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<SEC-DOCUMENT>0000950136-02-003007.txt : 20021028
<SEC-HEADER>0000950136-02-003007.hdr.sgml : 20021028
<ACCEPTANCE-DATETIME>20021028143244
ACCESSION NUMBER:		0000950136-02-003007
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		17
FILED AS OF DATE:		20021028

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLACKROCK INSURED MUNICIPAL INCOME TRUST
		CENTRAL INDEX KEY:			0001181187

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-98357
		FILM NUMBER:		02799740

	BUSINESS ADDRESS:	
		STREET 1:		40 EAST 52ND STREET
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10022
		BUSINESS PHONE:		2127545300

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BLACKROCK MUNICIPAL INCOME TRUST III
		DATE OF NAME CHANGE:	20020819

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLACKROCK INSURED MUNICIPAL INCOME TRUST
		CENTRAL INDEX KEY:			0001181187

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-21178
		FILM NUMBER:		02799741

	BUSINESS ADDRESS:	
		STREET 1:		40 EAST 52ND STREET
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10022
		BUSINESS PHONE:		2127545300

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BLACKROCK MUNICIPAL INCOME TRUST III
		DATE OF NAME CHANGE:	20020819
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>file001.txt
<DESCRIPTION>AMENDED REGISTRATION STATEMENT
<TEXT>
<PAGE>




   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 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. 3                       [X]
                        POST-EFFECTIVE AMENDMENT NO.
                                    AND/OR
                         REGISTRATION STATEMENT UNDER
                       THE INVESTMENT COMPANY ACT OF 1940                   [X]
                                AMENDMENT NO. 3                             [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)

                          ROBERT S. KAPITO, PRESIDENT
                    BLACKROCK INSURED MUNICIPAL INCOME TRUST
                              40 EAST 52ND STREET
                           NEW YORK, NEW YORK 10022
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)


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

                                   COPY TO:

<TABLE>
<S>                                           <C>
              MICHAEL K. HOFFMAN, ESQ.          CYNTHIA G. COBDEN, ESQ.
   SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP   SIMPSON THACHER & BARTLETT
              FOUR TIMES SQUARE                  425 LEXINGTON AVENUE
              NEW YORK, NEW YORK 10036         NEW YORK, NEW YORK 10017
</TABLE>

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

     APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.


<TABLE>
<CAPTION>
                            CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
===========================================================================================================================
                                                                    PROPOSED              PROPOSED
                                             AMOUNT BEING       MAXIMUM OFFERING     MAXIMUM 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.........   27,000,000 shares          $ 15.00           $ 405,000,000          $  37,260(1)
===========================================================================================================================
</TABLE>



(1)   $5,520 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.

===============================================================================

<PAGE>

                   BLACKROCK INSURED MUNICIPAL INCOME TRUST

                             CROSS REFERENCE SHEET

                              PART A -- PROSPECTUS




<TABLE>
<CAPTION>
               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
           Securities ....................................  Description of Shares; Distributions;
                                                            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
           Additional Information ........................  Table of Contents for the Statement of
                                                            Additional Information

                               PART B -- STATEMENT OF ADDITIONAL INFORMATION

Item 14.   Cover Page ....................................  Cover Page
Item 15.   Table of Contents .............................  Cover Page
Item 16.   General Information and History ...............  Not Applicable
Item 17.   Investment Objective and Policies .............  Investment Objective and Policies;
                                                            Investment Policies and Techniques; 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
           Securities ....................................  Not Applicable
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

                                        PART C -- OTHER INFORMATION
Items 24-33 have been answered in Part C of this Registration Statement
</TABLE>

<PAGE>

PROSPECTUS                                                      [BLACKROCK LOGO]


                                27,000,000 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 Federal income tax, including the alternative minimum tax.

     Portfolio Contents. The Trust will invest primarily in insured municipal
bonds that pay interest that is exempt from Federal income tax, including the
alternative minimum tax. The Trust will invest in municipal bonds that, in the
opinion of the Trust's investment advisor or sub-advisor, are underrated or
undervalued. Under normal market conditions, the Trust expects to be fully
invested in these tax-exempt municipal bonds. The Trust will, under normal
market conditions, be invested primarily in municipal bonds 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 (as defined herein) may be invested in bonds rated below
Aaa or AAA (but not lower than BBB or Baa) and comparable unrated municipal
bonds and/or municipal bonds that are uninsured. Accordingly, the Trust does
not intend to invest any of its assets in municipal bonds rated below
investment grade or in comparable unrated municipal bonds. The Trust intends to
invest primarily in long-term bonds and expects bonds in its portfolio to have
a dollar weighted average maturity of 15 years or more under current market
conditions. The Trust cannot ensure that it will achieve its investment
objective.

     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 "BYM".

     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.


     Insurance. Insurance does not protect the market value of municipal bonds
or the net asset value of the Trust.


     INVESTING IN THE COMMON SHARES INVOLVES CERTAIN RISKS. SEE "RISKS"
BEGINNING ON PAGE 21.

     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.
                                  ----------


<TABLE>
<CAPTION>
                                                        PER SHARE       TOTAL
                                                       -----------   ----------
<S>                                                    <C>           <C>
Public offering price ..............................     $            $
Sales load .........................................     $            $
Estimated offering expenses ........................     $            $
Proceeds, after expenses, to the Trust(1) ..........     $            $
</TABLE>


(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.
     The Underwriters expect to deliver the common shares to purchasers on or
about        , 2002.

                                  ----------

SALOMON SMITH BARNEY                                        MERRILL LYNCH & CO.
PRUDENTIAL SECURITIES                                      WACHOVIA SECURITIES
FAHNESTOCK & CO. INC.                              JANNEY MONTGOMERY SCOTT LLC
J.J.B. HILLIARD, W.L. LYONS, INC.                       LEGG MASON WOOD WALKER
      A PNC COMPANY                                           INCORPORATED

QUICK & REILLY, INC.                                          RYAN BECK & CO.

                                 TD WATERHOUSE
          , 2002

<PAGE>

     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.


                                       2
<PAGE>


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


                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         -----
<S>                                                                      <C>
Prospectus Summary .....................................................  4
Summary of Trust Expenses .............................................. 11
The Trust .............................................................. 13
Use of Proceeds ........................................................ 13
The Trust's Investments ................................................ 13
Preferred Shares and Leverage .......................................... 19
Risks .................................................................. 21
How the Trust Manages Risk ............................................. 24
Management of the Trust ................................................ 26
Net Asset Value ........................................................ 29
Distributions .......................................................... 29
Dividend Reinvestment Plan ............................................. 29
Description of Shares .................................................. 31
Certain Provisions in the Agreement and Declaration of Trust ........... 34
Closed-End Trust Structure ............................................. 35
Repurchase of Common Shares ............................................ 36
Tax Matters ............................................................ 36
Underwriting ........................................................... 38
Custodian and Transfer Agent ........................................... 40
Legal Opinions ......................................................... 40
Table of Contents for the Statement of Additional Information .......... 41
</TABLE>


     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.


                                       3
<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
                               Salomon Smith Barney Inc., Merrill Lynch, Pierce,
                               Fenner & Smith Incorporated ("Merrill Lynch"),
                               Prudential Securities Incorporated, Wachovia
                               Securities, Inc., Fahnestock & Co. Inc., Janney
                               Montgomery Scott LLC, J.J.B. Hilliard, W.L.
                               Lyons, Inc., Legg Mason Wood Walker,
                               Incorporated, Quick & Reilly, Inc. A FleetBoston
                               Financial Company, Ryan, Beck & Co., LLC and TD
                               Waterhouse Investor Services, Inc. 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 Federal income tax,
                               including the alternative minimum tax. The Trust
                               cannot ensure that it will achieve its investment
                               objective.




INVESTMENT POLICIES.........   The Trust will invest primarily in insured
                               municipal bonds that pay interest that is exempt
                               from Federal income tax, including the
                               alternative minimum tax. Under normal
                               circumstances, the Trust expects to be fully
                               invested in tax exempt municipal bonds. The Trust
                               will not invest in a municipal bond if the
                               interest on that bond is subject to the
                               alternative minimum tax. Municipal bond insurance
                               does not protect the market value of such
                               municipal bonds or the net asset value of the
                               Trust. The value of a municipal bond will be
                               affected by the credit standing of its insurer.

                               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



                                       4
<PAGE>


                               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.

                               At least 80% of the Trust's Managed Assets will,
                               under normal circumstances, be invested in
                               municipal bonds:

                               o that pay interest that is exempt from Federal
                                 income tax, including the alternative minimum
                                 tax;

                               o insured as to timely payment of principal and
                                 interest; and

                               o 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), which ratings are independent
                                 of any insurance on the bonds.

                               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 municipal bonds and/or municipal bonds
                               that are uninsured. Accordingly, the Trust does
                               not intend to invest any of its assets in
                               municipal bonds rated below investment grade or
                               in comparable unrated municipal bonds. The
                               foregoing policies are non-fundamental, except
                               the policy with respect to investing in
                               municipal bonds that pay interest exempt from
                               Federal income tax, including the alternative
                               minimum tax, is fundamental. 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. See "The
                               Trust's Investments."


INSURANCE...................   Insured municipal bonds 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 municipal bond 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 municipal bond'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 bonds
                               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
                               Insurance or Secondary Market Insurance). There
                               is no limit on the percentage of the Trusts'
                               assets that may be invested in municipal bonds
                               insured by any one insurer.



                                       5
<PAGE>


SPECIAL TAX CONSIDERATIONS...  Distributions of any capital gain or other
                               taxable income will be taxable to shareholders.
                               See "Tax Matters."



PROPOSED OFFERING OF PREFERRED
SHARES......................   Approximately one to three months after
                               completion of this offering of the common shares
                               (subject to market conditions), the Trust intends
                               to offer preferred shares of beneficial interest
                               ("Preferred Shares") that will represent
                               approximately 38% of the Trust's capital
                               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 0.55% 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



                                       6
<PAGE>


                               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 0.20% of the average weekly values
                               of the Trust's Managed Assets for the first five
                               years of the Trust's operations (through October
                               31, 2007), and for a declining amount for an
                               additional three years (through October 31,
                               2010). 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
                               "BYM". 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


                                       7
<PAGE>

                               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. There is no limit on the
                               percentage of the Trust's assets that may be
                               invested in municipal bonds insured by any one
                               insurer. Any such downgrade could have an
                               adverse impact on the net asset value and market
                               price of the Trust's shares.



                                       8
<PAGE>


                               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 Trust's 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


                                       9
<PAGE>


                               BlackRock than would be a stock fund or taxable
                               bond fund. The secondary market for municipal
                               bonds, 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.


                                       10
<PAGE>

                           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


<TABLE>
<S>                                                                     <C>
 Sales Load Paid by You (as a percentage of offering price) .........   4.50%
 Dividend Reinvestment Plan Fees ....................................   None*
</TABLE>



<TABLE>
<CAPTION>
                                        PERCENTAGE OF
                                          NET ASSETS
                                       ATTRIBUTABLE TO
                                        COMMON SHARES
                                      (ASSUMESPREFERRED
                                     SHARES ARE ISSUED)**
                                    ---------------------
<S>                                 <C>
ANNUAL EXPENSES
 Management Fees ................            0.89%
 Other Expenses .................            0.32%
                                          -------
 Total Annual Expenses ..........            1.21%***
                                          =======
 Fee and Expense Waiver .........           (0.32)%***
                                          -------
 Net Annual Expenses ............            0.89%***
</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 ................             0.55%
     Other Expenses .................             0.20%
                                               -------
     Total Annual Expenses ..........             0.75%***
                                               =======
     Fee and Expense Waiver .........            (0.20)%***
                                               -------
     Net Annual Expenses ............             0.55%***
</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
      0.32% of average weekly net assets attributable to common shares (0.20%
      of average weekly Managed Assets) for the first 5 years of the Trust's
      operations, 0.24% (0.15%) in year 6, 0.16% (0.10%) in year 7 and 0.08%
      (0.05%) in year 8. Without the waiver, "Total Annual Expenses" would be
      estimated to be 1.21% of average weekly net assets attributable to common
      shares and 0.75% 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


                                       11
<PAGE>


amounts for the Trust's first full year of operations and assume that the Trust
issues 11,666,666 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 0.89% 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 ..........      $54        $72         $92          $164
</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 0.24% of average weekly net assets
      attributable to common shares in year 6 (0.15% of average weekly Managed
      Assets), 0.16% (0.10%) in year 7 and, 0.08% (0.05%) in year 8 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 October 31, 2010. See "Management of the
      Trust--Investment Management Agreement."



                                       12
<PAGE>

                                   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, as subsequently amended and restated,
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
Federal income tax, including the alternative minimum tax.

     The Trust will invest primarily in insured municipal bonds that pay
interest that is exempt from Federal income tax, including the alternative
minimum tax. Under normal circumstances, the Trust will invest as least 80% of
its Managed Assets in municipal bonds that pay interest that is exempt from
Federal income tax, including the alternative minimum tax. The Trust intends to
be fully invested in such tax exempt municipal bonds. The Trust will not invest
in any bond if the interest on that bond is subject to the alternative minimum
tax. Under normal circumstances the Trust will invest at least 80% of its
Managed Assets in municipal bonds that are insured as to principal and
interest. Such municipal bond insurance will be from insurers having a claims
paying ability of rated "Aaa" by Moody's or "AAA" by S&P or Fitch. This
insurance does not protect the market of such bonds or the net asset value of
the Trust. The value of an insured municipal bond will be affected by the
credit rating of its insurer.

     At least 80% of the Trust's Managed Assets will normally be invested in
municipal bonds 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), which ratings are
independent of any insurance on the bonds. 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 bonds that
are uninsured. Accordingly, the Trust does not intend to invest any of its
assets in municipal bonds rated below investment grade or in comparable unrated
bonds. 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 and
the insurer, the price at which the security could be sold and the rating, if
any, assigned to the security and the insurer by other rating agencies.

     The Trust's policy of investing 80% of its Managed Assets in bonds that
pay interest that is exempt from Federal income tax, including the alternative
minimum tax, is fundamental and may not be changed without approval of
shareholders. The Trust's 80% policies with respect to credit quality



                                       13
<PAGE>


and investment in insured municipal bonds are non-fundamental and may be
changed by the Trust's board of trustees. In addition, the Trust's 80% policy
with respect to investment in insured municipal bonds may only be changed by
the Trust's board or trustees upon 60 days' prior notice to shareholders.

     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 and
insurers.

     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 Federal income tax, including alternative minimum 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


                                       14
<PAGE>

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 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 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 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 Bond Insurance Generally. Insured municipal bonds 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
municipal bond 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 municipal bond's original issuance ("Secondary Market
Insurance") or (iii) another municipal insurance policy purchased by the Trust
("Portfolio Insurance"). See below for a discussion of these different types of
municipal bond insurance. This insurance does not protect the market value of
such bonds 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 Insurance 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.



                                       15
<PAGE>

     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


                                       16
<PAGE>

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 bond 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


                                       17
<PAGE>

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 bonds, 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.

     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 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 bonds 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 Original Issue Insurance, Secondary Market Insurance or Portfolio
Insurance. Accordingly, despite the existence of the foregoing credit support
characteristics, these bonds will not be considered to be insured bonds for
purposes of the Trust's non-fundamental policy of investing at least 80% of its
Managed Assets in insured bonds. 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


                                       18
<PAGE>

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. The Trust has no
present intention to invest in other investment companies managed by
BlackRock or its affiliates.



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
Federal income tax, including the alternative minimum 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 Federal
income tax, including the alternative minimum 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 80% in
"Aaa/AAA"; and 20% 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


                                       19
<PAGE>

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.
Only holders of common shares bear the cost of the Trust's fees and expenses,
including the costs associated with any offering of Preferred Shares (estimated
to be slightly more than 1.25% of the total amount of the Preferred Share
offering), which will be borne immediately by holders of common shares and the
costs associated with any borrowing. See "Summary of Trust Expenses."


     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.


                                       20
<PAGE>

     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 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

                                       21
<PAGE>

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.


     Market interest rates for investment grade municipal bonds in which the
Trust will primarily invest have recently declined significantly below the
recent historical average rates for such bonds. This decline may have
increased the risk that these rates will rise in the future (which would
cause the value of the Trust's net assets to decline) and the degree to
which asset values may decline in such event.


     Credit Risk. Credit risk is the risk that an issuer of a municipal bond
will become unable to meet its obligation to make interest and principal
payments. In general, lower rated municipal bonds carry a greater degree of
risk that the issuer will lose its ability to make interest and principal
payments, which could have a negative impact on the Trust's net asset value or
dividends. The Trust may invest up to 20% of its Managed Assets in securities
rated BBB/Baa which, while investment grade, may have speculative
characteristics.

     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
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





                                       22
<PAGE>

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 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. There is no limit on the
percentage of the Trust's assets that may be invested in municipal bonds
insured by any one insurer. Any such downgrade could have an adverse impact on
the net asset value and market price of the common 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 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

                                       23
<PAGE>

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 bonds of issuers in the same state (or U.S.
territory) or in municipal bonds in the same economic sector, including without
limitation the following: lease rental bonds of state and local authorities;
bonds dependent on annual appropriations by a state's legislature for payment;
bonds of state and local housing finance authorities, municipal utilities
systems or public housing authorities; bonds 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 outstanding 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, under normal
circumstances, be invested in municipal bonds 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


                                       24
<PAGE>


Sub-Advisor), which ratings are independent of any insurance on the bonds. Up
to 20% of the Trust's Managed Assets may be invested in municipal bonds rated
below "Aaa" or "AAA" (but not lower than "BBB" or "Baa") and comparable unrated
municipal bonds and/or municipal bonds that are uninsured. Accordingly, the
Trust does not intend to invest any of its assets in municipal bonds rated
below investment grade or in comparable unrated municipal bonds. At least 80%
of the Trust's Managed Assets will, under normal circumstances, be invested in
municipal bonds insured as to timely payment of principal and interest.


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.



STRATEGIC TRANSACTIONS

     The Trust may use various investment strategies designed to limit the risk
of bond price fluctuations and to preserve capital. These 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 of these
strategies would generate taxable income and the Trust has no present intention
to use these strategies.



                                       25
<PAGE>


                            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 under
management 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 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 four portfolio managers and five
credit research analysts with an average experience of 16 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, F. Howard Downs and James Pruskowski. 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

                                       26
<PAGE>

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. Mr.
Pruskowski has been a portfolio manager and a member of the Investment Strategy
Group at BlackRock since 2000. From 1996 to 2000 Mr. Pruskowski was an analyst
in BlackRock's Risk Management and Analytics Group, focusing on portfolio risk
reporting and pricing of individual fixed income assets.



     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 nominated for
the same award in several subsequent years.


                                       27
<PAGE>


     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 0.55% 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 0.20% of the
average weekly value of the Trust's Managed Assets for the first five years of
the Trust's operations (through October 31, 2007), and for a declining amount
for an additional three years (through October 31, 2010). 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 8 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:





<TABLE>
<CAPTION>
                                             PERCENTAGE WAIVED
                                            (AS A PERCENTAGE OF
TWELVE MONTH                                  AVERAGE WEEKLY
PERIOD ENDING                                MANAGED ASSETS)*
- ----------------------------------------   --------------------
<S>                                        <C>
  October 31, 2003** ...................            0.20%
  October 31, 2004 .....................            0.20%
  October 31, 2005 .....................            0.20%
  October 31, 2006 .....................            0.20%
  October 31, 2007 .....................            0.20%
  October 31, 2008 .....................            0.15%
  October 31, 2009 .....................            0.10%
  October 31, 2010 .....................            0.05%
</TABLE>


- ----------
*     Including net assets attributable to Preferred Shares.

**    From the commencement of operations.


                                       28
<PAGE>


     BlackRock Advisors has not undertaken to waive any portion of the Trust's
fees and expenses beyond October 31, 2010 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"), the administrator for shareholders in the Trust's
Dividend Reinvestment Plan (the "Plan"), in additional common shares of the
Trust.


                                       29
<PAGE>

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

                                       30
<PAGE>

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, telephone (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, as subsequently amended and restated. 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 "BYM".


                                       31
<PAGE>


     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


                                       32
<PAGE>

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.


