and other instruments shall be
executed on behalf of the Trust by its properly authorized officers, agent
or agents, as provided in the Declaration or By-laws or as the Trustees may
from time to time by resolution provide.

            8.6 Seal. The Trust is not required to have any seal, and the
adoption or use of a seal shall be purely ornamental and be of no legal
effect. The seal, if any, of the Trust may be affixed to any instrument,
and the seal and its attestation may be lithographed, engraved or otherwise
printed on any document with the same force and effect as if it had been
imprinted and affixed manually in the same manner and with the same force
and effect as if done by a Delaware business corporation. The presence or
absence of a seal shall have no effect on the validity, enforceability or
binding nature of any document or instrument that is otherwise duly
authorized, executed and delivered.


                                 ARTICLE X

                              Stock Transfers

            10.2 Transfer Agents, Registrars and the Like. As provided in
Section 6.7 of the Declaration, the Trustees shall have authority to employ
and compensate such transfer agents and registrars with respect to the
Shares of the Trust as the Trustees shall deem necessary or desirable. In
addition, the Trustees shall have power to employ and compensate such
dividend disbursing agents, warrant agents and agents for the reinvestment
of dividends as they shall deem necessary or desirable. Any of such agents
shall have such power and authority as is delegated to any of them by the
Trustees.

            10.4 Transfer of Shares. The Shares of the Trust shall be
transferable on the books of the Trust only upon delivery to the Trustees
or a transfer agent of the Trust of proper documentation as provided in
Section 6.8 of the Declaration. The Trust, or its transfer agents, shall be
authorized to refuse any transfer unless and until presentation of such
evidence as may be reasonably required to show that the requested transfer
is proper.

            10.6 Registered Shareholders. The Trust may deem and treat the
holder of record of any Shares as the absolute owner thereof for all
purposes and shall not be required to take any notice of any right or claim
of right of any other person.


                                ARTICLE XII

                            Amendment of By-Laws

            12.2 Amendment and Repeal of By-Laws. In accordance with
Section 3.9 of the Declaration, the Trustees shall have the power to amend
or repeal the By-Laws or adopt new By-Laws at any time; provided, however,
that By-Laws adopted by the Shareholders may, if such By-Laws so state, be
altered, amended or repealed only by the Shareholders by an affirmative
vote of a majority of the outstanding voting securities of the Trust, and
not by the Trustees. Action by the Trustees with respect to the By-Laws
shall be taken by an affirmative vote of a majority of the Trustees. The
Trustees shall in no event adopt By-Laws which are in conflict with the
Declaration, and any apparent inconsistency shall be construed in favor of
the related provisions in the Declaration.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>EXHIBIT (E)
<TEXT>


                                                                Exhibit (e)


                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST

                    AUTOMATIC DIVIDEND REINVESTMENT PLAN


                            TERMS AND CONDITIONS

      Pursuant to the Automatic Dividend Reinvestment Plan (the "Plan") of
BlackRock California Municipal Income Trust (the "Trust"), unless a holder
(each, a "Shareholder") of the Trust's common shares of beneficial interest
(the "Common Shares") otherwise elects, all dividends and capital gain
distributions on such Shareholder's Common Shares will be automatically
reinvested by State Street Bank & Trust Co. ("State Street Bank"), as agent
for Shareholders in administering the Plan (the "Plan Agent"), in
additional Common Shares of the Trust. Shareholders who elect not to
participate in the Plan will receive all dividends and other distributions
in cash paid by check mailed directly to the Shareholder of record (or, if
the Common Shares are held in street or other nominee name, then to such
nominee) by State Street Bank as the Dividend Disbursing Agent. Such
participants may elect not to participate in the Plan and to receive all
dividends and capital gain distributions in cash by sending written
instructions to State Street Bank, as the Dividend Disbursing Agent, at the
address set forth below. Participation in the Plan is completely voluntary
and may be terminated or resumed at any time without penalty by written
notice if received by the Plan Agent not less than ten days prior to any
dividend record date; otherwise such termination or resumption will be
effective with respect to any subsequently declared dividend or other
distribution.

      The Plan Agent will open an account for each Shareholder under the
Plan in the same name in which such Shareholder's Common Shares are
registered. Whenever the Trust declares an income dividend or a capital
gain distribution (collectively referred to as "dividends") payable in
cash, non-participants in the Plan will receive cash and participants in
the Plan will receive the equivalent in Common Shares. The Common Shares
will be acquired by the Plan Agent for the participants' accounts,
depending upon the circumstances described below, either (i) through
receipt of additional unissued but authorized Common Shares from the Trust
("newly issued Common Shares") or (ii) by purchase of outstanding Common
Shares on the open market ("open-market purchases") on the New York Stock
Exchange (the "NYSE"), the primary national securities exchange on which
the common shares are traded (the "Exchange"), or elsewhere. If, on the
record date for any dividend, the net asset value per Common Share is equal
to or less than the market price per Common Share (such condition being
referred to herein as "market premium"), the Plan Agent will invest the
dividend amount in newly issued Common Shares on behalf of the
participants. The number of newly issued Common Shares to be credited to
each participant's account will be determined by dividing the dollar amount
of the dividend by the net asset value per Common Share on the date the
Common Shares are issued. If, on the record date for any dividend, the net
asset value per Common Share is greater than the market value (such
condition being referred to herein as "market discount"), the Plan Agent
will invest the dividend amount in Common Shares acquired on behalf of the
participants in open-market purchases.

      In the event of a market discount on the record date for any
dividend, the Plan Agent will have until the last business day before the
next date on which the Common Shares trade on an "ex-dividend" basis or 30
days after the record date for such dividend, whichever is sooner (the
"last purchase date"), to invest the dividend amount in Common Shares
acquired in open-market purchases. It is contemplated that the Trust will
pay monthly income dividends. Therefore, the period during which
open-market purchases can be made will exist only from the record date of
each dividend through the date before the next "ex-dividend" date which
typically will be approximately ten days. If, before the Plan Agent has
completed its open-market purchases, the market price of a Common Share
exceeds the net asset value per Common Share, the average per Common Share
purchase price paid by the Plan Agent may exceed the net asset value of the
Common Shares, resulting in the acquisition of fewer Common Shares than if
the dividend had been paid in newly issued Common Shares on the dividend
record date. Because of the foregoing difficulty with respect to open
market purchases, the Plan provides that if the Plan Agent is unable to
invest the full dividend amount in open market purchases during the
purchase period or if the market discount shifts to a market premium during
the purchase period, the Plan Agent may cease making open-market purchases
and may invest the uninvested portion of the dividend amount in newly
issued Common Shares at the net asset value per Common Share at the close
of business on the last purchase date.

      The Plan Agent maintains all Shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts,
including information needed by Shareholders for tax records. Common Shares
in the account of each Plan participant will be held by the Plan Agent on
behalf of the Plan participant.

      In the case of Shareholders such as banks, brokers or nominees that
hold Common Shares for others who are the beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of Common Shares
certified from time to time by the record Shareholder and held for the
account of beneficial owners who participate in the Plan.

      There will be no brokerage charges with respect to Common Shares
issued directly by the Trust as a result of dividends or capital gains
distributions payable either in Common Shares or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open- market purchases in connection with
the reinvestment of dividends.

VOTING

      Each Shareholder proxy will include those Common Shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for Common Shares
held pursuant to the Plan in accordance with the instructions of the
participants.

TAXATION

      The automatic reinvestment of dividends will not relieve participants
of any federal, state or local income tax that may be payable (or required
to be withheld) on such dividends.

AMENDMENT OF THE PLAN

      The Plan may be amended or terminated by the Trust or the Plan Agent.
There is no direct service charge to participants in the Plan; however, the
Trust reserves the right to amend the Plan to include a service charge
payable by the participants. Notice will be sent to Plan participants of
any amendments as soon as practicable after such action by the Trust.

INQUIRIES REGARDING THE PLAN

      All correspondence concerning the Plan should be directed to the Plan
Agent at 225 Franklin Street, Boston, MA 02110, 1-800-699-1236.

APPLICABLE LAW

      These terms and conditions shall be governed by the laws of the State
of New York without regard to its conflicts of laws provisions.

EXECUTION

            To record the adoption of the Plan as of [_________], 2001, the
Trust has caused this Plan to be executed in the name and on behalf of the
Trust by a duly authorized officer.


                                    BLACKROCK CALIFORNIA
                                    MUNICIPAL INCOME TRUST,
                                    a Delaware business trust


                                   ----------------------------------
                                   By:
                                   Name:
                                   Title:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>EXHIBIT (G)
<TEXT>


                                                                Exhibit (g)

                      INVESTMENT MANAGEMENT AGREEMENT


            AGREEMENT, dated _____________, between BlackRock California
Municipal Income Trust (the "Trust"), a Delaware business trust, and
BlackRock Advisors, Inc. (the "Advisor"), a Delaware corporation.

            WHEREAS, Advisor has agreed to furnish investment advisory
services to BlackRock California Municipal Income Trust (the "Trust"), a
closed-end management investment company registered under the Investment
Company Act of 1940, as amended (the "Act");

            WHEREAS, this Agreement has been approved in accordance with
the provisions of the Act, and the Advisor is willing to furnish such
services upon the terms and conditions herein set forth;

            NOW, THEREFORE, in consideration of the mutual premises and
covenants herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed by and between the
parties hereto as follows:

            1. In General. The Advisor agrees, all as more fully set forth
herein, to act as investment adviser to the Trust with respect to the
investment of the Trust's assets and to supervise and arrange for the
day-to-day operations of the Trust and the purchase of securities for and
the sale of securities held in the investment portfolio of the Trust.

            2. Duties and Obligations of the Advisor with Respect to
Investment of Assets of the Trust. Subject to the succeeding provisions of
this section and subject to the direction and control of the Trust's Board
of Trustees, the Advisor shall (i) act as investment adviser for and
supervise and manage the investment and reinvestment of the Trust's assets
and in connection therewith have complete discretion in purchasing and
selling securities and other assets for the Trust and in voting, exercising
consents and exercising all other rights appertaining to such securities
and other assets on behalf of the Trust; (ii) supervise continuously the
investment program of the Trust and the composition of its investment
portfolio; (iii) arrange, subject to the provisions of paragraph 4 hereof,
for the purchase and sale of securities and other assets held in the
investment portfolio of the Trust; and (iv) provide investment research to
the Trust.

            3. Duties and Obligations of Advisor with Respect to the
Administration of the Trust. The Advisor also agrees to furnish office
facilities and equipment and clerical, bookkeeping and administrative
services (other than such services, if any, provided by the Trust's
Custodian, Transfer Agent and Dividend Disbursing Agent and other service
providers) for the Trust. To the extent requested by the Trust, the Advisor
agrees to provide the following administrative services:

                  (a) Oversee the determination and publication of the
Trust's net asset value in accordance with the Trust's policy as adopted
from time to time by the Board of Trustees;

                  (b) Oversee the maintenance the Trust's Custodian and
Transfer Agent and Dividend Disbursing Agent of certain books and records
of the Trust as required under Rule 31a-1(b)(4) of the Act and maintain (or
oversee maintenance by such other persons as approved by the Board of
Trustees) such other books and records required by law or for the proper
operation of the Trust;

                  (c) Oversee the preparation and filing of the Trust's
federal, state and local income tax returns and any other required tax
returns;

                  (d)  Review the appropriateness of and arrange for payment
of the Trust's expenses;

                  (e) Prepare for review and approval by officers of the
Trust financial information for the Trust's semi-annual and annual reports,
proxy statements and other communications with shareholders required or
otherwise to be sent to Trust shareholders, and arrange for the printing
and dissemination of such reports and communications to shareholders;

                  (f) Prepare for review by an officer of the Trust the
Trust's periodic financial reports required to be filed with the Securities
and Exchange Commission ("SEC") on Form N-SAR and such other reports, forms
and filings, as may be mutually agreed upon;

                  (g) Prepare reports relating to the business and affairs
of the Trust as may be mutually agreed upon and not otherwise appropriately
prepared by the Trust's custodian, counsel or auditors;

                  (h) Prepare such information and reports as may be
required by any stock exchange or exchanges on which the Trust's shares are
listed;

                  (i) Make such reports and recommendations to the Board of
Trustees concerning the performance of the independent accountants as the
Board of Trustees may reasonably request or deems appropriate;

                  (j) Make such reports and recommendations to the Board of
Trustees concerning the performance and fees of the Trust's Custodian and
Transfer and Dividend disbursing agent as the Board of Trustees may
reasonably request or deems appropriate;

                  (k)  Oversee and review calculations of fees paid to the
Trust's service providers;

                  (l)  Oversee the Trust's portfolio and perform necessary
calculations as required under Section 18 of the Act;

                  (m) Consult with the Trust's officers, independent
accountants, legal counsel, custodian, accounting agent and transfer and
dividend disbursing agent in establishing the accounting policies of the
Trust and monitor financial and shareholder accounting services;

                  (n)  Review implementation of any share purchase programs
authorized by the Board of Trustees;

                  (o) Determine the amounts available for distribution as
dividends and distributions to be paid by the Trust to its shareholders;
prepare and arrange for the printing of dividend notices to shareholders;
and provide the Trust's dividend disbursing agent and custodian with such
information as is required for such parties to effect the payment of
dividends and distributions and to implement the Trust's dividend
reinvestment plan;

                  (p)  Prepare such information and reports as may be required
by any banks from which the Trust borrows funds;

                  (q) Provide such assistance to the Custodian and the
Trust's counsel and auditors as generally may be required to properly carry
on the business and operations of the Trust;

                  (r) Assist in the preparation and filing of Forms 3, 4,
and 5 pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended, and Section 30(f) of the Act for the officers and trustees of the
Trust, such filings to be based on information provided by those persons;

                  (s) Respond to or refer to the Trust's officers or
transfer agent, shareholder (including any potential shareholder) inquiries
relating to the Trust.

                  (t)  Supervise any other aspects of the Trust's
administration as may be agreed to by the Trust and the Advisor.

            All services are to be furnished through the medium of any
directors, officers or employees of the Advisor or its affiliates as the
Advisor deems appropriate in order to fulfill its obligations hereunder.

            The Trust will reimburse the Advisor or its affiliates for all
out-of-pocket expenses incurred by them in connection with the performance
of the administrative services described in this paragraph 3.

            4. Covenants. In the performance of its duties under this
Agreement, the Advisor shall at all times conform to, and act in accordance
with, any requirements imposed by:

                  (a) (i) the provisions of the Act and the Investment
Advisers Act of 1940, as amended, and all applicable Rules and Regulations
of the Securities and Exchange Commission (the "SEC"); (ii) any other
applicable provision of law; (iii) the provisions of the Agreement and
Declaration of Trust and By-Laws of the Trust, as such documents are
amended from time to time; (iv) the investment objectives and policies of
the Trust as set forth in its Registration Statement on Form N-2; and (v)
any policies and determinations of the Board of Trustees of the Trust;

                  (b) will place orders either directly with the issuer or
with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, the Advisor will
attempt to obtain the best price and the most favorable execution of its
orders. In placing orders, the Advisor will consider the experience and
skill of the firm's securities traders as well as the firm's financial
responsibility and administrative efficiency. Consistent with this
obligation, the Advisor may select brokers on the basis of the research,
statistical and pricing services they provide to the Trust and other
clients of the Advisor. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Advisor hereunder. A commission paid to such brokers may
be higher than that which another qualified broker would have charged for
effecting the same transaction, provided that the Advisor determines in
good faith that such commission is reasonable in terms either of the
transaction or the overall responsibility of the Advisor to the Trust and
its other clients and that the total commissions paid by the Trust will be
reasonable in relation to the benefits to the Trust over the long-term. In
addition, the Advisor is authorized to take into account the sale of shares
of the Trust in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Advisor), provided that the Advisor believes that the
quality of the transaction and the commission are comparable to what they
would be with other qualified firms. In no instance, however, will the
Trust's securities be purchased from or sold to the Advisor, or any
affiliated person thereof, except to the extent permitted by the SEC or by
applicable law;

                  (c) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial
banking operations of its affiliates. When the Advisor makes investment
recommendations for the Trust, its investment advisory personnel will not
inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Trust's account are customers of the
commercial department of its affiliates; and

                  (d) will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust, and the
Trust's prior, current or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Advisor may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities,
or when so requested by the Trust.

            5. Services Not Exclusive. Nothing in this Agreement shall
prevent the Advisor or any officer, employee or other affiliate thereof
from acting as investment adviser for any other person, firm or
corporation, or from engaging in any other lawful activity, and shall not
in any way limit or restrict the Advisor or any of its officers, employees
or agents from buying, selling or trading any securities for its or their
own accounts or for the accounts of others for whom it or they may be
acting; provided, however, that the Advisor will undertake no activities
which, in its judgment, will adversely affect the performance of its
obligations under this Agreement.

