<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>ny452372.txt
<DESCRIPTION>N-2/A
<TEXT>

    As filed with the Securities and Exchange Commission on September 5, 2002
                                       Securities Act Registration No. 333-98357
                                   Investment Company Registration No. 811-21178


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-2

            Registration Statement under the Securities Act of 1933 /x/
                           Pre-Effective Amendment No. 1            /x/
                          Post-Effective Amendment No.
                                     and/or
                          Registration Statement Under
                      The Investment Company Act of 1940            /x/
                                 Amendment No. 1                    /x/


                    BlackRock Insured 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)

                           Anne F. Ackerley, President
                    BlackRock Insured Municipal Income Trust
                               40 East 52nd Street
                            New York, New York 10022
                     (Name and Address of Agent for Service)

                                    Copy 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.
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        CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

                                                               Proposed       Proposed Maximum
                                          Amount Being     Maximum Offering      Aggregate           Amount of
Title of Securities Being Registered       Registered       Price per Unit     Offering Price    Registration Fee
------------------------------------       ----------       --------------     --------------    ----------------
<S>                                      <C>                    <C>              <C>                  <C>
Common Shares, $.001 par value.........  100,000 shares         $15.00           $1,500,000           $138(2)
</TABLE>


(1)   Estimated solely for the purpose of calculating the registration fee.
(2)   Previously paid.


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.


<TABLE>
<CAPTION>
                    BLACKROCK INSURED MUNICIPAL INCOME TRUST
                              CROSS REFERENCE SHEET


                              Part A -- Prospectus

              Items in Part A of Form N-2                     Location in Prospectus
              ---------------------------                     ----------------------
<S>           <C>                                             <C>
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 Agreement and Declaration of
                                                              Trust; Closed-End Trust Structure;
                                                              Preferred Shares and Leverage
Item 9.       Management                                      Management of the Trust; Custodian and
                                                              Transfer Agent; Trust Expenses
Item 10.      Capital Stock, Long-Term Debt, and Other        Description of Shares; Distributions;
              Securities                                      Dividend Reinvestment Plan; Certain
                                                              Provisions in the Agreement and
                                                              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           Table of Contents for the Statement of
              Additional Information                          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; Other
                                                              Investment Policies and Techniques;
                                                              Portfolio Transactions
Item 18.      Management                                      Management of the Trust; Portfolio
                                                              Transactions and Brokerage
Item 19.      Control Persons and Principal Holders of        Not Applicable
              Securities
Item 20.      Investment Advisory and Other Services          Management of the Trust; Experts
Item 21.      Brokerage Allocation and Other Practices        Portfolio Transactions and Brokerage
Item 22.      Tax Status                                      Tax Matters; Distributions
Item 23.      Financial Statements                            Financial Statements; Report of
                                                              Independent Auditors
</TABLE>

                           Part C -- Other Information

Items 24-33 have been answered in Part C of this Registration Statement
<PAGE>
PROSPECTUS

                                                               [GRAPHIC OMITTED]


                                     Shares
                    BlackRock Insured Municipal Income Trust
                                  Common Shares
                                $15.00 per Share


         Investment Objective. BlackRock Insured Municipal Income Trust (the
"Trust") is a newly organized, diversified, closed-end management investment
company. The Trust's investment objective is to provide current income exempt
from regular Federal income tax, including the alternative minimum tax.

         Portfolio Contents. The Trust will invest primarily in municipal bonds
that pay interest that is exempt from regular Federal income tax and that are
insured as to timely payment of principal and interest. The Trust will invest in
municipal bonds that, in the opinion of the Trust's investment advisor and
sub-advisor, are underrated or undervalued. Under normal market conditions, the
Trust expects to be fully invested in these tax-exempt municipal bonds. At least
80% of the Trust's Managed Assets (as defined herein) will normally be invested
in municipal obligations rated in the highest category at the time of investment
(which is Aaa by Moody's Investor's Service, Inc. ("Moody's") or AAA by Standard
& Poor's Ratings Group ("S&P") or Fitch IBCA, Inc. ("Fitch") or, if unrated,
determined to be of comparable quality by the Trust's investment advisor or
sub-advisor). Up to 20% of the Trust's Managed Assets may be invested in
obligations rated below Aaa or AAA (but not lower than BBB or Baa) and
comparable unrated obligations and/or municipal obligations that are uninsured.
Accordingly, the Trust does not intend to invest any of its assets in
obligations rated below investment grade or in comparable unrated obligations.
From time to time, the Trust may hold obligations that are unrated but judged to
be of comparable quality by the Trust's investment advisor or sub-advisor. 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.

         No Prior History. 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 " ".

         Preferred Shares. 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 risks.

         Investing in the common shares involves certain risks. See "Risks" on
page of this prospectus.

                                                          Per Share        Total
Public offering price..................................   $                $
Sales load.............................................   $                $
Estimated offering expenses............................   $                $
Proceeds, after expenses, to the Trust(1)..............   $                $

(1)  Aggregate offering expenses are expected to be $ . BlackRock has agreed to
     reimburse offering expenses in excess of $0.03 per common share.

         The underwriters may also purchase up to additional common shares at
the public offering price, less the sales load, 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 on or about , 2002.


                  The date of this prospectus is     , 2002.

         You should read this prospectus, which contains important information
about the Trust, before deciding whether to invest in the common shares and
retain it for future reference. A Statement of Additional Information, dated ,
2002, containing additional information about the Trust, has been filed with the
Securities and Exchange Commission and is incorporated by reference in its
entirety into this prospectus. You may request a free copy of the Statement of
Additional Information, the table of contents of which is on page of this
prospectus, by calling (888) 825-2257 or by writing to the Trust, or obtain a
copy (and other information regarding the Trust) from the Securities and
Exchange Commission's web site (http://www.sec.gov).

         The Trust's common shares do not represent a deposit or obligation of,
and are not guaranteed or endorsed by, any bank or other insured depository
institution, and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.
<PAGE>

         You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the Underwriters have not,
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not, and the Underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information in this prospectus is accurate only as of the
date of this prospectus. Our business, financial condition and prospects may
have changed since that date.


                                TABLE OF CONTENTS

                                                                          PAGE

Prospectus Summary......................................................   4
Summary of Trust Expenses...............................................   11
The Trust...............................................................   13
Use of Proceeds.........................................................   13
The Trust's Investments.................................................   13
Preferred Shares and Leverage...........................................   18
Risks...................................................................   20
How the Trust Manages Risk..............................................   23
Management of the Trust.................................................   24
Net Asset Value.........................................................   27
Distributions...........................................................   28
Dividend Reinvestment Plan..............................................   28
Description of Shares...................................................   30
Certain Provisions in the Agreement and Declaration of Trust............   32
Closed-End Trust Structure..............................................   34
Repurchase of Common Shares.............................................   34
Tax Matters.............................................................   34
Underwriting............................................................   37
Custodian and Transfer Agent............................................   38
Legal Opinions..........................................................   38
Table of Contents for the Statement of Additional Information...........   39



         Until , 2002 (25 days after the date of this prospectus), all dealers
that buy, sell or trade the common shares, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

                         PRIVACY PRINCIPLES OF THE TRUST

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

         The Trust restricts access to non-public personal information about its
shareholders to employees of the Trust's investment advisor and its affiliates
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 its shareholders.
<PAGE>



                               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 Insured Municipal Income
                                           Trust is a newly organized,
                                           diversified, closed-end management
                                           investment company. Throughout the
                                           prospectus, we refer to BlackRock
                                           Insured 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 (the "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) in
                                           order to participate in this
                                           offering. The Trust has given the
                                           Underwriters an option to purchase
                                           up to additional common shares to
                                           cover orders in excess of common
                                           shares. BlackRock Advisors, Inc. has
                                           agreed to pay organizational
                                           expenses and offering costs (other
                                           than sales load) that exceed $0.03
                                           per common share. See
                                           "Underwriting."


Investment Objective.....................  The Trust's investment objective is
                                           to provide current income exempt from
                                           regular Federal income tax, including
                                           the alternative minimum tax.

Investment Policies......................  The Trust will invest primarily in
                                           municipal bonds that pay interest
                                           that is exempt from regular Federal
                                           income tax, including the alternative
                                           minimum tax, and that are insured as
                                           to principal and interest payments.
                                           Such insurance will be from insurers
                                           having a claims-paying ability rated
                                           Aaa by Moody's or AAA by S&P or
                                           Fitch. This insurance does not
                                           protect the market value of such
                                           obligations or the net asset value of
                                           the Trust. The value of an obligation
                                           will be affected by the credit
                                           standing of its insurer. The Trust
                                           will not invest in an obligation if
                                           the interest on that obligation is
                                           subject to the alternative minimum
                                           tax.. The Trust will invest in
                                           municipal bonds that, in the opinion
                                           of BlackRock Advisors, Inc.
                                           ("BlackRock Advisors" or the
                                           "Advisor") and BlackRock Financial
                                           Management, Inc. ("BlackRock
                                           Financial Management" or the
                                           "Sub-Advisor") are underrated or
                                           undervalued. Underrated municipal
                                           bonds are those whose ratings do not,
                                           in the Advisor's or Sub-Advisor's
                                           opinion, reflect their true
                                           creditworthiness. Undervalued
                                           municipal bonds are bonds that, in
                                           the Advisor's or Sub-Advisor'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. At least 80% of the
                                           Trust's Managed Assets will normally
                                           be invested in municipal obligations
                                           rated in the highest category at the
                                           time of investment (which is Aaa by
                                           Moody's or AAA by S&P or Fitch or, if
                                           unrated, determined to be of
                                           comparable quality by the Advisor or
                                           Sub-Advisor). Up to 20% of the
                                           Trust's Managed Assets may be
                                           invested in obligations rated below
                                           Aaa or AAA (but not lower than BBB or
                                           Baa) and comparable unrated
                                           obligations and/or municipal
                                           obligations that are uninsured.
                                           Accordingly, the Trust does not
                                           intend to invest any of its assets in
                                           obligations rated below investment
                                           grade or in comparable unrated
                                           obligations. From time to time, the
                                           Fund may hold obligations that are
                                           unrated but judged to be of
                                           comparable quality by the Advisor or
                                           Sub-Advisor. 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...............  Distributions of any capital gain or
                                           other taxable income will be taxable
                                           to shareholders.


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 immediately after
                                           their issuance. For purposes of this
                                           prospectus, the Trust's capital means
                                           the total assets of the Trust less
                                           all liabilities and indebtedness not
                                           representing Preferred Shares or
                                           other senior securities. The issuance
                                           of Preferred Shares will leverage the
                                           common 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 bonds.

                                           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 may
                                           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 the
                                           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 Advisor.......................  BlackRock Advisors will be the
                                           Trust's investment advisor and
                                           BlackRock Advisors' affiliate,
                                           BlackRock Financial Management, will
                                           provide certain day-to-day investment
                                           management services to the Trust.
                                           Throughout the prospectus, we
                                           sometimes refer to BlackRock Advisors
                                           and BlackRock Financial Management
                                           collectively as "BlackRock."
                                           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 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 , 2007), and for
                                           a declining amount for an additional
                                           five years (through , 2012). 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 through
                                           the receipt of additional unissued
                                           but authorized common shares from the
                                           Trust or by purchasing common shares
                                           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 that may be
                                           outstanding. If the Trust realizes a
                                           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 dividends paid to each
                                           class for the year in which or with
                                           respect to which the income is paid.
                                           See "Distributions" and "Preferred
                                           Shares and Leverage."

Listing..................................  The common shares are expected to be
                                           listed on the New York Stock Exchange
                                           under the symbol " ". See
                                           "Description of Shares--Common
                                           Shares."

Custodian and Transfer Agent.............  State Street Bank and Trust Company
                                           will serve as the Trust's Custodian,
                                           and EquiServe Trust Company, N.A.
                                           will serve as the Trust's Transfer
                                           Agent. See "Custodian and Transfer
                                           Agent."

Market Price of Shares...................  Common shares of closed-end
                                           investment companies frequently trade
                                           at prices lower than their net asset
                                           value. Common shares of closed-end
                                           investment companies like the Trust
                                           that invest primarily 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 or equal to 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,
                                           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
                                           management investment company with no
                                           operating history.

                                           Market Discount Risk. Shares of
                                           closed-end management investment
                                           companies frequently trade at a
                                           discount from their net asset value.

                                           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.

                                           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.

                                           Municipal Bond Insurance. In the
                                           event Moody's, S&P or Fitch (or all
                                           of them) should downgrade its
                                           assessment of the claims-paying
                                           ability of a particular insurer, it
                                           (or they) could also be expected to
                                           downgrade the ratings assigned to
                                           municipal bonds insured by such
                                           insurer, and municipal bonds insured
                                           under Portfolio Insurance (as defined
                                           below) issued by such insurer also
                                           would be of reduced quality in the
                                           portfolio of the Trust. Any such
                                           downgrade could have an adverse
                                           impact on the net asset value and
                                           market price of the Shares.

                                           In addition, to the extent the Trust
                                           employs Portfolio Insurance, the
                                           Trust may be subject to certain
                                           restrictions on investments imposed
                                           by guidelines of the insurance
                                           companies issuing such Portfolio
                                           Insurance. The Trust does not expect
                                           these guidelines to prevent BlackRock
                                           from managing the Trust's portfolio
                                           in accordance with the Trusts'
                                           investment objective and policies.

                                           Economic Sector Risk. The Trust may
                                           invest 25% or more of its Managed
                                           Assets in municipal obligations of
                                           issuers in the same economic sector,
                                           such as hospitals or life care
                                           facilities and transportation related
                                           issuers. 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 investment
                                           income dividends, but also creates
                                           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 intends to 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 may 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 net investment
                                                income will fall if the
                                                Preferred Share dividend rate
                                                rises or that common share net
                                                investment 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 BlackRock
                                           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.

                                           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 or at net asset value.
                                           In addition, if the Trust issues
                                           Preferred Shares, the holders of the
                                           Preferred Shares will have voting
                                           rights that could deprive holders of
                                           common shares of such opportunities.

                            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.