                                       33
<PAGE>

         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


                                       34
<PAGE>

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


                                       35
<PAGE>

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.


                                       36
<PAGE>

     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.


                                       37
<PAGE>

                                  UNDERWRITING


     Salomon Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Prudential Securities Incorporated, Wachovia Securities, Inc.,
Fahnestock & Co. Inc., Janney Montgomery Scott LLC, J.J.B. Hilliard, W.L.
Lyons, Inc., Legg Mason Wood Walker, Incorporated, Quick & Reilly, Inc. A
FleetBoston Financial Company, Ryan, Beck & Co., LLC and TD Waterhouse Investor
Services, Inc. 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.





<TABLE>
<CAPTION>
                                                                    NUMBER OF
         UNDERWRITERS                                             COMMON SHARES
         ------------                                             -------------
<S>                                                               <C>
   Salomon Smith Barney Inc. ....................................
   Merrill Lynch, Pierce, Fenner & Smith
     Incorporated ................................     ..........
   Prudential Securities Incorporated ...........................
   Wachovia Securities, Inc. ....................................
   Fahnestock & Co. Inc. ........................................
   Janney Montgomery Scott LLC ..................................
   J.J.B. Hilliard, W.L. Lyons, Inc. ............................
   Legg Mason Wood Walker, Incorporated .........................
   Quick & Reilly, Inc. A FleetBoston Financial Company .........
   Ryan, Beck & Co., LLC ........................................
   TD Waterhouse Investor Services, Inc. ........................
      Total .....................................................
</TABLE>


     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 Underwriters may allow, and such dealers may
reallow, a concession not in excess of $        per common share on sales to
certain other dealers. If all of the common shares are not sold at the initial
offering price, the representatives may change the public offering price and
other selling terms. The representatives have advised the Trust that the
Underwriters do not intend to confirm any sales to any accounts over which they
exercise discretionary authority. Investors must pay for any common shares
purchased on or before       , 2002.

     BlackRock Advisors has also agreed to pay from its own assets to the
Underwriters a fee at an annual rate equal to 0.10% of the Trust's Managed
Assets. This fee will be payable in arrears at the end of each calendar quarter
during the continuance of the investment management agreement or other advisory
agreement between BlackRock Advisors and the Trust. Salomon Smith Barney Inc.
will be entitled to receive the entire amount of this fee unless other
Underwriters meet certain minimum sales thresholds during this offering or in
combination with other affiliated offerings. If an Underwriter other than
Salomon Smith Barney Inc. meets these minimum thresholds, it will receive an
annual fee equal to 0.10% of the Trust's Managed Assets multiplied by the
percentage of the Trust's common shares sold by the qualifying Underwriter.
Salomon Smith Barney Inc.'s fee will be reduced by an amount equal to the fee
paid to other qualifying Underwriters. The total amount of the fee payments
plus the amounts paid by the Trust to reimburse certain Underwriter legal
expenses, will not exceed 4.5% of the total price to the public of the common
shares offered hereby. In exchange for



                                       38
<PAGE>


this fee, Salomon Smith Barney Inc. and each qualifying Underwriter will
provide certain after-market shareholder support services designed to maintain
the visibility of the Trust in the investor community and to provide relevant
information, studies or reports regarding the Trust and the closed-end
investment company industry.


     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 Salomon Smith Barney Inc. 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. Salomon Smith
Barney Inc., 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 "BYM".


     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


                                       39
<PAGE>

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 the
Underwriters 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
Trust's common shares shall have been suspended by the Securities and Exchange
Commission or the American Stock Exchange or trading in securities generally on
the New York Stock Exchange or the American Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchanges, (2) a commercial banking moratorium shall have been declared by
either federal or New York state authorities, or (3) there shall have occurred
any outbreak or escalation of hostilities, declaration by the United States of
a national emergency or war, or other calamity or crisis the effect of which on
financial markets in the United States is such as to make it, in the sole
judgment of the representatives, impracticable or inadvisable to proceed with
the offering or delivery of the common shares as contemplated by this
prospectus (exclusive of any supplement thereto).



     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.



     J.J.B Hilliard, W.L. Lyons, Inc., one of the Underwriters, is an affiliate
of BlackRock Financial Management.


     The principal business address of Salomon Smith Barney Inc. is 388
Greenwich Street, New York, New York 10013. The principal business address of
Merrill Lynch, Pierce, Fenner & Smith Incorporated is 4 World Financial Center,
New York, New York 10080.



                          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 Simpson Thacher & Bartlett, New York, New
York. Simpson Thacher & Bartlett may rely as to certain matters of Delaware law
on the opinion of Skadden, Arps, Slate, Meagher & Flom LLP.



                                       40
<PAGE>

                           TABLE OF CONTENTS FOR THE
                      STATEMENT OF ADDITIONAL INFORMATION




<TABLE>
<CAPTION>
                                                                               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-13
Management of the Trust ...................................................   B-16
Portfolio Transactions and Brokerage ......................................   B-22
Description of Shares .....................................................   B-23
Repurchase of Common Shares ...............................................   B-24
Tax Matters ...............................................................   B-25
Performance Related and Comparative Information ...........................   B-29
Experts ...................................................................   B-33
Additional Information ....................................................   B-33
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 Strategic Transactions ....    C-1
</TABLE>




                                       41
<PAGE>

================================================================================


                               27,000,000 SHARES





                          BLACKROCK INSURED MUNICIPAL
                                 INCOME TRUST


                                 COMMON SHARES


                                   --------

                              P R O S P E C T U S

                                        , 2002



                                   --------

                              SALOMON SMITH BARNEY

                              MERRILL LYNCH & CO.

                             PRUDENTIAL SECURITIES

                              WACHOVIA SECURITIES

                             FAHNESTOCK & CO. INC.

                          JANNEY MONTGOMERY SCOTT LLC

                       J.J.B. HILLIARD, W.L. LYONS, INC.
                                 A PNC COMPANY

                             LEGG MASON WOOD WALKER
                                  INCORPORATED

                              QUICK & REILLY, INC.


                                  RYAN BECK & CO.


                                 TD WATERHOUSE


================================================================================

<PAGE>




                   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 OF CONTENTS


<TABLE>
<CAPTION>
                                                                              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-13
Management of the Trust ...................................................   B-16
Portfolio Transactions and Brokerage ......................................   B-22
Description of Shares .....................................................   B-23
Repurchase of Common Shares ...............................................   B-24
Tax Matters ...............................................................   B-25
Performance Related and Comparative Information ...........................   B-29
Experts ...................................................................   B-33
Additional Information ....................................................   B-33
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 Strategic 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. 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


                                      B-2
<PAGE>

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 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


                                      B-3
<PAGE>

       (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, 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 insured grade municipal
bonds that are exempt from Federal income tax, including the alternative
minimum tax. Under normal circumstances, these municipal bonds will be rated
investment grade.

     In general, there are three categories of municipal obligations the
interest on which is exempt from federal income tax and is not a tax preference
item for purposes of the alternative minimum tax ("AMT"): (i) certain "public
purpose" obligations (whenever issued), which include obligations issued
directly by state and local governments or their agencies to fulfill essential
governmental functions; (ii) certain obligations issued before August 8, 1986
for the benefit of non-governmental persons or entities; and (iii) certain
"private activity bonds" issued after August 7, 1986 which include "qualified
Section 501(c)(3) bonds" or refundings of certain obligations included in the
second category.

     Interest on certain "private activity bonds" issued after August 7, 1986
is exempt from regular federal income tax, but is treated as a tax preference
item that could subject the recipient to or



                                      B-4
<PAGE>


increase the recipient's liability for the AMT. For corporate shareholders, the
Fund's distributions derived from interest on all municipal obligations
(whenever issued) is included in "adjusted current earnings" for purposes of
the AMT as applied to corporations (to the extent not already included in
alternative minimum taxable income as income attributable to private activity
bonds). In assessing the federal income tax treatment of interest on any such
obligation, the Fund will rely on an opinion of the issuer's counsel (when
available) obtained by the issuer or other reliable authority and will not
undertake any independent verification thereof.

     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


                                      B-5
<PAGE>

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. To enforce its rights in the
event of a default in the payment of interest or repayment of principal, or
both, the Fund may take possession of and manage the assets or have a receiver
appointed to collect and disburse pledged revenues securing the issuer's
obligations on such securities, which may increase the operating expenses and
adversely affect the net asset value of the Fund. Any income derived from the
ownership or operation of such assets may not be tax-exempt. In addition, the
Fund's intention to qualify as a "regulated investment company" ("RIC") under
the Internal Revenue Code of 1986, as amended (the "Code") may limit the extent
to which the Fund may exercise its rights by taking possession of such assets,
because as a regulated investment company, the Fund is subject to certain
limitations on its investments and on the nature of its income.

     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 Federal income tax, including the
alternative minimum 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 bonds 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 ("Original 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 bonds will be subject to Original 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 Original Issue Insurance or Secondary
Market Insurance reduce the Trust's current yield.

     Insurance will cover the timely payment of interest and principal on bonds
and, as a matter of non-fundamental policy, 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 bonds 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 bond, the insurer is not obligated to make such
payment until a specified



                                      B-6
<PAGE>


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 bonds 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 bonds or the net asset value of the Trust.

     Bonds 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 bonds
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 bonds. 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 bonds 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 bonds 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
bonds and the market value of similar bonds 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 bonds, which will limit its
ability in certain circumstances to purchase other bonds. 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 bond becomes due. The Trust expects that the market
value of a defaulted insured bond covered by Original Issue Insurance or
Secondary Market Insurance will generally be greater than the market value of
an otherwise comparable defaulted bond covered by Portfolio Insurance.

     The Trust may also invest in bonds 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 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 Managed Assets in insured
bonds.


     Principal Insurers. Currently, Municipal Bond Investors Assurance
Corporation ("MBIA"), Financial Guaranty Insurance Company ("FGIC"), AMBAC
Indemnity Corporation ("AMBAC"), 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
bonds. 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 the Securities
and Exchange Commission or other public sources. 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.




                                      B-7
<PAGE>


     MBIA is a monoline financial guaranty insurance company. 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 $11.8 billion and qualified
statutory capital of approximately $4.9 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. As of December 31, 2000, FGIC had total assets of
approximately $2.75 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 $3.7 billion. AMBAC has a claims-paying ability rating of "AAA" by
S&P and "Aaa" by Moody's.

     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. As of December 31, 2001 XL Capital Ltd. had assets of
approximately $6.9 billion.


     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 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 $1.59 billion. FSA has a claims-paying ability rating
of "AAA" by S&P and "Aaa" by Moody's. FSA is a separately capitalized indirect
subsidiary of Dexia, a leading European banking group.


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

                                      B-8
<PAGE>

   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:


                                      B-9
<PAGE>


     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, "Strategic Transactions"). These Strategic
Transactions 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


                                      B-10
<PAGE>


and the composition of the portfolio. The Strategic Transactions 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 Strategic Transactions 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

                                      B-11
<PAGE>

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 Strategic Transactions 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 Strategic Transactions 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 Strategic Transactions. 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.

                                      B-12
<PAGE>


     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.


                                      B-13
<PAGE>



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

                                      B-14
<PAGE>

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 33 1/3% of the value of the Trust's
total assets (including such loans). Loan arrangements made by the Trust will
comply with all other applicable regulatory requirements, including the rules
of the New York Stock Exchange, 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

                                      B-15
<PAGE>

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 and certain scheduled waivers of the
investment advisory fees were approved by the Trust's board of trustees at an
"in person" meeting of the board of trustees held on October 22, 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 0.55% of the average weekly value of the Trust's Managed Assets. A
related waiver letter from BlackRock Advisors provided for temporary fee waiver
of 0.20% the average weekly value of the Trust's Managed Assets in each of the
first five years of the Trust's operations (through October 31, 2007) and for a
declining amount for an additional three years (through October 31, 2010). 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 October 22,
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


                                      B-16
<PAGE>


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 October 31, 2003, 38% of the
monthly management fees received by BlackRock Advisors, (ii) from October 31,
2003 to October 31, 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 October 22, 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 October 22, 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).




                                      B-17
<PAGE>




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. The following is a list of the
trustees and officers of the Trust and their present positions and principal
occupations during the past five years. Trustees who are interested persons of
the Trust (as defined in the Investment Company Act) are denoted by an asterisk
(*). Trustees who are independent trustees (as defined in the Investment
Company Act) (the "Independent Trustees") are denoted without an asterisk. 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. The trustees listed below are either trustees or directors of
other closed-end funds in which BlackRock Advisors acts as investment advisor.






<TABLE>
<CAPTION>
                           TERM OF
NAME, ADDRESS, AGE       OFFICE AND     PRINCIPAL OCCUPATION DURING THE
AND POSITION(S)           LENGTH OF        PAST FIVE YEARS AND OTHER
HELD WITH REGISTRANT     TIME SERVED              AFFILIATIONS
- ---------------------- -------------- -----------------------------------
<S>                    <C>            <C>
INDEPENDENT
TRUSTEES:
Andrew F. Brimmer      3 year(1)(2)   President of Brimmer & Company,
P.O. Box 4546                         Inc., a Washington, D.C. based
New York, NY 10163                    economic and financial consulting
Age: 76                               firm. Lead Director and Chairman
Trustee                               of the Audit Committee of each of
                                      the closed-end Trusts in which
                                      BlackRock Advisors Inc. acts as
                                      investment advisor.

Richard E. Cavanagh    3 years(1)(2)   President and Chief Executive
P.O. Box 4546                          Officer of The Conference Board,
New York, NY 10163                     Inc., a leading global business
Age: 56                                membership organization, from
Trustee                                1995-present. Former Executive
                                       Dean of the John F. Kennedy
                                       School of Government at Harvard
                                       University from 1988-1995. Acting
                                       Director, Harvard Center for
                                       Business and Government
                                       (1991-1993). Formerly Partner
                                       (principal) of McKinsey &
                                       Company, Inc. (1980-1988). Former
                                       Executive Director of Federal Cash
                                       Management, White House Office
                                       of Management and Budget
                                       (1977-1979). Co-author, THE
                                       WINNING PERFORMANCE
                                       (best selling management book
                                       published in 13 national editions).

Kent Dixon             3 years(1)(2)   Consultant/Investor, Former
P.O. Box 4546                          President and Chief Executive
New York, NY 10163                     Officer of Empire Federal Savings
Age: 65                                Bank of America and Banc PLUS
Trustee                                Savings Association, former
                                       Chairman of the Board, President
                                       and Chief Executive Officer of
                                       Northeast Savings.


<CAPTION>
                          NUMBER OF
                        PORTFOLIOS IN
                        FUND COMPLEX
                         OVERSEEN BY
NAME, ADDRESS, AGE       TRUSTEE OR
AND POSITION(S)          NOMINEE FOR               OTHER DIRECTORSHIPS
HELD WITH REGISTRANT       TRUSTEE                   HELD BY TRUSTEE
- ---------------------- -------------- ---------------------------------------------
<S>                    <C>            <C>
INDEPENDENT
TRUSTEES:
Andrew F. Brimmer            44       Director of CarrAmerica Realty Corporation
P.O. Box 4546                         and Borg-Warner Automotive. Formerly
New York, NY 10163                    member of the Board of Governors of the
Age: 76                               Federal Reserve System. Formerly Director of
Trustee                               AirBorne Express, BankAmerica Corporation
                                      (Bank of America), Bell South Corporation,
                                      College Retirement Equities Fund (Trustee),
                                      Commodity Exchange, Inc. (Public Governor),
                                      Connecticut Mutual Life Insurance Company
                                      E.I. Dupont de Nemours & Company,
                                      Equitable Life Assurance Society of the
                                      United States, Gannett Company, Mercedes
                                      Benz of North America, MNC Financial
                                      Corporation (American Security Bank), NMC
                                      Capital Management, Navistar International
                                      Corporation, PHH Corp. and UAL
                                      Corporation (United Airlines).

Richard E. Cavanagh          44       Trustee Emeritus, Wesleyan University,
P.O. Box 4546                         Trustee: Drucker Foundation, Airplanes
New York, NY 10163                    Group, Aircraft Finance Trust (AFT) and
Age: 56                               Education Testing Service (ETS). Director,
Trustee                               Arch Chemicals, Fremont Group and The
                                      Guardian Life Insurance Company of
                                      America.

Kent Dixon                   44       Former Director of ISFA (the owner of
P.O. Box 4546                         INVEST, a national securities brokerage
New York, NY 10163                    service designed for banks and thrift
Age: 65                               institutions).
Trustee

</TABLE>


                                      B-18
<PAGE>




<TABLE>
<CAPTION>
                           TERM OF
NAME, ADDRESS, AGE        OFFICE AND       PRINCIPAL OCCUPATION DURING THE
AND POSITION(S)           LENGTH OF           PAST FIVE YEARS AND OTHER
HELD WITH REGISTRANT     TIME SERVED                AFFILIATIONS
- ---------------------- --------------- --------------------------------------
<S>                    <C>             <C>


Frank J. Fabozzi       3 years(1)(2)   Consultant, Editor of THE
P.O. Box 4546                          JOURNAL OF PORTFOLIO
New York, NY 10163                     MANAGEMENT and Adjunct
Age: 54                                Professor of Finance at the School
Trustee                                of Management at Yale University.
                                       Author and editor of several books
                                       on fixed income portfolio
                                       management. Visiting Professor of
                                       Finance and Accounting at the
                                       Sloan School of Management,
                                       Massachusetts Institute of
                                       Technology from 1986 to August
                                       1992.

James Clayburn         3 years(1)(2)   Dean Emeritus of The John E.
La Force, Jr.                          Anderson Graduate School of
P.O. Box 4546                          Management, University of
New York, NY 10163                     California since July 1, 1993. Acting
Age: 73                                Dean of The School of Business,
Trustee                                Hong Kong University of Science
                                       and Technology 1990-1993, from
                                       1978 to September 1993, Dean of
                                       The John E. Anderson Graduate
                                       School of Management, University
                                       of California.

Walter F. Mondale      3 years(1)(2)   Partner, Dorsey & Whitney, a law
P.O. Box 4546                          firm (December 1996-present,
New York, NY 10163                     September 1987-August 1993).
Age: 74                                Formerly U.S. Ambassador to
Trustee                                Japan (1993-1996). Formerly, Vice
                                       President of the United States, U.S.
                                       Senator and Attorney General of
                                       the State of Minnesota. 1984
                                       Democratic Nominee for President
                                       of the United States.

INTERESTED
TRUSTEES
Robert S. Kapito                      Vice Chairman of BlackRock, Inc.,
Age: 45                               is Head of the Portfolio
Trustee and President                 Management Group, a member of
                                      the Management Committee, the
                                      Investment Strategy Group, the
                                      Fixed Income and Global Equity
                                      Operating Committees and the
                                      Equity Investment Strategy Group.
                                      Formerly, Vice President of the
                                      First Boston Corporation, head of
                                      its Mortgage Capital Markets
                                      Group. Currently, President and
                                      Director of each of the closed-end
                                      Trusts which BlackRock Advisors,
                                      Inc. acts as investment advisor.

Ralph L. Schlosstein*   3 years       Director since 1999 and President
Age: 51                               of BlackRock, Inc. since its
Chairman                              formation in 1998 and of
                                      BlackRock, Inc.'s predecessor
                                      entities since 1988. Member of the
                                      Management Committee and
                                      Investment Strategy Group of
                                      BlackRock, Inc. Formerly,
                                      Managing Director of Lehman
                                      Brothers, Inc. and Co-head of its
                                      Mortgage and Savings Institutions
                                      Group. Currently, Chairman and
                                      Director of each of the closed-end
                                      Trusts in which BlackRock
                                      Advisors, Inc. acts as investment
                                      advisor.