            6. Books and Records. In compliance with the requirements of
Rule 31a-3 under the Act, the Advisor hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees
to surrender promptly to the Trust any such records upon the Trust's
request. The Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2 under the Act the records required to be maintained by Rule
31a-1 under the Act.

            7. Agency Cross Transactions. From time to time, the Advisor or
brokers or dealers affiliated with it may find themselves in a position to
buy for certain of their brokerage clients (each an "Account") securities
which the Advisor's investment advisory clients wish to sell, and to sell
for certain of their brokerage clients securities which advisory clients
wish to buy. Where one of the parties is an advisory client, the Advisor or
the affiliated broker or dealer cannot participate in this type of
transaction (known as a cross transaction) on behalf of an advisory client
and retain commissions from one or both parties to the transaction without
the advisory client's consent. This is because in a situation where the
Advisor is making the investment decision (as opposed to a brokerage client
who makes his own investment decisions), and the Advisor or an affiliate is
receiving commissions from both sides of the transaction, there is a
potential conflicting division of loyalties and responsibilities on the
Advisor's part regarding the advisory client. The Securities and Exchange
Commission has adopted a rule under the Investment Advisers Act of 1940, as
amended, which permits the Advisor or its affiliates to participate on
behalf of an Account in agency cross transactions if the advisory client
has given written consent in advance. By execution of this Agreement, the
Trust authorizes the Advisor or its affiliates to participate in agency
cross transactions involving an Account. The Trust may revoke its consent
at any time by written notice to the Advisor.

            8. Expenses. During the term of this Agreement, the Advisor
will bear all costs and expenses of its employees and any overhead incurred
in connection with its duties hereunder and shall bear the costs of any
salaries or trustees fees of any officers or trustees of the Trust who are
affiliated persons (as defined in the Act) of the Advisor; provided that
the Board of Trustees of the Trust may approve reimbursement to the Advisor
of the pro rata portion of the salaries, bonuses, health insurance,
retirement benefits and all similar employment costs for the time spent on
Trust operations (other than the provision of investment advice and
administrative services required to be provided hereunder) of all personnel
employed by the Advisor who devote substantial time to Trust operations or
the operations of other investment companies advised by the Advisor.

            9. Compensation of the Advisor. (a) The Trust agrees to pay to
the Advisor and the Advisor agrees to accept as full compensation for all
services rendered by the Advisor as such, a monthly fee (the "Investment
Advisory Fee") in arrears at an annual rate equal to [ % of the average
weekly value of the Trust's net assets]. For any period less than a month
during which this Agreement is in effect, the fee shall be prorated
according to the proportion which such period bears to a full month of 28,
29, 30 or 31 days, as the case may be.

                  (b) For purposes of this Agreement, the net assets of the
Trust shall be calculated pursuant to the procedures adopted by resolutions
of the Trustees of the Trust for calculating the value of the Trust's
assets or delegating such calculations to third parties.

            10. Indemnity. (a) The Trust hereby agrees to indemnify the
Advisor, and each of the Advisor's directors, officers, employees, agents,
associates and controlling persons and the directors, partners, members,
officers, employees and agents thereof (including any individual who serves
at the Advisor's request as director, officer, partner, member, trustee or
the like of another entity) (each such person being an "Indemnitee")
against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees (all as provided in accordance with applicable state law)
reasonably incurred by such Indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative body in which
such Indemnitee may be or may have been involved as a party or otherwise or
with which such Indemnitee may be or may have been threatened, while acting
in any capacity set forth herein or thereafter by reason of such Indemnitee
having acted in any such capacity, except with respect to any matter as to
which such Indemnitee shall have been adjudicated not to have acted in good
faith in the reasonable belief that such Indemnitee's action was in the
best interest of the Trust and furthermore, in the case of any criminal
proceeding, so long as such Indemnitee had no reasonable cause to believe
that the conduct was unlawful; provided, however, that (1) no Indemnitee
shall be indemnified hereunder against any liability to the Trust or its
shareholders or any expense of such Indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv)
reckless disregard of the duties involved in the conduct of such
Indemnitee's position (the conduct referred to in such clauses (i) through
(iv) being sometimes referred to herein as "disabling conduct"), (2) as to
any matter disposed of by settlement or a compromise payment by such
Indemnitee, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided unless
there has been a determination that such settlement or compromise is in the
best interests of the Trust and that such Indemnitee appears to have acted
in good faith in the reasonable belief that such Indemnitee's action was in
the best interest of the Trust and did not involve disabling conduct by
such Indemnitee and (3) with respect to any action, suit or other
proceeding voluntarily prosecuted by any Indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of such action,
suit or other proceeding by such Indemnitee was authorized by a majority of
the full Board of Trustees of the Trust.

                  (b) The Trust shall make advance payments in connection
with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Trust receives a written
affirmation of the Indemnitee's good faith belief that the standard of
conduct necessary for indemnification has been met and a written
undertaking to reimburse the Trust unless it is subsequently determined
that such Indemnitee is entitled to such indemnification and if the
trustees of the Trust determine that the facts then known to them would not
preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for
such Indemnitee-undertaking, (B) the Trust shall be insured against losses
arising by reason of any lawful advance, or (C) a majority of a quorum
consisting of trustees of the Trust who are neither "interested persons" of
the Trust (as defined in Section 2(a)(19) of the Act) nor parties to the
proceeding ("Disinterested Non-Party Trustees") or an independent legal
counsel in a written opinion, shall determine, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Indemnitee ultimately will be found entitled to
indemnification.

                  (c) All determinations with respect to indemnification
hereunder shall be made (1) by a final decision on the merits by a court or
other body before whom the proceeding was brought that such Indemnitee is
not liable or is not liable by reason of disabling conduct, or (2) in the
absence of such a decision, by (i) a majority vote of a quorum of the
Disinterested Non-Party Trustees of the Trust, or (ii) if such a quorum is
not obtainable or, even if obtainable, if a majority vote of such quorum so
directs, independent legal counsel in a written opinion. All determinations
that advance payments in connection with the expense of defending any
proceeding shall be authorized shall be made in accordance with the
immediately preceding clause (2) above.

                  The rights accruing to any Indemnitee under these
provisions shall not exclude any other right to which such Indemnitee may
be lawfully entitled.

            11. Limitation on Liability. (a) The Advisor will not be liable
for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Trust in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties
under this Agreement.

                  (b) Notwithstanding anything to the contrary contained in
this Agreement, the parties hereto acknowledge and agree that, as provided
in Section 5.1 of Article V of the Declaration of Trust, this Agreement is
executed by the Trustees and/or officers of the Trust, not individually but
as such Trustees and/or officers of the Trust, and the obligations
hereunder are not binding upon any of the Trustees or Shareholders
individually but bind only the estate of the Trust.

            12. Duration and Termination. This Agreement shall become
effective as of the date hereof and, unless sooner terminated with respect
to the Trust as provided herein, shall continue in effect for a period of
two years. Thereafter, if not terminated, this Agreement shall continue in
effect with respect to the Trust for successive periods of 12 months,
provided such continuance is specifically approved at least annually by
both (a) the vote of a majority of the Trust's Board of Trustees or the
vote of a majority of the outstanding voting securities of the Trust at the
time outstanding and entitled to vote, and (b) by the vote of a majority of
the Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Trust at any time, without the payment
of any penalty, upon giving the Advisor 60 days' notice (which notice may
be waived by the Advisor), provided that such termination by the Trust
shall be directed or approved by the vote of a majority of the Trustees of
the Trust in office at the time or by the vote of the holders of a majority
of the voting securities of the Trust at the time outstanding and entitled
to vote, or by the Advisor on 60 days' written notice (which notice may be
waived by the Trust). This Agreement will also immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested person" and "assignment"
shall have the same meanings of such terms in the Act.)

            13. Notices. Any notice under this Agreement shall be in
writing to the other party at such address as the other party may designate
from time to time for the receipt of such notice and shall be deemed to be
received on the earlier of the date actually received or on the fourth day
after the postmark if such notice is mailed first class postage prepaid.

            14. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the Act.

            15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York for
contracts to be performed entirely therein without reference to choice of
law principles thereof and in accordance with the applicable provisions of
the Act.

            16. Use of the name BlackRock. The Advisor has consented to the
use by the Trust of the name or identifying word "BlackRock" in the name of
the Trust. Such consent is conditioned upon the employment of the Advisor
as the investment adviser to the Trust. The name or identifying word
"BlackRock" may be used from time to time in other connections and for
other purposes by the Advisor and any of its affiliates. The Advisor may
require the Trust to cease using "BlackRock" in the name of the Trust if
the Trust ceases to employ, for any reason, the Advisor, any successor
thereto or any affiliate thereof as investment advisor of the Trust.

            17. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding on, and shall
inure to the benefit of the parties hereto and their respective successors.

            18. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an
original counterpart, and all of which, together, shall constitute one
Agreement.

            IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly authorized officers, all
as of the day and the year first above written.

                               BLACKROCK CALIFORNIA MUNICIPAL
                                INCOME TRUST



                              By:_________________________________
                                 Name:
                                 Title:


                              BLACKROCK ADVISORS, INC.



                              By:_________________________________
                                 Name:
                                 Title:





                        BlackRock Advisors, Inc.
                            345 Park Avenue
                        New York, New York 10154


                                           _______________, 2001

BlackRock California Municipal Income Trust
100 Bellevue Parkway
Wilmington, Delaware 19809

Gentlemen:

            We are writing to confirm our understanding that BlackRock
California Municipal Income Trust (the "Trust") has a nonexclusive,
revocable license to use the word "BlackRock" in its name and that if
BlackRock Advisors, Inc. (the "Advisor") ceases to be the investment
adviser to the Trust, the Trust will cease using such name as promptly as
practicable, making all reasonable efforts to remove "BlackRock" from its
name including calling a special meeting of stockholders.

            Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Trust,
has informed us that the provision described above is contained in the
Trust's investment management agreement, and that continued use of the name
"BlackRock" if the Advisor ceases to be the investment adviser would
probably violate those provisions of the Investment Company Act of 1940, as
amended, that require that the Trust's name not be misleading.

            Execution of this letter agreement on behalf of the Trust will
signify that the Trust understands that it has a nonexclusive, revocable
license to the use of the name "BlackRock."

                        BLACKROCK ADVISORS, INC.


                        By:_________________________________________
                           Name:
                           Title:

                        BLACKROCK CALIFORNIA MUNICIPAL
                        INCOME  TRUST


                        By:_________________________________________
                           Name:
                           Title:



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>EXHIBIT (J)
<TEXT>


                                                            Exhibit (j)


                             CUSTODIAN CONTRACT


                                  Between


                    STATE STREET BANK AND TRUST COMPANY

                                    And


                BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST






                          TABLE OF CONTENTS

                                                                   Page

1.    Employment of Custodian and Property to be Held by It.........1

2.    Duties of the Custodian with Respect to Property of the
      Fund Held By the Custodian....................................2
      2.1   Holding Securities......................................2
      2.2   Delivery of Securities..................................2
      2.3   Registration of Securities..............................7
      2.4   Bank Accounts...........................................8
      2.5   Availability of Federal Funds...........................8
      2.6   Collection of Income....................................9
      2.7   Payment of Fund Monies.................................10
      2.8   Liability for Payment in Advance of Receipt of Securities
            Purchased..............................................12
      2.9   Appointment of Agents..................................13
      2.10  Deposit of Fund Assets in Securities Systems...........13
      2.10A Fund Assets Held in the Custodian's Direct Paper System16
      2.11  Segregated Account.....................................17
      2.12  Ownership Certificates for Tax Purposes................19
      2.13  Proxies................................................19
      2.14  Communications Relating to Fund Portfolio Securities...19
      2.15  Proper Instructions....................................20
      2.16  Actions Permitted without Express Authority............21
      2.17  Evidence of Authority..................................22

3.    Duties of Custodian with Respect to the Books of Account
      and Calculation of Net Asset Value and Net Income............22

4.    Records......................................................23

5.    Opinion of Fund's Independent Accountant.....................24

6.    Reports to Fund by Independent Public Accountants............24

7.    Compensation of Custodian....................................25

8.    Responsibility of Custodian..................................25

9.    Effective Period, Termination and Amendment..................26

10.   Successor Custodian..........................................28

11.   Interpretive and Additional Provisions ......................29

12.   Massachusetts Law to Apply...................................30

13.   Prior Contracts .............................................30




                             CUSTODIAN CONTRACT


            This Contract between BlackRock California Municipal Income
Trust, a Delaware business trust organized and existing under the laws of
Delaware, having its principal place of business at 100 Bellevue Parkway,
Wilmington, Delaware 19809, hereinafter called the "Fund", and State Street
Bank and Trust Company, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massachusetts, 02110,
hereinafter called the "Custodian",

            WITNESSETH:  That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:

1.    Employment of Custodian and Property to be Held by It

            The Fund hereby employs the Custodian as the custodian of its
assets pursuant to the provisions of the Agreement and Declaration of
Trust. The Fund agrees to deliver to the Custodian all securities and cash
owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Fund from time to time, and the cash consideration received by it for such
new or treasury shares of capital stock, $0.001 par value, ("Shares") of
the Fund as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of the Fund held or received by the
Fund and not delivered to the Custodian.

            Upon receipt of "Proper Instructions" (within the meaning of
Section 2.15), the Custodian shall from time to time employ one or more
sub-custodians, but only in accordance with an applicable vote by the Board
of Trustees of the Fund, and provided that the Custodian shall have no more
or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian
has to the Custodian.

2.    Duties of the Custodian with Respect to Property of the
      Fund Held By the Custodian

2.1   Holding Securities. The Custodian shall hold and physically segregate
      for the account of the Fund all non-cash property, including all
      securities owned by the Fund, other than (a) securities which are
      maintained pursuant to Section 2.10 in a clearing agency which acts
      as a securities depository or in a book- entry system authorized by
      the U.S. Department of the Treasury, collectively referred to herein
      as "Securities System" and (b) commercial paper of an issuer for
      which State Street Bank and Trust Company acts as issuing and paying
      agent ("Direct Paper") which is deposited and/or maintained in the
      Direct Paper System of the Custodian pursuant to Section 2.10A.

2.2   Delivery of Securities. The Custodian shall release and deliver
      securities owned by the Fund held by the Custodian or in a Securities
      System account of the Custodian or in the Custodian's Direct Paper
      book entry system account ("Direct Paper System Account") only upon
      receipt of Proper Instructions, which may be continuing instructions when
      deemed appropriate by the parties, and only in the following cases:

            1)    Upon sale of such securities for the account of the Fund and
                  receipt of payment therefor;
            2)    Upon the receipt of payment in connection with any
                  repurchase agreement related to such securities entered
                  into by the Fund;
            3)    In the case of a sale effected through a Securities
                  System, in accordance with the provisions of Section 2.10
                  hereof;
            4)    To the depository agent in connection with tender or other
                  similar offers for portfolio securities of the Fund;
            5)    To the issuer thereof or its agent when such securities
                  are called, redeemed, retired or otherwise become
                  payable; provided that, in any such case, the cash or
                  other consideration is to be delivered to the Custodian;
            6)    To the issuer thereof, or its agent, for transfer into
                  the name of the Fund or into the name of any nominee or
                  nominees of the Custodian or into the name or nominee
                  name of any agent appointed pursuant to Section 2.9 or
                  into the name or nominee name of any sub-custodian
                  appointed pursuant to Article 1; or for exchange for a
                  different number of bonds, certificates or
                  other evidence representing the same aggregate face
                  amount or number of units; provided that, in any such
                  case, the new securities are to be delivered to the
                  Custodian;
            7)    Upon the sale of such securities for the account of the
                  Fund, to the broker or its clearing agent, against a
                  receipt, for examination in accordance with "street
                  delivery" custom; provided that in any such case, the
                  Custodian shall have no responsibility or liability for
                  any loss arising from the delivery of such securities
                  prior to receiving payment for such securities except as
                  may arise from the Custodian's own negligence or willful
                  misconduct;
            8)    For exchange or conversion pursuant to any plan of
                  merger, consolidation, recapitalization, reorganization
                  or readjustment of the securities of the issuer of such
                  securities, or pursuant to provisions for conversion
                  contained in such securities, or pursuant to any deposit
                  agreement; provided that, in any such case, the new
                  securities and cash, if any, are to be delivered to the
                  Custodian;
            9)    In the case of warrants, rights or similar securities,
                  the surrender thereof in the exercise of such warrants,
                  rights or similar securities or the surrender of interim
                  receipts or temporary securities for definitive securities;
                  provided that, in any such case, the new securities and cash,
                  if any, are to be delivered to the Custodian;
            10)   For delivery in connection with any loans of securities
                  made by the Fund, but only against receipt of adequate
                  collateral as agreed upon from time to time by the
                  Custodian and the Fund, which may be in the form of cash
                  or obligations issued by the United States government,
                  its agencies or instrumentalities, except that in
                  connection with any loans for which collateral is to be
                  credited to the Custodian's account in the book-entry
                  system authorized by the U.S. Department of the Treasury,
                  the Custodian will not be held liable or responsible for
                  the delivery of securities owned by the Fund prior to the
                  receipt of such collateral;
            11)   For delivery as security in connection with any
                  borrowings by the Fund requiring a pledge of assets by
                  the Fund, but only against receipt of amounts borrowed;
            12)   For delivery in accordance with the provisions of any
                  agreement among the Fund, the Custodian and a
                  broker-dealer registered under the Securities Exchange
                  Act of 1934 (the "Exchange Act") and a member of The
                  National Association of Securities Dealers, Inc.
                  ("NASD"), relating to compliance with the rules of The
                  Options Clearing Corporation and of any registered
                  national securities exchange, or of any similar
                  organization or organizations, regarding escrow or other
                  arrangements in connection with transactions by the Fund;
            13)   For delivery in accordance with the provisions of any
                  agreement among the Fund, the Custodian, and a Futures
                  Commission Merchant registered under the Commodity
                  Exchange Act, relating to compliance with the rules of
                  the Commodity Futures Trading Commission and/or any
                  Contract Market, or any similar organization or
                  organizations, regarding account deposits in connection
                  with transactions by the Fund; and
            14)   For any other proper corporate purpose, but only upon
                  receipt of, in addition to Proper Instructions, a
                  certified copy of a resolution of the Board of Trustees
                  or of the Executive Committee signed by an officer of the
                  Fund and certified by the Secretary or an Assistant
                  Secretary, specifying the securities to be delivered,
                  setting forth the purpose for which such delivery is to
                  be made, declaring such purpose to be a proper corporate
                  purpose, and naming the person or persons to whom
                  delivery of such securities shall be made.