Shareholder Transaction Expenses

  Sales Load Paid by You (as a percentage of offering price).............. 4.50%
  Dividend Reinvestment Plan Fees......................................... None*

<TABLE>
<CAPTION>
                                                                           Percentage of Net Assets Attributable
                                                                            to Common Shares (Assumes Preferred
                                                                                    Shares Are Issued)**
Annual Expenses

<S>                                                                           <C>
    Management Fees.....................................                         %
    Other Expenses......................................                         %
                                                                              -------------------------
    Total Annual Expenses...............................                         %* **
                                                                              =========================
    Fee and Expense Waiver..............................                        (    )%***
                                                                              -------------------------
    Net Annual Expenses.................................                         %* **
</TABLE>


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

**       The table presented in this footnote estimates what the Trust's annual
         expenses would be stated as percentages of the Trust's net assets
         attributable to Common Shares. This table assumes the Trust is the same
         size as in the table above, but unlike the table above, assumes that no
         Preferred Shares are issued or outstanding. This will be the case, for
         instance, prior to the Trust's expected issuance of Preferred Shares.
         In accordance with these assumptions, the Trust's expenses would be
         estimated to be as follows:
<TABLE>
<CAPTION>

                                                                          Percentage of Net Assets Attributable
                                                                         to Common Shares (Assumes No Preferred
                                                                            Shares Are Issued or Outstanding)
<S>                                                                           <C>

         Annual Expenses
             Management Fees.....................................               %
             Other Expenses......................................               %
                                                                              -------------------------
             Total Annual Expenses...............................               %* **
                                                                              =========================
             Fee and Expense Waiver..............................              (     )%***
                                                                              -------------------------
             Net Annual Expenses.................................                %* **
</TABLE>

***      BlackRock Advisors has voluntarily agreed to waive receipt of a portion
         of the management fee or other expenses of the Trust in the amount of %
         of average weekly net assets attributable to common shares ( % of
         average weekly Managed Assets) for the first 5 years of the Trust's
         operations, % ( %) in year 6, % ( %) in year 7, % ( %) in year 8, % (
         %) in year 9 and % ( %) in year 10. Without the waiver, "Total Annual
         Expenses" would be estimated to be % of average weekly net assets
         attributable to common shares and % of average weekly Managed Assets.

         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 "Net Annual Expenses" are based on estimated amounts for the
Trust's first full year of operations and assume that the Trust issues common
shares. If the Trust issues fewer common shares, all other things being equal,
these expenses would increase. See "Management of the Trust" and "Dividend
Reinvestment Plan."

         The following example illustrates the expenses (including the sales
load of $45) 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, and (2) a 5% annual return:(1)

<TABLE>
<CAPTION>
                                              1 Year         3 Years        5 Years           10 Years(2)
                                              ------         -------        ------            ---------
<S>                                           <C>            <C>            <C>               <C>
Total Expenses Incurred...................    $              $              $                 $
</TABLE>

(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 2 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)  Assumes waiver of fees and expenses of % of average weekly net assets
     attributable to common shares in year 6 ( % of average weekly Managed
     Assets), % ( %) in year 7, % ( %) in year 8, % ( %) in year 9 and % ( %) in
     year 10 and assumes that leverage remains 38% of the Trust's capital
     throughout the periods reflected. BlackRock Advisors has not agreed to
     waive any portion of its fees and expenses beyond , 2012. See "Management
     of the Trust--Investment Management Agreement."

                                    THE TRUST

         The Trust is a newly organized, diversified, closed-end management
investment company registered under the Investment Company Act. The Trust was
organized as a Delaware business trust on August 19, 2002, 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.


                                 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 primarily in tax-exempt municipal bonds that meet the
Trust's investment objective and policies within approximately 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 income tax, including the alternative minimum tax.

         The Trust will invest primarily in municipal bonds that pay interest
that is exempt from regular Federal income tax, including the alternative
minimum tax and that are insured as to the timely payment of principal and
interest. Under normal market conditions, the Trust expects to be fully invested
in such tax-exempt municipal bonds. Such insurance will be from insurers having
a claims-paying ability rated Aaa by Moody's Investors Service, Inc. ("Moody's)
or AAA by Standard & Poor's Ratings Group ("S&P) or Fitch Ratings ("Fitch").
This insurance does not protect the market value of such obligations or the net
asset value of the Trust. The value of an insured municipal obligation will be
affected by the credit standing of its insurer. The Trust will not invest in an
obligation if the interest on that obligation is subject to the federal
alternative minimum tax. Under normal market conditions the Trust expects to be
fully invested in such tax-exempt municipal bonds. At least 80% of the Trust's
Managed Assets will normally be invested in municipal obligations rated in the
highest category at the time of investment (which is Aaa by Moody's or AAA by
S&P or Fitch or, if unrated, determined to be of comparable quality by the
Advisor or Sub-Advisor). Up to 20% of the Trust's Managed Assets may be invested
in obligations rated below Aaa or AAA (but not lower than BBB or Baa) and
comparable unrated obligations and/or municipal obligations that are uninsured.
Accordingly, the Trust does not intend to invest any of its assets in
obligations rated below investment grade or in comparable unrated obligations.
From time to time, the Fund may hold obligations that are unrated but judged to
be of comparable quality by the Advisor or Sub-Advisor. 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 or insurer. In determining
whether to retain or sell a security that a rating agency has downgraded,
BlackRock may consider such factors as BlackRock'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. 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. See "--Other Investment Companies,"
"--Tax-Exempt Preferred Securities" and "--Initial Portfolio Composition."


         The Trust will invest in municipal bonds that, in BlackRock's opinion,
are underrated or undervalued. Underrated municipal bonds are those whose
ratings do not, in BlackRock's opinion, reflect their true creditworthiness.
Undervalued municipal bonds are bonds that, in the opinion of BlackRock, are
worth more than the value assigned to them in the marketplace. BlackRock may at
times believe that bonds associated with a particular municipal market sector
(for example, but not limited to, electrical utilities), or issued by a
particular municipal issuer, are undervalued. BlackRock may purchase those bonds
for the Trust's portfolio because they represent a market sector or issuer that
BlackRock 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, but not limited to, 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 BlackRock'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 taxation.



         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 total assets
in liquid, short-term investments, including high quality, short-term securities
that may be either tax-exempt or taxable. The Trust may not achieve its
investment objective under these circumstances. 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 income tax.

         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 BlackRock believes
the issuer has a strong incentive to continue making appropriations until
maturity.


         The municipal bonds in which the Trust will invest pay interest that,
in the opinion of bond counsel to the issuer, or on the basis of another
authority believed by BlackRock to be reliable, is exempt from regular Federal
income tax, including the alternative minimum tax. BlackRock 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 income tax, including the alternative minimum tax.. 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
taxes, 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 invest primarily in municipal bonds with long-term
maturities in order to maintain a weighted average maturity of 15 or more years,
but the weighted average maturity of obligations held by the Trust may be
shortened, depending on market conditions.


         Municipal Obligation Insurance Generally. Insured municipal obligations
held by the Trust will be insured as to their scheduled payment of principal and
interest under (i) an insurance policy obtained by the issuer or underwriter of
the Trust municipal obligation at the time of its original issuance ("Original
Issue Insurance"), (ii) an insurance policy obtained by the Trust or a third
party subsequent to the Trust municipal obligation's original issuance
("Secondary Market Insurance") or (iii) another municipal insurance policy
purchased by the Trust ("Portfolio Insurance"). This insurance does not protect
the market value of such obligations or the net asset value of the Trust. The
Trust expects initially to emphasize investments in municipal bonds insured
under bond-specific insurance policies (i.e., Original Issue or Secondary Market
Insurance). The Trust may obtain Portfolio Insurance from the insurers described
under "Investment Policies and Techniques - Description of Insurers" in the
Statement of Additional Information. The Trust, as a non-fundamental policy that
can be changed by the Trust's Board of Trustees, will only obtain policies of
Portfolio Insurance issued by insurers whose claims-paying ability is rated
"Aaa" by Moody's or "AAA" by S&P or Fitch. There is no limit on the percentage
of the Trusts' assets that may be invested in municipal bonds insured by any one
insurer.

         Municipal bonds covered by Original Issue Insurance or Secondary Market
Insurance are themselves typically assigned a rating of "Aaa" or "AAA", as the
case may be, by virtue of the rating of the "Aaa" or "AAA" claims-paying ability
of the insurer and would generally be assigned a lower rating if the ratings
were based primarily upon the credit characteristics of the issuer without
regard to the insurance feature. By way of contrast, the ratings, if any,
assigned to municipal bonds insured under Portfolio Insurance will be based
primarily upon the credit characteristics of the issuer, without regard to the
insurance feature, and generally will carry a rating that is below "Aaa" or
"AAA." While in the portfolio of the Trust, however, a municipal bond backed by
Portfolio Insurance will effectively be of the same credit quality as a
municipal bond issued by an issuer of comparable credit characteristics that is
backed by Original Issue Insurance or Secondary Market Insurance.

         The Trust's policy of investing in municipal bonds insured by insurers
whose claims-paying ability is rated "Aaa" or "AAA" applies only at the time of
purchase of a security, and the Trust will not be required to dispose of the
securities in the event Moody's, S&P or Fitch, as the case may be, downgrades
its assessment of the claims-paying ability of a particular insurer or the
credit characteristics of a particular issuer or withdraws its assessment. In
this connection, it should be noted that in the event Moody's, S&P or Fitch (or
all of them) should downgrade its assessment of the claims-paying ability of a
particular insurer, it (or they) could also be expected to downgrade the ratings
assigned to municipal bonds insured by such insurer, and municipal bonds insured
under Portfolio Insurance issued by such insurer also would be of reduced
quality in the portfolio of the Trust. Moody's, S&P and Fitch continually assess
the claims-paying ability of insurers and the credit characteristics of issuers,
and there can be no assurance that they will not downgrade or withdraw their
assessments subsequent to the time the Trust purchases securities.

         The value of municipal bonds covered by Portfolio Insurance that are in
default or in significant risk of default will be determined by separately
establishing a value for the municipal bond and a value for the Portfolio
Insurance.

         Original Issue Insurance. Original Issue Insurance is purchased with
respect to a particular issue of municipal bonds by the issuer thereof or a
third party in conjunction with the original issuance of such municipal bonds.
Under this insurance, the insurer unconditionally guarantees to the holder of
the municipal bond the timely payment of principal and interest on such
obligations when and as these payments become due but not paid by the issuer,
except that in the event of the acceleration of the due date of the principal by
reason of mandatory or optional redemption (other than acceleration by reason of
a mandatory sinking fund payment), default or otherwise, the payments guaranteed
may be made in the amounts and at the times as payment of principal would have
been due had there not been any acceleration. The insurer is responsible for
these payments less any amounts received by the holder from any trustee for the
municipal bond issuer or from any other source. Original Issue Insurance does
not guarantee payment on an accelerated basis, the payment of any redemption
premium (except with respect to certain premium payments in the case of certain
small issue industrial development and pollution control municipal bonds), the
value of the Trust's shares, the market value of municipal bonds, or payments of
any tender purchase price upon the tender of the municipal bonds. Original Issue
Insurance also does not insure against nonpayment of principal or interest on
municipal bonds resulting from the insolvency, negligence or any other act or
omission of the trustee or other paying agent for these bonds.

         Original Issue Insurance remains in effect as long as the municipal
bonds it covers remain outstanding and the insurer remains in business,
regardless of whether the Trust ultimately disposes of these municipal bonds.
Consequently, Original Issue Insurance may be considered to represent an element
of market value with respect to the municipal bonds so insured, but the exact
effect, if any, of this insurance on the market value cannot be estimated.

         Secondary Market Insurance. Subsequent to the time of original issuance
of a municipal bond, the Trust or a third party may, upon the payment of a
single premium, purchase insurance on that security. Secondary Market Insurance
generally provides the same type of coverage as Original Issue Insurance and, as
with Original Issue Insurance, Secondary Market Insurance remains in effect as
long as the municipal bonds it covers remain outstanding and the insurer remains
in business, regardless of whether the Trust ultimately disposes of these
municipal bonds.

         One of the purposes of acquiring Secondary Market Insurance with
respect to a particular municipal bond would be to enable the Trust to enhance
the value of the security. The Trust, for example, might seek to purchase a
particular municipal bond and obtain Secondary Market Insurance for it if, in
BlackRock's opinion, the market value of the security, as insured, less the cost
of the Secondary Market Insurance, would exceed the current value of the
security without insurance. Similarly, if the Trust owns but wishes to sell a
municipal bond that is then covered by Portfolio Insurance, the Trust might seek
to obtain Secondary Market Insurance for it if, in BlackRock's opinion, the net
proceeds of the Trust's sale of the security, as insured, less the cost of the
Secondary Market Insurance, would exceed the current value of the security. In
determining whether to insure municipal bonds the Trust owns, an insurer will
apply its own standards, which correspond generally to the standards the insurer
has established for determining the insurability of new issues of municipal
bonds. See "Original Issue Insurance" above.

         Portfolio Insurance. Portfolio Insurance guarantees the payment of
principal and interest on specified eligible municipal bonds purchased by the
Trust and presently held by the Trust. Except as described below, Portfolio
Insurance generally provides the same type of coverage as is provided by
Original Issue Insurance or Secondary Market Insurance. Municipal bonds insured
under a Portfolio Insurance policy would generally not be insured under any
other policy. A municipal bond is eligible for coverage under a policy if it
meets certain requirements of the insurer. Portfolio Insurance is intended to
reduce financial risk, but the cost thereof and compliance with investment
restrictions imposed under the policy will reduce the yield to shareholders of
the Trust.

         If a municipal obligation is already covered by Original Issue
Insurance or Secondary Market Insurance, then the security is not required to be
additionally insured under any Portfolio Insurance that the Trust may purchase.
All premiums respecting municipal bonds covered by Original Issue Insurance or
Secondary Market Insurance are paid in advance by the issuer or other party
obtaining the insurance.

         Portfolio Insurance policies are effective only as to municipal bonds
owned by and held by the Trust, and do not cover municipal bonds for which the
contract for purchase fails. A "when-issued" municipal obligation will be
covered under a Portfolio Insurance policy upon the settlement date of the issue
of such "when-issued" municipal bond.

         In determining whether to insure municipal bonds held by the Trust, an
insurer will apply its own standards, which correspond generally to the
standards it has established for determining the insurability of new issues of
municipal bonds. See "Original Issue Insurance" above.

         Each Portfolio Insurance policy will be noncancellable and will remain
in effect so long as the Trust is in existence, the municipal bonds covered by
the policy continue to be held by the Trust, and the Trust pays the premiums for
the policy. Each insurer will generally reserve the right at any time upon 90
days' written notice to the Trust to refuse to insure any additional bonds
purchased by the Trust after the effective date of such notice. The Trust's
Board generally will reserve the right to terminate each policy upon seven days'
written notice to an insurer if it determines that the cost of such policy is
not reasonable in relation to the value of the insurance to the Trust.

         Each Portfolio Insurance policy will terminate as to any municipal bond
that has been redeemed from or sold by the Trust on the date of redemption or
the settlement date of sale, and an insurer will not have any liability
thereafter under a policy for any municipal bond, except that if the redemption
date or settlement date occurs after a record date and before the related
payment date for any municipal bond, the policy will terminate for that
municipal bond on the business day immediately following the payment date. Each
policy will terminate as to all municipal bonds covered thereby on the date on
which the last of the covered municipal bonds mature, are redeemed or are sold
by the Trust.