<CAPTION>
                          NUMBER OF
                        PORTFOLIOS IN
                        FUND COMPLEX
                         OVERSEEN BY
NAME, ADDRESS, AGE       TRUSTEE OR
AND POSITION(S)          NOMINEE FOR              OTHER DIRECTORSHIPS
HELD WITH REGISTRANT       TRUSTEE                  HELD BY TRUSTEE
- ---------------------- -------------- -------------------------------------------
<S>                    <C>            <C>

Frank J. Fabozzi             44       Director, Guardian Mutual Funds Group.
P.O. Box 4546
New York, NY 10163
Age: 54
Trustee

James Clayburn               44       Director, Jacobs Engineering Group, Inc.,
La Force, Jr.                         Payden & Rygel Investment Trust, Provident
P.O. Box 4546                         Investment Counsel Funds.
New York, NY 10163
Age: 73
Trustee

Walter F. Mondale            44       Director, Northwest Airlines Corp.,
P.O. Box 4546                         UnitedHealth Group, Formerly, Director,
New York, NY 10163                    RBC Dain Rauscher, Inc.
Age: 74
Trustee

INTERESTED
TRUSTEES
Robert S. Kapito              44       Mr. Kapito currently serves as President of the
Age: 45                                Board of Directors of Periwinkle National
Trustee and President                  Theatre, a national non-profit effort to help
                                       disadvantaged youth, and Chairman of the
                                       Hope & Heroes/Babies & Children's Cancer
                                       Fund.

Ralph L. Schlosstein*         44       Chairman and President of the BlackRock
Age: 51                                Provident Institutional Funds, Director of
Chairman                               several of BlackRock's alternative investment
                                       vehicles. Currently, a Member of the Visiting
                                       Board of Overseers of the John F. Kennedy
                                       School of Government at Harvard University,
                                       the Financial Institutions Center Board of the
                                       Wharton School of the University of
                                       Pennsylvania, a trustee of Trinity School in
                                       New York City and a Trustee of New Visions
                                       for Public Education in New York Council.
                                       Formerly, a Director of Pulte Corporation and
                                       a Member of Fannie Mae's Advisory Council.

</TABLE>


                                      B-19
<PAGE>

<TABLE>
<CAPTION>
                                                       PRINCIPAL OCCUPATION DURING THE
NAME AND AGE                   TITLE               PAST FIVE YEARS AND OTHER AFFILIATIONS
- --------------------   ---------------------   ----------------------------------------------
<S>                    <C>                     <C>
OFFICERS:
Anne F. Ackerley            Secretary          Managing Director of BlackRock, Inc. since
Age: 40                                        2000. Formerly First Vice President and
                                               Chief Operating Officer, Mergers and
                                               Acquisition Group at Merrill Lynch & Co..
                                               from 1997 to 2000; First Vice President and
                                               Chief Operating Officer, Public Finance
                                               Group at Merrill Lynch & Co. from 1995 to
                                               1997; First Vice President, Emerging
                                               Markets Fixed Income Research at Merrill
                                               Lynch & Co. prior thereto.

Henry Gabbay                Treasurer          Managing Director of BlackRock, Inc. and
Age: 54                                        its predecessor entities.

Kevin Klingert           Vice President        Managing Director of BlackRock, Inc. and
Age: 39                                        its predecessor entities.

James Kong             Assistant Treasurer     Managing Director of BlackRock, Inc. and
Age: 41                                        its predecessor entities

Richard Shea, Esq.      Vice President/Tax     Managing Director of BlackRock, Inc. since
Age: 42                                        2000; Chief Operating Officer and Chief
                                               Financial Officer of Anthracite Capital, Inc.
                                               since 1998. Formerly, Director of
                                               BlackRock, Inc. and its predecessors
                                               entities.
</TABLE>



- ----------
(1)   After a Trustee's initial term, each Trustee is expected to serve a three
      year term concurrent with the class of trustees for which he serves;

      --Messrs. Cavanagh and La Force, as Class I trustees, are expected to
        stand for re-election at the Trust's 2003 annual meeting of shareholders

      --Messrs. Schlosstein, Fabozzi and Mondale, as Class II trustees, are
        expected to stand for re-election at the Trust's 2004 annual meeting of
        shareholders

      --Messrs. Kapito, Brimmer and Dixon, as Class III Trustees, are expected
        to stand for re-election at the Trust's 2005 annual meeting of
        shareholders

(2)   Each Trustee has served in such capacity since the Trust's inception.



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





<TABLE>
<CAPTION>
                                                                     AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES
                                          DOLLAR RANGE OF EQUITY       IN ALL REGISTERED INVESTMENT COMPANIES
                                             SECURITIES IN THE           OVERSEEN BY DIRECTORS IN THE FAMILY
NAME OF DIRECTOR                                 TRUST(*)                      INVESTMENT COMPANIES(*)
- --------------------------------------   ------------------------   --------------------------------------------
<S>                                              <C>                          <C>
Andrew F. Brimmer ....................           $0                             $1-$10,000
Richard E. Cavanagh ..................           $0                           $50,000-$100,000
Kent Dixon ...........................           $0                            over $100,000
Frank J. Fabozzi .....................           $0                             $1-$10,000
James Clayburn La Force, Jr. .........           $0                           $50,001-$100,000
Robert S. Kapito .....................           $0                            over $100,000
Walter F. Mondale ....................           $0                           $50,001-$100,000
Ralph L. Schlosstein .................           $0                           $50,001-$100,000
</TABLE>



- ----------
(*) As of December 31, 2001. The Trustees do not own shares in the Trust as it
   is a newly formed 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.


                                      B-20
<PAGE>




<TABLE>
<CAPTION>
                                                               TOTAL COMPENSATION FROM THE
                                    ESTIMATED COMPENSATION     TRUST AND FUND COMPLEX PAID
NAME OF BOARD MEMBER                      FROM TRUST                TO BOARD MEMBER(1)
- ---------------------------------- ------------------------ ---------------------------------
<S>                                         <C>                      <C>
Andrew F. Brimmer ................          $2,000(2)                $195,000(3),(4),(5)
Richard E. Cavanagh ..............          $2,000(2)                    $160,000(4)
Kent Dixon .......................          $2,000(2)                    $160,000(4)
Frank J. Fabozzi .................          $2,000(2)                    $160,000(4)
James Clayburn La Force, Jr. .....          $2,000(2)                    $160,000(4)
Walter F. Mondale ................          $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 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. Brimmer, Cavanagh, Dixon,
      Fabozzi, La Force and Mondale may defer $0, $0, $0, $0, $2,000 and
      $1,000, respectively, pursuant to the Fund Complex's deferred
      compensation plan.

(3)   Dr. Brimmer serves as "lead director" for each board of
      trustees/directors in the Fund Complex. For his services as lead
      trustee/director, Dr. Brimmer 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. Brimmer, Cavanagh, La Force and Mondale 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 Dr. Brimmer 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 Dr. Brimmer
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 Ralph Schlosstein and Robert Kapito
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 Messrs. Brimmer, Cavanagh and Dixon. The
Audit Committee acts according to the Audit Committee charter. Dr. Brimmer 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 Messrs. Brimmer, Cavanagh, Dixon,
Fabozzi, La Force and Mondale. The Governance committee acts in accordance with
the Governance Committee charter. Dr. Brimmer has been appointed as Chairman of
the Governance Committee. The Governance


                                      B-21
<PAGE>


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.


     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),



                                      B-22
<PAGE>


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.


                                      B-23
<PAGE>


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


                                      B-24
<PAGE>

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


                                      B-25
<PAGE>


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.


     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.



                                      B-26
<PAGE>


     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. The
Trust will not invest in such "private activity bonds." However, 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.

                                      B-27
<PAGE>


     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.

                                      B-28

<PAGE>

                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.


     Insured Municipal bonds have had a taxable equivalent annualized total
return for the 10 years ended August 31, 2002, of 11.04% which is better than
the after tax return of other major fixed income categories.


     The Federal Alternative Minimum Tax (AMT) was initially designed to reduce
a number of deductions used by wealthy individuals to ensure that these
higher-income taxpayers paid a fair amount of income tax.


     However, since it is not indexed for inflation, more taxpayers are
becoming subject to the AMT. BlackRock's Insured Municipal Income Trusts intend
to distribute monthly income that is exempt from the AMT (for non-corporate
investors).


                       TAX ADJUSTED MUNICIPALS VS. OTHER
                         FIXED INCOME CATEGORY RETURNS
                         LAST 10 YEARS ENDING 8/31/02



10 YEAR INSURED MUNICIPAL BOND TAXABLE-EQUIVALENT ANNUALIZED RETURNS AND
STANDARD DEVIATION VS. ALTERNATIVES.(1)





<TABLE>
<CAPTION>
                          TAX
                          ADJ.
10 YEAR PERIOD          INSURED     AGGREGATE
8/31/92 - 8/31/2002      MUNIS       BONDS(2)     TREASURY(3)   AGENCY(4)
- --------------------- ----------- -------------- ------------- -----------
<S>                   <C>         <C>            <C>           <C>
Annualized Return ...     11.04%        7.33%         7.58%        7.45%
Standard Deviation ..      4.85         3.75          4.33         3.91



<CAPTION>
10 YEAR PERIOD                          MORTGAGES-      ASSET       HIGH        S&P
8/31/92 - 8/31/2002    CORPORATES(5)     BACKED(6)    BACKED(7)   YIELD(8)     500(9)    NASDAQ(10)
- --------------------- --------------- -------------- ----------- ---------- ----------- -----------
<S>                   <C>             <C>            <C>         <C>        <C>         <C>
Annualized Return ...       7.48%           7.22%        7.13%       5.52%      10.37%      8.85%
Standard Deviation ..       4.71            2.99         2.59        6.80       14.14      27.33
</TABLE>



     Over the past 10 years on a taxable-equivalent basis, insured municipal
bonds have returned 106% of the total return of the S&P 500 with only 34% of
the volatility.(11)

(1)  Lehman Brothers. Past performance is no guarantee of future results. The
     taxable-equivalent return for insured 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 Insured 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.


(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.


                                      B-29
<PAGE>


(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)  S&P 500 Index


(10) NASDAQ Composite Index


(11) Source: Lehman Brothers/BlackRock Advisors, Inc. Past performance does not
     guarantee future results. Calculations result from comparing the Lehman
     Brothers Insured Municipal Index with the S&P 500 Index, for the ten year
     period from 8/31/92-8/31/02. The Lehman Brothers Insured Municipal Index
     produced a taxable-equivalent annualized return of 11.04% for the period
     with 4.85 Standard Deviation (volatility). In comparison the S&P 500 Index
     produced an annualized return of 10.37% for the same period with 14.14
     Standard Deviation. These indices are unmanaged and an investment cannot be
     made directly in an index.



                                      B-30
<PAGE>

CHART B




     INSURED MUNICIPAL BONDS ARE ATTRACTVIE COMPARED TO U.S. TREASURIES(1)






<TABLE>
<CAPTION>
                                                       30 YEAR
                       30 YEAR                      INSURED MUNI
                     INSURED AAA                    AS PERCENTAGE
                      MUNICIPAL        30 YEAR       OF TREASURY
  DATE                    YIELD      TREASURY YIELD     YIELD(2)
  ----              ------------- ---------------- --------------
  <S>               <C>           <C>              <C>
  8/31/92 .........      6.35%           7.42%          85.63%
  9/30/92 .........      6.25%           7.37%          84.77%
  9/30/93 .........      5.40%           6.03%          89.48%
  9/30/04 .........      6.49%           7.82%          82.94%
  9/29/95 .........      6.00%           6.48%          92.54%
  9/30/96 .........      5.75%           6.93%          82.98%
  9/30/97 .........      5.45%           6.41%          85.03%
  9/30/98 .........      4.92%           4.98%          98.85%
  9/30/99 .........      5.83%           6.06%          96.23%
  9/29/00 .........     5.745            5.88%          97.62%
  9/28/01 .........      5.20%           5.42%          95.99%
  8/30/02 .........      5.00%           4.93%         101.36%
</TABLE>



- ----------
(1)   Source: JP Morgan/BlackRock Advisors, Inc. Past performance is no
      guarantee of future results. Chart shows the relationship between the 30
      Year Insured AAA Municipal Yield Benchmark 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 8/31/02 the average yield (measured monthly) of Insured AAA
      municipal bonds as a percentage of Treasuries was 89.75%.



                                      B-31
<PAGE>


                        TAXABLE EQUIVALENT YIELD TABLES
                  FOR BLACKROCK INSURED MUNICIPAL INCOME TRUSTS




     The information below shows how much more a taxable investment needs to
yield to match the yield of a tax-free investment.1 On August 30, 2002, the
Lehman Brothers Aggregate Bond Index, a common measure of the taxable bond
market, yielded 4.69%.(2)





<TABLE>
<CAPTION>
                                                                                    TAXABLE EQUIVALENT YIELD
                                                         YOUR COMBINED    ---------------------------------------------
                     SINGLE              JOINT          FED./STATE TAX       5.0         5.5         6.0         7.0
                   RETURN ($)          RETURN ($)       BRACKET IS (%):     (%)(3)      (%)(3)      (%)(3)      (%)(3)
               -----------------   -----------------   ----------------   ---------   ---------   ---------   ---------
<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
                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
                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
                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            6.85        7.53        8.22        9.59
               067,701-141,250     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
</TABLE>


- ----------

(1)  The tax-free yields used in the charts are for illustrative purposes only
     and do not represent or predict the tax-free yield of any of the Trusts.
     Trust yields will vary. The lower your combined federal and state tax rate,
     the less you can take advantage of tax-free investing, which can be seen by
     comparing the taxable-equivalent yields at a given tax-free yield level for
     different tax brackets. The tables do not take into account among other
     things, the effects of the federal alternative minimum tax or capital gains
     taxes. In addition, the Trusts may invest in securities that are not exempt
     from federal or state income taxes, although they do not intend to do so to
     a significant degree. Consult your tax advisor for more information.

(2)  The Lehman Brothers Aggregate Bond Index is an unmanaged index
     representative of intermediate-term government bonds, investment-grade
     corporate debt securities and mortgage backed securities. It is not
     possible to invest directly in an index.

(3)  This tax-free yield is equivalent to the taxable yields below in the chart.



                        AVERAGE ANNUAL TOTAL RETURNS(1)
                             As of August 31, 2002






<TABLE>
<CAPTION>
                                                            1-YEAR       3-YEAR       5-YEAR       10-YEAR
                                                          ----------   ----------   ----------   ----------
<S>                                                       <C>          <C>          <C>          <C>
Lipper Closed-End Insured Muni Debt Funds (Leveraged)         9.44%        9.54%        6.47%        6.92%
Lipper Open-End Insured Muni Debt Funds                       5.12%        6.79%        5.30%        5.96%
</TABLE>



- ----------
(1)   Source: Lipper, Inc. Past performance is no guarantee of future results.
      The Lipper Peer Groups shown contains funds with fees and expenses
      different from those of the Trusts. Fund fees and expenses affect
      performance and the Trusts' performance may vary from the Peer Groups.



                                      B-32
<PAGE>

                                    EXPERTS



     The Statement of Net Assets of the Trust as of October 21, 2002 of
appearing in this Statement of Additional Information has been audited by
Deloitte & Touche LLP, 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,
Deloitte & Touche LLP, located at 200 Berkeley Street, Boston, MA 02116,
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
on the EDGAR Database at the Commission's website at http://www.sec.gov or 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.



                                      B-33
<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 October 21, 2002
and the related statements of operations and changes in net assets for the
period from August 19, 2002 (date of inception) to October 21, 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 October 21, 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.

/s/ Deloitte & Touch LLP
    Boston, Massachusetts
    October 25, 2002

                                      F-1
<PAGE>


                   BLACKROCK INSURED MUNICIPAL INCOME TRUST
                      STATEMENT OF ASSETS AND LIABILITIES
                               OCTOBER 21, 2002


<TABLE>
<S>                                                                                      <C>
ASSETS:
Cash .................................................................................   $ 115,001
LIABILITIES:
Payable for organization costs .......................................................      15,000
                                                                                         ---------
Net Assets ...........................................................................   $ 100,001
                                                                                         =========
NET ASSETS WERE COMPRISED OF:
 Common stock at par (Note 1) ........................................................   $       8
 Paid-in capital in excess of par ....................................................     114,993
                                                                                         ---------
                                                                                           115,001
 Accumulated net investment loss .....................................................     (15,000)
                                                                                         ---------
Net assets, October 21, 2002 .........................................................   $ 100,001
                                                                                         =========
NET ASSET VALUE PER SHARE:
Equivalent to 8,028 shares of common stock issued 8,028 shares of common stock issued
 and outstanding, par value $0.001, unlimited shares authorized.......................   $   12.46
                                                                                         =========
</TABLE>

                    BLACKROCK INSURED MUNICIPAL INCOME TRUST
                             STATEMENT OF OPERATIONS
     FOR THE PERIOD AUGUST 19, 2002 (DATE OF INCEPTION) TO OCTOBER 21, 2002

<TABLE>
<S>                                                                                     <C>
Investment Income ....................................................................   $      --
Expenses .............................................................................
 Organization expenses ...............................................................      15,000
                                                                                         ---------
Net investment loss ..................................................................   $ (15,000)
                                                                                         =========
</TABLE>

                    BLACKROCK INSURED MUNICIPAL INCOME TRUST
                       STATEMENT OF CHANGES IN NET ASSETS
     FOR THE PERIOD AUGUST 19, 2002 (DATE OF INCEPTION) TO OCTOBER 21, 2002

<TABLE>
<S>                                                                                   <C>
INCREASE (DECREASE) IN NET ASSETS ....................................................
Operations:
 Net Investment loss .................................................................   $ (15,000)
                                                                                         ---------
 Net decrease in net assets resulting from operations ................................     (15,000)
                                                                                         ---------
Capital Stock Transactions ...........................................................
 Net proceeds from the issuance of common shares .....................................     115,001
                                                                                         ---------
   Total increase ....................................................................     100,001
                                                                                         ---------
NET ASSETS ...........................................................................
Beginning of period ..................................................................          --
                                                                                         ---------
End of period ........................................................................   $100,001
                                                                                         =========
</TABLE>



                                      F-2
<PAGE>

                         NOTES TO FINANCIAL STATEMENTS


NOTE 1. ORGANIZATION


BlackRock Insured Municipal Income Trust (the "Trust") was organized as a
Delaware business trust on August 19, 2002, and is registered as a diversified,
closed-end management investment company under the Investment Company Act of
1940. The Trust had no operations other than a sale to Blackrock Advisors, Inc.
of 8,028 shares of common stock for $115,001 ($14.325 per share).


NOTE 2. AGREEMENTS


The Trust has entered into an Investment Advisory Agreement with BlackRock
Advisors, Inc. The Trust will pay BlackRock Advisors, Inc. a monthly fee (the
"Investment Management Fee") at an annual rate of 0.55% of the average weekly
value of the Trust's Managed Assets. BlackRock Advisors, Inc. has voluntarily
agreed to waive receipt of a portion of its management fee in the amount of
0.20% of the average weekly value of the Trust's managed assets for the first
five years of the Trust's operations (through October 31, 2007), and for a
declining amount for an additional three years (through October 31, 2010).


NOTE 3. ORGANIZATION EXPENSES AND OFFERING COSTS


Organization expenses of $15,000 have been expensed. Offering costs, estimated
to be approximately $585,000 will be charged to paid-in capital at the time
shares of beneficial interest are sold.


NOTE 4. CASH & CASH EQUIVALENTS


The Trust considers all highly liquid debt instruments with a maturity of three
months or less at time of purchase to be cash equivalents.


                                      F-3


<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.


                                      A-1
<PAGE>

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).


                                      A-2
<PAGE>

   --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.


                                      A-3
<PAGE>

     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


<TABLE>
<S>        <C>
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.
</TABLE>

                                      A-4
<PAGE>

 Short-Term Loans


<TABLE>
<S>            <C>
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.
</TABLE>

     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:


                                      A-5
<PAGE>

     Long-Term Credit Ratings


     Investment Grade


<TABLE>
<S>     <C>
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
CC, C   solely reliant upon sustained, favorable business or economic developments. A "CC" rating
        indicates that default of some kind appears probable. "C" ratings signal imminent default.

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

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

 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.


                                      A-6
<PAGE>


<TABLE>
<S>  <C>
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.
</TABLE>

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.