2.3   Registration of Securities. Securities held by the Custodian (other
      than bearer securities) shall be registered in the name of the Fund
      or in the name of any nominee of the Fund or of any nominee of the
      Custodian which nominee shall be assigned exclusively to the Fund,
      unless the Fund has authorized in writing the appointment of a
      nominee to be used in common with other registered investment
      companies having the same investment adviser as the Fund, or in the
      name or nominee name of any agent appointed pursuant to Section 2.9
      or in the name or nominee name of any sub-custodian appointed
      pursuant to Article 1. All securities accepted by the Custodian on
      behalf of the Fund under the terms of this Contract shall be in
      "street name" or other good delivery form. If, however, the Fund
      directs the Custodian to maintain securities in "street name", the
      Custodian shall utilize its best efforts only to timely collect
      income due the Fund on such securities and to notify the Fund on a
      best efforts basis only of relevant corporate actions including,
      without limitation, pendency of calls, maturities, tender or exchange
      offers.

2.4   Bank Accounts. The Custodian shall open and maintain a separate bank
      account or accounts in the name of the Fund, subject only to draft or
      order by the Custodian acting pursuant to the terms of this Contract,
      and shall hold in such account or accounts, subject to the provisions
      hereof, all cash received by it from or for the account of the Fund,
      other than cash maintained by the Fund in a bank account established
      and used in accordance with Rule 17f-3 under the Investment Company
      Act of 1940. Funds held by the Custodian for the Fund may be
      deposited by it to its credit as Custodian in the Banking Department
      of the Custodian or in such other banks or trust companies as it may
      in its discretion deem necessary or desirable; provided, however,
      that every such bank or trust company shall be qualified to act as a
      custodian under the Investment Company Act of 1940 and that each such
      bank or trust company and the funds to be deposited with each such
      bank or trust company shall be approved by vote of a majority of the
      Board of Trustees of the Fund. Such funds shall be deposited by the
      Custodian in its capacity as Custodian and shall be withdrawable by
      the Custodian only in that capacity.

2.5   Availability of Federal Funds. Upon mutual agreement between the Fund
      and the Custodian, the Custodian shall, upon the receipt of Proper
      Instructions, make federal funds available to the Fund as of
      specified times agreed upon from time to time by the Fund and the
      Custodian in the amount of checks received in payment for Shares of
      the Fund which are deposited into the Fund's account.

2.6   Collection of Income. Subject to the provisions of Section 2.3, the
      Custodian shall collect on a timely basis all income and other
      payments with respect to registered securities held hereunder to
      which the Fund shall be entitled either by law or pursuant to custom
      in the securities business, and shall collect on a timely basis all
      income and other payments with respect to bearer securities if, on
      the date of payment by the issuer, such securities are held by the
      Custodian or its agent thereof and shall credit such income, as
      collected, to the Fund's custodian account. Without limiting the
      generality of the foregoing, the Custodian shall detach and present
      for payment all coupons and other income items requiring presentation
      as and when they become due and shall collect interest when due on
      securities held hereunder. Income due the Fund on securities loaned
      pursuant to the provisions of Section 2.2 (10) shall be the
      responsibility of the Fund. The Custodian will have no duty or
      responsibility in connection therewith, other than to provide the
      Fund with such information or data as may be necessary to assist the
      Fund in arranging for the timely delivery to the Custodian of the
      income to which the Fund is properly entitled.

2.7   Payment of Fund Monies. Upon receipt of Proper Instructions, which
      may be continuing instructions when deemed appropriate by the
      parties, the Custodian shall pay out monies of the Fund in the
      following cases only:

            1)    Upon the purchase of securities, options, futures
                  contracts or options on futures contracts for the account
                  of the Fund but only (a) against the delivery of such
                  securities or evidence of title to such options, futures
                  contracts or options on futures contracts to the
                  Custodian (or any bank, banking firm or trust company
                  doing business in the United States or abroad which is
                  qualified under the Investment Company Act of 1940, as
                  amended, to act as a custodian and has been designated by
                  the Custodian as its agent for this purpose) registered
                  in the name of the Fund or in the name of a nominee of
                  the Custodian referred to in Section 2.3 hereof or in
                  proper form for transfer; (b) in the case of a purchase
                  effected through a Securities System, in accordance with
                  the conditions set forth in Section 2.10 hereof; (c) in
                  the case of a purchase involving the Direct Paper System,
                  in accordance with the conditions set forth in Section
                  2.10A; (d) in the case of repurchase agreements entered
                  into between the Fund and the Custodian, or another bank,
                  or a broker-dealer which is a member of NASD, (i) against
                  delivery of the securities either in certificate form or
                  through an entry crediting the Custodian's account at the
                  Federal Reserve Bank with such securities or (ii) against
                  delivery of the receipt evidencing purchase by the Fund
                  of securities owned by the Custodian along with written
                  evidence of the agreement by the Custodian to repurchase
                  such securities from the Fund or (e) for transfer to a
                  time deposit account of the Fund in any bank, whether
                  domestic or foreign; such transfer may be effected prior
                  to receipt of a confirmation from a broker and/or the
                  applicable bank pursuant to Proper Instructions from the
                  Fund as defined in Section 2.15;
            2)    In connection with conversion, exchange or surrender of
                  securities owned by the Fund as set forth in Section 2.2
                  hereof;
            3)    For the payment of any expense or liability incurred by
                  the Fund, including but not limited to the following
                  payments for the account of the Fund: interest, taxes,
                  management, accounting, transfer agent and legal fees,
                  and operating expenses of the Fund whether or not such
                  expenses are to be in whole or part capitalized or
                  treated as deferred expenses;
            4)    For the payment of any dividends declared pursuant to the
                  governing documents of the Fund;
            5)    For payment of the amount of dividends received in respect of
                  securities sold short;
            6)    For any other proper purpose, but only upon receipt of,
                  in addition to Proper Instructions, a certified copy of a
                  resolution of the Board of Trustees or of the Executive
                  Committee of the Fund signed by an officer of the Fund
                  and certified by its Secretary or an Assistant Secretary,
                  specifying the amount of such payment, setting forth the
                  purpose for which such payment is to be made, declaring
                  such purpose to be a proper purpose, and naming the
                  person or persons to whom such payment is to be made.

2.8   Liability for Payment in Advance of Receipt of Securities Purchased.
      Except as specifically stated otherwise in this Contract, in any and
      every case where payment for purchase of securities for the account
      of the Fund is made by the Custodian in advance of receipt of the
      securities purchased in the absence of specific written instructions
      from the Fund to so pay in advance, the Custodian shall be absolutely
      liable to the Fund for such securities to the same extent as if the
      securities had been received by the Custodian.

2.9   Appointment of Agents. The Custodian may at any time or times in its
      discretion appoint (and may at any time remove) any other bank or
      trust company which is itself qualified under the Investment Company
      Act of 1940, as amended, to act as a custodian, as its agent to carry
      out such of the provisions of this Article 2 as the Custodian may
      from time to time direct; provided, however, that the appointment of
      any agent shall not relieve the Custodian of its responsibilities or
      liabilities hereunder.

2.10  Deposit of Fund Assets in Securities Systems. The Custodian may
      deposit and/or maintain securities owned by the Fund in a clearing
      agency registered with the Securities and Exchange Commission under
      Section 17A of the Securities Exchange Act of 1934, which acts as a
      securities depository, or in the book-entry system authorized by the
      U.S. Department of the Treasury and certain federal agencies,
      collectively referred to herein as "Securities System" in accordance
      with applicable Federal Reserve Board and Securities and Exchange
      Commission rules and regulations, if any, and subject to the
      following provisions:

            1)    The Custodian may keep securities of the Fund in a
                  Securities System provided that such securities are
                  represented in an account ("Account") of the Custodian in
                  the Securities System which shall not include any assets
                  of the Custodian other than assets held as a fiduciary,
                  custodian or otherwise for customers;
            2)    The records of the Custodian with respect to securities
                  of the Fund which are maintained in a Securities System
                  shall identify by book-entry those securities belonging
                  to the Fund;
            3)    The Custodian shall pay for securities purchased for the
                  account of the Fund upon (i) receipt of advice from the
                  Securities System that such securities have been
                  transferred to the Account, and (ii) the making of an
                  entry on the records of the Custodian to reflect such
                  payment and transfer for the account of the Fund. The
                  Custodian shall transfer securities sold for the account
                  of the Fund upon (i) receipt of advice from the
                  Securities System that payment for such securities has
                  been transferred to the Account, and (ii) the making of
                  an entry on the records of the Custodian to reflect such
                  transfer and payment for the account of the Fund. Copies
                  of all advices from the Securities System of transfers of
                  securities for the account of the Fund shall identify the
                  Fund, be maintained for the Fund by the Custodian and be
                  provided to the Fund at its request. Upon request, the
                  Custodian shall furnish the Fund confirmation of each
                  transfer to or from the account of the Fund in the form
                  of a written advice or notice and shall furnish to the
                  Fund copies of daily transaction sheets reflecting each
                  day's transactions in the Securities System for the
                  account of the Fund.
            4)    The Custodian shall provide the Fund with any report
                  obtained by the Custodian on the Securities System's
                  accounting system, internal accounting control and
                  procedures for safeguarding securities deposited in the
                  Securities System;
            5)    The Custodian shall have received the initial or annual
                  certificate, as the case may be, required by Article 9
                  hereof;
            6)    Anything to the contrary in this Contract
                  notwithstanding, the Custodian shall be liable to the
                  Fund for any loss or damage to the Fund resulting from
                  use of the Securities System by reason of any negligence,
                  misfeasance or misconduct of the Custodian or any of its
                  agents or of any of its or their employees or from
                  failure of the Custodian or any such agent to enforce
                  effectively such rights as it may have against the
                  Securities System; at the election of the Fund, it shall
                  be entitled to be subrogated to the rights of the
                  Custodian with respect to any claim against the
                  Securities System or any other person which the Custodian
                  may have as a consequence of any such loss or damage if
                  and to the extent that the Fund has not been made whole
                  for any such loss or damage.

2.10A       Fund Assets Held in the Custodian's Direct Paper System. The
            Custodian may deposit and/or maintain securities owned by the
            Fund in the Direct Paper System of the Custodian subject to the
            following provisions:

            1)    No transaction relating to securities in the Direct Paper
                  System will be effected in the absence of Proper Instructions;
            2)    The Custodian may keep securities of the Fund in the Direct
                  Paper System only if such securities are represented in an
                  account ("Account") of the Custodian in the Direct Paper
                  System which shall not include any assets of the
                  Custodian other than assets held as a fiduciary,
                  custodian or otherwise for customers;
            3)    The records of the Custodian with respect to securities
                  of the Fund which are maintained in the Direct Paper
                  System shall identify by book-entry those securities
                  belonging to the Fund;
            4)    The Custodian shall pay for securities purchased for the
                  account of the Fund upon the making of an entry on the
                  records of the Custodian to reflect such payment and
                  transfer of securities to the account of the Fund. The
                  Custodian shall transfer securities sold for the account
                  of the Fund upon the making of an entry on the records of
                  the Custodian to reflect such transfer and receipt of
                  payment for the account of the Fund;
            5)    The Custodian shall furnish the Fund confirmation of each
                  transfer to or from the account of the Fund, in the form
                  of a written advice or notice, of Direct Paper on the
                  next business day following such transfer and shall
                  furnish to the Fund copies of daily transaction sheets
                  reflecting each day's transaction in the Securities System
                  for the account of the Fund;
            6)    The Custodian shall provide the Fund with any report on
                  its system of internal accounting control as the Fund may
                  reasonably request from time to time.

2.11  Segregated Account. The Custodian shall upon receipt of Proper
      Instructions establish and maintain a segregated account or accounts
      for and on behalf of the Fund, into which account or accounts may be
      transferred cash and/or securities, including securities maintained
      in an account by the Custodian pursuant to Section 2.10 hereof, (i)
      in accordance with the provisions of any agreement among the Fund,
      the Custodian and a broker-dealer registered under the Exchange Act
      and a member of the NASD (or any futures commission merchant
      registered under the Commodity Exchange Act), relating to compliance
      with the rules of The Options Clearing Corporation and of any
      registered national securities exchange (or the Commodity Futures
      Trading Commission or any registered contract market), or of any
      similar organization or organizations, regarding escrow or other
      arrangements in connection with transactions by the Fund, (ii) for
      purposes of segregating cash or government securities in connection
      with options purchased, sold or written by the Fund or commodity
      futures contracts or options thereon purchased or sold by the Fund,
      (iii) for the purposes of compliance by the Fund with the procedures
      required by Investment Company Act Release No. 10666, or any
      subsequent release or releases of the Securities and Exchange
      Commission relating to the maintenance of segregated accounts by
      registered investment companies and (iv) for other proper corporate
      purposes, but only, in the case of clause (iv), upon receipt of, in
      addition to Proper Instructions, a certified copy of a resolution of
      the Board of Trustees or of the Executive Committee signed by an
      officer of the Fund and certified by the Secretary or an Assistant
      Secretary, setting forth the purpose or purposes of such segregated
      account and declaring such purposes to be proper corporate purposes.

2.12  Ownership Certificates for Tax Purposes. The Custodian shall execute
      ownership and other certificates and affidavits for all federal and
      state tax purposes in connection with receipt of income or other
      payments with respect to securities of the Fund held by it and in
      connection with transfers of securities.

2.13  Proxies. The Custodian shall, with respect to the securities held
      hereunder, cause to be promptly executed by the registered holder of
      such securities, if the securities are registered otherwise than in
      the name of the Fund or a nominee of the Fund, all proxies, without
      indication of the manner in which such proxies are to be voted, and
      shall promptly deliver to the Fund such proxies, all proxy soliciting
      materials and all notices relating to such securities.

2.14  Communications Relating to Fund Portfolio Securities. Subject to the
      provisions of Section 2.3, the Custodian shall transmit promptly to
      the Fund all written information (including, without limitation,
      pendency of calls and maturities of securities and expirations of
      rights in connection therewith and notices of exercise of call and
      put options written by the Fund and the maturity of futures contracts
      purchased or sold by the Fund) received by the Custodian from issuers
      of the securities being held for the Fund. With respect to tender or
      exchange offers, the Custodian shall transmit promptly to the Fund
      all written information received by the Custodian from issuers of the
      securities whose tender or exchange is sought and from the party (or
      his agents) making the tender or exchange offer. If the Fund desires
      to take action with respect to any tender offer, exchange offer or
      any other similar transaction, the Fund shall notify the Custodian at
      least three business days prior to the date on which the Custodian is
      to take such action.