         One or more Portfolio Insurance policies may provide the Trust,
pursuant to an irrevocable commitment of the insurer, with the option to
exercise the right to obtain permanent insurance ("Permanent Insurance") for a
municipal bond that is sold by the Trust. The Trust would exercise the right to
obtain Permanent Insurance upon payment of a single, predetermined insurance
premium payable from the sale proceeds of the municipal bond. The Trust expects
to exercise the right to obtain Permanent Insurance for a municipal bond only
if, in BlackRock's opinion, upon the exercise the net proceeds from the sale of
the municipal bond, as insured, would exceed the proceeds from the sale of the
security without insurance.

         The Portfolio Insurance premium for each municipal bond is determined
based upon the insurability of each security as of the date of purchase and will
not be increased or decreased for any change in the security's creditworthiness
unless the security is in default as to payment of principal or interest, or
both. If such event occurs, the Permanent Insurance premium will be subject to
an increase predetermined at the date of the Trust's purchase.

         Because each Portfolio Insurance policy will terminate for municipal
bonds sold by the Trust on the date of sale, in which event the insurer will be
liable only for those payments of principal and interest that are then due and
owing (unless Permanent Insurance is obtained by the Trust), the provision for
this insurance will not enhance the marketability of the Trust's obligations,
whether or not the obligations are in default or in significant risk of default.
On the other hand, because Original Issue Insurance and Secondary Market
Insurance generally will remain in effect as long as the municipal bonds they
cover are outstanding, these insurance policies may enhance the marketability of
these bonds even when they are in default or in significant risk of default, but
the exact effect, if any, on marketability, cannot be estimated. Accordingly,
the Trust may determine to retain or, alternatively, to sell municipal bonds
covered by Original Issue Insurance or Secondary Market Insurance that are in
default or in significant risk of default.

         Premiums for a Portfolio Insurance policy are paid monthly, and are
adjusted for purchases and sales of municipal bonds covered by the policy during
the month. The yield on the Trust is reduced to the extent of the insurance
premiums it pays. Depending upon the characteristics of the municipal bonds held
by the Trust, the annual premium rate for policies of Portfolio Insurance is
estimated to range from 12 to 18 basis points of the value of the municipal
bonds covered under the policy.

         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 current yield. 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 does not guarantee the market value of the insured
obligation or the net asset value of the Trust's Shares.

         Other Types of Credit Support. The Trust may also invest in uninsured
municipal obligations that are secured by an escrow or trust account that
contains securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, that are backed by the full faith and credit of the United
States, and sufficient, in combination with available trustee-held funds, in
amount to ensure the payment of interest on and principal of the secured
obligation ("collateralized obligations"). These collateralized obligations
generally will not be insured and will include, but are not limited to,
municipal bonds that have been advance refunded where the proceeds of the
refunding have been used to buy U.S. Government or U.S. Government agency
securities that are placed in escrow and whose interest or maturing principal
payments, or both, are sufficient to cover the remaining scheduled debt service
on that municipal bond. Collateralized obligations generally are regarded as
having the credit characteristics of the underlying U.S. Government, U.S.
Government agency or instrumentality securities. These obligations will not be
subject to Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
Accordingly, despite the existence of the foregoing credit support
characteristics, these obligations will not be considered to be insured
obligations for purposes of the Trust's non-fundamental policy of investing at
least 80% of its net assets in insured obligations. The credit quality of
companies that provide such credit enhancements will affect the value of those
securities.


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. The Trust will designate on
its books and records cash or other liquid 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 will remain subject to payment of the Trust's advisory
and other fees and expenses with respect to assets so invested. Holders of
common shares will therefore be subject to duplicative expenses to the extent
the Trust invests in other investment companies. BlackRock 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 BlackRock. The Trust treats its investments in such open- or
closed-end investment companies as investments in municipal bonds.

Tax-Exempt Preferred Securities

         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. A portion of such dividends may be capital gain
distributions subject to Federal capital gains tax. Such funds in turn invest in
municipal bonds and other assets that generally 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. Investing 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 of regulation governing investment
practices, capital structure and leverage, affiliated transactions and other
matters, and concentration of investments in particular issuers or industries.



Initial Portfolio Composition


         If current market conditions persist, the Trust expects that 100% 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 BlackRock (approximately % in Aaa/AAA; %
in Aa/AA; % in A; and % in Baa/BBB). BlackRock generally expects to select
obligations that may not be redeemed at the option of the issuer for
approximately ten years from the date of purchase by the Trust. 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 income 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 for advisory and
sub-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 Managed
Assets, including the gross 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 dividends
paid to each class for the year in which or with respect to which the net
capital gain or other taxable income is paid. 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
capital 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 capital).
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 capital 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 (the "Code"). 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 BlackRock 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.

Effects of Leverage

         Assuming that the Preferred Shares will represent approximately 38% of
the Trust's capital and pay dividends at an annual average rate of 2.00%, the
income generated by the Trust's portfolio (net of estimated expenses) must
exceed 0.76% 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." The table further reflects the issuance of Preferred
Shares representing 38% of the Trust's capital, a 3.81% yield on the Trust's
investment portfolio, net of expenses, and the Trust's currently projected
annual Preferred Share dividend rate of 2.00%.
<TABLE>
<S>                                                          <C>        <C>        <C>         <C>        <C>
     Assumed Portfolio Total Return (Net of Expenses)....    (10.00)%   (5.00)%    0.00%       5.00%      10.00%
     Common Share Total Return...........................    (17.35)%   (9.29)%    (1.23)%     6.84%      14.90%
</TABLE>

         Common share total return is composed of two elements: the common share
dividends paid by the Trust (the amount of which is largely determined by the
net investment income of the Trust after paying dividends on Preferred Shares)
and gains or losses on the value of the securities the Trust owns. As required
by Securities and Exchange Commission rules, the table assumes that the Trust is
more likely to suffer capital losses than to enjoy capital appreciation. For
example, to assume a total return of 0% the Trust must assume that the
tax-exempt interest it receives on its municipal bond investments is entirely
offset by losses in the value of those bonds.

         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. As with any stock, the price of the Trust's
shares will fluctuate with market conditions and other factors. If shares are
sold, the price received may be more or less than the original investment. Net
asset value will be reduced immediately following the initial offering by the
amount of the sales load and organizational and selling expenses paid by the
Trust. Common shares are designed for long-term investors and should not be
treated as trading vehicles. Shares of closed-end management investment
companies frequently trade at a discount from their net asset value. The Trust's
shares may trade at a price that is less than the initial offering price. This
risk may be greater for investors who sell their shares in a relatively short
period of time after completion of the initial offering.

         Interest Rate Risk. Interest rate risk is the risk that bonds, and the
Trust's 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.


         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.


         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 BlackRock 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.

         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 generally associated with municipal bonds, 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.


         Municipal Bond Insurance. In the event Moody's, S&P or Fitch (or all of
them) should downgrade its assessment of the claims-paying ability of a
particular insurer, it (or they) could also be expected to downgrade the ratings
assigned to municipal obligations insured by such insurer, and municipal
obligations insured under Portfolio Insurance issued by such insurer also would
be of reduced quality in the portfolio of the Trust. Any such downgrade could
have an adverse impact on the net asset value and market price of the Shares.

         In addition, to the extent the Trust employs Portfolio Insurance, the
Trust may be subject to certain restrictions on investments imposed by
guidelines of the insurance companies issuing such Portfolio Insurance. The Fund
does not expect these guidelines to prevent BlackRock from managing the Fund's
portfolio in accordance with the Trust's investment objective and policies.


         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 turned 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 and Geographic Risk. The Trust may invest 25% or more
of its Managed Assets in municipal obligations of issuers in the same state (or
U.S. territory) or in municipal obligations 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; and industrial development or
pollution control bonds issued for electrical 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
state or 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.



                           HOW THE TRUST MANAGES RISK

Investment Limitations

         The Trust has adopted certain investment limitations designed to limit
investment risk. These limitations are fundamental and may not be changed
without the approval of the holders of a majority of the outstanding common
shares and, if issued, Preferred Shares voting together as a single class, and
the approval of the holders of a majority of the Preferred Shares voting as a
separate class. Among other restrictions, the Trust may not invest more than 25%
of its Managed Assets in securities of issuers in any one industry, except that
this limitation does not apply to municipal bonds backed by the assets and
revenues of governments or political subdivisions of governments. In addition,
with respect to 75% of its Managed Assets the Trust may not invest more than 5%
of the value of its Managed Assets in the securities of any single issuer or
purchase more than 10% of the outstanding voting securities of any one issuer.

         The Trust may become subject to guidelines which are more limiting than
its investment restrictions in order to obtain and maintain ratings from Moody's
or S&P on the Preferred Shares that it intends to issue. The Trust does not
anticipate that such guidelines would have a material adverse effect on the
Trust's common shareholders or the Trust's ability to achieve its investment
objective. See "Investment Objective and Policies" in the Statement of
Additional Information for a complete list of the fundamental and
non-fundamental investment policies of the Trust.

Quality of Investments


         At least 80% of the Trust's Managed Assets will normally be invested in
municipal obligations rated in the highest category at the time of investment
(which is Aaa by Moody's or AAA by S&P or Fitch or, if unrated, determined to be
of comparable quality by the Advisor or Sub-Advisor). Up to 20% of the Trust's
Managed Assets may be invested in obligations rated below Aaa or AAA (but not
lower than BBB or Baa) and comparable unrated obligations and/or municipal
obligations that are uninsured. Accordingly, the Trust does not intend to invest
any of its assets in obligations rated below investment grade or in comparable
unrated obligations. From time to time, the Trust may hold obligations that are
unrated but judged to be of comparable quality by the Advisor or Sub-Advisor.


Limited Issuance of Preferred Shares

         Under the Investment Company Act, the Trust could issue Preferred
Shares having a total liquidation value (original purchase price of the shares
being liquidated plus any accrued and unpaid dividends) of up to 50% of the
value of the capital of the Trust. If the total liquidation value of the
Preferred Shares were ever more than 50% of the value of the capital of the
Trust, the Trust would not be able to declare dividends on the common shares
until the liquidation value, as a percentage of the Trust's assets, was reduced.
Approximately one to three months after the completion of the offering of the
common shares, the Trust intends to issue Preferred Shares representing about
38% of the Trust's capital immediately after the time of issuance of the
Preferred Shares. This higher than required margin of net asset value provides a
cushion against later fluctuations in the value of the Trust's portfolio and
will subject common shareholders to less income and net asset value volatility
than if the Trust were more leveraged. The Trust intends to purchase or redeem
Preferred Shares, if necessary, to keep the liquidation value of the Preferred
Shares below 50% of the value of the Trust's capital.

Management of Investment Portfolio and Capital Structure to Limit Leverage Risk

         The Trust may take certain actions if short-term interest rates
increase or market conditions otherwise change (or the Trust anticipates such an
increase or change) and the Trust's leverage begins (or is expected) to
adversely affect common shareholders. In order to attempt to offset such a
negative impact of leverage on common shareholders, the Trust may shorten the
average maturity of its investment portfolio (by investing in short-term, high
quality securities) or may extend the auction period of outstanding Preferred
Shares. The Trust may also attempt to reduce the leverage by redeeming or
otherwise purchasing Preferred Shares. As explained above under "Risks--Leverage
Risk," the success of any such attempt to limit leverage risk depends on
BlackRock's ability to accurately predict interest rate or other market changes.
Because of the difficulty of making such predictions, the Trust may never
attempt to manage its capital structure in the manner described in this
paragraph.

         If market conditions suggest that additional leverage would be
beneficial, the Trust may sell previously unissued Preferred Shares or Preferred
Shares that the Trust previously issued but later repurchased.

         Currently, the Trust may not invest in inverse floating securities,
which are securities that pay interest at rates that vary inversely with changes
in prevailing short-term tax-exempt interest rates and which represent a
leveraged investment in an underlying municipal bond. This restriction is a
non-fundamental policy of the Trust that may be changed by vote of the Trust's
board of trustees.

Hedging Strategies

         The Trust may use various investment strategies designed to limit the
risk of bond price fluctuations and to preserve capital. These hedging
strategies include using financial futures contracts, options on financial
futures or options based on either an index of long-term municipal securities or
on taxable debt securities whose prices, in the opinion of BlackRock, correlate
with the prices of the Trust's investments. Successful implementation of most
hedging strategies would generate taxable income and the Trust has no present
intention to use these strategies.


                             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. 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
trustees 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 Advisor and Sub-Advisor

         BlackRock Advisors acts as the Trust's investment advisor. BlackRock
Financial Management acts as the Trust's sub-advisor. BlackRock Advisors,
located at 100 Bellevue Parkway, Wilmington, Delaware 19809 and BlackRock
Financial Management, located at 40 East 52nd Street, New York, New York 10022,
are wholly owned subsidiaries of BlackRock, Inc., which is one of the largest
publicly traded investment management firms in the United States with
approximately $250 billion of assets under management as of June 30, 2002.
BlackRock manages assets on behalf of institutional and individual investors
worldwide through a variety of equity, fixed income, liquidity and alternative
investment products, including the BlackRock Funds and BlackRock Provident
Institutional Funds. In addition, BlackRock provides risk management and
investment system services to institutional investors under the BlackRock
Solutions name.


         The BlackRock organization has over 13 years of experience managing
closed-end products and currently advises a closed-end family of 40 funds with
approximately $9.9 billion in assets. BlackRock has 31 leveraged municipal
closed-end funds and six open-end municipal funds under management. As of June
30, 2002, BlackRock had approximately $17.5 billion in municipal assets
firm-wide. Clients are served from the company's headquarters in New York City,
as well as offices in Wilmington, San Francisco, Boston, Edinburgh, Tokyo and
Hong Kong. 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's 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 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 current income exempt from regular Federal income tax, including the
alternative minimum tax. This strategy is combined with disciplined risk control
techniques and applied in sector, sub-sector and individual security selection
decisions. BlackRock's extensive personnel and technology resources are the key
drivers of the investment philosophy.


         BlackRock's Municipal Bond Team. BlackRock uses a team approach in
managing municipal portfolios. BlackRock 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's municipal bond team includes three portfolio managers with
an average experience of 20 years and five credit research analysts with an
average experience of 13 years. Kevin M. Klingert, senior portfolio manager and
head of municipal bonds at BlackRock, leads the team, a position he has held
since joining BlackRock in 1991. A Managing Director since 1996, Mr. Klingert
was a Vice President from 1991 through 1993 and a Director in 1994 and 1995. Mr.
Klingert has over 18 years of experience in the municipal market. Prior to
joining BlackRock in 1991, Mr. Klingert was an Assistant Vice President at
Merrill Lynch, Pierce, Fenner & Smith Incorporated, which he joined in 1985. The
portfolio management team also includes James McGinley and F. Howard Downs. Mr.
McGinley has been a portfolio manager and a member of the Investment Strategy
Group at BlackRock since 1999. Prior to joining BlackRock in 1999, Mr. McGinley
was Vice President of Municipal Trading from 1996 to 1999 and Manager of the
Municipal Strategy Group from 1995 to 1999 with Prudential Securities
Incorporated. Mr. McGinley joined Prudential Securities Incorporated in 1993 as
an Associate in Municipal Research. F. Howard Downs has been a portfolio manager
since joining BlackRock in 1999. Prior to joining BlackRock in 1999, Mr. Downs
was a Vice President, Institutional Salesman and Sales Manager from 1990 to 1999
at William E. Simon & Sons Municipal Securities, Inc. Mr. Downs was one of the
original employees of William E. Simon & Sons Municipal Securities, Inc.,
founded in 1990, and was responsible for sales of municipal bonds.