                                      A-7
<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




<TABLE>
<CAPTION>
    SINGLE RETURN       JOINT RETURN BRACKET     FEDERAL TAX RATE
- --------------------   ----------------------   -----------------
<S>                    <C>                      <C>
      $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>


<TABLE>
<CAPTION>
                                                            TAXABLE EQUIVALENT ESTIMATE CURRENT RETURN
                                           ----------------------------------------------------------------------------
    SINGLE RETURN    JOINT RETURN BRACKET     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>

                                      B-1
<PAGE>

                                  APPENDIX C


                       GENERAL CHARACTERISTICS AND RISKS
                            OF STRATEGIC 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
Strategic Transactions. 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


                                      C-1
<PAGE>

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. 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
Trust will be required to designate on


                                      C-2
<PAGE>


its books and records an ongoing basis, cash, U.S. government securities, or
other liquid 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.


     Strategic Transactions 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 Strategic
Transactions 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 Strategic Transactions will reduce net asset
value.



                                      C-3
<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



<TABLE>
<S>             <C>
      (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)
      (r)(3)    Code of Ethics J.J.B. Hilliard, W.L. Lyons, Inc.
      (s)       Powers of Attorney. (2)
</TABLE>

- ----------

(1) Filed as an exhibit to Pre-Effective Amendment Number 1 to the Trust's
    Registration Statement filed with the Securities and Exchange Commission on
    September 5, 2002.



(2) Filed herewith.



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.

<PAGE>

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:



<TABLE>
<S>                                                    <C>
       Registration fee ............................   $ 37,260
       NYSE listing fee ............................   $124,800
       Printing (other than certificates) ..........   $445,802
       Engraving and printing certificates .........   $ 17,500
       Accounting fees and expenses ................   $  5,000
       Legal fees and expenses .....................   $137,647
       NASD fee ....................................   $ 30,500
       Miscellaneous ...............................   $182,383
          Total ....................................   $930,862
                                                        =======
</TABLE>


ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT

     None.


ITEM 28. NUMBER OF HOLDERS OF SHARES




<TABLE>
<CAPTION>
  AS OF OCTOBER 21, 2002                        NUMBER OF
   TITLE OF CLASS                             RECORD HOLDERS
   --------------                            ---------------
   <S>                                           <C>
   Shares of Beneficial Interest .........        1
</TABLE>


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


                                      C-2
<PAGE>

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.


                                      C-3
<PAGE>

     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 8 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.


                                      C-4
<PAGE>

     (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.


                                      C-5
<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 28th day of
October, 2002.





                                        /s/ ROBERT S. KAPITO
                                      ----------------------------------------
                                            Robert S. Kapito
                                                President



     Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed by the following persons in
the capacities set forth below on the 28th day of October, 2002.







<TABLE>
<CAPTION>
                NAME                              TITLE
               -----                              -----
<S>                                    <C>
        /s/ ROBERT S. KAPITO           Trustee, President, Chief
 ----------------------------------        Executive Officer
         Robert S. Kapito

          /s/ HENRY GABBAY             Treasurer and Principal
 ----------------------------------       Financial Officer
           Henry Gabbay

                   *                   Trustee
 ----------------------------------
           Andrew F. Brimmer

                   *                   Trustee
 ----------------------------------
          Richard E. Cavanagh

                   *                   Trustee
 ----------------------------------
              Kent Dixon

                   *                   Trustee
 ----------------------------------
           Frank J. Fabozzi

                   *                   Trustee
 ----------------------------------
       James Clayburn La Force, Jr.

                   *                   Trustee
 ----------------------------------
           Walter F. Mondale

                   *                   Trustee
 ----------------------------------
         Ralph L. Schlosstein

*By:  /s/ ROBERT S. KAPITO
 ----------------------------------
           Robert S. Kapito
           Attorney-in-fact
</TABLE>


<PAGE>

INDEX OF EXHIBITS


(d)    Form of Specimen Certificate
(e)    Form of Dividend Reinvestment Plan
(g)(1) Investment Management Agreement
(g)(2) Sub-Investment Advisory Agreement
(g)(3) Waiver Reliance Letter
(h)    Form of Underwriting Agreement
(i)    Form of Deferred Compensation Plan for Independent Trustees
(j)    Custodian Agreement
(k)    Transfer Agency Agreement
(l)    Opinion and Consent of Counsel to the Trust
(n)    Consent of Independent Public Accountants
(p)    Initial Subscription Agreement
(r)(1) Code of Ethics of Trust
(r)(2) Code of Ethics of Advisor and Sub-Advisor
(r)(3) Code of Ethics of J.J.B. Hilliard, W.L. Lyons, Inc.
(s)    Power of Attorney



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(D)
<SEQUENCE>3
<FILENAME>file002.txt
<DESCRIPTION>FORM OF SPECIMEN CERTIFICATE
<TEXT>

<PAGE>


COMMON SHARESShares
        OF BENEFICIAL INTEREST

Number  PAR VALUE $.001

        ORGANIZED UNDER THE LAWS
        OF THE STATE OF DELAWARE

        The Shares represented by this         THIS CERTIFICATE
        certificate may not be owned or        IS TRANSFERABLE IN
        transferred, directly or indirectly,   BOSTON OR IN NEW YORK CITY
        by or to (I) the United States, or
        any state or political subdivision
        thereof, any foreign government, any   CUSIP
        international organization, or any     SEE REVERSE FOR CERTAIN
        agency or instrumentality of any of    DEFINITIONS
        the foregoing, (II) any organization
        (other than a farmer's cooperative
        described in ss. 521 of the Internal
        Revenue Code of 1988, as amended
        (the "Code")) that is exempt from
        the tax imposed by 28 U.S.C. ss.ss.
        1-1399 and not subject to the tax
        imposed by 28 U.S.C. ss. 511; or
        (III) any rural electric or
        telephone cooperative described in
        ss. 1381(A)(2)(C) of the Code.


                    BLACKROCK INSURED MUNICIPAL INCOME TRUST


         THIS CERTIFIES THAT




         IS THE OWNER OF


     FULLY PAID AND NONASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST OF


     BlackRock Insured Municipal Income Trust, transferable on the books of the
     Trust by the holder hereof in person or by duly authorized attorney upon
     surrender of this Certificate properly endorsed. This Certificate and the
     shares represented hereby are issued and shall be subject to all of the
     provisions of the Trust, as amended from time to time, to all of which the
     holder by acceptance hereof assents. This Certificate is not valid until
     countersigned and registered by the Transfer Agent and Registrar.

     Witness the facsimile signatures of the duly authorized officers of the
Trust.

         DATED:

         COUNTERSIGNED AND REGISTERED:
              EQUISERVE TRUST COMPANY N.A.
                            (BOSTON)
BY                TRANSFER AGENT AND REGISTRAR



     AUTHORIZED SIGNATURE          SECRETARY                  PRESIDENT


<PAGE>



     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S>          <C>                                <C>
TEN COM  -   as tenants in common               UNIF GIFT MIN ACT-...........Custodian....................
TEN ENT  -   as tenants by the entireties                           (Cust)                 (Minor)

JT TEN   -   as joint tenants with right of
             survivorship and not as tenants     Act ...........................
             in common                                      (State)
</TABLE>

     Additional abbreviations may also be used though not in the above list.


For Value Received                       hereby sell, assign and transfer unto
                  -----------------------

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE


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

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

        (NAME AND ADDRESS OF TRANSFEREE SHOULD BE PRINTED OR TYPEWRITTEN)

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



                     Common Shares of Beneficial Interest represented by the
- --------------------
within Certificate and do hereby irrevocably constitute and appoint
                     Attorney to transfer the said shares on the books of the
- --------------------
within-named Trust, with full power of substitution in the premises.

Dated
     ---------

                                       X
                                        ---------------------------------------

                                       X
                                        ---------------------------------------

                              NOTICE:   THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
                                        CORRESPOND WITH THE NAME(S) AS WRITTEN
                                        UPON THE FACE OF THE CERTIFICATE IN
                                        EVERY PARTICULAR, WITHOUT ALTERATION OR
                                        ENLARGEMENT OR ANY CHANGE WHATEVER.


Signature(s) Guaranteed



By
  ----------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO
S.E.C. RULE 17Ad-15.

                                       2



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(E)
<SEQUENCE>4
<FILENAME>file003.txt
<DESCRIPTION>DIVIDEND REINVESTMENT PLAN
<TEXT>

<PAGE>


                    BLACKROCK INSURED MUNICIPAL INCOME TRUST

                      AUTOMATIC DIVIDEND REINVESTMENT PLAN


                              TERMS AND CONDITIONS

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

         The Plan Agent will open an account for each Shareholder under the Plan
in the same name in which such Shareholder's Common Shares are registered.
Whenever the Trust declares a dividend or a distribution (collectively referred
to as "dividends") payable in cash, non-participants in the Plan will receive
cash and participants in the Plan will receive the equivalent in Common Shares.
The Common Shares will be acquired by the Plan Agent for the participants'
accounts, depending upon the circumstances described below, either (i) through
receipt of additional unissued but authorized Common Shares from the Trust
("newly issued Common Shares") or (ii) by purchase of outstanding Common Shares
on the open market

<PAGE>

("open-market purchases") on the New York Stock Exchange, the primary national
securities exchange on which the common shares are traded, or elsewhere.

         If, on the payment date for any dividend, the market price per Common
Share plus estimated brokerage commissions is greater than the net asset value
per Common Share (such condition being referred to herein as "market premium"),
the Plan Agent will invest the dividend amount in newly issued Common Shares,
including fractions, 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 per Common
Share is less than or equal to 95% of the market price per Common Share on the
payment date, the dollar amount of the dividend will be divided by 95% of the
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 market value per Common Share plus estimated
brokerage commissions (such condition being referred to herein as "market
discount"), the Plan Agent will invest the dividend amount in Common Shares
acquired on behalf of the participants in open-market purchases.

         In the event of a market discount on the payment date for any dividend,
the Plan Agent will have until the last business day before the next date on
which the Common Shares trade on an "ex-dividend" basis or 30 days after the
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 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 Agent has completed its open-market purchases, the market price of a
Common Share exceeds the net asset value per Common Share, the average per
Common Share purchase price paid by the Plan Agent may exceed the net asset
value of the Common Shares, resulting in the acquisition of fewer Common Shares
than if the dividend had been paid in newly issued Common Shares on the dividend
payment date. Because of the foregoing difficulty with respect to open market
purchases, if the Plan Agent is unable to invest the full dividend amount in
open market purchases during the purchase period or if the market discount
shifts to a market premium during the purchase period, the Plan Agent may cease
making open-market purchases and may invest the uninvested portion of the
dividend amount in newly issued Common Shares at the net asset

                                       2

<PAGE>

value per Common Share at the close of business on the last purchase date;
provided that, if the net asset value per Common Share is less than 95% of the
market price per Common Share on the payment date, the dollar amount of the
dividend will be divided by 95% of the market price per Common Share on the
payment date.

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

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

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

         For the avoidance of doubt, no Common Shares will be issued under the
Plan at a price less than net asset value or under any circumstance that may
violate the Investment Company Act of 1940, as amended, or any rules issued
thereunder.

VOTING

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

TAXATION

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

                                        3

<PAGE>



AMENDMENT OF THE PLAN

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

INQUIRIES REGARDING THE PLAN

         All correspondence concerning the Plan should be directed to the Plan
Agent at 150 Royall Street, Canton, MA 02021, 781-575-2149.

APPLICABLE LAW

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

EXECUTION

         To record the adoption of the Plan as of September 20, 2002, the Trust
has caused this Plan to be executed in the name and on behalf of the Trust by a
duly authorized officer.


                               BLACKROCK INSURED MUNICIPAL
                               INCOME TRUST,
                               a Delaware statutory trust


                               /s/ Anne Ackerley
                               ---------------------------------
                               By:  Anne Ackerley
                               Title: Secretary

                                       4



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(G)(1)
<SEQUENCE>5
<FILENAME>file004.txt
<DESCRIPTION>INVESTMENT MANAGEMENT AGREEMENT
<TEXT>


<PAGE>



                         INVESTMENT MANAGEMENT AGREEMENT
                         -------------------------------


           AGREEMENT, dated October 22, 2002, between BlackRock Insured
Municipal Income Trust (the "Trust"), a Delaware statutory trust, and BlackRock
Advisors, Inc. (the "Advisor"), a Delaware corporation.

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

           WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Advisor is willing to furnish such services
upon the terms and conditions herein set forth;

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

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

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

           3. Duties and Obligations of Advisor with Respect to the
Administration of the Trust. The Advisor also agrees to furnish office
facilities and equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Trust's Custodian, Transfer
Agent and Dividend Disbursing Agent and other service provid-

<PAGE>



ers) for the Trust. To the extent requested by the Trust, the Advisor agrees to
provide the following administrative services:

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

           (b) Oversee the maintenance the Trust's Custodian and Transfer Agent
and Dividend Disbursing Agent of certain books and records of the Trust as
required under Rule 31a-1(b)(4) of the 1940 Act and maintain (or oversee
maintenance by such other persons as approved by the Board of Trustees) such
other books and records required by law or for the proper operation of the
Trust;

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

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

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

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

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

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

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

                                       2

<PAGE>

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

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

           (l) Oversee the Trust's portfolio and perform necessary calculations
as required under Section 18 of the 1940 Act;

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

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

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

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

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

           (r) Assist in the preparation and filing of Forms 3, 4, and 5
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, and
Section 30(f) of the 1940 Act for the officers and trustees of the Trust, such
filings to be based on information provided by those persons;

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

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

                                       3

<PAGE>

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

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

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

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

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

                                       4

<PAGE>


from or sold to the Advisor, or any affiliated person thereof, except to the
extent permitted by the SEC or by applicable law;

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

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

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

           6. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.

           7. Agency Cross Transactions. From time to time, the Advisor or
brokers or dealers affiliated with it may find themselves in a position to buy
for certain of their brokerage clients (each an "Account") securities which the
Advisor's investment advisory clients wish to sell, and to sell for certain of
their brokerage clients securities which advisory clients wish to buy. Where one
of the parties is an advisory client, the Advisor or the affiliated broker or
dealer cannot participate in this type of transaction (known as a cross

                                       5

<PAGE>

transaction) on behalf of an advisory client and retain commissions from one or
both parties to the transaction without the advisory client's consent. This is
because in a situation where the Advisor is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Advisor or an affiliate is receiving commissions from both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Advisor's part regarding the advisory client. The
Securities and Exchange Commission has adopted a rule under the Investment
Advisers Act of 1940, as amended, which permits the Advisor or its affiliates to
participate on behalf of an Account in agency cross transactions if the advisory
client has given written consent in advance. By execution of this Agreement, the
Trust authorizes the Advisor or its affiliates to participate in agency cross
transactions involving an Account. The Trust may revoke its consent at any time
by written notice to the Advisor.

           8. Expenses. During the term of this Agreement, the Advisor will bear
all costs and expenses of its employees and any overhead incurred in connection
with its duties hereunder and shall bear the costs of any salaries or trustees
fees of any officers or trustees of the Trust who are affiliated persons (as
defined in the 1940 Act) of the Advisor; provided that the Board of Trustees of
the Trust may approve reimbursement to the Advisor of the pro rata portion of
the salaries, bonuses, health insurance, retirement benefits and all similar
employment costs for the time spent on Trust operations (other than the
provision of investment advice and administrative services required to be
provided hereunder) of all personnel employed by the Advisor who devote
substantial time to Trust operations or the operations of other investment
companies advised by the Advisor.

           9. Compensation of the Advisor. (a) The Trust agrees to pay to the
Advisor and the Advisor agrees to accept as full compensation for all services
rendered by the Advisor as such, a monthly fee (the "Investment Advisory Fee")
in arrears at an annual rate equal to 0.55% of the average weekly value of the
Trust's Managed Assets. "Managed Assets" means the total assets of the Trust
minus the sum of the accrued liabilities (other than the aggregate indebtedness
constituting financial leverage). For any period less than a month during which
this Agreement is in effect, the fee shall be prorated according to the
proportion which such period bears to a full month of 28, 29, 30 or 31 days, as
the case may be.

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

           10. Indemnity. (a) The Trust hereby agrees to indemnify the Advisor,
and each of the Advisor's directors, officers, employees, agents, associates and
controlling persons and the directors, partners, members, officers, employees
and agents thereof (including any individual who serves at the Advisor's request
as director, officer, partner,

                                       6

<PAGE>

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

               (b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that such Indemnitee is entitled to such indemnification
and if the trustees of the Trust determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for such
Indemnitee-undertaking, (B) the Trust shall be insured against losses arising by
reason of any lawful advance, or (C) a majority of a quorum consisting of
trustees of the Trust who are neither "interested persons" of the Trust (as
defined in Section 2(a)(19) of the 1940 Act) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(as opposed to a

                                       7

<PAGE>

full trial-type inquiry), that there is reason to believe that the Indemnitee
ultimately will be found entitled to indemnification.

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

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

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

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

           12. Duration and Termination. This Agreement shall become effective
as of the date hereof and, unless sooner terminated with respect to the Trust as
provided herein, shall continue in effect for a period of two years. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to the
Trust for successive periods of 12 months, provided such continuance is
specifically approved at least annually by both (a) the vote of a majority of
the Trust's Board of Trustees or the vote of a majority of the outstanding
voting securities of the Trust at the time outstanding and entitled to vote, and
(b) by the vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement may be terminated by the Trust at any time,
without the payment of any penalty, upon giving the Advisor 60 days'

                                       8

<PAGE>

notice (which notice may be waived by the Advisor), provided that such
termination by the Trust shall be directed or approved by the vote of a majority
of the Trustees of the Trust in office at the time or by the vote of the holders
of a majority of the voting securities of the Trust at the time outstanding and
entitled to vote, or by the Advisor on 60 days' written notice (which notice may
be waived by the Trust). This Agreement will also immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings of such terms in the 1940 Act.)

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

           14. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. Any amendment of this Agreement shall be
subject to the 1940 Act.

           15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York for contracts to be
performed entirely therein without reference to choice of law principles thereof
and in accordance with the applicable provisions of the 1940 Act.

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

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

                                       9

<PAGE>

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

                                      10

<PAGE>


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

                    BLACKROCK INSURED MUNICIPAL INCOME TRUST



                                            By: Anne. F. Ackerley
                                                --------------------------
                                                Name:  Anne F. Ackerley
                                                Title: Secretary

                                            BLACKROCK ADVISORS, INC.


                                            By: Anne. F. Ackerley
                                                --------------------------
                                                Name:  Anne F. Ackerley
                                                Title: Managing Director

                                       11




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(G) (2)
<SEQUENCE>6
<FILENAME>file005.txt
<DESCRIPTION>SUB-INVESTMENT ADVISORY AGREEMENT
<TEXT>


<PAGE>

                        SUB-INVESTMENT ADVISORY AGREEMENT
                        ---------------------------------

           AGREEMENT dated as of October 22, 2002, between BlackRock Insured
Municipal Income Trust, a Delaware statutory trust (the "Trust"), BlackRock
Advisors, Inc. a Delaware corporation (the "Advisor"), and BlackRock Financial
Management, Inc., a Delaware corporation (the "Sub-Advisor").

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

           WHEREAS, the Advisor wishes to retain the Sub-Advisor to provide it
with certain sub-advisory services as described below in connection with
Advisor's advisory activities on behalf of the Trust;

           WHEREAS, the advisory agreement between the Advisor and the Trust
dated October 22, 2002 (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Trust is referred to
herein as the "Advisory Agreement") contemplates that the Advisor may
sub-contract investment advisory services with respect to the Trust to a
sub-advisor pursuant to a sub-advisory agreement agreeable to the Trust and
approved in accordance with the provisions of the 1940 Act; and

           WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Sub-Advisor is willing to furnish such
services upon the terms and conditions herein set forth;

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

           1. Appointment. The Advisor hereby appoints the Sub-Advisor to act as
sub-advisor with respect to the Trust and the Sub-Advisor accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.