2.15  Proper Instructions. Proper Instructions as used throughout this
      Article 2 means a writing signed or initialed by one or more person
      or persons as the Board of Trustees shall have from time to time
      authorized. Each such writing shall set forth the specific
      transaction or type of transaction involved, including a specific
      statement of the purpose for which such action is requested. Oral
      instructions will be considered Proper Instructions if the Custodian
      reasonably believes them to have been given by a person authorized to
      give such instructions with respect to the transaction involved. The
      Fund shall cause all oral instructions to be confirmed in writing.
      Upon receipt of a certificate of the Secretary or an Assistant
      Secretary as to the authorization by the Board of Trustees of the
      Fund accompanied by a detailed description of procedures approved by
      the Board of Trustees, Proper Instructions may include communications
      effected directly between electro- mechanical or electronic devices
      provided that the Board of Trustees and the Custodian are satisfied
      that such procedures afford adequate safeguards for the Fund's
      assets. For purposes of this Section, Proper Instructions shall
      include instructions received by the Custodian pursuant to any
      three-party agreement which requires a segregated asset account in
      accordance with Section 2.11.

2.16  Actions Permitted without Express Authority.  The Custodian may in its
      discretion, without express authority from the Fund:

            1)    make payments to itself or others for minor expenses of
                  handling securities or other similar items relating to
                  its duties under this Contract, provided that all such
                  payments shall be accounted for to the Fund;
            2)    surrender securities in temporary form for securities in
                  definitive form;
            3)    endorse for collection, in the name of the Fund, checks,
                  drafts and other negotiable instruments; and
            4)    in general, attend to all non-discretionary details in
                  connection with the sale, exchange, substitution,
                  purchase, transfer and other dealings with the securities
                  and property of the Fund except as otherwise directed by
                  the Board of Trustees of the Fund.

2.17  Evidence of Authority. The Custodian shall be protected in acting
      upon any instructions, notice, request, consent, certificate or other
      instrument or paper believed by it to be genuine and to have been
      properly executed by or on behalf of the Fund. The Custodian may
      receive and accept a certified copy of a vote of the Board of
      Trustees of the Fund as conclusive evidence (a) of the authority of
      any person to act in accordance with such vote or (b) of any
      determination or of any action by the Board of Trustees pursuant to
      the Agreement and Declaration of Trust as described in such vote, and
      such vote may be considered as in full force and effect until receipt
      by the Custodian of written notice to the contrary.

3.    Duties of Custodian with Respect to the Books of Account and
      Calculation of Net Asset Value and Net Income

      The Custodian shall cooperate with and supply necessary information
to the entity or entities appointed by the Board of Trustees of the Fund to
keep the books of account of the Fund and/or compute the net asset value
per share of the outstanding shares of the Fund or, if directed in writing
to do so by the Fund, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the Custodian shall
also calculate weekly the net income of the Fund as described in the Fund's
currently effective prospectus and shall advise the Fund and the Transfer
Agent weekly of the total amounts of such net income and, if instructed in
writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share and the
weekly income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.

4. Records

      The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 3la-1 and 3la-2
thereunder. All such records shall be the property of the Fund and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation
of securities owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in
such tabulations.

5.    Opinion of Fund's Independent Accountant

      The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from
the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-2, and Form N-SAR
or other annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.

6.    Reports to Fund by Independent Public Accountants

      The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.

7.    Compensation of Custodian

      The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Fund and the Custodian.

8.    Responsibility of Custodian

      So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper
party or parties, including any futures commission merchant acting pursuant
to the terms of a three-party futures or options agreement. The Custodian
shall be held to the exercise of reasonable care in carrying out the
provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted
pursuant to such advice.

      If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may,
in the opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in
an amount and form satisfactory to it.

      If the Fund requires the Custodian to advance cash or securities for
any purpose or in the event that the Custodian or its nominee shall incur
or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of the Fund assets to the extent necessary to
obtain reimbursement.

9.    Effective Period, Termination and Amendment

      This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties hereto and
may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect
not sooner than thirty (30) days after the date of such delivery or
mailing; provide, however that the Custodian shall not act under Section
2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the Fund
has approved the initial use of a particular Securities System and the
receipt of an annual certificate of the Secretary or an Assistant Secretary
that the Board of Trustees has reviewed the use by the Fund of such
Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not
act under Section 2.10A hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System and the
receipt of an annual certificate of the Secretary or an Assistant Secretary
that the Board of Trustees has reviewed the use by the Fund of the Direct
Paper System; provided further, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Agreement and Declaration of Trust,
and further provided, that the Fund may at any time by action of its Board
of Trustees (i) substitute another bank or trust company for the Custodian
by giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.

      Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.

10.   Successor Custodian

      If a successor custodian shall be appointed by the Board of Trustees
of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in
the form for transfer, all securities then held by it hereunder and shall
transfer to an account of the successor custodian all of the Fund's
securities held in a Securities System.

      If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Trustees of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.

      In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Trustees shall have been
delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property
held by it under this Contract and to transfer to an account of such
successor custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of
the Custodian under this Contract.

      In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing
to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force and
effect.

11.   Interpretive and Additional Provisions

      In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Agreement and Declaration of Trust of
the Fund. No interpretive or additional provisions .made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.

12.   Massachusetts Law to Apply

      This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.

13.   Prior Contracts

      This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund and the Custodian relating to the custody
of the Fund's assets.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>EXHIBIT (K)(1)
<TEXT>



                                                             Exhibit (k)(1)

                      EXPENSE REIMBURSEMENT AGREEMENT


            AGREEMENT made this ___ day of _________, 2001, by and between
BLACKROCK CALIFORNIA MUNICIPAL INCOME TRUST, a Delaware business trust (the
"Trust"), and BLACKROCK ADVISORS, INC., a Delaware corporation (the
"Advisor").

                         W I T N E S S E T H

            WHEREAS, the Trust and the Advisor have separately entered into
an Investment Management Agreement of even date herewith (the "Management
Agreement");

            In consideration of the mutual covenants hereinafter contained,
and in connection with the establishment and commencement of operations of
the Fund, it is hereby agreed by and between the parties hereto as follows:


            1. For the period from the commencement of the Trust's
operations through [December 31, 2001] and for the 12 month periods ending
[December 31] in each indicated year during the term of the Management
Agreement (including any continuation done in accordance with Section 15(c)
of the Investment Company Act of 1940), the Advisor agrees to reimburse
expenses (including the management fee and other expenses) in the amounts
determined by applying the following annual rates to the average daily net
assets of the Trust:


Period Ending                        Period Ending
[December 31]      Reimbursement     [December 31]     Reimbursement

      2001*              [ ]%              2007              [ ]%
       2002              [ ]%              2008              [ ]%
       2003              [ ]%              2009              [ ]%
       2004              [ ]%              2010              [ ]%
       2005              [ ]%              2011              [ ]%
       2006              [ ]%

 *From the commencement of operations.

            2. To effect the expense reimbursement provided for in this
Agreement, the Trust may offset the appropriate amount of the reimbursement
contemplated hereunder against the management fee payable under the
Management Agreement.

            3. This Agreement, and the Advisor's obligation to so reimburse
expenses hereunder, shall terminate on the earlier of (a) [December 31,
2011] or (b) termination of the Management Agreement.

            4. Except as provided in paragraph 3, above, this Agreement may
be terminated only by the vote of (a) the Board of Trustees of the Trust,
including the vote of the members of the Board who are not "interested
persons" within the meaning of the Investment Company Act of 1940, and (b)
a majority of the outstanding voting securities of the Trust.

            5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder
shall not be thereby affected.

            6. The Trust's Declaration of Trust is on file with the
Secretary of the State of Delaware. This Agreement is executed on behalf of
the Trust by the Trust's officers as officers and not individually and the
obligations imposed upon the Trust by this Agreement are not binding upon
any of the Trust's Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.

            IN WITNESS WHEREOF, the Trust and the Advisor have caused this
Agreement to be executed on the day and year above written.

                                    BLACKROCK CALIFORNIA
                                    MUNICIPAL INCOME TRUST


                                    by: ________________________________
                                        Name:
                                        Title:



Attest: __________________________
      Name:
      Title:
                                    BLACKROCK ADVISORS, INC.


                                    by:_________________________________
                                       Name:
                                       Title:



Attest: __________________________
      Name:
      Title:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>EXHIBIT (P)
<TEXT>


                                                          Exhibit (p)

                       SUBSCRIPTION AGREEMENT

            THIS SUBSCRIPTION AGREEMENT is entered into as of the day of
May, 2001, between BlackRock California Municipal Income Trust, a trust
organized and existing under the laws of Delaware (the "Trust"), and
BlackRock Advisors, Inc. or one of its affiliates (the "Purchaser").

            THE PARTIES HEREBY AGREE AS FOLLOWS:

            1.    PURCHASE AND SALE OF THE SHARES

            1.1 SALE AND ISSUANCE OF SHARES. Subject to the terms and
conditions of this Agreement, the Trustees agree to sell to the Purchaser,
and the Purchaser agrees to purchase from the Trustees [ ] common shares of
beneficial interest, par value [$ ], representing undivided beneficial
interests in the Trust (the "Shares") at a price per Share of $[ ] for an
aggregate purchase price of $[ ].

            2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser hereby represents and warrants to, and covenants for the
benefit of, the Trust that:

            2.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
by the Trustees with the Purchaser in reliance upon the Purchaser's
representation to the Trustees, which by the Purchaser's execution of this
Agreement the Purchaser hereby confirms, that the Shares are being acquired
for investment for the Purchaser's own account, and not as a nominee or
agent and not with a view to the resale or distribution by the Purchaser of
any of the Shares, and that the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the
Shares, in either case in violation of any securities registration
requirement under applicable law, but subject nevertheless, to any
requirement of law that the disposition of its property shall at all times
by within its control. By executing this Agreement, the Purchaser further
represents that the Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of
the Shares.

            2.2 INVESTMENT EXPERIENCE. The Purchaser acknowledges that it
can bear the economic risk of the investment for an indefinite period of
time and has such knowledge and experience in financial and business
matters (and particularly in the business in which the Trust operates) as
to be capable of evaluating the merits and risks of the investment in the
Shares. The Purchaser is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the Securities Act of 1933 (the "Act").

            2.3 RESTRICTED SECURITIES. The Purchaser understands that the
Shares are characterized as "restricted securities" under the United States
securities laws inasmuch as they are being acquired from the Trustees in a
transaction not involving a public offering and that under such laws and
applicable regulations such Shares may be resold without registration under
the Act only in certain circumstances. In this connection, the Purchaser
represents that it understands the resale limitations imposed by the Act
and is generally familiar with the existing resale limitations imposed by
Rule 144.

            2.4 FURTHER LIMITATIONS ON DISPOSITION. The Purchaser further
agrees not to make any disposition directly or indirectly of all or any
portion of the Shares unless and until:

            (a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

            (b) The Purchaser shall have furnished the Trustees with an
opinion of counsel, reasonably satisfactory to the Trustees, that such
disposition will not require registration of such Shares under the Act.

            (c) Notwithstanding the provisions of subsections (a) and (b)
above, no such registration statement or opinion of counsel shall be
necessary for a transfer by the Purchaser to any affiliate of the
Purchaser, if the transferee agrees in writing to be subject to the terms
hereof to the same extent as if it were the original Purchaser hereunder.

            2.5 LEGENDS. It is understood that the certificate evidencing
the Shares may bear either or both of the following legends:

            (a) "These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the Shares under such Act or an opinion of counsel reasonably
satisfactory to the Trustees of BlackRock California Municipal Income Trust
that such registration is not required."

            (b) Any legend required by the laws of any other applicable
jurisdiction.

            The Purchaser and the Trustees agree that the legend contained
in the paragraph (a) above shall be removed at a holder's request when they
are no longer necessary to ensure compliance with federal securities laws.

            2.6 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.


            IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.

                              BLACKROCK CALIFORNIA
                               MUNICIPAL INCOME TRUST



                              By:_________________________________________
                                 Name:
                                 Title:




                              BlackRock Advisors, Inc.



                              By:_________________________________________
                                 Name:
                                 Title:
                                 Address:




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>EXHIBIT (R)(1)
<TEXT>


                                                             Exhibit (r)(1)



                      THE BLACKROCK CLOSED END TRUSTS

                               CODE OF ETHICS


I.    Introduction.

      The purpose of this Code of Ethics is to prevent Access Persons (as
defined below) of The BlackRock Closed End Trusts (the "Trusts") from
engaging in any act, practice or course of business prohibited by paragraph
(b) of Rule 17j-l (the "Rule") under the Investment Company Act of 1940, as
amended (the "Act"). This Code of Ethics is required by paragraph (c) of
the Rule. A copy of the Rule is attached to this Code of Ethics as Appendix
1.

      Access Persons of the Trusts, in conducting their personal securities
transactions, owe a fiduciary duty to the shareholders of the Trusts. The
fundamental standard to be followed in personal securities transactions is
that Access Persons may not take inappropriate advantage of their
positions. All personal securities transactions by Access Persons must be
conducted in such a manner as to avoid any actual or potential conflict of
interest between the Access Person's interest and the interests of the
Trusts, or any abuse of an Access Person's position of trust and
responsibility. Potential conflicts arising from personal investment
activities could include buying or selling securities based on knowledge of
the Trust's trading position or plans (sometimes referred to as
front-running), and acceptance of personal favors that could influence
trading judgments on behalf of the Trusts. While this Code of Ethics is
designed to address identified conflicts and potential conflicts, it cannot
possibly be written broadly enough to cover all potential situations and,
in this regard, Access Persons are expected to adhere not only to the
letter, but also the spirit, of the policies contained herein.


II.   Definitions.

      In order to understand how this Code of Ethics applies to particular
persons and transactions, familiarity with the key terms and concepts used
in this Code of Ethics is necessary. Those key terms and concepts are:

      1. "Access Person" means any trustee, officer or "advisory person" of
the Trusts. A list of the Trust's Access Persons is attached as Appendix 2
to this Code of Ethics and will be updated from time to time.

      2. "Advisory person" means (a) any employee of the Trusts or of any
company in a control relationship to the Trusts, who, in connection with
his regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a "Covered Security" by the
Trusts, or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (b) any natural person in a control
relationship to the Trusts who obtains information concerning
recommendations made to the Trusts with regard to the purchase or sale of
"Covered Securities".

      3. "Beneficial ownership" has the meaning set forth in Rule
16a-1(a)(2) of the Securities Exchange Act of 1934, as amended, a copy of
which is included as Appendix 3. The determination of direct or indirect
beneficial ownership shall apply to all securities which an Access Person
has or acquires.

      4.    "BlackRock" means BlackRock Advisors, Inc. the investment adviser
of the Trusts.

      5.    "BlackRock Code" means the Employee Investment Transaction
Policy adopted by BlackRock and approved by the Board.

      6.    "Control" has the meaning set forth in Section 2(a)(9) of the Act.

      7. "Covered Security" has the meaning set forth in Section 2(a)(36)
of the Act, except that it shall not include: direct obligations of the
Government of the United States; bankers' acceptances, bank certificates of
deposit, commercial paper, and high-quality short-term debt instruments,
including repurchase agreements; and shares issued by registered open-end
investment companies. A high-quality short- term debt instrument is one
with a maturity at issuance of less than 366 days and that is rated in one
of the two highest rating categories by a nationally recognized statistical
rating organization.

      8. "Independent trustee" means a trustee of the Trusts who is not an
"interested person" of the Trusts within the meaning of Section 2(a)(19) of
the Act.

      9. "Investment Personnel" of the Trusts means (a) any employee of the
Trusts (or of any company in a control relationship to the Trusts) who, in
connection with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase or sale of
securities by the Trusts and (b) any natural person who controls the Trusts
and who obtains information concerning recommendations made to the Trusts
regarding the purchase or sale of securities by the Trusts.

      10. "IPO" means an offering of securities registered under the
Securities Act of 1933, the issuer or which, immediately before the
registration, was not subject to the reporting requirements of Sections 13
or 15(d) of the Securities Exchange Act.

      11. "Limited Offering" means an offering exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2), 4(6) or Rule
504, 505 or 506 under the Securities Act of 1933.

      12. "Purchase or sale of a Covered Security" includes, among other
things, the writing of an option to purchase or sell a Covered Security.


III.  Restrictions Applicable to Directors, Officers and Employees of
      BlackRock.

      1. All Directors, officers and employees of BlackRock's investment
advisory companies shall be subject to the restrictions, limitations and
reporting responsibilities set forth in the BlackRock Code, respectively,
as if fully set forth herein.

      2. Persons subject to this Section III shall not be subject to the
restrictions, limitations and reporting responsibilities set forth in
Sections IV. and V. below.