         As of June 30, 2002, BlackRock's municipal bond portfolio managers were
responsible for over 85 municipal bond portfolios, valued at approximately $12.7
billion. Municipal mandates include the management of open- and closed-end
mutual funds, municipal-only separate accounts or municipal allocations within
larger institutional mandates. In addition, BlackRock manages 12 municipal
liquidity accounts valued at approximately $4.8 billion. The team currently
manages 31 closed-end municipal funds, with over $7 billion in assets under
management.

         BlackRock's Investment Process. BlackRock has in-depth expertise in the
fixed income market. BlackRock applies the same risk-controlled, active sector
rotation style to the management process for all of its fixed income portfolios.
BlackRock 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.

         BlackRock's portfolio management process emphasizes research and
analysis of specific sectors and securities, not interest rate speculation.
BlackRock believes that market-timing strategies can be highly volatile and
potentially produce inconsistent results. Instead, BlackRock 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 believes one of the most important
determinants of value is supply and demand. BlackRock's ability to monitor
investor flows and frequency and seasonality of issuance is helpful in
anticipating the supply and demand for sectors. BlackRock believes that the
breadth and expertise of its municipal bond team allow it to anticipate issuance
flows, forecast which sectors are likely to have the most supply and plan its
investment strategy accordingly.

         BlackRock 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 C. Heide, Ph.D., who has
been, since 1999, Managing Director, Head of Municipal Credit Research and
co-chair of BlackRock's Credit Committee. From 1995 to 1999, Dr. Heide was a
Director and Head of Municipal Credit Research. Dr. Heide specializes in the
credit analysis of municipal securities and as such chairs the monthly municipal
bond presentation to the Credit Committee. In addition, Dr. Heide supervises the
team of municipal bond analysts that assists with the ongoing surveillance of
approximately $12.7 billion in municipal bonds managed by BlackRock.

         Prior to joining BlackRock as a Vice President and Head of Municipal
Credit Research in 1993, Dr. Heide was Director of Research and a portfolio
manager at OFFITBANK. For eight years prior to this assignment (1984 to 1992),
Dr. Heide was with American Express Company's Investment Division where she was
the Vice President of Credit Research, responsible for assessing the
creditworthiness of $6 billion in municipal securities. Dr. Heide began her
investment career in 1983 at Moody's Investors Service, Inc. where she was a
municipal bond analyst.

         Dr. Heide initiated the Disclosure Task Force of the National
Federation of Municipal Analysts in 1988 and was co-chairperson of this
committee from its inception through the completion of the Disclosure Handbook
for Municipal Securities--1992 Update, published in January 1993. Dr. Heide has
authored a number of articles on municipal finance and edited The Handbook of
Municipal Bonds published in the fall of 1994. Dr. Heide was selected by the
Bond Buyer as a first team All-American Municipal Analyst in 1990 and was
recognized in subsequent years.

         BlackRock's 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's analytical process focuses on anticipating change in credit trends
before market recognition. Credit research is a critical, independent element of
BlackRock's 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"). BlackRock has voluntarily agreed to waive
receipt of a portion of its Management Fee in the amount of % of the average
weekly value of the Trust's Managed Assets for the first five years of the
Trust's operations (through , 2007), and for a declining amount for an
additional five years (through , 2012). The Trust will also reimburse BlackRock
Advisors for certain expenses BlackRock Advisors incurs in connection with
performing certain 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 may be reimbursed to BlackRock
Advisors. Managed Assets are the total assets of the Trust, which includes any
proceeds from the Preferred Shares, 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, which include those assets purchased
with leverage.

         In addition to the Management 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 agent expenses, legal fees, leverage expenses,
rating agency fees, listing fees and expenses, 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 10 years of the Trust's operation, BlackRock Advisors has
undertaken to waive its investment advisory fees and expenses payable by the
Trust in the amounts, and for the time periods, set forth below:

                                                    Percentage Waived
                                                   (as a Percentage of
                       Twelve Month                  Average Weekly
                      Period Ending                 Managed Assets)*
                      -------------                 ---------------
                           2003**                          %
                           2004                            %
                           2005                            %
                           2006                            %
                           2007                            %
                           2008                            %
                           2009                            %
                           2010                            %
                           2011                            %
                           2012                            %

*        Including net assets attributable to Preferred Shares.
**       From the commencement of operations.

         BlackRock Advisors has not undertaken to waive any portion of the
Trust's fees and expenses beyond , 2012 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 on the
Friday of each week and on the last business day of each month. In the event
that any Friday is not a business day, the net asset value will be calculated on
a date determined by BlackRock Advisors. 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 Preferred Shares of the Trust from the Trust's Managed
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 may be 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 at least
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 the registered owner of common shares elects to receive cash by
contacting the Plan Administrator, all dividends declared on common shares of
the Trust will be automatically reinvested by EquiServe Trust Company, N.A. (the
"Plan Administrator"), Administrator for shareholders in administering the
Trust's Dividend Reinvestment Plan (the "Plan"), 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 EquiServe Trust Company, N.A., as
dividend disbursing agent. You may elect not to participate in the Plan and to
receive all dividends in cash by contacting EquiServe Trust Company, N.A., as
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 notice if received and processed by the Plan Administrator
prior to the dividend record date; otherwise such termination or resumption will
be effective with respect to any subsequently declared dividend or other
distribution. Some brokers may automatically elect to receive cash on your
behalf and may re-invest that cash in additional common shares of the Trust for
you. If you wish for all dividends declared on your common shares of the Trust
to be automatically reinvested pursuant to the Plan, please contact your broker.

         The Plan Administrator will open an account for each common shareholder
under the Plan in the same name in which such common shareholder's common shares
are registered. Whenever the Trust declares a dividend or other distribution
(together, 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 Administrator 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 or elsewhere. If, on the payment date for any Dividend, the closing
market price plus estimated brokerage commissions per common share is equal to
or greater than the net asset value per common share, the Plan Administrator
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 payment date; provided
that, if the net asset value is less than or equal to 95% of the closing market
value on the payment date, the dollar amount of the Dividend will be divided by
95% of the closing market price per common share on the payment date. If, on the
payment date for any Dividend, the net asset value per common share is greater
than the closing market value plus estimated brokerage commissions, the Plan
Administrator 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 payment date for any Dividend, the Plan Administrator 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 payment 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 payment date of
each Dividend through the date before the next "ex-dividend" date which
typically will be approximately ten days. If, before the Plan Administrator has
completed its Open-Market Purchases, the market price per common share exceeds
the net asset value per common share, the average per common share purchase
price paid by the Plan Administrator 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 payment
date. Because of the foregoing difficulty with respect to Open-Market Purchases,
the Plan provides that if the Plan Administrator 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
Administrator 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 provided that, if the net asset value is less than or equal to 95% of the
then current market price per common share; the dollar amount of the Dividend
will be divided by 95% of the market price on the payment date.

         The Plan Administrator 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 Administrator on
behalf of the Plan participant, and each shareholder proxy will include those
shares purchased or received pursuant to the Plan. The Plan Administrator will
forward all proxy solicitation materials to participants and vote proxies for
shares held under the 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 Administrator
will administer the 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 participate in the 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." Participants that request a sale
of shares through the Plan Administrator are subject to a $2.50 sales fee and a
$0.15 per share sold brokerage commission.

         The Trust reserves the right to amend or terminate the Plan. There is
no direct service charge to participants with regard to purchases in the Plan;
however, the Trust reserves the right to amend the Plan to include a service
charge payable by the participants.

         All correspondence or questions concerning the Plan should be directed
to the Plan Administrator, Equiserve Trust Company, N.A., P.O. Box 43011,
Providence, RI 02940-3011 or Equiserve Trust Company, N.A., 150 Royall Street,
Canton, Massachusetts 02021 Ph: (800) 699-1236.


                              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 August
19, 2002. 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, except that the trustees shall
have the power to cause shareholders to pay expenses of the Trust by setting off
charges due from shareholders from declared but unpaid dividends or
distributions owed the shareholders and/or by reducing the number of common
shares owned by each respective shareholder. 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, 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 and unless certain other requirements imposed by any rating
agencies rating the Preferred Shares have been met. 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
provides 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's common shares are expected to be listed 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 through a broker on the New York
Stock Exchange 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 predominantly 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 on its portfolio securities, 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 of 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
capital 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 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 permitted by the Investment Company Act, which
currently limits the aggregate liquidation preference of all outstanding
Preferred Shares to 50% of the value of the Trust's capital. 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 Preferred 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. The remaining trustees will be elected
by holders of common shares and Preferred Shares, voting together as a single
class. 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 "Certain Provisions in
the Agreement and Declaration of 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 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.

         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 to increase or decrease the authorized 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 possible offering of Preferred
Shares by the Trust. 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

         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. Such 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 a
majority of the remaining trustees followed by a vote of the holders of at least
75% of the shares then entitled to vote for the election of the respective
trustee.

         In addition, the Trust's Agreement and Declaration of Trust requires
the favorable vote of a majority of the Trust's board of trustees followed by
the favorable vote of the holders of at least 75% of the outstanding shares of
each affected class or series of the Trust, voting separately as a class or
series, to approve, adopt or authorize certain transactions with 5% or greater
holders of a class or series of shares and their associates, unless the
transaction has been approved by at least 80% of the trustees, in which case "a
majority of the outstanding voting securities" (as defined in the Investment
Company Act) of the Trust shall be required. For purposes of these provisions, a
5% or greater holder of a class or series 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 or series of shares of beneficial interest of
the Trust.

         The 5% holder 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 (other than pursuant of any automatic
               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, 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 purposes of
               such computation all assets sold, leased or exchanged in any
               series of similar transactions within a twelve-month period.

         To convert the Trust to an open-end investment company, the Trust's
Agreement and Declaration of Trust requires the favorable vote of a majority of
the board of the trustees followed by the favorable vote of the holders of at
least 75% of the outstanding shares of each affected class or series of shares
of the Trust, voting separately as a class or series, unless such amendment has
been approved by at least 80% of the trustees, in which case "a majority of the
outstanding voting securities" (as defined in the Investment Company Act) of the
Trust shall be required. The foregoing vote would satisfy a separate requirement
in the Investment Company Act that any conversion of the Trust to an open-end
investment company be approved by the shareholders. If approved in the foregoing
manner, conversion of the Trust to an open-end investment company 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 common 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 reserves 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.

         To liquidate the Trust, the Trust's Agreement and Declaration of Trust
requires the favorable vote of a majority of the board of trustees followed by
the favorable vote of the holders of at least 75% of the outstanding shares of
each affected class or series of the Trust, voting separately as a class or
series, unless such liquidation has been approved by at least 80% of trustees,
in which case "a majority of the outstanding voting securities" (as defined in
the Investment Company Act) of the Trust shall be required.

         For the purposes of calculating "a majority of the outstanding voting
securities" under the Trust's Agreement and Declaration of Trust, each class and
series of the Trust shall vote together as a single class, except to the extent
required by the Investment Company Act or the Trust's Agreement and Declaration
of Trust with respect to any class or series of shares. If a separate vote is
required, the applicable proportion of shares of the class or series, voting as
a separate class or series, also will be required.

         The board of trustees has determined that provisions with respect to
the board of trustees and the shareholder voting requirements described above,
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, diversified, closed-end 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 objective, 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 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.


                           REPURCHASE OF COMMON 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.
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 capital of the Trust and, therefore, may have the effect
of increasing the Trust's expense ratio and decreasing the asset coverage with
respect to any Preferred Shares outstanding. Any share repurchases or tender
offers will be made in accordance with requirements of the Securities Exchange
Act of 1934, as amended, the Investment Company Act and the principal stock
exchange on which the common shares are traded.


                                   TAX MATTERS

Federal Tax Matters

         The discussion below and in the Statement of Additional Information
provides general tax information related to an investment in the common shares.
The discussion reflects applicable tax laws of the United States as of the date
of this prospectus, which tax laws may be changed or subject to new
interpretations by the courts or the Internal Revenue Service retroactively or
prospectively. Because tax laws are complex and often change, you should consult
your tax advisor about the tax consequences of an investment in the Trust.


         The Trust invests primarily in municipal bonds the income of which is
exempt from Federal income tax, including alternative minimum tax. Consequently,
the regular monthly dividends you receive will generally be exempt from Federal
income tax, including 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 designating the
amounts of tax-exempt dividends, capital gain dividends and ordinary income
dividends paid to you during the preceding year, including the source of
investment income by state. 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 taxable income and be
permitted to pay tax-exempt dividends, the Trust must elect to be treated as a
regulated investment company under Subchapter M of the Code and meet certain
requirements that govern the Trust's sources of income, diversification of
assets and distribution of earnings to shareholders. The Trust intends to make
such an election and meet these requirements. If the Trust failed to do so, the
Trust would be required to pay corporate taxes on its taxable income and all the
distributions would be taxable as ordinary income to the extent of the Trust's
earnings and profits. 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 on a quarterly basis. 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 to the extent of
the Trust's earnings and profits.


         The Trust may be required to withhold taxes on 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 exempt dividend 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 be permitted to 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. Holders are urged to consult their own tax advisors regarding the impact
of an investment in common shares upon the deductibility of interest payable by
the holder.




State and Local Tax Matters

         The exemption from Federal income tax for exempt-interest dividends
does not necessarily result in exemption for such dividends under the income or
other tax laws of any state or local taxing authority. In some states, the
portion of any exempt-interest dividend that is derived from interest received
by a regulated investment company on its holdings of that state's securities and
its political subdivisions and instrumentalities is exempt from that state's
income tax. Therefore, the Trust will report annually to its shareholders the
percentage of interest income earned by the Trust during the preceding year on
tax-exempt obligations indicating, on a state-by-state basis, the source of such
income. Shareholders of the Trust are advised to consult with their own tax
advisors about state and local tax matters.

         Please refer to the Statement of Additional Information for more
detailed information. You are urged to consult your tax advisor.
<PAGE>



                                  UNDERWRITING

                 are acting as representatives of the Underwriters named below.
Subject to the terms and conditions stated in the underwriting agreement dated ,
2002, each Underwriter named below has agreed to purchase, and the Trust has
agreed to sell to such Underwriter, the number of common shares set forth
opposite the name of such Underwriter.

                                                                     Number of
Underwriters                                                     Common Shares



         Total............................................................

         The underwriting agreement provides that the obligations of the several
Underwriters to purchase the common shares included in this offering are subject
to approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to purchase all the common shares (other than
those covered by the over-allotment option described below) if they purchase any
of the common shares.