           2. Services of the Sub-Advisor. Subject to the succeeding provisions
of this section, the oversight and supervision of the Advisor and the



<PAGE>

direction and control of the Trust's Board of Trustees, the Sub-Advisor will
perform certain of the day-to-day operations of the Trust which may include one
or more of the following services at the request of the Advisor: (a) acting as
investment advisor for and managing the investment and reinvestment of those
assets of the Trust as the Advisor may from time to time request and in
connection therewith have complete discretion in purchasing and selling such
securities and other assets for the Trust and in voting, exercising consents and
exercising all other rights appertaining to such securities and other assets on
behalf of the Trust; (b) arranging, subject to the provisions of paragraph 3
hereof, for the purchase and sale of securities and other assets held in the
investment portfolio of the Trust; (c) providing investment research and credit
analysis concerning the Trust's investments, (d) assist the Advisor in
determining what portion of the Trust's assets will be invested in cash, cash
equivalents and money market instruments, (e) placing orders for all purchases
and sales of such investments made for the Trust, and (f) maintaining the books
and records as are required to support Trust investment operations. At the
request of the Advisor, the Sub-Advisor will also, subject to the oversight and
supervision of the Advisor and the direction and control of the Trust's Board of
Trustees, provide to the Advisor or the Trust any of the facilities and
equipment and perform any of the services described in Section 3 of the Advisory
Agreement. In addition, the Sub-Advisor will keep the Trust and the Advisor
informed of developments materially affecting the Trust and shall, on its own
initiative, furnish to the Trust from time to time whatever information the
Sub-Advisor believes appropriate for this purpose. The Sub-Advisor will
periodically communicate to the Advisor, at such times as the Advisor may
direct, information concerning the purchase and sale of securities for the
Trust, including: (a) the name of the issuer, (b) the amount of the purchase or
sale, (c) the name of the broker or dealer, if any, through which the purchase
or sale is effected, (d) the CUSIP number of the instrument, if any, and (e)
such other information as the Advisor may reasonably require for purposes of
fulfilling its obligations to the Trust under the Advisory Agreement. The
Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Trust's investment objectives, policies and restrictions (as
currently in effect and as they may be amended or supplemented from time to
time) as stated in the Trust's Prospectus and Statement of Additional
Information and the resolutions of the Trust's Board of Trustees.

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

               (a) (i) the provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended (the "Advisers Act") and all applicable Rules
and

                                       2

<PAGE>

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

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

               (c) will maintain books and records with respect to the Trust's
securities transactions and will render to the Advisor and the Trust's Board of
Trustees such periodic and special reports as they may request;

               (d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Sub-Advisor makes investment
recommenda-

                                       3

<PAGE>

tions for the Trust, its investment advisory personnel will not inquire or take
into consideration whether the issuer of securities proposed for purchase or
sale for the Trust's account are customers of the commercial department of its
affiliates; and

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

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

           5. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act (to the extent such books and records are not maintained by the
Advisor).

           6. Agency Cross Transactions. From time to time, the Sub-Advisor or
brokers or dealers affiliated with it may find themselves in a position to buy
for certain of their brokerage clients (each an "Account") securities which the
Sub-Advisor's investment advisory clients wish to sell, and to sell for certain
of their brokerage clients securities which advisory clients wish to buy. Where
one of the parties is an advisory client, the Advisor or the affiliated broker
or dealer cannot participate in this type of transaction (known as a cross
transaction) on behalf of an advisory client and retain commissions from both
parties to the transaction without

                                       4

<PAGE>

the advisory client's consent. This is because in a situation where the
Sub-Advisor is making the investment decision (as opposed to a brokerage client
who makes his own investment decisions), and the Sub-Advisor or an affiliate is
receiving commissions from one or both sides of the transaction, there is a
potential conflicting division of loyalties and responsibilities on the
Sub-Advisor's part regarding the advisory client. The Securities and Exchange
Commission has adopted a rule under the Advisers Act which permits the
Sub-Advisor or its affiliates to participate on behalf of an Account in agency
cross transactions if the advisory client has given written consent in advance.
By execution of this Agreement, the Trust authorizes the Sub-Advisor or its
affiliates to participate in agency cross transactions involving an Account. The
Trust may revoke its consent at any time by written notice to the Sub-Advisor.

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

           8. Compensation.

               (a) The Advisor agrees to pay to the Sub-Advisor and the
Sub-Advisor agrees to accept as full compensation for all services rendered by
the Sub-Advisor as such, a monthly fee in arrears at an annual rate equal to (i)
prior to October 31, 2003, 38% of the monthly advisory fees received by the
Advisor, (ii) from October 31, 2003 to October 31, 2004, 19% of the monthly
advisory fee received by the Advisor; and (iii) after October 31, 2004, 0% of
the advisory fees received by the Advisor; provided that thereafter the
Sub-Advisor may be compensated at cost for any services rendered to the Trust at
the request of the Advisor and approved of by the Board of Trustees. For any
period less than a month during which this Agreement is in effect, the fee shall
be prorated according to the proportion which such period bears to a full month
of 28, 29, 30 or 31 days, as the case may be.

                                       5
<PAGE>

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

            9. Indemnity.

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

                                       6

<PAGE>

the prosecution of such action, suit or other proceeding by such Indemnitee was
authorized by a majority of the full Board of Trustees of the Trust.

               (b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that such Indemnitee is entitled to such indemnification
and if the trustees of the Trust determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for such
Indemnitee-undertaking, (B) the Trust shall be insured against losses arising by
reason of any lawful advance, or (C) a majority of a quorum consisting of
trustees of the Trust who are neither "interested persons" of the Trust (as
defined in Section 2(a)(19) of the 1940 Act) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
the Indemnitee ultimately will be found entitled to indemnification.

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

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

           10. Limitation on Liability.

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

                                       7

<PAGE>

the performance of its duties or from reckless disregard by it of its duties
under this Agreement.

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

           11. Duration and Termination. This Agreement shall become effective
as of the date hereof and, unless sooner terminated with respect to the Trust as
provided herein, shall continue in effect for a period of two years. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to the
Trust for successive periods of 12 months, provided such continuance is
specifically approved at least annually by both (a) the vote of a majority of
the Trust's Board of Trustees or a vote of a majority of the outstanding voting
securities of the Trust at the time outstanding and entitled to vote and (b) by
the vote of a majority of the Trustees, who are not parties to this Agreement or
interested persons (as such term is defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the Trust or
the Advisor at any time, without the payment of any penalty, upon giving the
Sub-Advisor 60 days' notice (which notice may be waived by the Sub-Advisor),
provided that such termination by the Trust or the Advisor shall be directed or
approved by the vote of a majority of the Trustees of the Trust in office at the
time or by the vote of the holders of a majority of the voting securities of the
Trust at the time outstanding and entitled to vote, or by the Sub-Advisor on 60
days' written notice (which notice may be waived by the Trust and the Advisor),
and will terminate automatically upon any termination of the Advisory Agreement
between the Trust and the Advisor. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)

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

                                       8

<PAGE>

           13. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. Any amendment of this Agreement shall be
subject to the 1940 Act.

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

           15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York for contracts to be
performed entirely therein without reference to choice of law principles thereof
and in accordance with the applicable provisions of the 1940 Act.

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


                                       9


<PAGE>



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


                                    BLACKROCK ADVISORS, INC.


                                    By: Anne. F. Ackerley
                                        --------------------------
                                        Name:  Anne F. Ackerley
                                        Title:    Managing Director


                                    BLACKROCK FINANCIAL MANAGEMENT, INC.


                                    By: Anne. F. Ackerley
                                        --------------------------
                                        Name:  Anne F. Ackerley
                                        Title:    Managing Director


                                    BLACKROCK INSURED MUNICIPAL INCOME TRUST


                                    By: Anne. F. Ackerley
                                        --------------------------
                                        Name:  Anne F. Ackerley
                                        Title: Secretary

                                       10



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(G)(3)
<SEQUENCE>7
<FILENAME>file006.txt
<DESCRIPTION>WAIVER RELIANCE LETTER
<TEXT>

<PAGE>


                            BLACKROCK ADVISORS, INC.
                             WAIVER RELIANCE LETTER


                                                     October 22, 2002

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


Ladies and Gentlemen:

           BlackRock Advisors, Inc. (the "Advisor") and BlackRock Insured
Municipal Income Trust (the "Trust"), a closed-end management investment company
registered under the Investment Company Act of 1940, as amended, have entered
into an Investment Management Agreement, dated as of October 22, 2002 (the
"Advisory Agreement"), pursuant to which the Advisor has agreed to furnish
investment advisory services to the Trust on the terms and subject to the
conditions of the Advisory Agreement.

           The Advisory Agreement provides, among other things, that the Trust
will pay to the Advisor as full compensation for all investment advisory
services rendered by the Advisor to the Trust under the Advisory Agreement a
monthly fee in arrears at an annual rate equal to 0.55% of the average weekly
value of the Trust's Managed Assets (as defined in the Advisory Agreement) (such
fee being referred to herein as the "Investment Advisory Fee"). The Advisor has
covenanted to the underwriters of the Trust's common shares of beneficial
interest that the Advisor will waive receipt of certain payments that would be
expenses of the Trust, as set forth below. The Advisor understands that you
intend to disclose this undertaking in your Registration Statement on Form N-2
and the prospectus included therein. This letter confirms that you may rely on
such undertaking for purposes of making disclosure in your Registration
Statement and prospectus and authorizes you to offset the appropriate amount of
the waived payments described herein against the Investment Advisory Fee.

           For the period from the commencement of the Trust's operations
through October 31, 2003, and for the twelve month periods ending October 31 in
each indicated year during the term of the Advisory Agreement (including any
continuation thereof in accordance with Section 15 of the Investment Company Act



<PAGE>

of 1940, as amended), the Advisor will waive receipt of certain payments that
would be expenses of the Trust in the amount determined by applying the
following annual rates to the average weekly value of the Trust's Managed
Assets:

<TABLE>
<CAPTION>
Period Ending                                        Period Ending
October 31                  Waiver                   October 31               Waiver
- ----------                  ------                   ----------               ------
<S>                         <C>                      <C>                      <C>
2003                        0.20%                    2007                     0.20%

2004                        0.20%                    2008                     0.15%

2005                        0.20%                    2009                     0.10%

2006                        0.20%                    2010                     0.05%
</TABLE>

           The Advisor intends to cease to so waive receipt of payments upon the
earlier of (a) October 31, 2010 or (b) termination of the Advisory Agreement.

           Please acknowledge the foregoing by signing the enclosed copy of this
letter in the space provided below and returning the executed copy to the
Advisor.

                                            Sincerely,

                                            BLACKROCK ADVISORS, INC.


                                            By: Anne. F. Ackerley
                                                ----------------------------
                                                Name: Anne F. Ackerley
                                                Title: Managing Director


                                       2

<PAGE>



CONFIRMED AND ACCEPTED:

BLACKROCK INSURED MUNICIPAL INCOME TRUST


By: Anne. F. Ackerley
    ----------------------------
    Name: Anne F. Ackerley
    Title: Secretary


                                       3



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(H)
<SEQUENCE>8
<FILENAME>file007.txt
<DESCRIPTION>FORM OF UNDERWRITING AGREEMENT
<TEXT>


<PAGE>

                    BLACKROCK INSURED MUNICIPAL INCOME TRUST

                               ____________ Shares
                      Common Shares of Beneficial Interest


                                                            _______ __, 2002

SALOMON SMITH BARNEY INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
WACHOVIA SECURITIES, INC.
FAHNESTOCK & CO. INC.
JANNEY MONTGOMERY SCOTT LLC
J.J.B. HILLIARD, W.L. LYONS, INC.
LEGG MASON WOOD WALKER, INCORPORATED
QUICK & REILLY, INC. A FLEETBOSTON FINANCIAL COMPANY
RYAN, BECK & CO., LLC
TD WATERHOUSE INVESTOR SERVICES, INC.
 As Representatives of the
several Underwriters listed in
Schedule I hereto
c/o SALOMON SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013


Ladies and Gentlemen:

           BlackRock Insured Municipal Income Trust, a Delaware business trust
(the "Trust"), proposes, upon the terms and conditions set forth herein, to
issue and sell an aggregate of __________ shares (the "Firm Shares") of its
Common Shares of Beneficial Interest, par value $0.001 per share (the "Common
Shares"). The Trust also proposes to grant to the Underwriters (as defined
below), upon the terms and subject to the conditions set forth herein, an option
to purchase up to __________ additional shares (the "Option Shares" and together
with the Firm Shares, the "Shares") of Common Shares. The Shares will be
authorized by, and subject to the terms and conditions of, the Amended and
Restated Agreement and Declaration of Trust of the Trust (the "Declaration") in
the form filed as an exhibit to the Registration Statement referred to in
Section 1 of this agreement, as the same may be amended from time to time. The
Trust, its investment adviser, BlackRock Advisors, Inc. ("BAI"), and its
investment sub-adviser, BlackRock Financial Management, Inc. ("BFM") (each, an
"Adviser" and together, the "Advisers"), wish to confirm as follows their
agreement with Salomon Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Prudential Securities Incorporated, Wachovia Securities, Inc.,
Fahnestock & Co. Inc., Janney Montgomery Scott LLC, J.J.B. Hilliard, W.L. Lyons,
Inc., Legg Mason Wood Walker, Incorporated, Quick & Reilly, Inc. A FleetBoston
Financial Company, Ryan, Beck & Co., LLC and TD Waterhouse Investor Services,


<PAGE>

Inc., (the "Representatives"), as representatives of the several Underwriters
listed in Schedule I hereto (the "Underwriters"), in connection with the
purchase of the Shares by the Underwriters.

           Collectively, the Investment Management Agreement, dated ________,
__, 2002 between the Trust and BAI (the "Investment Advisory Agreement"), the
Sub-Investment Advisory Agreements dated _______ __, 2002 among the Trust, BAI
and BFM (the "Sub-Advisory Agreement"), the Custodian Agreement, dated _______
__, 2002 between the Trust and State Street Bank and Trust Company (the
"Custodian Agreement") and the Transfer Agent and Service Agreement, dated
_______ __, 2002 between the Trust and EquiServe Trust Company, N.A. (the
"Transfer Agency Agreement") are hereinafter referred to as the "Trust
Agreements." The Investment Advisory Agreement and the Sub-Advisory Agreement
are hereinafter collectively referred to as the "Advisory Agreements." This
Underwriting Agreement is hereinafter referred to as the "Agreement."

           1. Registration Statement and Prospectus. The Trust has prepared and
filed in accordance with the provisions of the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated under the 1933 Act (the "1933 Act
Rules and Regulations") and the 1940 Act (the "1940 Act Rules and Regulations"
and, together with the 1933 Act Rules and Regulations, the "Rules and
Regulations"), a registration statement on Form N-2 (File Nos. 333-98357 and
811-21178), as amended by Pre-Effective Amendments Nos. _______ (the
"registration statement"), including a prospectus relating to the Shares. The
Trust also has filed a notification of registration of the Trust as an
investment company under the 1940 Act on Form N-8A (the "1940 Act
Notification"). The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective under the 1933 Act or, if
the registration statement became effective under the 1933 Act prior to the
execution of this Agreement, as amended or supplemented at the time it became
effective, prior to the execution of this Agreement, and includes any
information deemed to be included by Rule 430A under the 1933 Act Rules and
Regulations. If it is contemplated, at the time this Agreement is executed, that
a post-effective amendment to the registration statement will be filed under the
1933 Act and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. If the Trust
has filed an abbreviated registration statement to register an additional amount
of Shares pursuant to Rule 462(b) under the 1933 Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall include such Rule 462 Registration Statement. The term "Prospectus" as
used in this Agreement means the prospectus and statement of additional
information in the forms included in the Registration Statement or, if the
prospectus and statement of additional information included in the Registration
Statement omit information in reliance on Rule 430A under the 1933 Act Rules and
Regulations and such information is included in a prospectus and statement of
additional information filed with the Commission pursuant to Rule 497(h) under
the 1933 Act, the term "Prospectus" as used in this Agreement means the
prospectus and statement of additional information in the forms included in the
Registration Statement as supplemented by the addition of the information
contained in the prospectus filed with the Commission pursuant to Rule 497(h).
The term "Prepricing Prospectus" as used in this Agreement means the prospectus
and statement of additional information subject to completion in the forms
included


                                      -2-

<PAGE>

in the registration statement at the time of filing of Pre-Effective Amendment
No. 1 to the registration statement with the Commission on September 5, 2002,
and as such prospectus and statement of additional information shall have been
amended from time to time prior to the date of the Prospectus. The terms
"Registration Statement," "Prospectus" and "Prepricing Prospectus" shall also
include any financial statements and other information incorporated by reference
therein.

           The Trust has furnished you with copies of such registration
statement, each amendment to such registration statement filed with the
Commission and each Prepricing Prospectus.

           2. Agreements to Sell and Purchase. (a) The Trust hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
the Underwriters and, upon the basis of the representations, warranties and
agreements of the Trust and the Advisers herein contained and subject to all the
terms and conditions set forth herein, each Underwriter agrees, severally and
not jointly, to purchase from the Trust, at a purchase price of $15 per share,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto.

           (b) The Trust also agrees, subject to all the terms and conditions
set forth herein, to issue and to sell to the Underwriters, and, upon the basis
of the representations, warranties and agreements of the Trust and the Advisers
herein contained and subject to all the terms and conditions set forth herein,
the Underwriters shall have the right to purchase from the Trust, at the same
purchase price per share as the Underwriters shall pay for the Firm Shares,
pursuant to an option (the "over-allotment option") which may be exercised at
any time and from time to time prior to 9:00 P.M., New York City time, on the
45th day after the date of the Prospectus (or, if such 45th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange (the "NYSE") is open for trading), up to an aggregate of
_______ Option Shares. Option Shares may be purchased only for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. Upon any exercise of the over-allotment option, each Underwriter agrees,
severally and not jointly, to purchase from the Trust the number of Option
Shares (subject to such adjustments as you may determine in order to avoid
fractional shares) which bears the same proportion to the number of Option
Shares to be purchased by the Underwriters as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or such number
of Firm Shares increased as set forth in Section 11 hereof) bears to the
aggregate number of Firm Shares.

           3. Terms of Public Offering. The Trust and the Advisers have been
advised by you that the Underwriters propose to make a public offering of their
respective portion of the Firm Shares as soon after the Registration Statement
has become effective and this Agreement has been executed and delivered as in
your judgment is advisable and initially to offer the Firm Shares upon the terms
set forth in the Prospectus.

           4. Delivery of the Shares and Payment Therefor. (a) Delivery to the
Underwriters of and payment to the Trust for the Firm Shares and the Option
Shares (if the option provided for in Section 2(b) hereof shall have been
exercised on or before the third business day prior to the Closing Date (as
defined below)) and compensation of the Underwriters with respect thereto shall
be made at the office of Skadden, Arps, Slate, Meagher & Flom LLP,


                                      -3-

<PAGE>

Four Times Square, New York, NY 10036, or through the facilities of The
Depository Trust Company or another mutually agreeable facility, at 9:30 A.M.,
New York City time, on _______ __, 2002 (the "Closing Date"). The place of
closing for the Firm Shares and the Option Shares and the Closing Date may be
varied by agreement between you and the Trust.

           (b) Delivery to the Underwriters of and payment to the Trust for any
Option Shares to be purchased by the Underwriters and compensation of the
Underwriters with respect thereto shall be made at the aforementioned office of
Skadden, Arps, Slate, Meagher & Flom LLP at such time on such date (an "Option
Closing Date"), which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than two nor later than ten
business days after the giving of the notice hereinafter referred to, as shall
be specified in a written notice from you on behalf of the Underwriters to the
Trust of the Underwriters' determination to purchase a number, specified in such
notice, of Option Shares. The place of closing for any Option Shares and the
Option Closing Date for such Shares may be varied by agreement between you and
the Trust.

           (c) Certificates for the Firm Shares and for any Option Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Option Shares
to be purchased hereunder shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, through the facilities of The
Depository Trust Company, against payment of the purchase price therefor in
immediately available funds to the order of the Trust.

           5. Agreements of the Trust and the Advisers. The Trust and the
Advisers, jointly and severally, agree with the several Underwriters as follows:

           (a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Firm
Shares may commence, the Trust will use its reasonable best efforts to cause the
Registration Statement or such post-effective amendment to become effective
under the 1933 Act as soon as possible and will advise you promptly and, if
requested by you, will confirm such advice in writing when the Registration
Statement or such post-effective amendment has become effective.