IV.   Prohibitions; Exemptions.

      1.    Prohibited Purchases and Sales.

      A. No Access Person may purchase or sell, directly or indirectly, any
Covered Security in which that Access Person has, or by reason of the
transaction would acquire, any direct or indirect beneficial ownership and
which to the actual knowledge of that Access Person at the time of such
purchase or sale:

      (1)   is being considered for purchase or sale by the Trusts; or

      (2)   is being purchased or sold by the Trusts.

      2.    Exemptions From Certain Prohibitions.

      A. The prohibited purchase and sale transactions described in
paragraph IV.1 above do not apply to the following personal securities
transactions:

      (1) purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;

      (2) purchases or sales which are non-volitional on the part of either
the Access Person or the Trusts;

      (3) purchases which are part of an automatic dividend reinvestment
plan (other than pursuant to a cash purchase plan option);

      (4) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to the extent
the rights were acquired from that issuer, and sales of the rights so
acquired;

      (5) any purchase or sale, or series of related transactions,
involving 500 shares or less in the aggregate, if the issuer has a market
capitalization (outstanding shares multiplied by the current price per
share) greater than $1 billion;

      (6) any purchase or sale which the Compliance Officer of BlackRock
(as defined in the BlackRock Code) approves on the grounds that its
potential harm to the Trusts is remote.

      3.    Prohibited Recommendations.

      An Access Person may not recommend the purchase or sale of any
Covered Security to or for the Trusts without having disclosed his or her
interest, if any, in such security or the issuer thereof, including without
limitation:

      A. any direct or indirect beneficial ownership of any Covered
Security of such issuer, including any Covered Security received in a
private securities transaction;

      B. any contemplated purchase or sale by such person of a Covered
Security;

      C. any position with such issuer or its affiliates; or

      D. any present or proposed business relationship between such issuer
or its affiliates and such person or any party in which such person has a
significant interest.

      4.    Pre-approval of Investments in Initial
            Public Offerings or Limited Offerings.

      A. No Investment Personnel shall purchase any security (including,
but not limited to, any Covered Security) issued in an initial public
offering ("IPO") or a Limited Offering unless an officer of the Trusts
approves the transaction in advance. The Secretary shall maintain a written
record of any decisions to permit these transactions, along with the
reasons supporting the decision.

V.    Reporting.

      1.    Initial Holdings Reports.

      No later than ten (10) days after a person becomes an Access Person,
he or she must report to the Trusts the following information:

                  (i) the title, number of shares and principal amount of
each Covered Security in which the Access Person had any direct or indirect
beneficial ownership when the person became an Access Person;

                  (ii) the name of any broker, dealer or bank with whom the
Access Person maintained an account in which any securities were held for
the direct or indirect benefit of the Access Person as of the date the
person became an Access Person; and

                  (iii) the date that the report is submitted by the Access
Person.

      2.    Quarterly Reporting.

      A. Every Access Person shall either report to the Trusts the
information described in paragraphs B and C below with respect to
transactions in any Covered Security in which the Access Person has, or by
reason of the transaction acquires, any direct or indirect beneficial
ownership in the security or, in the alternative, make the representation
in paragraph D below.

      B. Every report shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which the report relates
was effected and shall contain the following information:

      (1) the date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the principal
amount of each Covered Security involved;

      (2) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);

      (3) the price at which the transaction was effected;

      (4) the name of the broker, dealer or bank with or through whom the
transaction was effected;

      (5) the date that the report is submitted by the Access Person; and

      (6) a description of any factors potentially relevant to an analysis
of whether the Access Person may have a conflict of interest with respect
to the transaction, including the existence of any substantial economic
relationship between the transaction and securities held or to be acquired
by the Trusts.

      C. With respect to any account established by the Access Person in
which any securities were held during the quarter for the direct or
indirect benefit of the Access Person, no later than 10 days after the end
of a calendar quarter, an Access Person shall provide a report to the
Trusts containing the following information:

      (1) the name of the broker, dealer or bank with whom the Access
Person established the account;

      (2) the date the account was established; and

      (3) the date that the report is submitted by the Access Person.

      D. If no transactions were conducted by an Access Person during a
calendar quarter that are subject to the reporting requirements described
above, such Access Person shall, not later than 10 days after the end of
that calendar quarter, provide a written representation to that effect to
the Trusts.

      3.    Annual Reporting.

      A. Every Access Person shall report to the Trusts the information
described in paragraph B below with respect to transactions in any Covered
Security in which the Access Person has, or by reason of the transaction
acquires, any direct or indirect beneficial ownership in the security.

      B. Annually, within 30 days of the end of each calendar year, the
following information (which information must be current as of a date no
more than 30 days before the report is submitted):

      (1) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership;

      (2) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held for the direct
or indirect benefit of the Access Person; and

      (3)   The date that the report is submitted by the Access Person.

      4.    Exceptions to Reporting Requirements.

      A. An Access Person is not required to make a report otherwise
required under paragraphs 1, 2 or 3 above with respect to any transaction
effected for any account over which the Access Person does not have any
direct or indirect influence or control; provided, (however, that if the
Access Person is relying upon the provisions of this paragraph 4(A) to
avoid making such a report, the Access Person shall, not later than 10 days
after the end of each calendar quarter, identify any such account in
writing and certify in writing that he or she had no direct or indirect
influence over any such account.

      B. An independent trustee of the Trusts who would be required to make
a report pursuant to paragraphs 1, 2 or 3 above solely by reason of being a
trustee of the Trusts is not required to make an initial holdings report
under paragraph 1 above and an annual report under paragraph 3 above, and
is only required to make a quarterly report under paragraph 2 above if the
independent trustee, at the time of the transaction, knew or, in the
ordinary course of fulfilling the independent trustee's official duties as
a trustee of the Trusts, should have known that (a) the Trusts has engaged
in a transaction in the same security within the last 15 days or is
engaging or going to engage in a transaction in the same security within
the next 15 days, or (b) the Trusts or BlackRock has within the last 15
days considered a transaction in the same security or is considering a
transaction in the same security or within the next 15 days is going to
consider a transaction in the same security.

      5.    Annual Certification.

      A. All Access Persons are required to certify that they have read and
understand this Code of Ethics and recognize that they are subject to the
provisions hereof and will comply with the policy and procedures stated
herein. Further, all Access Persons are required to certify annually that
they have complied with the requirements of this Code of Ethics and that
they have reported all personal securities transactions required to be
disclosed or reported pursuant to the requirements of such policies. A copy
of the certification form to be used in complying with this paragraph A is
attached to this Code of Ethics as Appendix 4.

      B. The Trusts and BlackRock shall prepare an annual report to the
Board of Trustees of the Trusts to be presented at the first regular
meeting of the Board after March 31 of each year and which shall:

      (1) Summarize existing procedures concerning personal investing,
including pre-clearance policies and the monitoring of personal investment
activity after pre-clearance has been granted, and any changes in the
procedures during the past year;

      (2) describe any issues arising under the Code of Ethics or
procedures since the last report to the Board including, but not limited
to, information about any material violations of the Code of Ethics or
procedures and the sanctions imposed during the past year;

      (3) identify any recommended changes in existing restrictions or
procedures based upon experience under this Code of Ethics, evolving
industry practice or developments in applicable laws and regulations;

      (4)   contain such other information, observations and recommendations as
deemed relevant by the Trusts or BlackRock; and

      (5) certify that the Trusts, BlackRock have adopted Codes of Ethics
with procedures reasonably necessary to prevent Access Persons from
violating the provisions of Rule 17j-1(b) or this Code.

      6.    Notification of Reporting Obligation and Review of Reports.

      Each Access Person shall receive a copy of this Code of Ethics and be
notified of his or her reporting obligations. All reports shall be promptly
submitted upon completion to the Trust's Secretary who shall review such
reports.

      7.    Miscellaneous.

      A. Any report under this Code of Ethics may contain a statement that
the report shall not be construed as an admission by the person making the
report that the person has any direct or indirect beneficial ownership in
the securities to which the report relates.

VI.   Confidentiality.

      No Access Person shall reveal to any other person (except in the
normal course of his or her duties on behalf of the Trusts) any information
regarding securities transactions by the Trusts or consideration by the
Trusts or BlackRock of any such securities transaction.

      All information obtained from any Access Person hereunder shall be
kept in strict confidence, except that reports of securities transactions
hereunder will be made available to the Securities and Exchange Commission
or any other regulatory or self-regulatory organization to the extent
required by law or regulation.

VII.  Sanctions.

      Upon discovering a violation of this Code of Ethics, the Board of
Trustees of the Trusts may impose any sanctions it deems appropriate,
including a letter of censure, the suspension or termination of any
trustee, officer or employee of the Trusts, or the recommendation to the
employer of the violator of the suspension or termination of the employment
of the violator.


Dated:  May 18, 2000



                                 Appendix 1

            Rule 17j-l under the Investment Company Act of 1940





                                 Appendix 2


The following are "Access Persons" for purposes of the foregoing Code of
Ethics:

                                 NAME TITLE

                                 DIRECTORS

                     Laurence D. Fink Chairman/Director
                         Andrew F. Brimmer Director
                        Richard E. Cavanagh Director
                             Kent Dixon Director
                          Frank J. Fabozzi Director
                    James Clayburn La Force, Jr. Director
                         Walter F. Mondale Director
                        Ralph L. Schlosstein Director


                                  OFFICERS

                       Ralph L. Schlosstein President
                 Scott Amero Vice President (Taxables Only)
                      Keith T. Anderson Vice President
                      Michael C. Heubsch Vice President
                       Robert S. Kapito Vice President
               Kevin Klingert Vice President (Municipals Only)
                  Dennis Schaney Vice President (BHY Only)
                     Richard M. Shea Vice President/Tax
                           Henry Gabbay Treasurer
                       James KongAssistant Treasurer
                           Anne Ackerley Secretary



                                 Appendix 3

             Rule 16a-l(a)(2) under the Securities Exchange Act




                                 Appendix 4

                             CERTIFICATION FORM


      This is to certify that I have read and understand the Code of Ethics
of the BlackRock Closed End Trusts dated May_, 2000, and that I recognize
that I am subject to the provisions thereof and will comply with the policy
and procedures stated therein.

      This is to further certify that I have complied with the requirements
of such Code of Ethics and that I have reported all personal securities
transactions required to be disclosed or reported pursuant to the
requirements of such Code of Ethics.


      Please sign your name here:


      Please print your name here:


      Please date here:
                              ------------------------





      Please sign two copies of this Certification Form, return one copy to
Mr. Bart Battista, Chief Compliance Officer, BlackRock Advisors, Inc., 345
Park Avenue, New York, NY 10154, and retain the other copy, together with a
copy of the Code of Ethics, for your records.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>EXHIBIT (R)(2)
<TEXT>


                                                             Exhibit (r)(2)


                   EMPLOYEE INVESTMENT TRANSACTION POLICY

                                    FOR

                   BLACKROCK INVESTMENT ADVISER COMPANIES











                                                       EFFECTIVE MARCH 1, 2000



                   EMPLOYEE INVESTMENT TRANSACTION POLICY

                             TABLE OF CONTENTS

                                                                          Page

TABLE OF CONTENTS..........................................................-i-

I.    PREAMBLE...............................................................1

      A.    General Principles...............................................1

      B.    The General Scope Of The Policy's Application To Personal
            Investment Transactions..........................................3

      C.    The Organization Of This Policy..................................4

      D.    Questions........................................................4

II.   PERSONAL INVESTMENT TRANSACTIONS.......................................5

      A.    In General.......................................................5

      B.    Reporting Obligations............................................5

            1.    Use Of Broker-Dealers And Futures Commission Merchants.....5

            2.    Initial Report.............................................5

            3.    New Accounts...............................................7

            4.    Timely Reporting Of Investment Transactions................7

            5.    Related Accounts...........................................7

            6.    Exemptions From Reporting..................................7

      C.    Prohibited Or Restricted Investment Transactions.................8

            1.    Initial Public Offerings...................................8

            2.    Private Placements.........................................9

      D.    Investment Transactions Requiring Prior Notification.............9

            1.    Prior Notification Procedure...............................9

            2.    Exemptions From Prior Notification........................10
                  (a)   Transactions Exempt From Prior Notification.........10
                  (b)   Securities Exempt From Prior Notification...........11
                  (c)   Futures Contracts Exempt From Prior Notification....11

      E.    Ban On Short-Term Trading Profits...............................12

      F.    Blackout Periods................................................12

            1.    Specific Blackout Periods.................................12

            2.    Exemptions From Blackout Restrictions.....................13

III.  INSIDE INFORMATION AND SERVICE AS A DIRECTOR..........................14

      A.    Inside Information..............................................14

      B.    Service As A Director...........................................14

IV.   EXEMPTIONS............................................................15

V.    COMPLIANCE............................................................15

      A.    Certifications..................................................15

            1.    Upon Receipt Of This Policy...............................15

            2.    Annual Certificate Of Compliance..........................16

      B.    Supervisory Procedures..........................................16

            1.    The Compliance Committee..................................16

            2.    The Compliance Officer....................................17

            3.    Post-Trade Monitoring And Investigations..................17

            4.    Remedial Actions..........................................18

            5.    Reports Of Violations Requiring Significant
                  Remedial Action...........................................18

            6.    Annual Reports............................................19

VI.   EFFECTIVE DATE........................................................19


APPENDICES

I.    Definitions Of Capitalized Terms
II.   Acknowledgment Of Receipt Of The Policy
III.  Annual Certification Of Compliance With The Policy
IV.   Initial Report of Accounts
V.    Request For Duplicate Broker Reports
VI.   Investment Transaction Prior Notification Form
VII.  Fully Discretionary Account Form



                   EMPLOYEE INVESTMENT TRANSACTION POLICY

                FOR BLACKROCK, INVESTMENT ADVISER COMPANIES



I.    PREAMBLE

      A.    GENERAL PRINCIPLES

      This Employee Investment Transaction Policy (the "Policy") is based
on the principle that you, as an officer, director or other Advisory
Employee of an Advisor affiliated with BlackRock, Inc. ("BlackRock"), owe a
fiduciary duty of undivided loyalty to the registered investment companies,
institutional investment clients, personal trusts and estates,
guardianships, employee benefit trusts, and other Advisory Clients which
that Advisor serves.(1) Accordingly, you must avoid transactions, activities,
and relationships that might interfere or appear to interfere with making
decisions in the best interests of those Advisory Clients.

      At all times, you must observe the following GENERAL PRINCIPLES:

- --------
(1)     This Policy uses a number of capitalized terms, e.g., Advisor,
      Advisory Client, Advisory Employee, Beneficial Ownership, Exempt
      Security, Fixed Income Security, Fully Discretionary Account, Futures
      Contract, Immediate Family, Investment Transaction, Personal Account,
      Portfolio Employee, Portfolio Manager, Related Account, and Security.
      The first time a capitalized term is used, a definition is stated in
      the text or in a footnote. The full definitions of these capitalized
      terms are set forth in Appendix L TO UNDERSTAND YOUR RESPONSIBILITIES
      UNDER THE POLICY, IT IS IMPORTANT THAT YOU REVIEW AND UNDERSTAND ALL
      OF THE DEFINITIONS OF CAPITALIZED TERMS IN APPENDIX I. AS INDICATED
      IN APPENDIX I:


            The term "ADVISOR" means any entity affiliated with BlackRock,
            whether now in existence or formed after the date hereof, that
            is registered as (i) an investment advisor under the Investment
            Advisers Act of 1940, as amended, or (ii) a broker-dealer under
            the Securities Exchange Act of 1934, as amended, other than any
            such investment advisor or broker-dealer that has adopted its
            own employee investment transaction policy.

            The term "ADVISORY CLIENT" means a registered investment
            company, an institutional investment client, a personal trust
            or estate, a guardianship, an employee benefit trust, or
            another client with which the Advisor by which you are employed
            or with which you are associated has an invest ment management,
            advisory or sub-advisory contract or relationship.

            The term "ADVISORY EMPLOYEE" means an officer, director, or
            employee of an Advisor, or any other person identified as a
            "control person" on the Form ADV or the Form BD filed by the
            Advisor with the U.S. Securities and Exchange Commission, (1)
            who, in connection with his or her regular functions or duties,
            generates, participates in, or obtains information regarding
            that Advisor's purchase or sale of a Security by or on behalf
            of an Advisory Client; (2) whose regular functions or duties
            relate to the making of any recommendations with respect to
            such purchases or sales; (3) who obtains information or
            exercises influence concerning investment recommendations made
            to an Advisory Client of that Advisor; or (4) who has line
            oversight or management responsibilities over employees
            described in (1), (2) or (3), above.

            1.    YOU MUST PLACE THE INTERESTS OF ADVISORY CLIENTS FIRST.
                  As a fiduciary you must scrupulously avoid serving your
                  own personal interests ahead of the interests of Advisory
                  Clients. You must adhere to this general fiduciary
                  principle as well as comply with the Policy's specific
                  provisions. Technical compliance with the Policy will not
                  automatically insulate from scrutiny any Investment
                  Transaction(2) that indicates an abuse of your fiduciary
                  duties or that creates an appearance of such abuse.