         The Underwriters propose to offer some of the common shares directly 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 $ per common share. The sales
load the Trust will pay of $0.675 per common share is equal to 4.5% of the
initial offering price.

         The Trust has granted to the Underwriters an option, exercisable for 45
days from the date of this prospectus, to purchase up to additional common
shares at the public offering price less the sales load. The Underwriters may
exercise such option solely for the purpose of covering over-allotments, if any,
in connection with this offering. To the extent such option is exercised, each
Underwriter will be obligated, subject to certain conditions, to purchase a
number of additional common shares approximately proportionate to such
Underwriter's initial purchase commitment.

         The Trust and BlackRock have agreed that, for a period of 180 days from
the date of this prospectus, they will not, without the prior written consent of
, on behalf of the Underwriters, dispose of or hedge any common shares of the
Trust or any securities convertible into or exercisable or exchangeable for
common shares of the Trust, or grant any options or warrants to purchase common
shares of the Trust. in its sole discretion may release any of the securities
subject to the foregoing agreement at any time without notice.

         Prior to this offering, there has been no public market for the common
shares. Consequently, the initial public offering price for the common shares
was determined by negotiation among the Trust, BlackRock and the
representatives. There can be no assurance, however, that the price at which the
common shares will sell in the public market after this offering will not be
lower than the price at which they are sold by the Underwriters or that an
active trading market in the common shares will develop and continue after this
offering. The Trust's common shares will be listed on the New York Stock
Exchange under the symbol " ".

         The Trust, BlackRock Advisors and BlackRock Financial Management have
each agreed to indemnify the several Underwriters or contribute to losses
arising out of certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").

         In connection with the requirements for listing the Trust's common
shares on the New York Stock Exchange, the Underwriters have undertaken to sell
lots of 100 or more common shares to a minimum of 2,000 beneficial owners in the
United States. The minimum initial investment requirement is 100 common shares
($1,500) in order to participate in this offering. Certain Underwriters may make
a market in the common shares after trading in the common shares has commenced
on the New York Stock Exchange. No Underwriter is, however, obligated to conduct
market-making activities and any such activities may be discontinued at any time
without notice, at the sole discretion of the Underwriter. No assurance can be
given as to the liquidity of, or the trading market for, the common shares as a
result of any market-making activities undertaken by any Underwriter. This
prospectus is to be used by any Underwriter in connection with the offering and,
during the period in which a prospectus must be delivered, with offers and sales
of the common shares in market-making transactions in the over-the-counter
market at negotiated prices related to prevailing market prices at the time of
the sale.

         The Underwriters have advised the Trust that, pursuant to Regulation M
under the Securities Exchange Act of 1934, as amended, certain persons
participating in the offering may engage in transactions, including stabilizing
bids, covering transactions or the imposition of penalty bids, which may have
the effect of stabilizing or maintaining the market price of the common shares
at a level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of common shares on behalf of an
Underwriter for the purpose of fixing or maintaining the price of the common
shares. A "covering transaction" is a bid for or purchase of the common shares
on behalf of an Underwriter to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is a contractual
arrangement whereby if, during a specified period after the issuance of the
common shares, the Underwriters purchase common shares in the open market for
the account of the underwriting syndicate and the common shares purchased can be
traced to a particular Underwriter or member of the selling group, the
underwriting syndicate may require the Underwriter or selling group member in
question to purchase the common shares in question at the cost to the syndicate
or may recover from (or decline to pay to) the Underwriter or selling group
member in question any or all compensation (including, with respect to a
representative, the applicable syndicate management fee) applicable to the
common shares in question. As a result, an Underwriter or selling group member
and, in turn, brokers may lose the fees that they otherwise would have earned
from a sale of common shares if their customer resells the common shares while
the penalty bid is in effect. The Underwriters are not required to engage in any
of these activities, and any such activities, if commenced, may be discontinued
at any time. These transactions may be effected on the New York Stock Exchange
or otherwise.

         The underwriting 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, BlackRock Advisors or BlackRock Financial Management
by notice to the Trust, BlackRock Advisors or BlackRock Financial Management 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 material 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 this prospectus or
to enforce contracts for the resale of the common shares by the Underwriters.

         The Trust anticipates that from time to time the representatives of the
Underwriters 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.

         Prior to the public offering of common shares, BlackRock Advisors will
purchase common shares from the Trust in an amount satisfying the net worth
requirements of Section 14(a) of the Investment Company Act.

         The principal business address of           is                     .


                          CUSTODIAN AND TRANSFER AGENT

         The Custodian of the assets of the Trust is State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110. The Custodian
performs custodial, fund accounting and portfolio accounting services. EquiServe
Trust Company, N.A., 150 Royall Street, Canton, Massachusetts 02021, will serve
as the Trust's Transfer Agent with respect to the common shares.


                                 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 . may rely as to certain matters of
Delaware law on the opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
<PAGE>


<TABLE>
<CAPTION>
                            TABLE OF CONTENTS FOR THE
                       STATEMENT OF ADDITIONAL INFORMATION

                                                                                                            Page
<S>                                                                                                          <C>
Use of Proceeds..........................................................................................    B-2
Investment Objective and Policies........................................................................    B-2
Investment Policies and Techniques.......................................................................    B-4
Other Investment Policies and Techniques.................................................................    B-20
Management of the Trust..................................................................................    B-23
Portfolio Transactions and Brokerage.....................................................................    B-32
Description of Shares....................................................................................    B-33
Repurchase of Common Shares..............................................................................    B-33
Tax Matters..............................................................................................    B-34
Performance Related and Comparative Information..........................................................    B-39
Experts..................................................................................................    B-42
Additional Information...................................................................................    B-42
Independent Auditors Report..............................................................................    F-1
Financial Statements.....................................................................................    F-2
APPENDIX A  Ratings of Investments.......................................................................    A-1
APPENDIX B  Taxable Equivalent Yield Table...............................................................    B-1
APPENDIX C  General Characteristics and Risks of Hedging Transactions....................................    C-1
</TABLE>


<PAGE>

                                         Shares


                    BlackRock Insured Municipal Income Trust


                                  Common Shares


                                   PROSPECTUS



                                            , 2002



                    BlackRock Insured Municipal Income Trust

                       STATEMENT OF ADDITIONAL INFORMATION

         BlackRock Insured Municipal Income Trust (the "Trust") is a newly

organized, diversified, closed-end 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 , 2002. This Statement of Additional Information, which is not a
prospectus, 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>
<CAPTION>
                                TABLE OF CONTENTS


                                                                                                             Page
<S>                                                                                                          <C>
Use of Proceeds..........................................................................................    B-2
Investment Objective and Policies........................................................................    B-2
Investment Policies and Techniques.......................................................................    B-4
Other Investment Policies and Techniques.................................................................    B-20
Management of the Trust..................................................................................    B-23
Portfolio Transactions and Brokerage.....................................................................    B-32
Description of Shares....................................................................................    B-33
Repurchase of Common Shares..............................................................................    B-33
Tax Matters..............................................................................................    B-34
Performance Related and Comparative Information..........................................................    B-39
Experts..................................................................................................    B-42
Additional Information...................................................................................    B-42
Independent Auditors Report..............................................................................    F-1
Financial Statements.....................................................................................    F-2
APPENDIX A  Ratings of Investments.......................................................................    A-1
APPENDIX B  Taxable Equivalent Yield Table...............................................................    B-1
APPENDIX C  General Characteristics and Risks of Hedging Transactions....................................    C-1
</TABLE>

            This Statement of Additional Information is dated , 2002.
<PAGE>


                                 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--
Short-Term Taxable Fixed Income Securities," the income on which is subject to
regular Federal income tax, 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's investment objective is to provide current income exempt
from Federal income tax, including alternative minimum tax, and California
income tax. 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 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 Managed 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 issuers;

                  (2) with respect to 75% of its Managed Assets, invest more
         than 5% of the value of its Managed Assets in the securities of any
         single issuer or purchase more than 10% of the outstanding securities
         of any one issuer.

                  (3) 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;

                  (4) 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 repurchase agreements;

                  (5) 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;

                  (6) 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

                  (7) 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 Commodity
         Futures Trading Commission (the "CFTC") 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 issuers may for this purpose be deemed to be issued
by such non-governmental issuers. Thus, the 25% limitation would apply to such
obligations. It is nonetheless possible that the Trust may invest more than 25%
of its Managed 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 Managed 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, the Trust may invest up to 10% of its
total assets in the aggregate in shares of other investment companies and 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 will remain subject to payment of the Trust's advisory
fees and other expenses with respect to assets so invested. Holders of common
shares will 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.


         As a fundamental policy, under normal market conditions, the Trust will
invest at least 80% of its Managed Assets in municipal bonds, the interest of
which is exempt from regular Federal income tax, including the alternative
minimum tax.


         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 after giving
         effect to such sale, the market value of all securities sold short does
         not exceed 25% of the value of the Trust's Managed 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; or

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


         As a matter of non-fundamental policy, under normal market conditions,
the Trust will invest at least 80% of its Managed Assets in insured securities.
For the purposes of the above non-fundamental policy an insured security is a
security that is insured as to the timely payment of both principal and interest
by an insurance company, which insurance may include without limitation original
issue insurance, secondary insurance or portfolio insurance. The Trust has
adopted a policy to provide shareholders of the Trust at least 60 days' prior
notice of any change in this non-fundamental investment policy, if the change is
not first approved by shareholders, which notice will comply with the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder. 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 the
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 taxable year, (a) no
more than 25% of the value of the Trust's total assets are invested in the
securities (other than United States government securities or securities of
other regulated investment companies) of a single issuer or two or more issuers
controlled by the Trust and engaged in the same, similar or related trades or
businesses 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 (other than
United States government securities or securities of other regulated investment
companies) 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 and/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 invest primarily in a portfolio of investment grade
municipal bonds that are exempt from regular Federal income tax, including the
alternative minimum tax.

         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.


         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 invest primarily in municipal bonds with long-term
maturities in order to maintain a weighted average maturity of 15 or more 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 BlackRock'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. Taxable temporary
investments of the Trust may include certificates of deposit issued by U.S.
banks with assets of at least $1 billion, 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 the disposition or re-leasing of the
property might prove difficult. In order to reduce this risk, the Trust will
only purchase Municipal Lease Obligations where BlackRock 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 taxes, regardless of the technical structure of
the issuer of the instrument. The Trust treats all such tax-exempt securities as
municipal bonds.

Description of Insurers


         In General. Insured obligations held by the Trust will be insured as to
their scheduled payment of principal and interest under (i) an insurance policy
obtained by the issuer or underwriter of the obligation at the time of its
original issuance ("Issue Insurance"), (ii) an insurance policy obtained by the
Trust or a third party subsequent to the obligation's original issuance
("Secondary Market Insurance") or (iii) a municipal insurance policy purchased
by the Trust ("Portfolio Insurance"). The Trust anticipates that all or
substantially all of its insured obligations will be subject to Issue Insurance
or Secondary Market Insurance. Although the insurance feature reduces certain
financial risks, the premiums for Portfolio Insurance (which, if purchased by
the Trust, are paid from the Trust's assets) and the higher market price paid
for obligations covered by Issue Insurance or Secondary Market Insurance reduce
the Trust's current yield.

         Insurance will cover the timely payment of interest and principal on
obligations and will be obtained from insurers with a claims-paying ability
rated Aaa by Moody's or AAA by S&P or Fitch. Obligations insured by any insurer
with such a claims-paying ability rating will generally carry the same rating or
credit risk as the insurer. See Appendix A for a brief description of Moody's,
Fitch's and S&P's claims-paying ability ratings. Such insurers must guarantee
the timely payment of all principal and interest on obligations as they become
due. Such insurance may, however, provide that in the event of non-payment of
interest or principal when due with respect to an insured obligation, the
insurer is not obligated to make such payment until a specified time period has
lapsed (which may be 30 days or more after it has been notified by the Trust
that such non-payment has occurred). For these purposes, a payment of principal
is due only at final maturity of the obligation and not at the time any earlier
sinking fund payment is due. While the insurance will guarantee the timely
payment of principal and interest, it does not guarantee the market value of the
obligations or the net asset value of the Trust.

         Obligation are generally eligible to be insured under Portfolio
Insurance if, at the time of purchase by the Trust, they are identified
separately or by category in qualitative guidelines furnished by the mutual fund
insurer and are in compliance with the aggregate limitations on amounts set
forth in such guidelines. Premium variations are based, in part, on the rating
of the obligations being insured at the time the Trust purchases the
obligations. The insurer may prospectively withdraw particular obligations from
the classifications of securities eligible for insurance or change the aggregate
amount limitation of each issue or category of eligible obligations. The insurer
must, however, continue to insure the full amount of the obligations previously
acquired which the insurer has indicated are eligible for insurance, so long as
they continue to be held by the Trust. The qualitative guidelines and aggregate
amount limitations established by the insurer from time to time will not
necessarily be the same as those the Trust would use to govern selection of
obligations for the Trust. Therefore, from time to time such guidelines and
limitations may affect investment decisions in the event the Trust's securities
are insured by Portfolio Insurance.

         For Portfolio Insurance that terminates upon the sale of the insured
security, the insurance does not have any effect on the resale value of such
security. Therefore, the Trust will generally retain any insured obligations
which are in default or, in the judgment of the Investment Adviser, are in
significant risk of default and place a value on the insurance. This value will
be equal to the difference between the market value of the defaulted insured
obligations and the market value of similar obligations which are not in
default. As a result, BlackRock may be unable to manage the securities held by
the Trust to the extent the Trust holds defaulted insured obligations, which
will limit its ability in certain circumstances to purchase other obligations.
While a defaulted insured obligation is held by the Trust, the Trust will
continue to pay the insurance premium thereon but will also collect interest
payments from the insurer and retain the right to collect the full amount of
principal from the insurer when the insured obligation becomes due. The Trust
expects that the market value of a defaulted insured obligation covered by Issue
Insurance or Secondary Market Insurance will generally be greater than the
market value of an otherwise comparable defaulted obligation covered by
Portfolio Insurance.

         The Trust may also invest in obligations that are secured by an escrow
or trust account which contains securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, that are backed by the full faith
and credit of the United States, and sufficient in amount to ensure the payment
of interest on and principal of the secured California obligation
("collateralized obligations"). Collateralized obligations generally are
regarded as having the credit characteristics of the underlying U.S. Government,
agency or instrumentality securities. These obligations will not be subject to
Issue Insurance, Secondary Market Insurance or Portfolio Insurance. Accordingly,
despite the existence of these credit support characteristics, these obligations
will not be considered to be insured obligations for purposes of the Trust's
policy of investing at least 80% of its net assets in insured obligations.