           (b) The Trust will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus (or any amendment or supplement to any of the
foregoing) or for additional information, (ii) of the issuance by the
Commission, the National Association of Securities Dealers, Inc. (the "NASD"),
any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official of any order suspending the effectiveness
of the Registration Statement, prohibiting or suspending the use of the
Prospectus or any Prepricing Prospectus, or any sales material (as hereinafter


                                      -4-

<PAGE>

defined), of any notice pursuant to Section 8(e) of the 1940 Act, of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Trust, the Advisers, any affiliate of the Trust or the
Advisers or any representative or attorney of the Trust or the Advisers of any
other material communication adverse to the Trust from the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official relating to the Trust (if such
communication relating to the Trust is received by such person within three
years after the date of this Agreement), the Registration Statement, the 1940
Act Notification, the Prospectus, any Prepricing Prospectus, any sales material
(as hereinafter defined) (or any amendment or supplement to any of the
foregoing) or this Agreement or any of the Trust Agreements and (iv) within the
period of time referred to in paragraph (f) below, of any material adverse
change in the condition (financial or other), assets or results of operations of
the Trust or any event which should reasonably be expected to have a material
adverse effect on the ability of either Adviser to perform its respective
obligations under this Agreement and the Advisory Agreements to which it is a
party (in either case, other than as a result of changes in market conditions
generally or the market for municipal securities generally) or of the happening
of any other event which makes any statement of a material fact made in the
Registration Statement or the Prospectus, or any Prepricing Prospectus (or any
amendment or supplement to any of the foregoing) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus, or any Prepricing Prospectus (or any amendment or supplement to any
of the foregoing) in order to state a material fact required by the 1933 Act,
the 1940 Act or the Rules and Regulations to be stated therein or necessary in
order to make the statements therein (in the case of a prospectus, in light of
the circumstances under which they were made) not misleading, or of the
necessity to amend or supplement the Registration Statement, the Prospectus, or
any Prepricing Prospectus (or any amendment or supplement to any of the
foregoing) to comply with the 1933 Act, the 1940 Act, the Rules and Regulations
or any other law or order of any court or regulatory body. If at any time the
Commission, the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official shall issue any order
suspending the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus, any Prepricing Prospectus or any sales
material (as hereinafter defined) (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or sale in
any jurisdiction, the Trust will use its reasonable best efforts to obtain the
withdrawal of such order at the earliest possible time.

           (c) The Trust will furnish to you, without charge, three signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits
thereto, and will also furnish to you, without charge, such number of conformed
copies of the Registration Statement as originally filed and of each amendment
thereto, but without exhibits, as you may request.

           (d) The Trust will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, any Prepricing
Prospectus or any sales material (as hereinafter defined) (or any amendment or
supplement to any of the foregoing), of which you shall not previously have been
advised or to which you shall reasonably object after being so advised or (ii)
so long as, in the opinion of counsel for the Underwriters, a Prospectus is


                                      -5-

<PAGE>

required to be delivered in connection with sales by any Underwriter or any
dealer, file any information, documents or reports pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), without delivering a copy of
such information, documents or reports to you, as Representatives of the several
Underwriters, prior to or concurrently with such filing.

           (e) Prior to the execution and delivery of this Agreement, the Trust
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Trust consents to the use,
in accordance with the provisions of the 1933 Act and with the state securities
or blue sky laws of the jurisdictions in which the Shares are offered by the
several Underwriters and by dealers, prior to the date of the Prospectus, of
each Prepricing Prospectus so furnished by the Trust.

           (f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales of Shares by any Underwriter or any dealer,
the Trust will promptly deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may reasonably request. The Trust consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters and by
all dealers to whom Shares may be sold, both in connection with the offering or
sale of the Shares and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection with sales of Shares by any
Underwriter or any dealer. If during such period of time any event shall occur
that in the judgment of the Trust or in the opinion of counsel for the
Underwriters is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or is required to be set forth
therein in order to make the statements therein (in the case of the Prospectus,
in light of the circumstances under which they were made) not misleading, or if
it is necessary to supplement or amend the Registration Statement or the
Prospectus to comply with the 1933 Act, the 1940 Act, the Rules and Regulations
or any other federal law, rule or regulation, or any state securities or blue
sky disclosure laws, rules or regulations, the Trust will forthwith prepare and,
subject to the provisions of paragraph (d) above, promptly file with the
Commission an appropriate supplement or amendment thereto, and will promptly
furnish to the Underwriters and dealers, without charge, a reasonable number of
copies thereof. In the event that the Trust and you, as Representatives of the
several Underwriters, agree that the Registration Statement or the Prospectus
should be amended or supplemented, the Trust, if in the opinion of counsel to
the Underwriters, is required by law or any national securities exchange on
which the Shares are listed, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or supplement or
will otherwise appropriately disseminate the required information.

           (g) The Trust will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or blue sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Trust be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or


                                      -6-

<PAGE>

to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject.

           (h) The Trust will make generally available to its security holders
an earnings statement, which need not be audited, covering a twelve-month period
ending not later than 17 months after the effective date of the Registration
Statement as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Rules and Regulations.

           (i) During the period of three years hereafter, the Trust will
furnish to you (i) as soon as available, a copy of each proxy statement, annual
and semi-annual report of the Trust mailed to shareholders or filed with the
Commission or furnished to the NYSE other than reports on Form N-SAR, and (ii)
from time to time such other information concerning the Trust as you may
reasonably request.

           (j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 11 hereof or by notice given by you terminating this
Agreement pursuant to Section 12 hereof) or if this Agreement shall be
terminated by the Underwriters because of any failure or refusal on the part of
the Trust or the Advisers to comply with any material term or fulfill any
material condition of this Agreement required to be complied with or fulfilled
by them, the Trust and the Advisers agree, jointly and severally, to reimburse
the Representatives for all out-of-pocket expenses (including reasonable fees
and expenses of counsel for the Underwriters) incurred by you in connection
herewith.

           (k) The Trust will apply the net proceeds from the sale of the Firm
Shares, and of the Option Shares, if any, in accordance with the description set
forth in the Prospectus and in such a manner as to comply with the investment
objectives, policies and restrictions of the Trust as described in the
Prospectus, as the same may be amended from time to time.

           (l) The Trust will file the requisite copies of the Prospectus with
the Commission in a timely fashion pursuant to Rule 497(c) or Rule 497(h) of the
1933 Act Rules and Regulations, whichever is applicable or, if applicable, will
file in a timely fashion the certification permitted by Rule 497(j) of the 1933
Act Rules and Regulations and will advise you of the time and manner of such
filing.

           (m) Except as provided in this Agreement, the Trust will not sell,
contract to sell or otherwise dispose of any Common Shares or any securities
convertible into or exercisable or exchangeable for Common Shares, or grant any
options or warrants to purchase Common Shares, for a period of 180 days after
the date of the Prospectus, without the prior written consent of Salomon Smith
Barney Inc.; provided, however, that the Trust may issue Common Shares pursuant
to any dividend reinvestment plan of the Trust in effect on the date hereof.

           (n) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, neither the Trust nor the Advisers have taken, nor
will any of them take, directly or indirectly, any action designed to or that
might reasonably be expected to cause or result in


                                      -7-

<PAGE>

stabilization or manipulation of the price of the Common Shares or any other
securities issued by the Trust to facilitate the sale or resale of the Common
Shares.

           (o) The Trust will use its reasonable best efforts to have the Common
Shares listed, subject to notice of issuance, on the NYSE concurrently with the
effectiveness of the registration statement.

           (p) The Trust will comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") to qualify as a
regulated investment company under the Code.

           (q) The Trust and the Advisers will use their reasonable best efforts
to perform all of the agreements required of them by this Agreement and
discharge all conditions of theirs to closing as set forth in this Agreement.

           (r) The Adviser hereby agrees and covenants to waive receipt of a
portion of its fees or other payments from the Trust to which it is entitled in
the amounts and for the time periods set forth in the Prospectus.

           6. Representations and Warranties of the Trust and the Advisers. The
Trust and the Advisers, jointly and severally, represent and warrant to each
Underwriter that, as of the date hereof or at such other time or times
identified below:

           (a) Each Prepricing Prospectus complied when filed with the
Commission in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations, except that this representation and
warranty does not apply to statements in or omissions from the registration
statement or the Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Trust in writing by or
on behalf of any Underwriter through you expressly for use therein. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus or the Prospectus.

           (b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 497 of the 1933
Act Rules and Regulations and the 1940 Act Notification when originally filed
with the Commission and any amendment or supplement thereto when filed with the
Commission, complied or will comply in all material respects with the
requirements of the 1933 Act, the 1940 Act and the Rules and Regulations, as
applicable, and did not or will not at any such times contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the registration statement or the Prospectus
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Trust in writing by or on behalf of any Underwriter
through you expressly for use therein.



                                      -8-

<PAGE>

           (c) All the shares of beneficial interest of the Trust outstanding as
of the date hereof have been duly authorized and validly issued, are fully paid
and nonassessable (except as provided in the last sentence of Section 3.8 of the
Declaration) and are free of any preemptive or similar rights; the Shares have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable (except as provided in the last sentence of Section
3.8 of the Declaration) and free of any preemptive or similar rights that
entitle or will entitle any person to acquire any Shares upon the issuance
thereof by the Trust, and will conform in all material respects to the
description thereof in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them); and the Common Shares of the Trust
conform in all material respects to the description thereof in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them).

           (d) Except for the Option Shares, shares to be issued pursuant to the
Trust's dividend reinvestment plan and as otherwise described in the Prospectus,
there are no outstanding options, warrants or other rights calling for the
issuance of, or any commitment, plan or arrangement to issue, any shares of
beneficial interest of the Trust or any security convertible into or
exchangeable or exercisable for shares of beneficial interest of the Trust.

           (e) The Trust is a business trust duly organized and validly existing
in good standing under the laws of the State of Delaware with full business
trust power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or qualify does not have a material adverse effect on the
condition (financial or other), assets or results of operations of the Trust;
and the Trust has no subsidiaries.

           (f) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust or the Advisers, threatened, against the Trust, or to
which the Trust or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them) but are not described as required, and there are
no agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the Prospectus (or any
amendment or supplement to either of them) or to be filed as an exhibit to the
Registration Statement that are not described or filed as required by the 1933
Act, the 1940 Act or the Rules and Regulations.

           (g) The Trust is not in violation of the Declaration or its bylaws
(the "Bylaws"), or other organizational documents or of any law, ordinance,
administrative or governmental rule or regulation applicable to the Trust or of
any decree of the Commission, the NASD, any state securities commission, any
national securities exchange, any arbitrator, any court or governmental agency,
body or official having jurisdiction over the Trust, or in default in the
performance of any material obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Trust is a party or
by which it or any of its properties may



                                      -9-

<PAGE>

be bound, except where such violation or default does not have a material
adverse effect on the condition (financial or other), assets or results of
operations of the Trust.

           (h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Trust Agreements by the
Trust, nor the consummation by the Trust of the transactions contemplated hereby
or thereby (A) requires any consent, approval, authorization or other order of,
or registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official having jurisdiction over the Trust (except such as may have been
obtained prior to the date hereof and such as may be required for compliance
with the state securities or blue sky laws of various jurisdictions which have
been or will be effected in accordance with this Agreement) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the Declaration, the Bylaws or other organizational documents of the Trust or
(B) conflicts or will conflict with or constitutes or will constitute a material
breach of, or a default under, any material agreement, indenture, lease or other
instrument to which the Trust is a party or by which it or any of its properties
may be bound, or materially violates or will materially violate any material
statute, law, regulation or judgment, injunction, order or decree applicable to
the Trust or any of its properties, or will result in the creation or imposition
of any material lien, charge or encumbrance upon any property or assets of the
Trust pursuant to the terms of any agreement or instrument to which it is a
party or by which it may be bound or to which any of its property or assets is
subject. The Trust is not subject to any order of any court or of any
arbitrator, governmental authority or administrative agency.

           (i) The accountants, Deloitte & Touche LLP, who have certified or
shall certify the financial statements included or incorporated by reference in
the Registration Statement and the Prospectus (or any amendment or supplement to
either of them) are independent public accountants as required by the 1933 Act,
the 1940 Act and the Rules and Regulations.

           (j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly the financial position of the Trust on the basis stated or incorporated
by reference in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) are accurately presented.

           (k) The execution and delivery of, and the performance by the Trust
of its obligations under, this Agreement and the Trust Agreements have been duly
and validly authorized by the Trust, and this Agreement and the Trust Agreements
have been duly executed and delivered by the Trust and, assuming due
authorization, execution and delivery by the other parties thereto, each
constitutes the valid and legally binding agreement of the Trust, enforceable
against the Trust in accordance with its terms, except as rights to indemnity
and contribution hereunder and thereunder may be limited by federal or state
securities laws, and subject to the qualification that the enforceability of the
Trust's obligations hereunder and thereunder may be


                                      -10-

<PAGE>

limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles whether enforcement is considered in a
proceeding in equity or at law.

           (l) Except as disclosed in or contemplated by the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them), subsequent to the respective dates as of which such information is given
in the Registration Statement and the Prospectus (or any amendment or supplement
to either of them), the Trust has not incurred any material liability or
material obligation, direct or contingent, or entered into any transaction, not
in the ordinary course of business, that is material to the Trust, and there has
not been any change in the capitalization, or material increase in the
short-term debt or long-term debt, of the Trust, or any material adverse change,
or any development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
assets or results of operations of the Trust, whether or not arising in the
ordinary course of business (other than as a result of changes in market
conditions generally or the market for municipal securities generally).

           (m) The Trust has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials permitted by the 1933 Act, the 1940 Act or the
Rules and Regulations.

           (n) The Trust has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus; the Trust has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Trust under any such permit, subject in each
case to such qualification as may be set forth in the Prospectus (and any
amendment or supplement thereto), and except where the revocation, termination
or impairment of the Trust's rights under such permits should not reasonably be
expected to have a material adverse effect on the condition (financial or
other), assets or results of operations of the Trust; and, except as described
in the Prospectus (and any amendment or supplement thereto), none of such
permits contains any restriction that should reasonably be expected to have a
material adverse effect on the condition (financial or other), assets or results
of operations of the Trust.

           (o) The Trust maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization and with the
investment policies and restrictions of the Trust and the applicable
requirements of the 1940 Act, the 1940 Act Rules and Regulations and the Code;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles, to
calculate net asset value, to maintain accountability for assets and to maintain
compliance with the books and records requirements under the 1940 Act and the
1940 Act Rules and Regulations; (iii) access to



                                      -11-

<PAGE>

assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded account for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

           (p) No holder of any security of the Trust has any right to require
registration of any security of the Trust because of the filing of the
registration statement or consummation of the transactions contemplated by this
Agreement.

           (q) The Trust, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
1933 Act Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.

           (r) The conduct by the Trust of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of any
patents, patent licenses, trademarks, service marks or trade names
(collectively, "Intellectual Property") which it does not own, possess or
license, except where the failure to own, possess or license such Intellectual
Property should not reasonably be expected to have a material adverse effect on
the condition (financial or other), assets or results of operations of the
Trust.

           (s) The Trust is duly registered under the 1940 Act and the 1940 Act
Rules and Regulations as a closed-end, non-diversified management investment
company and the 1940 Act Notification has been duly filed with the Commission
and, at the time of filing thereof and any amendment or supplement thereto,
conformed in all material respects with all applicable provisions of the 1940
Act and the 1940 Act Rules and Regulations; no order of suspension or revocation
of such registration under the 1940 Act and the 1940 Act Rules and Regulations
has been issued or proceedings therefor initiated or, to the knowledge of the
Trust or either of the Advisers, threatened by the Commission. The provisions of
the Declaration and Bylaws, and the investment policies and restrictions
described in the Registration Statement and the Prospectus, comply in all
material respects with the requirements of the 1940 Act and the 1940 Act Rules
and Regulations. The Trust is, and at all times through the completion of the
transactions contemplated hereby, will be, in compliance in all material
respects with the terms and conditions of the 1933 Act and the 1940 Act. No
person serving or acting as an officer, trustee or investment adviser of the
Trust is prohibited from so serving or acting by, and the composition of the
Trust's Board of Trustees is in compliance with, the provisions of the 1940 Act
and the 1940 Act Rules and Regulations and the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and Regulations").

           (t) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Trust has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Trust to facilitate the sale or resale of the Shares,
and the Trust is not aware of any such action taken or to be taken by any
affiliates of the Trust who are not underwriters or dealers participating in the
offering of the Shares.


                                      -12-

<PAGE>

           (u) All advertising, sales literature or other promotional material
(including "prospectus wrappers") intended for public distribution and
authorized in writing by or prepared by the Trust or the Advisers for use in
connection with the offering and sale of the Shares (collectively, "sales
material") complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, the Rules and Regulations and the
rules and interpretations of the NASD and no such sales material, when read
together with the Prospectus, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No advertising, sales
literature or other promotional material (including "broker kits," "road show
slides" and "road show scripts") not intended for public distribution and
authorized in writing by or prepared by the Trust or the Advisers for use in
connection with the offering and sale of the Shares was or is, when read
together with the Prospectus, materially false or misleading.

           (v) Each of the Trust Agreements and the Trust's and the Advisers'
obligations under this Agreement and each of the Trust Agreements to which it is
a party comply in all material respects with all applicable provisions of the
1933 Act, the 1940 Act, the Rules and Regulations, the Advisers Act and the
Advisers Act Rules and Regulations.

           (w) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee of the
Trust is an "interested person" (as defined in the 1940 Act) of the Trust or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter.

           (x) The Shares have been duly authorized for listing, upon notice of
issuance, on the NYSE and the Trust's registration statement on Form 8-A under
the 1934 Act has become effective.

           7. Representations and Warranties of the Advisers. BAI and BFM,
jointly and severally, represent and warrant to each Underwriter that, as of the
date hereof or at such other time or times identified below:

           (a) Each of the Advisers is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and each is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or to qualify does not have a material adverse effect on the
ability of such Adviser to perform its obligations under this Agreement and the
Advisory Agreements to which it is a party.

           (b) Each of the Advisers is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Advisory Agreements to which it is a party
for the Trust as contemplated by the Registration Statement and the Prospectus
(or any amendment or supplement thereto). There does not exist



                                      -13-

<PAGE>

any proceeding which should reasonably be expected to have a material adverse
affect on the registration of either Adviser with the Commission.

           (c) There are no legal or governmental proceedings pending or, to the
knowledge of each Adviser, threatened against such Adviser, that are required to
be described in the Registration Statement or the Prospectus (or any amendment
or supplement to either of them) but are not described as required or that
should reasonably be expected to have a material adverse effect on the ability
of such Adviser to perform its obligations under this Agreement and the Advisory
Agreements to which it is a party.

           (d) Neither the execution, delivery or performance of this Agreement
or the Advisory Agreements by each Adviser which is a party thereto, nor the
consummation by each Adviser of the transactions contemplated hereby or thereby
(A) requires either Adviser to obtain any consent, approval, authorization or
other order of, or registration or filing with, the Commission, the NASD, any
state securities commission, any national securities exchange, any arbitrator,
any court, regulatory body, administrative agency or other governmental body,
agency or official having jurisdiction over either Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a default under,
the certificate of incorporation or bylaws, or other organizational documents,
of such Adviser or (B) conflicts or will conflict with or constitutes or will
constitute a material breach of or a default under, any material agreement,
indenture, lease or other instrument to which either Adviser is a party or by
which either Adviser or any of its properties may be bound, or materially
violates or will materially violate any material statute, law, regulation or
judgment, injunction, order or decree applicable to either Adviser or any of its
properties or will result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of either Adviser pursuant to
the terms of any agreement or instrument to which it is a party or by which it
may be bound or to which any of the property or assets of either Adviser is
subject, except in any case under clause (A) or (B) as should not reasonably be
expected to have a material adverse effect on the ability of each Adviser to
perform its obligations under this Agreement and the Advisory Agreements to
which it is a party. Neither Adviser is subject to any order of any court or of
any arbitrator, governmental authority or administrative agency.

           (e) The execution and delivery of, and the performance by each
Adviser of its respective obligations under, this Agreement and the Advisory
Agreements to which it is a party have been duly and validly authorized by such
Adviser, and this Agreement and the Advisory Agreements have been duly executed
and delivered by such Adviser and, assuming due authorization, execution and
delivery by the other parties thereto, each constitutes the valid and legally
binding agreement of such Adviser, enforceable against such Adviser in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws, and subject to the
qualification that the enforceability of the Trust's obligations hereunder and
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles whether enforcement is
considered in a proceeding in equity or at law.