                  Your fiduciary obligation applies not only to your
                  personal Investment Transactions but also to actions
                  taken on behalf of Advisory Clients. In particular, you
                  may not cause an Advisory Client to take action, or not
                  to take action, for your personal benefit rather than for
                  the benefit of the Advisory Client. For example, you
                  would violate this Policy if you caused an Advisory
                  Client to purchase a Security you owned for the purpose
                  of increasing the value of that Security. If you are a
                  Portfolio Employee,(3) you would also violate this Policy
                  if you made a personal investment in a Security that
                  might be an appropriate investment for an Advisory Client
                  without first considering the Security as an investment
                  for the Advisory Client.

- --------

(2)   For purposes of this Policy, the term "INVESTMENT TRANSACTION" means
      any transaction in a Security or Futures Contract in which you have,
      or by reason of the transaction will acquire, a Beneficial Ownership
      interest.


            As a GENERAL MATTER, the term "SECURITY" means any stock, note,
      bond, debenture or other evidence of indebtedness (including any loan
      participation or assignment), limited partnership interest or
      investment contract OTHER THAN AN EXEMPT SECURITY (as defined above).
      The term "Security" includes an OPTION on a Security, an index of
      Securities, a currency or a basket of currencies, including such an
      option traded on the Chicago Board of Options Exchange or on the New
      York, American, Pacific or Philadelphia Stock Exchanges as well as
      such an option traded in the over-the-counter market. The term
      "Security" does NOT include a physical commodity or a Futures
      Contract.

            The term "FUTURES CONTRACT" includes (a) a futures contract and
      an option on a futures contract traded on a U.S. or foreign board of
      trade, such as the Chicago Board of Trade, the Chicago Mercantile
      Exchange, the New York Mercantile Exchange, or the London
      International Financial Futures Exchange (a "Publicly-Traded Futures
      Contract"), as well as (b) a forward contract, a "swap", a "cap", a
      "collar", a "floor" and an over-the-counter option (other than an
      option on a foreign currency, an option on a basket of currencies, an
      option on a Security or an option on an index of Securities) (a
      "Privately-Traded Futures Contract").

            As a GENERAL MATTER, you are considered to have a "BENEFICIAL
      OWNERSHIP" interest in a Security or Futures Contract if you have the
      opportunity, directly or indirectly, to profit or share in any profit
      derived from a transaction in that Security or Futures Contract. YOU
      ARE PRESUMED TO HAVE A BENEFICIAL OWNERSHIP INTEREST IN ANY SECURITY
      OR FUTURES CONTRACT HELD, INDIVIDUALLY OR JOINTLY, BY YOU AND/OR BY A
      MEMBER OF YOUR IMMEDIATE FAMILY (AS DEFINED BELOW). In addition,
      unless specifically excepted by the Compliance Officer based on a
      showing that your interest or control is sufficiently attenuated to
      avoid the possibility of a conflict, you will be considered to have a
      Beneficial Ownership interest in a Security held by: (1) a JOINT
      ACCOUNT to which you are a party, (2) a PARTNERSHIP in which you are
      a general partner, (3) a LIMITED LIABILITY COMPANY in which you are a
      manager-member, (4) a TRUST in which you or a member of your
      Immediate Family has an interest or(5) an INVESTMENT CLUB in which
      you are a member.

            See Appendix I for more complete definitions of the terms
      "Beneficial Ownership," "Futures Contract," and "Security."

(3)   The term "PORTFOLIO EMPLOYEE" means a Portfolio Manager or an
      Advisory Employee who provides information or advice to a Portfolio
      Manager, who helps execute a Portfolio Manager's decisions, or who
      directly supervises a Portfolio Manager. The term "PORTFOLIO MANAGER"
      means any employee of an Advisor who has the authority, whether sole
      or shared or only from time to time, to make investment decisions or
      to direct trades affecting an Advisory Client



            2.    YOU MUST CONDUCT ALL OF YOUR PERSONAL INVESTMENT
                  TRANSACTIONS IN FULL COMPLIANCE WITH THIS POLICY, THE
                  BLACKROCK, INC. INSIDER TRADING POLICY, THE PNC CODE OF
                  ETHICS, AND THE OTHER POLICIES OF PNC BANK CORP. ("PNC")
                  AND BLACKROCK (including the policies that prohibit
                  insider trading or that restrict trading in PNC
                  Securities). BlackRock encourages you and your family to
                  develop personal investment programs. However, those
                  investment programs must remain within boundaries
                  reasonably necessary to insure that appropriate
                  safeguards exist to protect the interests of our Advisory
                  Clients and to avoid even the APPEARANCE of unfairness or
                  impropriety. Doubtful situations should be resolved in
                  favor of our Advisory Clients and against your personal
                  Investment Transactions.

            3.    YOU MUST NOT TAKE INAPPROPRIATE ADVANTAGE OF YOUR
                  POSITION. The receipt of investment opportunities,
                  perquisites, gifts or gratuities from persons seeking to
                  do business, directly or indirectly, with BlackRock, an
                  affiliate, or an Advisory Client could call into question
                  the independence of your business judgment. Doubtful
                  situations should be resolved against your personal
                  interests.

      B.    THE GENERAL SCOPE OF THE POLICY'S APPLICATION TO PERSONAL
            INVESTMENT TRANSACTIONS

      Rule 17j-l under the Investment Company Act of 1940, as amended,
requires REPORTING of all personal Investment Transactions in Securities
(other than certain "Exempt Securities") by Advisory Employees, whether or
not they are Securities that might be purchased or sold by or on behalf of
an Advisory Client. This Policy implements that reporting requirement.

      However, since a primary purpose of the Policy is to avoid conflicts
of interest arising from personal Investment Transactions in Securities and
other instruments that are held or might be acquired on behalf of Advisory
Clients, this Policy only places RESTRICTIONS on personal Investment
Transactions in such investments. This Policy also requires reporting and
restricts personal Investment Transactions in certain Futures Contracts
which, although they are not Securities, are instruments that Advisors buy
and sell for Advisory Clients.

      Although this Policy applies to all officers, directors and other
Advisory Employees of BlackRock, the Policy recognizes that Portfolio
Managers, and the other Portfolio Employees who provide them with advice
and who execute their decisions, occupy more sensitive positions than other
Advisory Employees, and that it is appropriate to subject their personal
Investment Transactions to greater restrictions.

      C.    THE ORGANIZATION OF THIS POLICY

      The remainder of this Policy is divided into four main topics.
Section II concerns PERSONAL INVESTMENT TRANSACTIONS. Section III describes
restrictions that apply to Advisory Employees who receive INSIDE
INFORMATION or seek to serve on a BOARD OF DIRECTORS OR SIMILAR GOVERNING
BODY. Section IV outlines the procedure for seeking case-by-case EXEMPTIONS
from the Policy's requirements. Section V summarizes the methods for
ensuring COMPLIANCE under this Policy. In addition, the following
APPENDICES are also a part of this Policy:

I.    Definitions Of Capitalized Terms

II.   Acknowledgment Of Receipt Of The Policy

III.  Annual Certification Of Compliance With The Policy

IV.   Initial Report Of Accounts

V.    Request For Duplicate Broker Reports

VI.   Investment Transaction Prior Notification Form

VII.  Fully Discretionary Account Form

      D.    QUESTIONS

      Questions regarding this Policy should be addressed to the Compliance
Officer. If you have any question regarding the interpretation of this
Policy or its application to a potential Investment Transaction, you should
consult the Compliance Officer BEFORE you execute that transaction.

II.   PERSONAL INVESTMENT TRANSACTIONS

      A.    IN GENERAL

      Subject to the limited exceptions described below, you are required
to REPORT all Investment Transactions in Securities and Futures Contracts
made by you, a member of your Immediate Family, a trust or an investment
club in which you have an interest, or on behalf of any account in which
you have an interest or which you direct.(4) In addition, you must provide
PRIOR NOTIFICATION of certain Investment Transactions in Securities and
Futures Contracts that an Advisor holds or may acquire on behalf of an
Advisory Client. (The exercise of an option is an Investment Transaction
for purposes of these requirements.) The details of these reporting and
prior notification requirements are described below.
- --------

(4)   The term "IMMEDIATE FAMILY" means any of the following persons who
      RESIDE IN YOUR HOUSEHOLD OR WHO DEPEND ON YOU FOR BASIC LIVING
      SUPPORT: your spouse, any child, stepchild, grandchild, parent,
      stepparent, grandparent, sibling, mother-in-law, father-in-law,
      son-in-law, daughter-in-law, brother- in-law, or sister-in-law,
      including any adoptive relationships.

      B.    REPORTING OBLIGATIONS

            1.    USE OF BROKER-DEALERS AND FUTURES COMMISSION MERCHANTS

      YOU MUST USE A REGISTERED BROKER-DEALER OR FUTURES COMMISSION
MERCHANT to engage in any purchase or sale of a publicly traded Security or
Futures Contract. This requirement also applies to any purchase or sale of
a Security or Futures Contract in which you have, or by reason of the
Investment Transaction will acquire, a Beneficial Ownership interest. Thus,
as a general matter, any Securities or Futures Contract transactions by
members of your Immediate Family will need to be made through a registered
broker-dealer or futures commission merchant.

            2.    INITIAL REPORT

      Within 10 days of commencing employment or within 10 days of any
event that causes you to become subject to this Policy, you must supply to
the Compliance Officer copies of the most recent statements for each and
every Personal Account and Related Account that holds or is likely to hold
a Security or Futures Contract in which you have a Beneficial Ownership
interest, as well as copies of confirmations for any and all transactions
subsequent to the effective dates of those statements.(5) These documents
should be supplied to the Compliance Officer by attaching them to the form
attached hereto as Appendix IV.
- --------

(5)   The term "PERSONAL ACCOUNT" means the following accounts that hold or
      are likely to hold a Security or Futures Contract in which you have a
      Beneficial Ownership interest;

            o     any account in your individual name;

            o     any joint or tenant-in-common account in which you have
                  an interest or are a participant;

            o     any account for which you act as trustee, executor, or
                  custodian; and

            o     any account over which you have investment discretion or
                  have the power (whether or not exercised) to direct the
                  acquisition or disposition of Securities or Futures
                  Contracts (other than an Advisory Client's account that
                  you manage or over which you have investment discretion),
                  including the accounts of any individual or entity that
                  is managed or controlled directly or indirectly by or
                  through you, such as the account of an investment club to
                  which you belong. There is a presumption that you can
                  control accounts held by members of your Immediate Family
                  sharing the same household. This presumption may be
                  rebutted only by convincing evidence.

            The term"RELATED ACCOUNT" means any account, other than a
      Personal Account, that holds a Security or Futures Contract in which
      you have a direct or indirect Beneficial Ownership interest (other
      than an account over which you have no investment discretion and
      cannot otherwise exercise control) and any account (other than an
      Advisory Client's account) of any individual or entity to whom you
      give advice or make recommendations with regard to the acquisition or
      disposition of Securities or Futures Contracts (whether or not such
      advice is acted upon).

      On that same form you should supply the name of any registered
broker-dealer and/or futures commission merchant and the number for any
Personal Account and Related Account that holds or is likely to hold a
Security or Futures Contract in which you have a Beneficial Ownership
interest for which you CANNOT supply the most recent account statement. You
must also certify, where indicated on the form, that the contents of the
form and the documents attached thereto disclose all such Personal Accounts
and Related Accounts.

      In addition, you must also supply, where indicated on the form, the
following information for each Security or Futures Contract in which you
have a Beneficial Ownership interest, to the extent that this information
is not available from the statements attached to the form:

            1.    A description of the Security or Futures Contract,
                  including its name or title;

            2.    The quantity (e.g., in terms of numbers of shares, units
                  or contracts) and value (in dollars) of the Security or
                  Futures Contract; and

            3.    The custodian of the Security or Futures Contract.

            3.    NEW ACCOUNTS

      Upon the opening of a new Personal Account or a Related Account that
holds or is likely to hold a Security or a Futures Contract in which you
have a Beneficial Ownership interest, you must give written notice to the
Compliance Officer of the name of the registered broker-dealer or futures
commission merchant for that account, the identifying number for that
Personal Account or Related Account and the date that the account was
established.

            4.    TIMELY REPORTING OF INVESTMENT TRANSACTIONS

      You must cause each broker-dealer or futures commission merchant that
maintains a Personal Account or a Related Account that holds a Security or
a Futures Contract in which you have a Beneficial Ownership interest to
provide to the Compliance Officer, on a timely basis, duplicate copies of
confirmations of all transactions in that account and of periodic
statements for that account ("Duplicate Broker Reports"). A form for that
purpose is attached hereto as Appendix V.

      In addition, you must report to the Compliance Officer, on a timely
basis, any transaction in a Security or Futures Contract in which you have
or acquired a Beneficial Ownership interest that was made without the use
of a registered broker-dealer or futures commission merchant.

            5.    RELATED ACCOUNTS

      The reporting obligations described above also apply to any Related
Account (as defined in Appendix I) and to any Investment Transaction in a
Related Account.

      It is important that you recognize that the definitions of 'Personal
Account," "Related Account" and "Beneficial Ownership" in Appendix I
probably will require you to provide, or to arrange for the broker-dealer
or futures commission merchant to furnish, copies of reports for any
account used by or for a member of your Immediate Family or a trust in
which you or a member of your Immediate Family has an interest, as well as
for any other accounts in which you may have the opportunity, directly or
indirectly, to profit or share in the profit derived from any Investment
Transaction in that account, including the account of any investment club
to which you belong.

            6.    EXEMPTIONS FROM REPORTING

      You need not report Investment Transactions in any account, including
a Fully Discretionary Account,(6) over which neither you nor an Immediate
Family Member has or had any direct or indirect influence or control. For
example, Investment Transactions in the account of your spouse in an
employee benefit plan would not have to be reported if neither you nor your
spouse has any influence or control over those Investment Transactions.

- --------

(6)   The term "FULLY DISCRETIONARY ACCOUNT" means a Personal Account or
      Related Account managed or held by a broker-dealer, futures
      commission merchant, investment advisor or trustee as to which
      neither you nor an Immediate Family Member: (a) exercises any
      investment discretion; (b) suggests or receives notice of
      transactions prior to their execution; and (c) you do not otherwise
      have any direct or indirect influence or control. In addition, to
      qualify as a Fully Discretionary Account, the individual broker,
      registered representative or merchant responsible for that account
      must not be responsible for nor receive advance notice of any
      purchase or sale of a Security or Futures Contract on behalf of an
      Advisory Client. To qualify an account as a Fully Discretionary
      Account, the Compliance Officer must receive and approve a written
      notice, in the form attached hereto as Appendix VIII, that the
      account meets the foregoing qualifications as a Fully Discretionary
      Account.

   You also need not report Investment Transactions in Exempt Securities
nor need you furnish, or require a broker-dealer or futures commission
merchant to furnish, copies of confirmations or periodic statements for
accounts that hold ONLY Exempt Securities.(7) This includes accounts that
only hold U.S. Government securities, money market interests, or shares in
registered open-end investment companies (i.e., mutual funds). This
exemption from reporting will end immediately, however, at such time as
there is an Investment Transaction in that account in a Security that is
not an Exempt Security.
- --------

(7)   The term "EXEMPT SECURITY" means any Security (as defined in Appendix
      I) not included within the definition of Security in SEC Rule
      17j-l(e)(5) under the Investment Company Act of 1940, as amended,
      including:

      1.    A direct obligation of the Government of the United States;

      2.    Shares of registered open-end investment companies (i.e.,
            mutual funds); and

      3.    High quality short-term debt instruments, including, but not
            limited to, bankers' acceptances, bank certificates of deposit,
            commercial paper and repurchase agreements.

      See Appendix I for a more complete definition of "Exempt Security".

      C.    PROHIBITED OR RESTRICTED INVESTMENT TRANSACTIONS

            1.    INITIAL PUBLIC OFFERINGS

      As an Advisory Employee, you may not acquire Beneficial Ownership of
any Security in an initial public offering, except that, with the approval
of the Compliance Committee and the General Counsel of BlackRock, you may
acquire Beneficial Ownership of a Security in an initial public offering
directed or sponsored by BlackRock. For purposes of this Policy, an initial
public offering shall not include the purchase of a Security in an initial
public offering by (i) a savings bank to its depositors, (ii) a mutual
insurance company to its policyholders, (iii) an issuer of debt securities
(other than debt securities convertible into common or preferred stock) or
(iv) with respect to an Advisory Employee employed by BlackRock
International, Ltd. a building society to its depositors.