         Principal Insurers. Currently, Municipal Bond Investors Assurance
Corporation ("MBIA"), Financial Guaranty Insurance Company ("FGIC"), AMBAC
Indemnity Corporation ("AMBAC"), ACA, Radian Asset Assurance ("Radian"), XL
Capital Assurance ("XL Capital"), CDC IXIS Financial Guaranty North America,
Inc. ("CIFG NA"), and Financial Security Assurance Corp., together with its
affiliated insurance companies - Financial Security Assurance International Inc.
and Financial Security Assurance of Oklahoma, Inc. (collectively, "FSA"), are
considered to have a high claims-paying ability and, therefore, are eligible
insurers for the Trust's obligations. Additional insurers may be added without
further notification. The following information concerning these eligible
insurers is based upon information provided by such insurers or information
filed with certain state insurance regulators. Neither the Trust has
independently verified such information and make no representations as to the
accuracy and adequacy of such information or as to the absence of material
adverse changes subsequent to the date thereof.

         MBIA is a monoline financial guaranty insurance company created from an
unincorporated association (the Municipal Bond Insurance Association), through
which its members wrote municipal bond insurance on a several and joint-basis
through 1986. On January 5, 1990, MBIA acquired all of the outstanding stock of
Bond Investors Group, Inc., the parent of Bond Investors Guaranty Insurance
Company ("BIG"), which has subsequently changed its name to MBIA Insurance Corp.
of Illinois. Through a reinsurance agreement, BIG ceded all of its net insured
risks, as well as its related unearned premium and contingency reserves, to
MBIA. MBIA issues municipal bond insurance policies guarantying the timely
payment of principal and interest on new municipal bond issues and leasing
obligations of municipal entities, secondary market insurance of such
instruments and insurance on such instruments held in unit investment trusts and
mutual funds. As of December 31, 2001, MBIA had total assets of approximately
$16.12 billion and qualified statutory capital of approximately $4.8 billion.
MBIA has a claims-paying ability rating of "AAA" by S&P and "Aaa" by Moody's.

         Financial Guaranty Insurance Corporation, a wholly owned subsidiary of
FGIC Corporation, which is a wholly owned subsidiary of General Electric Capital
Corporation, is an insurer of municipal securities, including new issues,
securities held in unit investment trusts and mutual funds, and those traded on
secondary markets. The investors in FGIC Corporation are not obligated to pay
the debts of or claims against FGIC. As of December 31, 2000, FGIC had total
assets of approximately $2.75 billion and qualified statutory capital of
approximately $1.99 billion. FGIC has a claims-paying ability rating of "AAA" by
S&P and Fitch, and "Aaa" by Moody's.

         AMBAC, a wholly owned subsidiary of AMBAC Inc., is a monoline insurance
company whose policies guaranty the payment of principal and interest on
municipal obligations issues. As of December 31, 2001, AMBAC had assets of
approximately $12.26 billion and qualified statutory capital of approximately
$3.26 billion. AMBAC has a claims-paying ability rating of "AAA" by S&P and
"Aaa" by Moody's.

         ACA is a Maryland domiciled financial insurance company. ACA is the
primary subsidiary of American Access Capital Holding Inc. ACA carries a single
A rating. Total claims paying resources were $383 million in 2001, with total
statutory capital of $120.8 million. Soft capital totaled $135 million, though a
loss coverage agreement with ACE American Insurance Co., (rated A). ACA insures
primarily in the municipal and CDO market and acts as the manager/originator of
CDO issues.

         Radian is a wholly owned subsidiary of Radian Group Inc. Radian is
rated AA by S&P and Fitch and provides financial guaranty insurance and
reinsurance for debt and asset backed securities. Radian was formerly known as
Asset Guarantee Company and was purchased by Radian Group for $518 million in
February 2001. As of December 31, 2001, Radian had assets of $381 million and
statutory capital of $169.8 million.

         XL Capital is a new AAA rated financial guarantor and a wholly owned
subsidiary of property casualty insurer XL Capital Ltd. XL Capital began
transactions in January of 2001 and is rated AAA / Aaa by Moody's and S&P
respectively. It is currently capitalized with $100 million and cedes 90% of its
exposure to XL Financial Assurance a Bermuda based subsidiary of XL Capital Ltd.
XL Financial Assurance has $274 million in hard capital and $100 million in stop
loss protection. Beyond this XL Financial Assurance further guarantees 100% of
XL Capital exposure with $2.7 billion in shareholders equity. XL Capital has $88
million in assets and through its parent and subsidiary agreements XL Capital
has $1 billion in qualified statutory capital.

         CIFG NA is a new financial Guarantor rated AAA from Fitch, Moody's and
S&P. CIFG NA is a subsidiary of CDC IXIS Financial Guaranty ("CIFG"), which is a
subsidiary of CIFG Holding, which is in turn owned by parent company CDC IXIS.
CDC IXIS is a French domiciled corporation with a broad spectrum of insurance
related businesses. CIFG recently entered the bond insurance business with two
companies, CIFG Europe and CIFG NA. CIFG is capitalized with $280 million in
cash, with CIFG NA holding $100 million in cash. CDC IXIS backs the two entities
with $220 million in the form of a subordinated loan agreement. Over 75% of CIFG
NA's business will be passed on through a reinsurance policy to CIFG. Combining
all capital, CIFG NA will have claims paying resources of $500 million.

         FSA purchased Capital Guaranty Insurance Company including its book of
business and reserves effective December 20, 1995. FSA is a monoline insurer
whose policies guaranty the timely payment of principal and interest on new
issue and secondary market issue municipal securities transactions, among other
financial obligations. As of December 31, 2001, FSA had total assets of
approximately $4.3 billion and qualified statutory capital of approximately
$1.52 billion. FSA has a claims-paying ability rating of "AAA" by S&P and "Aaa"
by Moody's. On March 14, 2000, Dexia, Europe's largest municipal lender with
assets in excess of $230 billion announced that it had signed a definitive
agreement providing for the acquisition of FSA Holdings, holding company for
FSA, Inc. Dexia acquired the company in the second quarter of 2000, for $2.6
billion in cash, or $76 per share.


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 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 Federal Deposit Insurance
         Corporation.

                  (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. BlackRock 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. BlackRock
         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. BlackRock 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.

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 techniques in an 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 BlackRock'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 designating
liquid assets on the books and records of the Trust or offsetting transactions,
the Trust and BlackRock 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
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 designate on its books and
records 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 futures 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 or 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 total 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 total 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 BlackRock; 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 Code 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 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 liquid securities. The Trust will also be required to
designate on its books and records 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 Managed 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 Securities on a "when-issued" basis and may
purchase or sell Securities on a "forward commitment" basis in order to acquire
the security or to hedge against anticipated changes in interest rates and
prices. 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 might incur a gain or loss. At the time the Trust enters
into a transaction on a when-issued or forward commitment basis, it will
designate on its books and records cash or liquid debt securities equal to at
least 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 may take
substantially more than five business days, 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 right to borrow funds to the extent permitted as described under the caption
"Investment Objective and Policies--Investment Restrictions." The proceeds of
borrowings may be used for any valid purpose including, without limitation,
liquidity, investments 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 designate on its books and records 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 certain 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 in 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 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. The Trust will only enter into repurchase
agreements with registered securities dealers or domestic banks that, in the
opinion of BlackRock, 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.
BlackRock 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, BlackRock 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 banks or dealers 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 requirements of the Investment Company Act, which
currently require that (i) 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, (ii) 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),
(iii) the loan be made subject to termination by the Trust at any time and (iv)
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 of
such loans exceeds 331/3% 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, which rules presently require the borrower, after notice, to redeliver
the securities within the normal settlement time of five business days. All
relevant facts and circumstances, including the creditworthiness of the
Qualified Institution, will be monitored by BlackRock, and will be considered in
making decisions with respect to lending 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.



Residual Interest Municipal Bonds

         The Trust currently does not intend to invest in residual interest
municipal bonds. Residual interest municipal bonds pay interest at rates that
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. Although the Trust does not intend initially to invest in
inverse floaters, the Trust may do so at some point in the future. The Trust
will provide shareholders 30 days' written notice prior to any change in its
policy of not investing in inverse floaters.

                             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 at an in-person meeting of the board of trustees held on , 2002,
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). This agreement provides for the Trust to pay a management fee at
an annual rate equal to % of the average weekly value of the Trust's Managed
Assets. A related waiver letter from BlackRock Advisors provided for temporary
fee waiver of % the average weekly value of the Trust's Managed Assets in each
of the first five years of the Trust's operations (through , 2007) and for a
declining amount for an additional five years (through , 2012). In approving
this agreement the board of trustees considered, among other things, the nature
and quality of services to be provided by BlackRock Advisors, the profitability
to BlackRock Advisors of its relationship with the Trust, economies of scale and
comparative fees and expense ratios.

         The investment management agreement and the waivers of the management
fees were approved by the sole common shareholder of the Trust as of , 2002. 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 at the time outstanding and entitled
to vote (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 the investment
management 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 which can be
waived by the non-terminating party. 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).

Sub-Investment Advisory Agreement

         BlackRock Financial Management, the Sub-Advisor, is a wholly owned
subsidiary of BlackRock, Inc. Pursuant to the sub-investment advisory agreement,
BlackRock Advisors has appointed BlackRock Financial Management, one of its
affiliates, to perform certain of the day-to-day investment management of the
Trust. BlackRock Financial Management will receive a portion of the management
fee paid by the Trust to BlackRock Advisors. From the management fees, BlackRock
Advisors will pay BlackRock Financial Management, for serving as Sub-Advisor, a
fee equal to: (i) prior to , 2003, 38% of the monthly management fees received
by BlackRock Advisors, (ii) from , 2003 to , 2004, 19% of the monthly management
fees received by BlackRock Advisors; and (iii) after , 2004, 0% of the
management fees received by BlackRock Advisors; provided thereafter that the
Sub-Advisor may be compensated at cost for any services rendered to the Trust at
the request of BlackRock Advisors and approved of by the board of trustees.

         The sub-investment advisory agreement also provides that, in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations thereunder, the Trust will indemnify BlackRock
Financial Management, its directors, officers, employees, agents, associates and
control persons for liabilities incurred by them in connection with their
services to the Trust, subject to certain limitations.

         Although BlackRock Financial Management 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 Financial Management are not
exclusive and BlackRock Financial Management provides similar services to other
investment companies and other clients and may engage in other activities.

         The sub-investment advisory agreement was approved by the Trust's board
of trustees at an in-person meeting held on , 2002, 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). In approving this
agreement the board of trustees considered, among other things, the nature and
quality of services to be provided by BlackRock Financial Management, the
profitability to BlackRock Financial Management of its relationship with the
Trust, economies of scale and comparative fees and expense ratios.

         The sub-investment advisory agreement was approved by the sole common
shareholder of the Trust as of , 2002. The sub-investment advisory 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 at the time outstanding and entitled to vote (as 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 sub-investment advisory
agreement may be terminated as a whole at any time by the Trust or by BlackRock
Advisors 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 Trusts, or BlackRock Financial Management, on 60 days' written notice by any
party to the other (which may be waived by the non-terminating party). The
sub-investment advisory agreement will also 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. Anne F. Ackerley is the
sole initial Trustee of the Trust. Following is a list of her present positions
and principal occupations during the last five years. Ms Ackerley is an
interested person of the Trust (as defined by the Investment Company Act). The
business address of the Trust, BlackRock Advisors and their board members and
officers is 100 Bellevue Parkway, Wilmington, Delaware 19809, unless specified
otherwise below. Ms Ackerley is an officer of other closed-end funds in which
BlackRock Advisors acts as investment advisor.
<TABLE>
<CAPTION>
                                                         Principal Occupation During the
Name and Age               Title                     Past Five Years and Other Affiliations
-----------------          ---------------------     ------------------------------------------------
<S>                        <C>                       <C>
Anne F. Ackerley           Sole Initial              Managing Director of BlackRock, Inc. since 2000.  Formerly
Age 40                     Trustee, President,       First Vice President and Chief Operating Officer, Mergers
                           Chief Executive           and Acquisition Group at Merrill Lynch & Co. from 1997
                           Officer and               to 2000; First Vice President and Chief Operating Officer,
                           Chief Financial           Public Finance Group at Merrill Lynch & Co. from 1995 to
                           Officer                   1997; First Vice President, Emerging Markets Fixed Income
                                                     Research at Merrill Lynch & Co. prior thereto.
</TABLE>

         Prior to this offering, all of the outstanding shares of the Trust were
owned by BlackRock Advisors.
<TABLE>
<CAPTION>
                                                      Aggregate Dollar Range of Equity Securities
                                                          In all Registered Investment Companies
                           Dollar Range of Equity            Overseen by Trustees in the Family
Name of Trustee            Securities in the Fund*                     Investment Companies
-----------------          -----------------------    -----------------------------------------------------
<S>                        <C>                        <C>


----------
</TABLE>

* Trustees do not own equity securities of the Trust because the Trust is a
newly organized closed-end investment company.

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 calendar year ending December 31, 2002,
assuming the Trust had been in existence for the full calendar year.
<TABLE>
<CAPTION>
                                                                                    Total Compensation from the
                                                  Estimated Compensation From       Trust and Fund Complex Paid
Name of Board Member                                         Trust                      to Board Member(1)

<S>                                                        <C>                              <C>
                                                           $2,000(2)                        $195,000(3),(4),(5)
                                                           $2,000(2)                        $160,000(4)
                                                           $2,000(2)                        $160,000(4)
                                                           $2,000(2)                        $160,000(4)
                                                           $2,000(2)                        $160,000(4)
                                                           $2,000(2)                        $160,000(4)
</TABLE>
(1)      Represents the total compensation earned by such person during the
         calendar year ended December 31, 2001 from the thirty closed-end funds
         advised by a the Advisor (the "Fund Complex"). One of these funds, The
         BlackRock 2001 Term Trust, was terminated on June 30, 2001. On February
         28, 2002, one additional fund, on April 30, 2002 seven additional funds
         and on July 30, 2002 three additional funds were added to the Fund
         Complex.

(2)      Of these amounts it is anticipated that Messrs.               may defer
         $0, $0, $0, $0, $2,000 and $1,000, respectively, pursuant to the Fund
         Complex's deferred compensation plan.

(3)      serves as "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 $40,000 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, Messrs.             deferred $24,000, $24,000, $139,000
         and $68,000, respectively, pursuant to the Fund Complex's deferred
         compensation plan.

(5)      In 2002, it is anticipated that          compensation will be $200,000.

         Each Independent Trustee/Director receives an annual fee calculated as
follows: (i) $6,000 from each fund/trust 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, except that
receives an additional $40,000 from the Fund Complex for acting as the lead
trustee/director for each board of trustees/directors in the Fund Complex. 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/trusts are
reduced proportionately, based on each respective fund's/trust's net assets, so
that the aggregate per meeting fee for all meetings of the boards of
trustees/directors of the funds/trusts held on a single day does not exceed
$20,000 for any Independent Trustee/Director.