                                      -14-

<PAGE>

           (f) Each Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the Prospectus
(or any amendment or supplement thereto) and under this Agreement and the
Advisory Agreements to which it is a party.

           (g) The description of each Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them) complied and
comply in all material respects with the provisions of the 1933 Act, the 1940
Act, the Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.

           (h) Each of the Advisory Agreements complies in all material respects
with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.

           (i) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
there has not occurred any event which should reasonably be expected to have a
material adverse effect on the ability of either Adviser to perform its
respective obligations under this Agreement and the Advisory Agreements to which
it is a party.

           (j) Each of the Advisers has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), except to
the extent that the failure to so have should not reasonably be expected to have
a material adverse effect on the ability of such Adviser to perform its
obligations under the Advisory Agreements to which it is a party; each of the
Advisers has fulfilled and performed all its material obligations with respect
to such permits and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any other
material impairment of the rights of either Adviser under any such permit,
except where the revocation, termination or impairment of such Adviser's rights
under such permits should not reasonably be expected to have a material adverse
effect on the ability of such Adviser to perform its obligations under the
Advisory Agreements to which it is a party.

           (k) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), neither Adviser has taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in or which will constitute stabilization or
manipulation of the price of any securities issued by the Trust to facilitate
the sale or resale of the Shares, and neither Adviser is aware of any such
action taken or to be taken by any affiliates of the Advisers who are not
underwriters or dealers participating in the offering of the Shares.

           8. Indemnification and Contribution. (a) The Trust and the Advisers
agree, jointly and severally, to indemnify and hold harmless each of you and
each other Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the



                                      -15-

<PAGE>

1933 Act or Section 20 of the 1934 Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Prepricing Prospectus, the Registration Statement, the Prospectus, any sales
material or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information relating to any Underwriter
furnished in writing to the Trust by or on behalf of any Underwriter through you
expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to any Prepricing
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the 1933 Act and
the 1933 Act Rules and Regulations, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the Trust
has delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Trust or the Advisers
may otherwise have.

           (b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Trust or the Advisers, such Underwriter or
such controlling person shall promptly notify the Trust or the Advisers, and the
Trust or the Advisers shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the Trust or the Advisers have agreed in
writing to pay such fees and expenses, (ii) the Trust and the Advisers have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Trust or the Advisers
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Trust or the
Advisers by the same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the Trust and the Advisers shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Trust and the Advisers
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by the Representatives, and that



                                      -16-

<PAGE>

all such fees and expenses shall be reimbursed promptly as they are incurred.
The Trust and the Advisers shall not be liable for any settlement of any such
action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the Trust and the Advisers
agree to indemnify and hold harmless any Underwriter, to the extent provided in
the preceding paragraph, and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.

           (c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Trust and the Advisers, their directors, trustees, any
officers who sign the Registration Statement, and any person who controls the
Trust or the Advisers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity from
the Trust and the Advisers to each Underwriter, but only with respect to
information relating to such Underwriter furnished in writing by or on behalf of
such Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the Trust or
the Advisers, any of their trustees, directors, any such officer, or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this paragraph
(c), such Underwriter shall have the rights and duties given to the Trust and
the Advisers by paragraph (b) above (except that if the Trust or the Advisers
shall have assumed the defense thereof such Underwriter shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Trust and the Advisers, their trustees,
directors, any such officer, and any such controlling person shall have the
rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.

           (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Trust and the Advisers on the one hand (treated jointly for this purpose as one
person) and the Underwriters on the other hand from the offering of the Shares,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Trust and the Advisers on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Trust and the Advisers on the one hand (treated jointly
for this purpose as one person) and the Underwriters on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Trust bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The Trust and the


                                      -17-

<PAGE>

Advisers agree that as between the Trust, BAI and BFM (and solely for the
purpose of allocating among such parties the total amount to be contributed by
each of them to one another and without prejudice to the right of the
Underwriters to receive contributions from the Trust and the Advisers under this
Section 8(d) on a joint and several basis) the relative benefits received by the
Trust, on the one hand, and BAI and BFM, on the other hand, shall be deemed to
be in the same proportion that the total net proceeds from the offering (before
deducting expenses) received by the Trust bear to the present value of the
future revenue stream to be generated by the advisory fee to be paid by the
Trust to BAI pursuant to the Investment Advisory Agreement. The relative fault
of the Trust and the Advisers on the one hand (treated jointly for this purpose
as one person) and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Trust and the Advisers on the one hand
(treated jointly for this purpose as one person) or by the Underwriters on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

           (e) The Trust, the Advisers and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to the respective number of Firm Shares set forth opposite their
names in Schedule I hereto (or such numbers of Firm Shares increased as set
forth in Section 11 hereof) and not joint.

           (f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

           (g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Trust and the Advisers set forth in this
Agreement



                                      -18-

<PAGE>

shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Trust, the Advisers, their trustees, directors or officers,
or any person controlling the Trust or the Advisers, (ii) acceptance of any
Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Trust, the Advisers, their trustees, directors or
officers, or any person controlling the Trust or the Advisers, shall be entitled
to the benefits of the indemnity, contribution, and reimbursement agreements
contained in this Section 8.

           9. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase the Firm Shares and the Option Shares, as the
case may be, hereunder are subject to the following conditions:

           (a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 497 and 430A under the 1933 Act and the 1933
Act Rules and Regulations shall have been timely made; no order suspending the
effectiveness of the Registration Statement or order pursuant to Section 8(e) of
the 1940 Act shall have been issued and no proceeding for those purposes shall
have been instituted or, to the knowledge of the Trust, the Advisers or any
Underwriter, threatened by the Commission, and any request of the Commission for
additional information (to be included in the registration statement or the
Prospectus or otherwise) shall have been complied with to your satisfaction.

           (b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), business, properties,
net assets, or results of operations of the Trust or the Advisers not
contemplated by the Prospectus, which in your opinion, as Representatives of the
several Underwriters, would materially adversely affect the market for the
Shares, or (ii) any event or development relating to or involving the Trust or
the Advisers or any officer or trustee of the Trust or the Advisers which makes
any statement made in the Prospectus untrue or which, in the opinion of the
Trust and its counsel or the Underwriters and their counsel, requires the making
of any addition to or change in the Prospectus in order to state a material fact
required by the 1933 Act, the 1940 Act or the Rules and Regulations or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your opinion, as Representatives of the several
Underwriters, materially adversely affect the market for the Shares.

           (c) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Trust, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, in the form attached hereto as Exhibit A.

           (d) You shall have received on the Closing Date an opinion of
___________, counsel for the Advisers, dated the Closing Date and addressed to
you, as Representatives of the several Underwriters, in form and substance
satisfactory to you and to the effect that:


                                      -19-

<PAGE>

                      (i) Based on certificates of the Secretary of State of the
           State of Delaware, each of the Advisers is a corporation duly
           incorporated and validly existing in good standing under the laws of
           the State of Delaware, with all necessary corporate power and
           authority to own, lease and operate its properties and to conduct its
           business as described in the Registration Statement and the
           Prospectus (and any amendment or supplement to either of them). Based
           on certificates of the applicable secretaries of state, each Adviser
           is duly registered and qualified to conduct its business and is in
           good standing in each jurisdiction or place where the nature of its
           properties or the conduct of its business requires such registration
           or qualification, except where the failure to so register and qualify
           does not have a material adverse effect on the ability of such
           Adviser to perform its obligations under this Agreement and the
           Advisory Agreements to which it is a party;

                      (ii) Each of the Advisers is duly registered with the
           Commission as an investment adviser under the Advisers Act and is not
           prohibited by the Advisers Act, the Advisers Act Rules and
           Regulations, the 1940 Act or the 1940 Act Rules and Regulations from
           acting under the Advisory Agreements to which it is a party for the
           Trust as contemplated by the Prospectus (or any amendment or
           supplement thereto); and, to the best knowledge of such counsel after
           reasonable inquiry, there does not exist any proceeding which should
           reasonably be expected to adversely affect the registration of either
           Adviser with the Commission;

                      (iii) Each of the Advisers has corporate power and
           authority to enter into this Agreement and the Advisory Agreements to
           which it is a party, and this Agreement and the Advisory Agreements
           to which each Adviser is a party have been duly authorized, executed
           and delivered by each Adviser which is a party thereto and each
           Advisory Agreement is a valid and legally binding agreement of such
           Adviser, enforceable against such Adviser in accordance with its
           terms except as rights to indemnity and contribution hereunder and
           thereunder may be limited by Federal or state securities laws or
           principles of public policy and subject to the qualification that the
           enforceability of the Advisers' obligations thereunder may be limited
           by bankruptcy, fraudulent conveyance, insolvency, reorganization,
           moratorium, and other laws relating to or affecting creditors' rights
           generally and by general equitable principles whether enforcement is
           considered in a proceeding in equity or at law;

                      (iv) Neither the execution, delivery or performance of
           this Agreement or the Advisory Agreements by each Adviser which is a
           party thereto, nor the consummation by each Adviser of the
           transactions contemplated hereby and thereby (A) conflicts or will
           conflict with, or constitutes or will constitute a breach of or
           default under, the certificate of incorporation or bylaws, or other
           organizational documents, of such Adviser or (B) conflicts or will
           conflict with, or constitutes or will constitute a material breach of
           or material default under any material agreement, indenture, lease or
           other instrument to which either Adviser is a party, or will result
           in the creation or imposition of any material lien, charge or
           encumbrance upon any material property or material assets of either
           Adviser, nor will any such action result in any material violation of
           any law of the State of



                                      -20-

<PAGE>

           New York, the Delaware General Corporation Law, the 1940 Act, the
           Advisers Act or any regulation or judgment, injunction, order or
           decree applicable to either Adviser or any of its properties;

                      (v) No consent, approval, authorization or other order of,
           or registration or filing with, the Commission, any arbitrator, any
           court, regulatory body, administrative agency or other governmental
           body, agency, or official of the State of New York is required on the
           part of either Adviser for the execution, delivery and performance of
           this Agreement or the Advisory Agreements to which it is a party, or
           the consummation by such Adviser of the transactions contemplated
           hereby and thereby;

                      (vi) To the best knowledge of such counsel after
           reasonable inquiry, there are no legal or governmental proceedings
           pending or threatened against either Adviser or to which either
           Adviser or any of its properties is subject, which are required to be
           described in the Registration Statement or the Prospectus (or any
           amendment or supplement to either of them) but are not described as
           required;

                      (vii) Each of the Advisers has all material permits,
           licenses, franchises and authorizations of governmental or regulatory
           authorities as are necessary to own its properties and to conduct its
           business in the manner described in the Prospectus (and any amendment
           or supplement thereto), and to perform its obligations under the
           Advisory Agreements to which it is a party; and

                      (viii) Such counsel shall also state that the description
           of each of the Advisers contained in the Registration Statement (and
           any amendment or supplement thereto), as of the Registration
           Statement's effective date, does not contain an untrue statement of a
           material fact or omit to state a material fact required to be stated
           therein or necessary to make the statements contained therein not
           misleading and that the description of the Advisers contained in the
           Prospectus or any amendment or supplement thereto, as of its issue
           date and as of the Closing Date or the Option Closing Date, as the
           case may be, does not contain an untrue statement of a material fact
           or omit to state a material fact required to be stated therein or
           necessary to make the statements contained therein, in the light of
           the circumstances under which they were made, not misleading.

           (e) You shall have received on the Closing Date an opinion of Simpson
Thacher & Bartlett, counsel for the Underwriters, dated the Closing Date and
addressed to you, with respect to such matters as you may reasonably request.

           (f) You shall have received letters addressed to you and dated the
date hereof and the Closing Date from Deloitte & Touche LLP, independent
certified public accountants, substantially in the forms heretofore approved by
the Representatives.

           (g) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use of
the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus or any sales material shall have been issued



                                      -21-

<PAGE>

and no proceedings for such purpose or for the purpose of commencing an
enforcement action against the Trust, the Advisers or with respect to the
transactions contemplated by the Prospectus (or any amendment or supplement
thereto) and this Agreement (other than enforcement actions against any
Underwriter with respect to the transactions contemplated by the Prospectus (or
any amendment or supplement thereto) and this Agreement) may be pending before
or, to the knowledge of the Trust, the Advisers or any Underwriter or in the
reasonable view of counsel to the Underwriters, shall be threatened by the
Commission at or prior to the Closing Date and that any request for additional
information on the part of the Commission (to be included in the Registration
Statement, the Prospectus or otherwise) be complied with to the reasonable
satisfaction of the Underwriters; (ii) there shall not have been any change in
the capitalization of the Trust nor any material increase in the short-term or
long-term debt of the Trust (other than in the ordinary course of business) from
that set forth or contemplated in the Registration Statement or the Prospectus
(or any amendment or supplement thereto); (iii) there shall not have been,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus (or any amendment or supplement to
either of them), except as may otherwise be stated in the Registration Statement
and Prospectus (or any amendment or supplement to either of them), any material
adverse change (other than as a result of changes in market conditions generally
or the market for municipal securities generally) in the condition (financial or
other), assets or results of operations of the Trust; (iv) the Trust shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Trust, other than those
reflected in or contemplated by the Registration Statement or the Prospectus (or
any amendment or supplement to either of them); and (v) all the representations
and warranties of the Trust and the Advisers contained in this Agreement that
are qualified by a materiality standard shall be true and correct, and all
representations and warranties of the Trust and the Advisers contained in this
Agreement that are not so qualified shall be true and correct in all material
respects, on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received a certificate of
the Trust and the Advisers, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of each of the Trust and the
Advisers (or such other officers as are reasonably acceptable to you), to the
effect set forth in this Section 9(g) and in Section 9(h) hereof.

           (h) Neither the Trust nor either of the Advisers shall have failed at
or prior to the Closing Date to have performed or complied in all material
respects with any of its agreements herein contained and required to be
performed or complied with by it hereunder at or prior to the Closing Date.

           (i) The Shares have been duly authorized for listing, subject to
official notice of issuance, on the NYSE.

           (j) The Trust and the Advisers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.

           All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.


                                      -22-

<PAGE>

           Any certificate or document signed by any officer of the Trust or the
Advisers and delivered to you, or to your counsel, shall be deemed a
representation and warranty by the Trust or the Advisers, as applicable, to each
Underwriter as to the statements made therein.

           10. Expenses. The Trust agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the 1940 Act
Notification, the Prospectus and each amendment or supplement to any of them
(including, without limitation, the filing fees prescribed by the 1933 Act, the
1940 Act and the Rules and Regulations); (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, each Prepricing
Prospectus, the Prospectus, any sales material and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(iv) the reproduction and delivery of this Agreement, any dealer agreements and
all other agreements or documents reproduced and delivered in connection with
the offering of the Shares; (v) the registration of the Shares under the
Exchange Act and the listing of the Shares on the NYSE; (vi) the registration or
qualification of the Shares for offer and sale under the securities or blue sky
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental blue sky memoranda and such registration and
qualification, which fees, expenses and disbursements shall not exceed $5,000);
(vii) the filing fees and the fees and expenses of counsel for the Underwriters
in connection with any filings required to be made with the NASD (which fees and
expenses of counsel for the Underwriters (exclusive of filing fees) shall not
exceed $15,000); (viii) the transportation and other expenses incurred by or on
behalf of Trust representatives in connection with presentations to prospective
purchasers of the Shares; and (ix) the fees and expenses of the Trust's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Trust.

           11. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when the
registration statement or such post-effective amendment has become effective.
Until such time as this Agreement shall have become effective, it may be
terminated by the Trust, by notifying you, or by you, as Representatives of the
several Underwriters, by notifying the Trust.

           If any one or more of the Underwriters shall fail or refuse to
purchase Firm Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Firm Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Firm Shares which the
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the aggregate
number of Firm Shares set forth opposite its name in Schedule I hereto bears to
the aggregate number of Firm Shares set



                                      -23-

<PAGE>

forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Firm Shares
which it or they are obligated to purchase on the Closing Date and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares which the Underwriters are
obligated to purchase on the Closing Date and arrangements satisfactory to you
and the Trust for the purchase of such Firm Shares by one or more non-defaulting
Underwriters or other party or parties approved by you and the Trust are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter, the Trust or the
Advisers. In any such case which does not result in termination of this
Agreement, either you or the Trust shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and the Prospectus or any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
such default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Trust, purchases Firm Shares which a defaulting Underwriter
agreed, but failed or refused, to purchase.

           Any notice under this Section 11 may be given by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.

           12. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of the
Underwriters to the Trust or the Advisers, by notice given to the Trust or the
Advisers prior to delivery of and payment for the Firm Shares and any Additional
Shares, as the case may be, if at any time prior to such time (i) trading in the
Trust's Common Shares shall have been suspended by the Commission or the
American Stock Exchange or trading in securities generally on the NYSE or the
American Stock Exchange shall have been suspended or limited or minimum prices
for trading in securities generally shall have been established on either of
such Exchanges, (ii) a commercial banking moratorium shall have been declared by
either federal or New York state authorities, or (iii) there shall have occurred
any outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war, or other calamity or crisis the effect of which on
financial markets in the United States is such as to make it, in your sole
judgment, impracticable or inadvisable to proceed with the offering or delivery
of the Shares as contemplated by the Prospectus (exclusive of any supplement
thereto). Notice of such termination may be given to the Trust or the Advisers
by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.

           13. Information Furnished by the Underwriters. The statements set
forth in the [last paragraph on the cover page, and the statements in the first
paragraph and the table immediately thereafter, the third paragraph, the first
and third sentences of the ninth paragraph, the first and fifth sentences of the
tenth paragraph and the last paragraph] under the caption "Underwriting" in any
Prepricing Prospectus and in the Prospectus, constitute the only information
furnished by or on behalf of the Underwriters through you as such information is
referred to in Sections 6(b) and 8 hereof.



                                      -24-

<PAGE>

           14. Miscellaneous. Except as otherwise provided in Sections 5, 11 and
12 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Trust or the Advisers, at the
office of BlackRock Financial Management, Inc. at 40 East 52nd Street, New York,
New York 10022, Attention: [Ralph L. Schlosstein]; or (ii) if to you, as
Representatives of the several Underwriters, to Salomon Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division.

           This Agreement has been and is made solely for the benefit of the
several Underwriters, the Trust, the Advisers, their directors, trustees and
officers, and the other controlling persons referred to in Section 8 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns" as
used in this Agreement shall include a purchaser from any Underwriter of any of
the Shares in his status as such purchaser.

           15. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

           This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.



                                      -25-
<PAGE>



           Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Advisers and the several Underwriters.


                                    Very truly yours,

                                    BLACKROCK INSURED MUNICIPAL INCOME TRUST


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


                                    BLACKROCK ADVISORS, INC.


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


                                    BLACKROCK FINANCIAL MANAGEMENT, INC.


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





                                      -26-
<PAGE>



Confirmed as of the date first above mentioned on behalf of themselves and the
other several Underwriters named in Schedule I hereto.

SALOMON SMITH BARNEY INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
WACHOVIA SECURITIES, INC.
FAHNESTOCK & CO. INC.
JANNEY MONTGOMERY SCOTT LLC
J.J.B. HILLIARD, W.L. LYONS, INC.
LEGG MASON WOOD WALKER, INCORPORATED
QUICK & REILLY, INC. A FLEETBOSTON FINANCIAL COMPANY
RYAN, BECK & CO., LLC
TD WATERHOUSE INVESTOR SERVICES, INC.
As Representatives of the Several Underwriters

By:      SALOMON SMITH BARNEY INC.