            2.    PRIVATE PLACEMENTS

      If you are a Portfolio Employee, you may not acquire Beneficial
Ownership of any Security in a private placement, or subsequently sell that
interest, unless you have received the prior written approval of the
Compliance Officer and of any supervisor designated by the Compliance
Officer. Approval will not be given unless a determination is made that the
investment opportunity should not be reserved for one or more Advisory
Clients, and that the opportunity to invest has not been offered to you by
virtue of your position with an Advisor.

      If you have acquired Beneficial Ownership of Securities in a private
placement, you must disclose that investment to your supervisor when you
play a part in any consideration of any investment by an Advisory Client in
the issuer of the Securities, and any decision to make such an investment
must be independently reviewed by a Portfolio Manager who does not have a
Beneficial Ownership interest in any Securities of the issuer.

      D.    INVESTMENT TRANSACTIONS REQUIRING PRIOR NOTIFICATION

      You must give prior notification to the Compliance Officer of ANY
Investment Transaction in Securities or Futures Contracts in a Personal
Account or Related Account, or in which you otherwise have or will acquire
a Beneficial Ownership interest, UNLESS that Investment Transaction,
Security or Futures Contract falls into one of the following categories
that are identified as "exempt from prior notification." The purpose of
prior notification is to permit the Compliance Officer and the Compliance
Committee to take reasonable steps to investigate whether that Investment
Transaction is in accordance with this Policy. Satisfaction of the prior
notification requirement does not, however, constitute approval or
authorization of any Investment Transaction for which you have given prior
notification. As a result, the primary responsibility for compliance with
this Policy rests with you.

            1.    PRIOR NOTIFICATION PROCEDURE

      Prior notification must be given by completing and submitting to the
Compliance Officer a copy of the prior notification form attached hereto as
Appendix VII. No Investment Transaction requiring prior notification may be
executed prior to notice by the Compliance Officer that the prior
notification process has been completed. The time and date of that notice
will be reflected on the prior notification form. Unless otherwise
specified, an Investment Transaction requiring prior notification must be
placed and executed by the end of trading in New York City or, in the case
of Advisory Employees employed by BlackRock International, Ltd., by the end
of trading in the United Kingdom on the day of notice from the Compliance
Officer that the prior notification process has been completed. If a
proposed Investment Transaction is not executed (with the exception of a
limit order) within the time specified, you must repeat the prior
notification process before executing the transaction. A notice from a
Compliance Officer that the prior notification process has been completed
is no longer effective if you discover, prior to executing your Investment
Transaction, that the information on your prior notification form is no
longer accurate, or if the Compliance Officer revokes his or her notice for
any other reason.

      The Compliance Officer may undertake such investigation as he or she
considers necessary to investigate whether an Investment Transaction for
which prior notification has been sought complies with the terms of this
Policy and is consistent with the general principles described at the
beginning of this Policy.

      As part of that investigation, the Compliance Officer or a designee
of the Compliance Officer will determine whether there is a pending buy or
sell order in the same equity Security or Futures Contract, or a Related
Security, on behalf of an Advisory Client.(8) If such an order exists, the
Compliance Officer will not provide notice that the prior notification
process has been completed UNTIL the Advisory Client's order is executed or
withdrawn.

- --------

(8)   The term "RELATED SECURITY" means, as to any Security, any instrument
      related in value to that Security, including, but not limited to, any
      option or warrant to purchase or sell that Security, and any Security
      convertible into or exchangeable for that Security.

            2.    EXEMPTIONS FROM PRIOR NOTIFICATION

      Prior notification will not be required for the following Investment
Transactions, Securities and Futures Contracts. They are exempt only from
the Policy's prior notification requirement, and, unless otherwise
indicated, remain subject to the Policy's other requirements, including its
reporting requirements.


                  (a)   TRANSACTIONS EXEMPT FROM PRIOR NOTIFICATION

            Prior notification is not required for any of the following
Investment Transactions:

            1.    Any Investment Transaction in a Fully Discretionary
                  Account that has been approved as such by the Compliance
                  Officer.

            2.    Purchases of Securities under dividend reinvestment plans.

            3.    Purchases of Securities by an exercise of rights issued
                  to the holders of a class of Securities pro rata, to the
                  extent those rights are issued with respect to Securities
                  of which you have Beneficial Ownership.

            4.    Acquisitions or dispositions of Securities as the result
                  of a stock dividend, stock split, reverse stock split,
                  merger, consolidation, spin-off or other similar
                  corporate distribution or reorganization applicable to
                  all holders of a class of Securities of which you have
                  Beneficial Ownership.

            5.    Purchases of common stock of PNC Bank Corp. under the
                  Employee Stock Purchase Plan.

            6.    With respect to Advisory Employees who are employed by
                  BlackRock International, Inc., automatic investments by
                  direct debit into a personal equity plan (PEP), or
                  similar type of plan in Exempt Securities if the pre-
                  notification process was completed for the first such
                  investment.

            7.    Investment Transactions made by a person who serves on
                  the Board of Directors of an Advisor and is not involved
                  with the Advisory operations of such Advisor nor engages
                  in the type of activities described under (1) (2) or (3)
                  under the term Advisory Employee as defined in Appendix
                  I.

            (b)   SECURITIES EXEMPT FROM PRIOR NOTIFICATION

            Prior notification is not required for an Investment
Transaction in an Exempt Security, as defined in Appendix I, e.g., U.S.
Government securities, shares in registered open- end investment companies
(i.e., mutual funds) and "high quality short-term debt instruments" (as
defined in Appendix I).

            (c)   FUTURES CONTRACTS EXEMPT FROM PRIOR NOTIFICATION

            Prior notification is not required for an Investment
Transaction in the following Futures Contracts:

            1.    Currency futures.

            2.    U.S. Treasury futures.

            3.    Eurodollar futures.

            4.    Physical commodity futures (e.g., contracts for future
                  delivery of grain, livestock, fiber or metals).

            5.    Futures contracts to acquire Fixed Income Securities
                  issued by a U.S. Government agency, a foreign government,
                  or an international or supranational agency.

            6.    Futures contracts on the Standard and Poor's 500 (S&P
                  500) or the Dow Jones Industrial Average or NASDAQ 100
                  stock indexes.

            7.    For Advisory Employees who are employed by BlackRock
                  International, Ltd., futures contracts on the Financial
                  Times Stock Exchange 100 (FTSE) Index.

      E.    BAN ON SHORT-TERM TRADING PROFITS

      You may not profit from the purchase and sale, or the sale and
purchase, within 60 calendar days, of the same Securities and/or Related
Security. Any such short-term trade must be reversed or unwound, or if that
is not practical, the profits must be disgorged and distributed in a manner
determined by the Compliance Committee.

      This short-term trading ban does NOT apply to Investment Transactions
in Exempt Securities (as defined in Appendix I) or in Futures Contracts.
This ban also does NOT apply to a purchase or sale in connection with a
Transaction Exempt From Prior Notification (as described above in Section
II.D.2.(a)), a transaction in a Fully Discretionary Account or a
transaction exempt from the "blackout" periods pursuant to Section II.F.2
below.

      You are considered to profit from a short-term trade if Securities of
which you have Beneficial Ownership (including Securities held by Immediate
Family members) are sold for more than their purchase price, even though
the Securities purchased and the Securities sold are held of record or
beneficially by different persons or entities.

      F.    BLACKOUT PERIODS

      Your ability to engage in certain Investment Transactions may be
prohibited or restricted during the "blackout" periods described below:

            1.    SPECIFIC BLACKOUT PERIODS

                  a.    You may not purchase or sell a Security, a Related
                        Security, or Futures Contract at a time when you
                        intend or know of another's intention to purchase
                        or sell that same Security, a Related Security, or
                        Futures Contract, on behalf of an Advisory Client
                        of ANY Advisor (the "Specific Knowledge Blackout
                        Period").

                  b.    In addition, if you are a PORTFOLIO EMPLOYEE, you
                        may not purchase or sell a Security, a Related
                        Security or a Futures Contract which you are
                        actively considering or which you have actively
                        considered and rejected for purchase or sale for an
                        Advisory Client within the previous 15 CALENDAR
                        DAYS (the "15- Day Blackout Period") unless the
                        Compliance Officer, after consultation with your
                        supervisor, has approved your Investment
                        Transaction.(9)

                  c.    Finally, if you are a PORTFOLIO MANAGER, you may
                        not purchase or sell a Security, a Related
                        Security, or Futures Contract within 7 CALENDAR
                        DAYS before or after a transaction in that
                        Security, a Related Security, or Futures Contract,
                        by an Advisory Client for which you are responsible
                        (the "7-Day Blackout Period").

      For Portfolio Employees or Portfolio Managers, the Compliance Officer
will not give such notice until any applicable 15-Day Blackout Period or
7-Day Blackout Period has expired or any required approvals or exemptions
have been obtained. An Investment Transaction that violates one of these
Blackout restrictions must be reversed or unwound, or if that is not
practical, the profits must be disgorged and distributed in a manner
determined by the Compliance Committee.

- --------

(9)   SEC Rule 17j-l places restrictions on the purchase or sale of any
      "security held or to be acquired" by a registered investment company.
      Rule 17j-l(e)(6) defines a "security held or to be acquired" by a
      registered investment company as including any security which, within
      the most recent 15 days, "is being or has been considered by such
      company or its investment adviser for purchase by such company."

            2.    EXEMPTIONS FROM BLACKOUT RESTRICTIONS

      The foregoing blackout period restrictions do NOT apply to Investment
Transactions in:

                  a.    Exempt Securities, as defined in Appendix I.

                  b.    Securities of a company listed on the Standard &
                        Poor's 100 (S & P 100) Index.

                  c.    A Futures Contract Exempt From Prior Notification
                        under this Policy (as described above).

                  d.    A Fully Discretionary Account.

                  e.    With respect to Advisory Employees who are employed
                        by BlackRock International, Ltd., securities of a
                        company listed on the Financial Times Stock
                        Exchange 100 (FTSE 100).

III.  INSIDE INFORMATION AND SERVICE AS A DIRECTOR

      A.    INSIDE INFORMATION

      As an employee of a subsidiary of PNC and BlackRock, Inc., you must
comply with the PNC Insider Trading Policy and the BlackRock, Inc. Insider
Trading Policy. A copy of the PNC Insider Trading Policy is included in
Section E of the PNC Code of Ethics. A copy of the BlackRock, Inc. Insider
Trading Policy was furnished to all employees at the time of its adoption
and is furnished to all new employees at the commencement of their
employment. In addition, as an Advisory Employee, you must notify the
General Counsel of BlackRock if you receive or expect to receive material
non-public information about an entity that issues securities. The General
Counsel will determine the restrictions, if any, that will apply to your
communications and activities while in possession of that information. In
general, those restrictions will include:

            1.    An undertaking not to trade, either on your own behalf or
                  on behalf of an Advisory Client, in the securities of the
                  entity about which you have material non-public
                  information.

            2.    An undertaking not to disclose material non-public
                  information to other Advisory Employees.

            3.    An undertaking not to participate in discussions with or
                  decisions by other Advisory Employees relating to the
                  entity about which you have material non-public
                  information.

The General Counsel, in cooperation with the Compliance Officer, will
maintain a "restricted list" of entities about which Advisory Employees may
have material non-public information. This "restricted list" will be
available to the Compliance Officer when he or she conducts investigations
or reviews related to the Prior Notification Procedure described previously
in Section II(D)(1) or the Post-Trade Monitoring process described below in
Section V(B)(3).

      B.    SERVICE AS A DIRECTOR

      You may not serve on the board of directors or other governing board
of any entity unless you have received the prior written approval of the
General Counsel of PNC, to the extent such approval is required under the
terms of the PNC Code of Ethics, and the General Counsel of BlackRock. If
permitted to serve on a governing board, an Advisory Employee will be
isolated from those Advisory Employees who make investment decisions
regarding the securities of that entity, through a "Chinese wall" or other
procedures determined by the General Counsel of BlackRock. In general, the
"Chinese wall" or other procedures will include:

            1.    An undertaking not to trade or to cause a trade on behalf
                  of an Advisory Client in the securities of the entity on
                  whose board you serve.

            2.    An undertaking not to disclose material non-public
                  information about that entity to other Advisory
                  Employees.

            3.    An undertaking not to participate in discussions with or
                  decisions by other Advisory Employees relating to the
                  entity on whose board you serve.

Any entity on whose board an Advisory Employee serves will be included on
the "restricted list" referenced in subsection A, above.

IV.   EXEMPTIONS

      The Compliance Committee, in its discretion, may grant case-by-case
exceptions to any of the foregoing requirements, restrictions or
prohibitions, except that the Compliance Committee may not exempt any
Investment Transaction in a Security (other than an Exempt Security) or a
Futures Contract from the Policy's reporting requirements. Exemptions from
the Policy's prior notification requirements and from the Policy's
restrictions on acquisitions in initial public offerings, short-term
trading and trading during blackout periods will require a determination by
the Compliance Committee that the exempted transaction does not involve a
realistic possibility of violating the general principles described at the
beginning of this Policy. An application for a case-by-case exemption, in
accordance with this paragraph, should be made in WRITING to the Compliance
Officer, who will promptly forward that written request to the members of
the Compliance Committee.

V.    COMPLIANCE

      A.    CERTIFICATIONS

            1.    UPON RECEIPT OF THIS POLICY

      Upon commencement of your employment or the effective date of this
Policy, whichever occurs later, you will be required to acknowledge receipt
of your copy of this Policy by completing and returning to the Compliance
Officer a copy of the form attached hereto as Appendix II. By that
acknowledgment, you will also agree:

            1.    To read the Policy, to make a reasonable effort to
                  understand its provisions, and to ask the Compliance
                  Officer questions about those provisions you find
                  confusing or difficult to understand.

            2.    To comply with the Policy, including its general
                  principles, its reporting requirements, its prohibitions,
                  its prior notification requirements, its short- term
                  trading and blackout restrictions.

            3.    To advise the members of your Immediate Family about the
                  existence of the Policy, its applicability to their
                  personal Investment Transactions, and your responsibility
                  to assure that their personal Investment Transactions
                  comply with the Policy.

            4.    To cooperate fully with any investigation or inquiry by
                  or on behalf of the Compliance Officer or the Compliance
                  Committee to determine your compliance with the
                  provisions of the Policy.

In addition, your acknowledgment will recognize that any failure to comply
with the Policy and to honor the commitments made by your acknowledgment
may result in disciplinary action, including dismissal

            2.    ANNUAL CERTIFICATE OF COMPLIANCE

      You are required to certify on an annual basis, on a copy of the form
attached hereto as Appendix III, that you have complied with each provision
of your initial acknowledgment (see above). In particular, your annual
certification will require that you certify that you have read and that you
understand the Policy, that you recognize that you are subject to its
provisions, that you complied with the requirements of the Policy during
the year just ended, and that you have disclosed, reported, or caused to be
reported all Investment Transactions required to be disclosed or reported
pursuant to the requirements of the Policy and that you have disclosed,
reported or caused to be reported all Personal Accounts and Related
Accounts that hold or are likely to hold a Security or Futures Contract in
which you have a Beneficial Ownership interest. In addition, you will be
required to confirm the accuracy of the record of information on file with
the Advisor with respect to such Personal Accounts and Related Accounts.

      B.    SUPERVISORY PROCEDURES

            1.    THE COMPLIANCE COMMITTEE

      The policy will be implemented, monitored and reviewed by the
Compliance Committee. The initial members of the Compliance Committee will
be appointed by the management committee of BlackRock. The Compliance
Committee, by a simple majority of its members, may appoint new members of
the Committee, may replace existing members of the Committee, and may fill
vacancies on the Committee. Among other responsibilities, the Compliance
Committee will consider requests for case-by-case exemptions (described
above) and will conduct investigations (described below) of any actual or
suspected violations of the Policy. The Compliance Committee will determine
what remedial actions, if any, should be taken by an Advisor in response to
a violation of the Policy. The Compliance Committee will also provide
reports (described below) regarding significant violations of the Policy
and the procedures to implement the Policy. The Compliance Committee may
recommend changes to those procedures or to the Policy to the management of
the Advisors. Finally, the Compliance Committee will designate one person
to act as Compliance Officer for all Advisors.