         The Board of Trustees of the Trust currently has three committees: an
Executive Committee, an Audit Committee and a Governance Committee.

         The Executive Committee consists of                 and
and acts in accordance with the powers permitted to such a committee under the
Agreement and Declaration of Trust and By-Laws of the Trust. The Executive
Committee, subject to the Trust's Agreement and Declaration of Trust, By-Laws
and applicable law, acts on behalf of the full Board of Trustees in the
intervals between meetings of the Board.

         The Audit Committee consists of                and                    ,
The Audit Committee acts according to the Audit Committee charter. has been
appointed as Chairman of the Audit Committee. The Audit Committee is responsible
for reviewing and evaluating issues related to the accounting and financial
reporting policies of the Trust, overseeing the quality and objectivity of the
Trust's financial statements and the audit thereof and to act as a liaison
between the Board of Trustees and the Trust's independent accountants.

         The governance committee consists of           and                    .
The Governance committee acts in accordance with the Governance Committee
charter. has been appointed as Chairman of the Governance Committee. The
Governance Committee consists of the independent Trustees and performs those
functions enumerated in the Governance Committee Charter including, but not
limited to, making nominations for the appointment or election of independent
Trustees, reviewing independent Trustee compensation, retirement policies and
personnel training policies and administrating the provisions of the Code of
Ethics applicable to the independent Trustees.

         As the Trust is a newly organized closed-end investment company, no
meetings of the above committees have been held in the current fiscal year.

         No Trustee who is not an interested person of the Trust owns
beneficially or of record, any security of BlackRock Advisors or any person
(other than a registered investment company) directly or indirectly controlling,
controlled by or under common control with BlackRock Advisors.

Codes of Ethics

         The Trust, the Advisor, the Sub-Advisor and the Trust's principal
underwriters have adopted codes of ethics under Rule 17j-1 of the Investment
Company Act. These codes permit personnel subject to the codes to invest in
securities, including securities that may be purchased or held by the Trust.
These codes can be reviewed and copied at the Security and Exchange Commission's
Public Reference Room in Washington, D.C. Information on the operation of the
Public Reference Room may be obtained by calling the Security and Exchange
Commission at 1-202-942-8090. The code of ethics are available on the EDGAR
Database on the Security and Exchange Commission's web site
(http://www.sec.gov), and copies of these codes may be obtained, after paying a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov, or by writing the Security and Exchange Commission's Public
Reference Section, Washington, D.C. 20549-0102.

Investment Advisor and Sub-Advisor

         BlackRock Advisors acts as the Trust's investment advisor. BlackRock
Financial Management acts as the Trust's sub-advisor. BlackRock Advisors,
located at 100 Bellevue Parkway, Wilmington, Delaware 19809 and BlackRock
Financial Management, located at 40 East 52nd Street, New York, New York 10022,
are wholly owned subsidiaries of BlackRock, Inc., which is one of the largest
publicly traded investment management firms in the United States with
approximately $250 billion of assets under management as of June 30, 2002.
BlackRock manages assets on behalf of institutional and individual investors
worldwide through a variety of equity, fixed income, liquidity and alternative
investment products, including the BlackRock Funds and BlackRock Provident
Institutional Funds. In addition, BlackRock provides risk management and
investment system services to institutional investors under the BlackRock
Solutions name.

         The BlackRock organization has over 13 years of experience managing
closed-end products and currently advises a closed-end family of 40 funds with
approximately $9.9 billion in assets. BlackRock has 31 leveraged municipal
closed-end funds and six open-end municipal funds under management. As of June
30, 2002, BlackRock had approximately $17.5 billion in municipal assets
firm-wide. Clients are served from the company's headquarters in New York City,
as well as offices in Wilmington, San Francisco, Boston, Edinburgh, Tokyo and
Hong Kong. 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.

                      PORTFOLIO TRANSACTIONS AND BROKERAGE

         The Advisor and the Sub-Advisor are 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 the price of such securities
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 bonds on a stock
exchange are effected through brokers who charge a commission for their
services.

         The Advisor and the Sub-Advisor are 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
Advisor's and the Sub-Advisor'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
difficulty in executing the order, and the best net price. There are many
instances when, in the judgment of the Advisor or the Sub-Advisor, 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 BlackRock, absent
special circumstances, to pay higher commissions to a firm because it has
supplied such research or other services.

         The Advisor and the Sub-Advisor are able to fulfill their obligation to
furnish a continuous investment program to the Trust without receiving research
or other information from brokers; however, each 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 Advisor and/or the Sub-Advisor, and does not
reduce the Advisor's and/or the Sub-Advisor's normal research activities in
rendering investment advice under the investment management agreement or the
sub-investment advisory agreement. It is possible that the Advisor's and/or the
Sub-Advisor'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
Advisor and/or the Sub-Advisor 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 Advisor and/or the Sub-Advisor in their 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 Advisor's or the Sub-Advisor's organization,
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.

         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 costs, 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 any Preferred Share issued by the Trust,
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 any such 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.

Other Shares

         The board of trustees (subject to applicable law and the Trust's
Agreement and Declaration of Trust) may authorize an offering, without the
approval of the holders of either common shares or Preferred Shares, of other
classes of shares, or other classes or series of shares, as they determine to be
necessary, desirable or appropriate, having such terms, rights, preferences,
privileges, limitations and restrictions as the board of trustees see fit. The
Trust currently does not expect to issue any other classes of shares, or series
of shares, except for the common shares and the Preferred Shares.

                           REPURCHASE OF COMMON SHARES

         The Trust is a closed-end management 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, 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 may 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, or the
conversion of the Trust to an open-end investment company. The board of trustees
may decide not 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). 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 restrictions, 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, the Investment Company Act and the
rules and regulations thereunder.

         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 Code, (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
tender offers 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 from time
to time, or that the Trust may be converted to an open-end investment 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 Managed 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

         The following is a description of certain Federal income tax
consequences to a shareholder of acquiring, holding and disposing of common
stock of the Trust. The discussion reflects applicable tax laws of the United
States as of the date of this prospectus, which tax laws may be changed or
subject to new interpretations by the courts or the Internal Revenue Service
retroactively or prospectively.


         The Trust intends to elect to be treated and to qualify to be taxed as
a regulated investment company under Subchapter M of the Code. 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,
futures and forward contracts) 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 businesses.


         As a regulated investment company, the Trust will not be subject to
Federal income tax on income and gains that it distributes each taxable year to
its shareholders, provided that in such taxable year it distributes at least 90%
of the sum of (i) its "investment company taxable income" (which includes, among
other items, dividends, taxable interest, taxable original issue discount and
market discount income, income from securities lending, net short-term capital
gain in excess of net long-term capital loss, and any other taxable income other
than "net capital gain" (as defined below) and is reduced by deductible
expenses) determined without regard to the deduction for dividends paid 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 shareholders 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
shareholder of the Trust will be increased by the amount of undistributed
capital gains included in the gross income of the shareholder less the tax
deemed paid by the shareholder 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, 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, whether received in cash or additional shares, will be taxable to
shareholders as ordinary income (to the extent of the current or accumulated
earning and profits of the Trust) and generally will not qualify for the
dividends received deduction in the case of corporate shareholders. 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,
capital gain distributions or exempt-interest dividends (as defined below) will
be treated as a return of capital to the extent of (and in reduction of) the
shareholder's 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.


         [The Trust's investment in zero coupon and certain other securities
will cause it to realize income prior to the receipt of cash payments with
respect to these securities. Such income will be accrued daily by the Trust. In
order to avoid a tax payable by the Trust, the Trust may be required to
liquidate securities that it might otherwise have continued to hold in order to
generate cash with which to make required distributions to its shareholders.]


         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.



         The Trust intends to invest in sufficient tax-exempt municipal bonds to
permit payment of "exempt-interest dividends" (as defined in the Code). 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.

         The Internal Revenue Service's position in a published revenue ruling
indicates that the Trust is required to designate distributions paid with
respect to its common shares and its Preferred Shares as consisting of a portion
of each type of income distributed by the Trust. The portion of each type of
income deemed received by the holders of each class of shares will be equal to
the portion of total Trust dividends received by such class. Thus, the Trust
will designate dividends paid as exempt-interest dividends in a manner that
allocates such dividends between the holders of the common shares and the
holders of Preferred Shares in proportion to the total dividends paid to each
such class during or with respect to the taxable year, or otherwise as required
by applicable law. Capital gain dividends and ordinary income dividends will
similarly be allocated between the two classes.



         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 advisor 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.


         Federal income tax law imposes an alternative minimum tax with respect
to both corporations and individuals based on certain items of tax preference.
Interest on certain "private activity bonds" is an item of tax preference
subject to the alternative minimum tax on individuals and corporations. 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, sale or exchange of common shares normally will result
in capital gain or loss to the holders of common shares who hold their shares as
capital assets. Generally, a shareholder's gain or loss will be long-term
capital gain or loss if the shares have been held for more than one year even
though the increase in value in such common shares is attributable to tax-exempt
interest income. In addition, gain realized by the Trust from the disposition of
a tax-exempt municipal obligation that is attributable to accrued market
discount will be treated as ordinary income rather than capital gain, and thus
may increase the amount of ordinary income dividends received by holders of
common shares. Present law taxes both long- and short-term capital gains of
corporations at the rates applicable to ordinary income. For non-corporate
taxpayers, however, long-term capital gains will be taxed at a maximum rate of
20% (or 18% for capital assets that have been held for more than five years and
whose holding periods began after December 31, 2000), while short-term capital
gains and other ordinary income will currently be taxed at a maximum rate of
38.6%.[1] 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.

--------
1        The Economic Growth and Tax Relief Reconciliation Act of 2001,
         effective for taxable years beginning after December 31, 2000, creates
         a new 10 percent income tax bracket and reduces the tax rates
         applicable to ordinary income over a six year phase-in period.
         Beginning in the taxable year 2006, ordinary income will be subject to
         a 35% maximum rate, with approximately proportionate reductions in the
         other ordinary rates.

         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, sale 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, sale or exchange of common shares if the
shareholder purchases other common shares of the Trust (whether through
reinvestment of distributions or otherwise) or the shareholder acquires or
enters into a contract or option to acquire shares that are substantially
identical to common shares of the Trust within a period of 61 days beginning 30
days before and ending 30 days after such redemption, sale 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 redemption, 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 (or amounts credited
as undistributed capital gains) 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 the sum of at
least 98% of its taxable ordinary income for such year, at least 98% of its
capital gain net income (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
capital gain net income 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 tax 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 taxable 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 to withhold tax at a rate equal to the fourth
lowest rate applicable to unmarried individuals (currently, 30%) on 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. Backup withholding is not an
additional tax and any amount withheld may be refunded or credited against the
shareholder's Federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.


         The foregoing is a general and abbreviated summary of the provisions of
the Code 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 advisors for more detailed information concerning the
Federal income taxation of the Trust and the income tax consequences to its
holders of common shares.

                 PERFORMANCE RELATED AND COMPARATIVE INFORMATION


         Municipal bonds can provide tax-free income.


         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 and Lipper, that the Trust believes to be
generally accurate. In our sales materials, we may quote company rankings from
Fortune Magazine and other national publications.

         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.

         Municipal bonds have had an annualized total return for the 10 years
ended May 31, 2002 of 6.75%. This figure, when adjusted for taxes, assuming a
39.6% tax bracket and the highest average national state tax bracket, increases
to 10.94% which is better than the after tax return of other major fixed income
categories.

                        Tax Adjusted Municipals vs. Other
                          Fixed Income Category Returns
                          Last 10 Years Ending 5/31/02

10 Year Municipal Bond Taxable-Equivalent Annualized Returns and Standard
Deviation vs. Alternatives.(1)

<TABLE>
<CAPTION>
                                    Tax
10 Year Period                      Adj.
5/31/92 - 5/31/02                  Munis       Aggregate(2)     Treasury(3)     Agency(4)
---------------------------- -------------- ----------------- --------------- ---------------
<S>                            <C>              <C>             <C>             <C>           <C>            <C>
Annualized Return...........       10.94%           7.40%          7.47%          7.40%
Standard Deviation..........        4.40            3.76           4.31           3.91

10 Year Period                                                     Asset         High          S&P
5/31/92 - 5/31/02             Corporates(5)     Mortgages(6)      Backed(7)     Yield(8)      500(9)      NASDAQ(10)
----------------------- --------------------- ----------------- ------------- ----------- -------------- ---------------
Annualized Return...........      7.73%             7.28%            7.13%        6.91%       12.06%         10.68%
Standard Deviation..........      4.72              3.00             2.59         6.10        14.14          27.33
</TABLE>

(1)  Lehman Brothers. Past performance is no guarantee of future results. The
     taxable-equivalent return for municipal bonds in the above table reflects
     an adjustment of the highest federal tax bracket in each year and the
     highest current average national state tax bracket to the portion of the
     Lehman Brothers Municipal Index attributable to coupon payment and no
     adjustment to the portion of the Index attributable to principal
     appreciation. Treasury Bond income returns reflect an adjustment of the
     highest current average national state tax bracket to the portion of the
     Lehman Brothers Treasury Index attributable to coupon payment and no
     adjustment to the portion of the Index attributable to principal
     appreciation. Standard deviation measures performance fluctuation;
     generally the higher the Standard Deviation, the greater the expected
     volatility of returns. Standard deviation is not a complete measure of risk
     and cannot predict future performance. For the five year period from
     5/31/97 - 5/31/02 the Lehman Brothers Municipal Index, S&P 500 and NASDAQ
     produced an annualized return of 10.29% (taxable equivalent), 8.06% and
     7.71%, respectively, with standard deviation of 3.66%, 17.2% and 34.05%
     respectively. Referenced Indices: S&P Index and NASDAQ Composite. Other
     referenced Lehman Indices: Asset Backed, Mortgage Backed, Credit Bond
     (Corporate), U.S. Agency, Treasury Bond, Aggregate Bond and High Yield.

(2)  The Lehman Brothers Aggregate Bond Index consists of intermediate-term
     government bonds, investment-grade corporate debt securities and mortgage
     backed securities.

(3)  The Lehman Brothers U.S. Treasury Index consists of public obligations of
     the U.S. Treasury with a remaining maturity of one year or more. Securities
     in the Index are rated investment grade.

(4)  The Lehman Brothers U.S. Agency Index consists of publicly issued debt of
     U.S. Government agencies, quasi-federal corporations, and corporate or
     foreign debt guaranteed by the U.S. Government agencies, quasi-federal
     corporations, and corporate or foreign debt guaranteed by the U.S.
     Government. Securities in the Index are rated investment grade.

(5)  The Lehman Brothers U.S. Corporate Investment Grade Index consists of
     publicly issued U.S. corporate and specified foreign debentures and secured
     notes. To qualify, bonds must be registered with the Securities and
     Exchange Commission and be of investment grade credit quality.

(6)  The Lehman Brothers Mortgage Backed Securities Index consists of fixed rate
     mortgage-backed pass-through securities issued by Ginnie Mae (GNMA), Fannie
     Mae (FNMA), and Freddie Mac (FHLMC).

(7)  The Lehman Brothers Asset-Backed Securities Index consists of asset backed
     securities in five subsectors: (1) credit and charge cards (2) autos (3)
     home equity loans (4) utilities and (5) manufactured housing. To be
     included in the Index, a security must be fixed-rate and be rated
     investment grade.

(8) The Lehman Brothers High Yield Index consists of publicly issued fixed rate,
non-investment grade debt.

(9)  Standard & Poor's 500 Index

(10)     NASDAQ Composite Index

Chart B

Municipal Bonds May Be Attractively Valued Relative to Treasuries.(1)
<TABLE>
<CAPTION>
                                                Yield of Munis             Bond Buyer           30-Year
                                          (As a % of Treasuries)(2)         40 Index            Treasury
                                         ----------------------------- --------------------- ----------------
<C>  <C>                                            <C>                        <C>                <C>
9/30/1992...........................                89.01%                     6.57               7.381
3/31/1993...........................                87.93%                     6.09               6.926
3/31/1994...........................                99.27%                     7.04               7.092
3/31/1995...........................                86.13%                     6.40               7.431
3/29/1996...........................                96.60%                     6.44               6.667
3/31/1997...........................                88.22%                     6.26               7.096
3/31/1998...........................                92.03%                     5.46               5.933
3/31/1999...........................                95.82%                     5.39               5.625
3/31/2000...........................               104.50%                     6.09               5.828
3/30/2001...........................                99.01%                     5.39               5.444
3/29/2002...........................                98.53%                     5.71               5.795
5/31/2002...........................                98.47%                     5.53               5.616
</TABLE>

(1)  Source: Bloomberg/BlackRock Advisors Inc. Past performance is no guarantee
     of future results. Chart shows the relationship between the Bond Buyer 40
     Municipal Index and the U.S. 30 Year Treasury Index. The yields quoted
     above are a simple unweighted average of the estimated yields of the bonds
     in the index if those bonds were sold at par value. It is not possible to
     invest directly in an index.

(2)  As of 5/31/02 the ten year average yield (measured quarterly) of municipal
     bonds as a percentage of Treasuries is 94%.

                         TAXABLE EQUIVALENT YIELD TABLES
                    FOR BLACKROCK MUNICIPAL INCOME TRUSTS III

         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
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>
                                                         Your Combined             Taxable Equivalent Yield
                    Single                             Federal/State Tax   -------------------------------------------
                  Return ($)      Joint Return ($)      Bracket Is (%):       5.0        5.5        6.0        7.0
             ------------------ --------------------- -------------------- -------------------------------------------
                                                                             (%)(1)     (%)(1)     (%)(1)     (%)(1)
<S>             <C>               <C>                        <C>               <C>        <C>        <C>        <C>
National        27,951-67,700      46,701-112,850            27.0              6.85       7.53       8.22       9.59
(XXX)           67,701-141,250    112,851-171,950            30.0              7.14       7.86       8.57      10.00
               141,251-307,050    171,951-307,050            35.0              7.69       8.46       9.23      10.77
                 Over 307,050       Over 307,050             38.6              8.14       8.96       9.77      11.40
California      37,726-67,700      75,451-112,850            33.8              7.55       8.31       9.06      10.57
(XXX)           67,701-141,250    112,851-171,950            36.5              7.88       8.66       9.45      11.03
               141,251-307,050    171,951-307,050            41.1              8.48       9.33      10.18      11.87
                 Over 307,050       Over 307,050             44.3              8.98       9.88      10.77      12.57
New York        27,951-67,700      46,701-112,850            32.0              7.35       8.09       8.82      10.29
(XXX)           67,701-141,250    112,851-171,950            34.8              7.67       8.43       9.20      10.74
               141,251-307,050    171,951-307,050            39.5              8.26       9.08       9.91      11.56
                 Over 307,050       Over 307,050             42.8              8.74       9.62      10.49      12.24
Florida         27,951-67,700      46,701-112,850            27.0                         7.53       8.22       9.59
-------------   67,701-141,250    112,851-171,950            30.0                         7.86       8.57      10.00
(XXX)          141,251-307,050    171,951-307,050            35.0                         8.46       9.23      10.77
                 Over 307,050       Over 307,050             38.6                         8.96       9.77      11.40
</TABLE>

         Keep in mind that on June 14, 2002, the Lehman Brothers Aggregate Bond
Index, a common measure of the taxable bond market, yielded 5.23%.

(1)  This tax-free yield is equivalent to the taxable yields listed below in the
     chart.
<PAGE>



                                     EXPERTS

         The Statement of Net Assets of the Trust as of , 2002 of 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.
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


         The Board of Trustees and Shareholder of BlackRock Insured Municipal
Income Trust


         We have audited the accompanying statement of assets and liabilities of
BlackRock Insured Municipal Income Trust (the "Trust") as of , 2002 and the
related statements of operations and changes in net assets for the period from ,
2002 (date of inception) to , 2002. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

         In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Trust at , 2002 and the results
of its operations and changes in its net assets for the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.
<PAGE>



                    BLACKROCK INSURED MUNICIPAL INCOME TRUST


                       STATEMENT OF ASSETS AND LIABILITIES

                                                          , 2002





<PAGE>
                                   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; and

          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 Corporation or
     the Federal Deposit Insurance Corporation* 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 of 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 as signed 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 1 This 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 2      This designation denotes high quality.  Margins of protection
                  are ample  although not so large as in the preceding group.

MIG               3/VMIG 3 This 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 4 This 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 exception ally 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,     High default risk. Default is a real possibility. Capacity for meeting
         financial commitments is solely

CC,      reliant upon sustained, favorable business or economic developments. A
         "CC" rating indicates that

C        default of some kind appears probable. "C" ratings signal imminent
         default.

DDD,     Default. The ratings of obligations in this category are based on their
         prospects for achieving

DD,      partial or full recovery in a reorganization or liquidation of the
         obligor. While expected

and D    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 does not rate the issuer or issue in question.

`Withdrawn': A rating is withdrawn when Fitch 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.

DESCRIPTION OF THE INSURANCE CLAIMS-PAYING ABILITY RATINGS OF STANDARD & POOR'S

RATINGS GROUP AND MOODY'S INVESTORS SERVICE, INC.

         An S&P insurance claims-paying ability rating is an assessment of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with the terms. An insurer with an insurance
claims-paying ability of AAA has the highest rating assigned by S&P. Capacity to
honor insurance contracts is adjudged by S&P to be extremely strong and highly
likely to remain so over a long period of time. A Moody's insurance
claims-paying ability rating is an opinion of the ability of an insurance
company to repay punctually senior policy holder obligations and claims. An
insurer with an insurance claims-paying ability rating of Aaa is adjudged by
Moody's to be of the best quality. In the opinion of Moody's, the policy
obligations of an insurance company with an insurance claims-paying ability
rating of Aaa carry the smallest degree of credit risk and, while the financial
strength of the these companies is likely to change, such changes as can be
visualized are most unlikely to impair the company's fundamentally strong
position.

         An insurance claims-paying ability rating by S&P or Moody's does not
constitute an opinion on an specific contract in that such an opinion can only
be rendered upon the review of the specific insurance contract. Furthermore, an
insurance claims-paying ability rating does not take in account deductibles,
surrender or cancellation penalties or the timeliness of payment; nor does it
address the ability of a company to meet nonpolicy obligations (i.e., debt
contracts).

         The assignment of ratings by S&P and Moody's to debt issues that are
fully or partially supported by insurance policies, contracts, or guarantees is
a separate process from the determination of claims-paying ability ratings. The
likelihood of a timely flow of funds from the insurer to the trustee for the
bondholders is a key element in the rating determination of such debt issues.
<PAGE>



                                   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
assuming the stated marginal Federal tax rates for 2002 listed below:

                  2002-2003 FEDERAL TAXABLE VS. TAX-FREE YIELDS

                                                                FEDERAL
                    SINGLE                JOINT                 TAX
                    RETURN                RETURN BRACKET        RATE
                    ------                --------------        ----
                    $0 - 6,000            $0 - 12,000           10.00%
                    $6,001 - 27,950       $12,001 - 46,700      15.00%
                    $27,951 - 67,700      $46,701 - 112,850     27.00%
                    $67,701 - 141,250     $112,851 - 171,950    30.00%
                    $141,251 - 307,050    $171,951 - 307,050    35.00%
                    Over $307,050         Over $307,050         38.60%

<TABLE>
<CAPTION>
  SINGLE                JOINT
  RETURN                RETURN BRACKET                  TAXABLE EQUIVALENT ESTIMATE CURRENT RETURN
  -------               --------------        ----------------------------------------------------------------
                                               4.00%    4.50%     5.00%    5.50%    6.00%     6.50%    7.00%
                                               -----    -----     -----    -----    -----     -----    -----
<S>                     <C>                    <C>      <C>       <C>      <C>      <C>       <C>      <C>
  $0  -  6,000          $0  -  12,000          4.44%    5.00%     5.56%    6.11%    6.67%     7.22%    7.78%
  $6,001 - 27,950       $12,001 - 46,700       4.71%    5.29%     5.88%    6.47%    7.06%     7.65%    8.24%
  $27,951 - 67,700      $46,701 - 112,850      5.48%    6.16%     6.85%    7.53%    8.22%     8.90%    9.59%
  $67,701 - 141,250     $112,851 - 171,950     5.71%    6.43%     7.14%    7.86%    8.57%     9.29%   10.00%
  $141,251 - 307,050    $171,951 - 307,050     6.15%    6.92%     7.69%    8.46%    9.23%    10.00%   10.77%
  Over $307,050         Over $307,050          6.51%    7.33%     8.14%    8.96%    9.77%    10.59%   11.40%
</TABLE>
<PAGE>


                                   APPENDIX C

                        GENERAL CHARACTERISTICS AND RISKS

                             OF HEDGING TRANSACTIONS

         In order to manage the risk of its securities portfolio, 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 Advisor's or Sub-Advisor'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 be low 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, an account of cash equivalents designated on
the books and records 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 earmarking 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 T
rust will be required to designate on its books and records an ongoing basis,
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
earmarking 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 create 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 Advisor's
and the Sub-Advisor'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 on going
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.
<PAGE>


                                     PART C

                                Other Information

Item 24.  Financial Statements And Exhibits

(1)      Financial Statements

         Part A--None.

         Part B--Statement of Assets and Liabilities.

(2)      Exhibits

         (a)       Amended and Restated Agreement and Declaration of Trust.1

         (b)       Amended and Restated By-Laws. 1

         (c)       Inapplicable.

         (d)       Form of Specimen Certificate. 2

         (e)       Dividend Reinvestment Plan. 2

         (f)       Inapplicable.

         (g)(1)      Investment Management Agreement. 2

         (g)(2)      Sub-Investment Advisory Agreement. 2

         (g)(3)      Waiver Reliance Letter. 2

         (h)       Form of Underwriting Agreement. 2

         (i)       Form of Deferred Compensation Plan for Independent
                   Trustees. 2

         (j)       Custodian Agreement 2

         (k)       Transfer Agency Agreement 2

         (l)       Opinion and Consent of Counsel to the Trust. 2

         (m)       Inapplicable.

         (n)       Consent of Independent Public Accountants. 2

         (o)       Inapplicable.

         (p)       Initial Subscription Agreement. 2

         (q)       Inapplicable.

         (r)(1)      Code of Ethics of Trust. 2

         (r)(2)      Code of Ethics of Advisor and Sub-Advisor. 2

         (s)       Powers of Attorney. 2

         1  Filed herewith

         2.  To be filed by amendment

Item 25.  Marketing Arrangements

         Reference is made to the Form of Underwriting 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 fee....................................................$
         NYSE listing fee....................................................$
         Printing (other than certificates)..................................$
         Engraving and printing certificates.................................$
         Accounting fees and expenses........................................$
         Legal fees and expenses.............................................$
         NASD fee............................................................$
         Miscellaneous.......................................................$
              Total..........................................................$


Item 27.  Persons Controlled By Or Under Common Control With The Registrant

         None.

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:

         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 Delaware General Corporation Law.
No Trustee or officer of the Trust shall be subject in such capacity to any
personal liability whatsoever to any Person, save only liability to the Trust or
its Shareholders arising from bad faith, willful misfeasance, gross negligence
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. Any repeal or modification of this Section 5.1 shall not
adversely affect any right or protection of a Trustee or officer of the Trust
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.

         5.2 Mandatory Indemnification. (a) The Trust hereby agrees to indemnify
each person who at any time serves as a Trustee or officer 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 in this Article V 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, 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 (1) was authorized by a
majority of the Trustees or (2) was instituted by the indemnitee to enforce his
or her rights to indemnification hereunder in a case in which the indemnitee is
found to be entitled to such indemnification. The rights to indemnification set
forth in this Declaration shall continue as to a person who has ceased to be a
Trustee or officer of the Trust and shall inure to the benefit of his or her
heirs, executors and personal and legal representatives. No amendment or
restatement of this Declaration or repeal of any of its provisions shall limit
or eliminate any of the benefits provided to any person who at any time is or
was a Trustee or officer of the Trust or otherwise entitled to indemnification
hereunder in respect of any act or omission that occurred prior to such
amendment, restatement or repeal.

         (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
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 concludes 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 the indemnitee 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 which any person may have or hereafter acquire under
this Declaration, the By-Laws of the Trust, any statute, agreement, vote of
stockholders or Trustees who are "disinterested persons" (as defined in Section
2(a)(19) of the 1940 Act) or any other right to which he or she 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 and
provide for the advance payment of expenses to employees, agents and other
Persons providing services to the Trust or serving in any capacity at the
request of the Trust to the full extent corporations organized under the
Delaware General Corporation Law may indemnify or provide for the advance
payment of expenses for such Persons, 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. 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.

         Insofar as indemnification for liabilities arising under the Act, may
be terminated 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 (h), which is incorporated herein by reference.
Item 30.  Business And Other Connections Of Investment Advisor

         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, and EquiServe Trust Company,
N.A., the Registrant's Transfer 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) Not applicable

         (3) Not applicable

         (4) Not applicable

         (5) (a) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from 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.
<PAGE>

                                   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 5th day of
September, 2002.


                                  /s/Anne F. Ackerley
                                  ----------------------------------------------
                                  Anne F. Ackerley
                                  Sole Initial Trustee, President, Chief
                                  Executive Officer and Chief Financial Officer



         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 5th day of September, 2002.


         Name                                              Title

     /s/Anne F. Ackerley                Sole Initial Trustee, President, Chief
----------------------------------      Executive  Officer and  Chief Financial
     Anne F. Ackerley                   Officer




         INDEX TO EXHIBITS


         (a)       Amended and Restated Agreement and Declaration of Trust.

         (b)       Amended and Restated By-Laws.






</TEXT>
</DOCUMENT>