            2.    THE COMPLIANCE OFFICER

      The Compliance Officer designated by the Compliance Committee will be
responsible for the day-to-day administration of the Policy for all
Advisors, subject to the direction and control of the Compliance Committee.
Based on information supplied by the management of each Advisor, the
Compliance Officer will forward a copy of the policy to each Advisory
Employee subject to the policy and will notify each such person of his or
her designation as an Advisory Employee, Portfolio Employee or Portfolio
manager. The Compliance Officer will also be responsible for administration
of the reporting and prior notification functions described in the Policy,
and will maintain the reports required by those functions. In addition, the
Compliance Officer will attempt to answer any questions from an Advisory
Employee regarding the interpretation or administration of the Policy. When
necessary or desirable, the Compliance Officer will consult with the
Compliance Committee about such questions. The Compliance officer may
designate one or more Assistant Compliance Officers to whom the Compliance
Officer may delegate any of the duties described in this paragraph or in
the succeeding paragraph, and who shall be empowered to act on the
Compliance Officer's behalf when the Compliance Officer is absent or
unavailable.

            3.    POST-TRADE MONITORING AND INVESTIGATIONS

      The Compliance Officer will review the Duplicate Broker Reports and
other information supplied for each Advisory Employee so that the
Compliance Officer can detect and prevent potential violations of the
Policy. This information may also be disclosed to the Advisor's auditors,
attorneys and regulators. If, based on his or her review of information
supplied for an Advisory Employee, or based on other information, the
Compliance Officer suspects that the Policy may have been violated, the
Compliance Officer will perform such investigations and make such inquiries
as he or she considers necessary. You should expect that, as a matter of
course, the Compliance Officer will make inquiries regarding any personal
Investment Transaction in a Security or Futures Contract that occurs on the
same day as a transaction in the same Security or Futures Contract on
behalf of an Advisory Client. If the Compliance Officer reaches a
preliminary conclusion that an Advisory Employee may have violated this
Policy, the Compliance Officer will report that preliminary conclusion in a
timely manner to the Compliance Committee and will furnish to the Committee
all information that relates to the Compliance Officer's preliminary
conclusion. The Compliance Officer may also report his or her preliminary
conclusions and the information relating to that preliminary conclusion to
the Advisor's auditors, attorneys and regulators.

      Promptly after receiving the Compliance Officer's report of a
possible violation of the Policy, the Compliance Committee, with the aid
and assistance of the Compliance Officer, will conduct an appropriate
investigation to determine whether the policy has been violated and will
determine what remedial action should be taken by the Advisor in response
to any such violation(s). For purposes of these determinations, a majority
of the Compliance Committee will constitute a quorum and action taken by a
simple majority of that quorum constitute action by the Committee.

            4.    REMEDIAL ACTIONS

      The remedial actions that may be recommended by the Compliance
Committee may include, but are not limited to, disgorgement of profits,
imposition of a fine, censure, demotion, suspension or dismissal. As part
of any sanction e.g., for violation of the Policy's restrictions on
short-term trading or trading during blackout periods, you may be required
to reverse or unwind a transaction and to forfeit any profit or to absorb
any loss from the transaction. If an Investment Transaction may not be
reversed or unwound, you may be required to disgorge any profits associated
with the transaction, which profits will be distributed in a manner
prescribed by the Compliance Committee in the exercise of its discretion.
Profits derived from Investment Transactions in violation of this policy
may not be offset by any losses from Investment Transactions in violation
of this Policy. Finally, evidence suggesting violations of criminal laws
will be reported to the appropriate authorities, as required by applicable
law.

      In determining what, if any, remedial action is appropriate in
response to a violation of the Policy, the Compliance Committee will
consider, among other factors, the gravity of your violation, the frequency
of your violations, whether any violation caused harm or the potential of
harm to any Advisory Client, whether you knew or should have known that
your Investment Transaction violated the Policy, whether you engaged in an
Investment Transaction with a view to making a profit on the anticipated
market action of a transaction by an Advisory Client, your efforts to
cooperate with the Compliance Officer's investigation, and your efforts to
correct any conduct that led to a violation. In rare instances, the
Compliance Committee may find that, for equitable reasons, no remedial
action should be taken.

            5.    REPORTS OF VIOLATIONS REQUIRING SIGNIFICANT REMEDIAL ACTION

      In a timely manner, and not less frequently than annually, the
Compliance Committee will report to the management committee of BlackRock,
and to the directors or trustees of each investment company that is an
Advisory Client, any known Policy violation requiring significant remedial
action (as defined below) and the disposition of that violation. For this
purpose, a significant remedial action means any action that has a
significant financial effect on the violator. Evidence suggesting
violations of criminal laws will be reported to the appropriate
authorities, as required by applicable law.

            6.    ANNUAL REPORTS

      The Compliance Committee will furnish an annual report to the
management committee of BlackRock, and to the directors or trustees of each
investment company that is an Advisory Client, that, at a minimum, will:

            1.    Summarize existing procedures and restrictions concerning
                  personal investing by Advisory Employees and any changes
                  in those procedures and restrictions that were made
                  during the previous year;

            2.    Summarize any violations of the Policy that resulted in
                  significant remedial action during the previous year; and

            3.    Describe any changes in existing procedures or
                  restrictions that the Compliance Committee recommends
                  based upon its experience under the Policy, evolving
                  industry practices, or developments in applicable laws or
                  regulations.

VI.   EFFECTIVE DATE

      The provisions of this Policy will take effect on October 1, 1998.
Amendments to this Policy will take effect at the time such amendments are
promulgated and distributed to the Advisory Employees governed by this
Policy.



                                 APPENDIX I

                      DEFINITIONS OF CAPITALIZED TERMS

      The following definitions apply to the capitalized terms used in the
Policy:

ADVISOR

      The term "Advisor" means any entity affiliated with BlackRock,
whether now in existence or formed after the date hereof, that is
registered as (i) an investment advisor under the Investment Advisers Act
of 1940, as amended, or (ii) a broker-dealer under the Securities Exchange
Act of 1934, as amended, other than any such investment advisor or
broker-dealer that has adopted its own employee investment transaction
policy.

ADVISORY CLIENT

      The term "Advisory Client" means a registered investment company, an
institutional investment client, a personal trust or estate, a
guardianship, an employee benefit trust, or another client with which the
Advisor by which you are employed or with which you are associated has an
investment management, advisory or sub-advisory contract or relationship.

ADVISORY EMPLOYEE

      The term "Advisory Employee" means an officer, director, or employee
of an Advisor, or any other person identified as a "control person" on the
Form ADV or the Form BD filed by the Advisor with the U.S. Securities and
Exchange Commission, (1) who, in connection with his or her regular
functions or duties, generates, participates in, or obtains information
regarding that Advisor's purchase or sale of a Security by or on behalf of
an Advisory Client; (2) whose regular functions or duties relate to the
making of any recommendations with respect to such purchases or sales; or
(3) who obtains information or exercises influence concerning investment
recommendations made to an Advisory Client of that Advisor or who has line
oversight or management responsibilities over employees who obtain such
information or who exercise such influence.

BENEFICIAL OWNERSHIP

      As a GENERAL MATTER, you are considered to have a "Beneficial
Ownership" interest in a Security or Futures Contract if you have the
opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in that Security. YOU ARE PRESUMED TO HAVE A
BENEFICIAL OWNERSHIP INTEREST IN ANY SECURITY OR FUTURES CONTRACT HELD,
INDIVIDUALLY OR JOINTLY, BY YOU AND/OR BY A MEMBER OF YOUR IMMEDIATE FAMILY
(AS DEFINED BELOW). In addition, unless specifically excepted by the
Compliance Officer based on a showing that your interest or control is
sufficiently attenuated to avoid the possibility of a conflict, you will be
considered to have a Beneficial Ownership interest in a Security or Futures
Contract held by: (1) a JOINT ACCOUNT to which you are a party, (2) a
PARTNERSHIP in which you are a general partner, (3) a LIMITED LIABILITY
COMPANY in which you are a manager-member, or (4) a TRUST in which you or a
member of your Immediate Family has a vested interest. Although you may
have a Beneficial Ownership interest in a Security or Futures Contract held
in a Fully Discretionary Account (as defined below), the application of
this Policy to such a Security or Futures Contract may be modified by the
special exemptions provided for Fully Discretionary Accounts.

      As a TECHNICAL MATTER, the term "Beneficial Ownership" for purposes
of this Policy will be interpreted in the same manner as it would be under
SEC Rule 16a-1(a)(2) in determining whether a person has beneficial
ownership of a security for purposes of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder.

BLACKROCK

      The term "BlackRock" means BlackRock, Inc.

COMPLIANCE COMMITTEE

      The term "Compliance Committee" means the committee of persons who
have responsibility for implementing, monitoring and reviewing the Policy,
in accordance with Section V(B)(1) of the Policy.

COMPLIANCE OFFICER

      The term "Compliance Officer" means the person designated by the
Compliance Committee as responsible for the day-to-day administration of
the Policy in accordance with Section V(B)(2) of the Policy.

DUPLICATE BROKER REPORTS

      The term "Duplicate Broker Reports" means duplicate copies of
confirmations of transactions in your Personal or Related Accounts and of
periodic statements for those accounts.

EXEMPT SECURITY

      The term "Exempt Security" means any Security (as defined below) not
included within the definition of Security in SEC Rule l7j-1(e)(5) under
the Investment Company Act of 1940, as amended, including:

            1.    A direct obligation of the Government of the United
                  States;

            2.    Shares of registered open-end investment companies; and

            3.    High quality short-term debt instruments, including, but
                  not limited to, bankers' acceptances, bank certificates
                  of deposit, commercial paper and repurchase agreements.
                  For these purposes, a "high quality short-term debt
                  instrument" means any instrument having a maturity at
                  issuance of less than 366 days and which is rated in one
                  of the highest two rating categories by a Nationally
                  Recognized Statistical Rating Organization, or which is
                  unrated but is of comparable quality.

            4.    For Advisory Employees employed by BlackRock
                  International, Ltd., shares of authorized unit trusts,
                  open-ended investment companies (OEIC's) and direct
                  obligations of the Government of the United Kingdom.

FIXED INCOME SECURITIES

      For purposes of this Policy, the term "Fixed Income Securities" means
fixed income Securities issued by agencies or instrumentalities of, or
unconditionally guaranteed by, the Government of the United States,
corporate debt Securities, mortgage-backed and other asset- backed
Securities, fixed income Securities issued by state or local governments or
the political subdivisions thereof, structured notes and loan
participations, foreign government debt Securities, and debt Securities of
international agencies or supranational agencies. For purposes of this
Policy, the term "Fixed Income Securities" will not be interpreted to
include U.S. Government Securities or any other Exempt Security (as defined
above).

FULLY DISCRETIONARY ACCOUNT

      The term "Fully Discretionary Account" means a Personal Account or
Related Account (as defined below) managed or held by a broker-dealer,
futures commission merchant, investment advisor or trustee as to which
neither you nor an Immediate Family Member (as defined below): (a)
exercises any investment discretion; (b) suggests or receives notice of
transactions prior to their execution; and (c) otherwise has any direct or
indirect influence or control. In addition, to qualify as a Fully
Discretionary Account, the individual broker, registered representative or
merchant responsible for that account must not be responsible for nor
receive advance notice of any purchase or sale of a Security or Futures
Contract on behalf of an Advisory Client. To qualify an account as a Fully
Discretionary Account, the Compliance Officer must receive and approve a
written notice, in the form attached hereto as Appendix VIII, that the
account meets the foregoing qualifications as a Fully Discretionary
Account.

FUTURES CONTRACT

      The term "Futures Contract" includes (a) a futures contract and an
option on a futures contract traded on a U.S. or foreign board of trade,
such as the Chicago Board of Trade, the Chicago Mercantile Exchange, the
New York Mercantile Exchange, or the London International Financial Futures
Exchange (a "Publicly-Traded Futures Contract"), as well as (b) a forward
contract, a "swap", a "cap", a "collar", a "floor" and an over-the-counter
option (other than an option on a foreign currency, an option on a basket
of currencies, an option on a Security or an option on an index of
Securities, which fall within the definition of "Security") (a "Privately-
Traded Futures Contract"). You should consult with the Compliance Officer
if you have any doubt about whether a particular Investment Transaction you
contemplate involves a Futures Contract. For purposes of this definition, a
Publicly-Traded Futures Contract is defined by its expiration month, i.e.,
a Publicly-Traded Futures Contract on a U.S. Treasury Bond that expires in
June is treated as a separate Publicly-Traded Futures Contract, when
compared to a Publicly- Traded Futures Contract on a U.S. Treasury Bond
that expires in July.

IMMEDIATE FAMILY

      The term "Immediate Family" means any of the following persons who
RESIDE IN YOUR HOUSEHOLD OR WHO DEPEND ON YOU FOR BASIC LIVING SUPPORT:
your spouse, any child, stepchild, grandchild, parent, stepparent,
grandparent, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including any adoptive
relationships.

INVESTMENT TRANSACTION

      For purposes of this Policy, the term "Investment Transaction" means
any transaction in a Security or Futures Contract in which you have, or by
reason of the transaction will acquire, a Beneficial Ownership interest.
The exercise of an option to acquire a Security or Futures Contract is an
Investment Transaction in that Security or Futures Contract

PERSONAL ACCOUNT

      The term "Personal Account" means the following accounts that hold or
are likely to hold a Security or Futures Contract in which you have a
Beneficial Ownership interest:

     o      any account in your individual name;

     o      any joint or tenant-in-common account in which you have an
            interest or are a participant;.

     o      any account for which you act as trustee, executor, or
            custodian; and

     o      any account over which you have investment discretion or have
            the power (whether or not exercised) to direct the acquisition
            or disposition of Securities or Futures Contracts (other than
            an Advisory Client's account that you manage or over which you
            have investment discretion), including the accounts of any
            individual or entity that is managed or controlled directly or
            indirectly by or through you. There is a presumption that you
            can control accounts held by members of your Immediate Family
            sharing the same household. This presumption may be rebutted
            only by convincing evidence.

POLICY

      The term 'Policy" means this Employee Investment Transaction Policy.

PORTFOLIO EMPLOYEE

      The term "Portfolio Employee" means a Portfolio Manager or an
Advisory Employee who provides information or advice to a Portfolio
Manager, who helps execute a Portfolio Manager's decisions, or who directly
supervises a Portfolio Manager.

PORTFOLIO MANAGER

      The term "Portfolio Manager" means any employee of an Advisor who has
the authority, whether sole or shared or only from time to time, to make
investment decisions or to direct trades affecting an Advisory Client.

RELATED ACCOUNT

      The term "Related Account" means any account, other than a Personal
Account, that holds a Security or Futures Contract in which you have a
direct or indirect Beneficial Ownership interest (other than an account
over which you have no investment discretion and cannot otherwise exercise
control) and any account (other than an Advisory Client's account) of any
individual or entity to whom you give advice or make recommendations with
regard to the acquisition or disposition of Securities or Futures Contracts
(whether or not such advice is acted upon).

RELATED SECURITY

      The term "Related Security" means, as to any Security, any instrument
related in value to that Security, including, but not limited to, any
option or warrant to purchase or sell that Security, and any Security
convertible into or exchangeable for that Security. For example, the
purchase and exercise of an option to acquire a Security is subject to the
same restrictions that would apply to the purchase of the Security itself.

SECURITY

      As a GENERAL MATTER, the term "Security" means any stock, note, bond,
debenture or other evidence of indebtedness (including any loan
participation or assignment), limited partnership interest, or investment
contract, OTHER THAN AN EXEMPT SECURITY (as defined above). The term
"Security" includes an OPTION on a Security, an index of Securities, a
currency or a basket of currencies, including such an option traded on the
Chicago Board of Options Exchange or on the New York, American, Pacific or
Philadelphia Stock Exchanges as well as such an option traded in the
over-the-counter market. The term "Security" does NOT include a physical
commodity or a Futures Contract. The term "Security" may include an
interest in a limited liability company (LLC) or in a private investment
fund.

      As a TECHNICAL MATTER, the term "Security" has the meaning set forth
in Section 2(a)(36) of the Investment Company Act of 1940, which defines a
Security to mean:

      Any note, stock, treasury stock, bond debenture, evidence of
      indebtedness, certificate of interest or participation in any
      profit-sharing agreement, collateral-trust certificate,
      preorganization certificate or subscription, transferable share,
      investment contract, voting- trust certificate, certificate of
      deposit for a security, fractional undivided interest in oil, gas, or
      other mineral rights, any put, call, straddle, option, or privilege
      on any security (including a certificate of deposit) or on any group
      or index of securities (including any interest therein or based on
      the value thereof), or any put, call, straddle, option, or privilege
      entered into on a national securities exchange relating to foreign
      currency, or, in general, any interest or instrument commonly known
      as a "security", or any certificate of interest or instrument
      commonly known as a "security", or any certificate of interest or
      participation in, temporary or interim certificate for, receipt for,
      guarantee of, warrant or right to subscribe to or purchase any of the
      foregoing,

EXCEPT THAT the term "Security" does not include any Security that is an
Exempt Security (as defined above), a Futures Contract (as defined above),
or a physical commodity (such as foreign exchange or a precious metal).

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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