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



                                      -27-
<PAGE>




                                   SCHEDULE I


                    BLACKROCK INSURED MUNICIPAL INCOME TRUST


                                                                     Number of
                               Underwriter                         Common Shares
                               -----------                         -------------
Salomon Smith Barney Inc........................................       [   ]
[                   ]                                                  [   ]



















Total.........................................................          [   ]


                                      -28-
<PAGE>



                                    EXHIBIT A

           FORM OF OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP


                                      -29-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(I)
<SEQUENCE>9
<FILENAME>file008.txt
<DESCRIPTION>FORM OF DEFERRED COMPENSATION PLAN
<TEXT>

<PAGE>


                                 BLACKROCK FUNDS
                 AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

           The Board of Trustees of each of the participating management
investment companies listed on Schedule A (as such schedule may be amended from
time to time) attached hereto and made a part hereof (each a "Participating
Fund" and collectively, the "Participating Funds"), established the BlackRock
Funds Deferred Compensation Plan, effective as of February 24, 2000. The
BlackRock Funds Deferred Compensation Plan was amended and restated effective as
of September 27, 2002 (as amended and restated, the "Plan"). The purpose of the
Plan is to provide eligible trustees of Participating Funds, the opportunity to
defer the receipt of all or a portion of the amounts payable to them as
compensation for services rendered as members of the Board of Trustees of the
respective funds.

1.         DEFINITIONS

           1.1 Definitions. Unless a different meaning is plainly implied by the
context, the following terms as used in the Plan shall have the following
meanings:

           The term "Administrator" shall mean BlackRock Advisors, Inc., in its
capacity as the administrator of the Plan on behalf of the Participating Funds.

           The term "Advisor" shall mean BlackRock Advisors, Inc. and its
affiliates.

           The term "Board" shall mean the Board of Trustees of each respective
Participating Fund.

           The term "Deferral Share Account" shall mean a book entry account
maintained to reflect the number and value of shares of Eligible Investments
that the Administrator determines could have been purchased with an Eligible
Trustee's Deferred Compensation as provided in this Plan and any earnings
thereon.

           The term "Eligible Investment" shall mean a fund managed by the
Advisor and designated by the Participating Funds from time to time as an
investment medium that may be chosen by an Eligible Trustee in which such
Trustee's Deferred Compensation may be deemed to be invested, provided that any
Eligible Investment that is a term trust and also the Participating Fund from
which an Eligible Trustee's deferred compensation is paid, is not an Eligible
Investment that may be chosen by such Trustee as an investment medium for such
deferred compensation.

           The term "Eligible Trustee" shall mean a member of the Board who is
not an "interested person" of a Participating Fund or of BlackRock, as such term
is defined


<PAGE>

under Section 2(a)(1) of the Investment Company Act of 1940, as amended (the
"1940 Act").

           The term "Exchange" shall mean the principal stock exchange on which
common shares of an Eligible Investment trade.

           The term "Fair Market Value" shall mean, with respect to a date, on a
per share basis, the closing price of an Eligible Investment, as reported on the
consolidated tape of the Exchange on such date or, if the Exchange is closed on
such date, the next succeeding date on which it is open.

           The term "Participating Funds" shall mean those registered investment
management companies for which the Advisor serves or will serve in the future as
investment manager, whether existing at the time of adoption of the Plan or
established at a later date, designated by each respective Board as a fund from
which compensation may be deferred by an Eligible Trustee. Participating Funds
shall be listed on Schedule A to the Plan, provided that failure to list a
Participating Fund on Schedule A shall not affect its status as a Participating
Fund.

           The term "Valuation Date" shall mean the last business day of each
calendar quarter and any other day upon which the Participating Fund makes
valuations of the Deferral Share Accounts.

           1.2 Trustees and Directors. Where appearing in the Plan, "Trustee"
shall also refer to "Director" and "Board of Trustees" shall also refer to
"Board of Directors."

           1.3 Separate Plan for each Participating Fund. The Plan is drafted,
and shall be construed, as a separate Plan between each Eligible Trustee and
each Participating Fund.

2.         DEFERRALS

           2.1        Deferral Elections.

               (a) An Eligible Trustee participating in the Plan (a
"Participant") may elect to defer receipt of all, or a specified dollar amount
or percentage of the compensation (including fees for attending meetings) earned
by such Eligible Trustee for serving as a member of the Board or as a member of
any committee (or subcommittee of such committee) of the Board of which such
Eligible Trustee from time to time may be a member (the "Deferred
Compensation"). Expenses of attending meetings of the Board, committees of the
Board or subcommittees of such committees or other reimbursable expenses may not
be deferred.


                                       2
<PAGE>


               (b) Deferrals shall be withheld from each payment of compensation
by the Participating Fund to the Participant based upon the percentage or dollar
amount elected by the Participant under Section 2.3 hereof.

               (c) The Participant may modify the amount of such Participant's
Deferred Compensation on a prospective basis by submitting to the Participating
Fund a revised election to defer form prior to the end of the calendar year in
which the revised election is submitted. Such change will be effective as of the
first day of the calendar year following the date such revision is submitted;
provided, however, that if such modification was made on or after October 1st,
the change will not be effective until April 1st of the following calendar year.

           2.2        Manner of Election.

               (a) An Eligible Trustee shall elect to participate in the Plan
and defer compensation by completing, signing and filing with the Participating
Fund an election to defer in such written form as may be prescribed (the
"Election"). The Election shall include:

                      (i) The amount or percentage of compensation to be
           deferred;

                      (ii) The method of payment of Deferred Compensation (i.e.,
           in a lump sum or the number of installments);

                      (iii) The time or times of payment of the Deferred
           Compensation;

                      (iv) The Eligible Investments selected by the Trustee for
           the Deferred Compensation; and

                      (v) Any beneficiary(ies) designated by the Eligible
           Trustee pursuant to Section 3.2 of the Plan.

               (b) Each Eligible Trustee's receipt of compensation shall be
deferred until the first to occur of any of the following events:

                      (i) The date which such Eligible Trustee ceases to be a
           Trustee of the Participating Fund;

                      (ii) A date selected by such Eligible Trustee as specified
           on the Trustee's Election;


                                       3
<PAGE>


                      (iii) A date on which some future event occurs which is
           not within the Eligible Trustee's control, as specified on the
           Trustee's Election;

                      (iv) Upon the death of the Eligible Trustee;

                      (v) In the sole discretion of the Participating Fund, upon
           disability or financial hardship of the Eligible Trustee;

                      (vi) The effective date of the sale or liquidation of the
           Participating Fund or to comply with applicable law; or

                      (vii) Upon termination of the Plan in accordance with
           Section 4.5 hereof.

           2.3        Period of Deferrals.

               (a) Any Election by an Eligible Trustee pursuant to the Plan
shall be irrevocable from and after the date on which such Election is filed
with the Participating Fund and shall be effective to defer compensation of an
Eligible Trustee as follows:

                      (i) As to any Eligible Trustee in office on the original
           effective date of the Plan (prior to any amendments or restatements)
           who files an Election no later than thirty (30) days after such
           effective date, such Election shall be effective to defer any
           compensation which is earned by the Eligible Trustee after the date
           of the filing of the Election, or such effective date of the Plan, if
           later;

                      (ii) As to any individual who becomes an Eligible Trustee
           after the original effective date of the Plan and who files an
           Election within thirty (30) days of becoming an Eligible Trustee,
           such Election shall be effective to defer any compensation which is
           earned by the Eligible Trustee after the date of the filing of the
           Election, or the effective date of the Plan, if later;

                      (iii) As to any other Eligible Trustee, the Election shall
           be effective to defer any compensation that is earned from and after
           the first day of the calendar year next succeeding the calendar year
           in which the Election is filed; and

                      (iv) Any Elections in effect on the date this Plan is
           amended and restated shall remain in effect so that a Participant
           need not execute new a Election.


                                       4
<PAGE>

               (b) A Participant may revoke such Participant's Election at any
time by filing a written notice of termination with the Participating Fund. Any
compensation earned by the Participant after receipt of the notice by the
Participating Fund shall be paid currently and no longer deferred as provided in
the Plan.

               (c) A Participant who has filed a notice to terminate deferral of
compensation may thereafter again file a new Election pursuant to Section 2.2(a)
hereof effective for any calendar year subsequent to the calendar year in which
the new Election is filed; provided, however, that if the notice to terminate
the deferral is filed on or after October 1st, the new Election shall not become
effective until April 1st of the following calendar year.

           2.4        Valuation of Deferral Share Account.

               (a) Deferred Compensation will be deferred on the date it
otherwise would have been paid to a Participant (the "Deferral Date"). Each
Participating Fund will establish a Deferral Share Account for each Participant
that will be credited with all or a portion of the Participant's Deferred
Compensation from time to time in accordance with this Plan. The amount
initially credited to a Participant's Deferral Share Account in connection with
each Deferred Compensation amount shall be determined by reference to the number
of whole shares of Eligible Investments selected by the Participant that the
Deferred Compensation could have purchased at the Fair Market Value per share of
such Eligible Investments on a date on or about the Deferral Date (less any
brokerage fees payable upon the acquisition of shares of such in the open
market). Deferred Compensation shall be credited to the Deferral Share Account
as soon as reasonably practicable after the Deferral Date, as determined by the
Administrator in its sole discretion. Deferred Compensation not credited to the
Deferral Share Account on or about the Deferral Date (e.g., because the
remaining amount is not sufficient to purchase an additional whole share of
Eligible Investments selected by the Participant or for any other reason) shall
be credited to the Deferral Share Account as soon as reasonably practicable, as
determined by the Administrator in its sole discretion (i.e., as soon as such
amount, when taken together with other uncredited amounts, is sufficient to
purchase a whole share of an Eligible Investment as selected by the
Participant).

               (b) On each Valuation Date, each Deferral Share Account will be
credited or debited with the amount of gain or loss that would have been
recognized had the Deferral Share Account been invested in the Eligible
Investments designated by the Participant. Each Deferral Share Account will be
credited with the Fair Market Value of shares that would have been acquired
through reinvestment of dividends and capital gains distributed as if the amount
of Deferred Compensation represented by such Deferral Share Account had been
invested and reinvested in shares of the Eligible Investments designated by the
Participant. Each Participating Fund shall, from time to time, further adjust
the Participant's Deferral Share Account to reflect the value which would have


                                       5
<PAGE>

been earned as if the amount of Deferred Compensation credited to such Deferral
Share Account had been invested and reinvested in shares of the Eligible
Investments designated by the Participant, as determined by the Administrator in
its sole discretion in accordance with this Plan.

               (c) The Deferral Share Account shall be debited to reflect any
distributions as of the date such distributions are made in accordance with
Section 3 of the Plan.

           2.5        Investment of Deferral Share Account.

               (a) The Participating Funds shall from time to time designate one
or more funds eligible for investment. A Participant, at the time of Election,
shall have the right to select from the then-current list of Eligible
Investments one or more Eligible Investments in which amounts deferred shall be
deemed invested as set forth in Section 3. The Participant may select from the
Eligible Investments to which all or part of the amounts in the Deferral Share
Account shall be deemed to be invested. If, as the result of the requirement
that notional purchases of Eligible Investments be made in whole shares as set
forth in Section 2.4 or for any other reason, not all of a Participant's
Deferred Compensation has been credited to the Deferral Share Account, the cash
balance of such Deferred Compensation shall be held until the next Valuation
Date on which the Administrator determines, in its sole discretion, that it is
reasonably practicable to make a notional purchase (debiting the cash balance of
the Participant's Deferred Compensation) of one or more Eligible Investments
then selected by the Participant.

              (b) The Participant shall make investment designations at the time
such Participant files the Election with the Participating Fund which shall
remain effective until another valid direction has been made by the Participant
as herein provided. The Participant may amend the investment designations only
once each calendar year by giving written notice at least thirty (30) days prior
to the end of such calendar year. A timely change to a Participant's investment
designation shall become effective for future Deferred Compensation as soon as
practicable following receipt of notice by the Participating Fund.

               (c) The Eligible Investments deemed to be made available to the
Participant, and any restrictions or limitation on the maximum or minimum
percentages of the Participant's Deferral Share Account that may be invested in
any Eligible Investment, shall be the same as from time-to-time communicated to
the Participant.

               (d) A Participant may elect to transfer Deferred Compensation
from one Eligible Investment to a different Eligible Investment, provided that
in no event may any such election become effective sooner than six (6) months
following the last date on which Deferred Compensation was allocated to the
former Eligible Investment,


                                       6
<PAGE>

and the Participant shall not be permitted to defer any compensation earned
after such date to such former Eligible Investment for a period of six (6)
months from the date of such transfer. A transfer election shall be made by
written notice signed by the Participant and filed with the Participating Fund.

               (e) Notwithstanding the foregoing, the Participating Funds may,
from time to time, remove any fund from or add any fund to the list of Eligible
Investments. If the Participating Funds discontinue an Eligible Investment, the
Participant shall complete and file an election to transfer the amounts deferred
in the discontinued Eligible Investment to such other then-current Eligible
Investment. In the event that the Participant shall fail to timely elect a new
Eligible Investment, such amounts shall be transferred to an Eligible Investment
that the Participating Fund deems appropriate.

               (f) Except as provided below, the Participant's Deferral Share
Account shall be deemed to be invested in accordance with the Participant's
Election, provided such Election conforms to the provisions of this Section.
If--

                      (i) the Participant does not furnish complete, written
           investment instructions; or

                      (ii) the written investment instructions from the
           Participant are unclear,

the Participant's Deferral Share Account shall be deemed to be invested in such
other then-current Eligible Investments as the Participating Funds shall select,
until such time as the Participant shall provide complete investment
instructions.

3.         DISTRIBUTIONS FROM DEFERRAL SHARE ACCOUNT

           3.1        Distribution Election.

           The aggregate value of a Participant's Deferral Share Account and any
Deferred Compensation held in cash and not yet credited to a Participant's
Deferral Share Account will be paid in a lump sum or in ten (10) or fewer annual
installments, as specified in the Participant's Election (or Elections).
Distributions will be made as of the first business day of January of the
calendar year following the calendar year in which the Participant ceases being
a Trustee or on such other dates as the Participant may specify in such Election
(or Elections), which shall not be earlier than six (6) months following the
Election.

               (a) If a Participant elects installment payments, the unpaid
balance in the Participant's Deferral Share Account shall continue to accrue
earnings and dividend equivalents, computed in accordance with the provisions of
Section 2.4, and



                                       7
<PAGE>

shall be prorated and paid over the installment period. The amount of the first
payment shall be a fraction of the then Fair Market Value of such Participant's
Deferral Share Account, the numerator of which is one, and the denominator of
which is the total number of installments; provided that cash not yet credited
to a Participant's Deferral Share Account, if any, will be added to such amount
as a part of the first payment. The amount of each subsequent payment shall be a
fraction of the then Fair Market Value of the Participant's Deferral Share
Account remaining after the prior payment, the numerator of which is one and the
denominator of which is the total number of installments elected minus the
number of installments previously paid.

               (b) All payments shall be in cash; provided, however, if a lump
sum payment is elected, the Participant may elect to receive payment in full and
fractional shares of the Eligible Investments selected by such Participant at
Fair Market Value at the time of payment of the amounts credited to the
Participant's Deferral Share Account; provided, further, that any Deferred
Compensation held in cash will be distributed in cash. Any such election shall
be filed in writing by the Participant with the Participating Fund at least ten
(10) business days prior to the date which such payment is to be made.

               (c) A Participant may at any time, and from time to time, change
any distribution election applicable to such Participant's Deferral Share
Account, provided that no election to change the timing of any distribution
shall be effective unless it is made in writing and received by the
Participating Fund at least six (6) months prior to the earlier of (i) the time
at which the Participant ceases to be a Trustee or (ii) the time such
distribution shall commence.

           3.2 Death Prior to Complete Distribution. In the event of a
Participant's death prior to distribution of all amounts in such Participant's
Deferral Share Account, notwithstanding any Election made by the Participant and
notwithstanding any other provision set forth herein, the value of such Deferral
Share Account plus any Deferred Compensation held in cash shall be paid in a
lump sum in accordance with the provisions of the Plan as soon as reasonably
possible to the Participant's designated beneficiary(ies) (the "Beneficiary")
or, if such Beneficiary(ies) does not survive the Participant or no beneficiary
is designated, to such Participant's estate. Any Beneficiary(ies) so designated
by a Participant may be changed at any time by notice in writing from such
Participant to the Participating Fund. All payments under this subsection shall
otherwise be paid in accordance with Section 3.1 hereof.

           3.3        Payment in Discretion of Participating Funds.

           Amounts deferred hereunder, based on the then adjusted value of the
Participant's Deferral Share Account as of the Valuation Date next following
plus any



                                       8
<PAGE>

Deferred Compensation held in cash, may become payable to the Participant in the
discretion of the Participating Fund:

               (a) Disability. If the Participating Fund finds on the basis of
medical evidence satisfactory to it that the Participant is prevented from
engaging in any suitable gainful employment or occupation and that such
disability will be permanent and continuous during the remainder of such
Participant's life, the Participating Fund shall distribute the amounts in the
Participant's Deferral Share Account plus any Deferred Compensation held in cash
in a lump sum or in the number of installments previously selected by the
Participant.

               (b) Financial Hardship. If the Participant requests and if the
Participant provides evidence of financial hardship, the Participating Fund may,
in its sole and absolute discretion, permit a distribution of all or a portion
of the Participant's Deferral Share Account plus any Deferred Compensation held
in cash prior to the date on which payments would have commenced under Section
3.1.

           3.4        Acceleration of Payments.

               (a) In the event of the liquidation, dissolution or winding up of
a Participating Fund or the distribution of all or substantially all of a
Participating Fund's assets and property to its shareholders (for this purpose a
sale, conveyance or transfer of a Participating Fund's assets to a trust,
partnership, association or another corporation in exchange for cash, shares or
other securities with the transfer being made subject to, or with the assumption
by the transferee of, the liabilities of such Participating Fund shall not be
deemed a termination of such Participating Fund or such a distribution), the
entire unpaid balance of the Participant's Deferral Share Account plus any
Deferred Compensation held in cash of such Participating Fund shall be paid in a
lump sum as of the effective date thereof.

               (b) The Participating Funds are empowered to accelerate the
payment of deferred amounts to all Participants and Beneficiaries in the event
that there is a change in law which would have the effect of adversely affecting
such persons rights and benefits under the Plan if acceleration did not occur.

4.         MISCELLANEOUS

           4.1        Statements of Account.

           The Participating Funds will furnish each Participant with a
statement setting forth the value of such Participant's Deferral Share Account
plus any Deferred Compensation held in cash as of the end of each calendar year
and all credits and debits of such Deferral Share Account or to any Deferred
Compensation held in cash during



                                       9
<PAGE>

such year. Such statements will be furnished no later than sixty (60) days after
the end of each calendar year.

           4.2        Rights in Deferral Share Account.

           Credits to the Deferral Share Accounts or to any Deferred
Compensation held in cash shall (i) remain part of the general assets of the
Participating Funds, (ii) at all times be the sole and absolute property of the
Participating Funds and (iii) in no event be deemed to constitute a fund, trust
or collateral security for the payment of the Deferred Compensation to which
Participants are entitled. The right of the Participant or any Beneficiary or
estate to receive future payment of Deferred Compensation under the provisions
of the Plan shall be an unsecured claim against the general assets of the
Participating Funds, if any, available at the time of payment. A Participating
Fund shall not reserve or set aside funds for the payment of its obligations
hereunder by any form of trust, escrow, or similar arrangement. The arrangement
described in this Plan shall be "unfunded" for U.S. federal income tax purposes
and for purposes of the Employee Retirement Security Income Act of 1974, as
amended.

           4.3        Non-Assignability.

           The rights and benefits of Participants under the Plan and any other
person or persons to whom payments may be made pursuant to the Plan shall not be
subject to alienation, assignment, pledge, transfer or other disposition, except
as otherwise provided by law.

           4.4        Interpretation and Administration.

           The Participating Funds shall have the general authority to
interpret, construe and implement provisions of the Plan and to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan as
shall be from time to time, deemed advisable. Any determination by the
Participating Funds shall be final and conclusive.

           4.5        Amendment and Termination.

           The Participating Funds may in their sole discretion amend or
terminate the Plan at any time. No amendment or termination shall adversely
affect any then existing deferred amounts or rights under the Plan. Upon
termination of the Plan, the remaining balance of the Participant's Deferral
Share Account plus any Deferred Compensation held in cash shall be paid to the
Participant (or to a beneficiary, as the case may be), in a lump sum as soon as
practicable but no more than thirty (30) days following termination of the Plan.


                                       10
<PAGE>


           4.6        Incapacity.

           If the Participating Funds shall receive satisfactory evidence that
the Participant or any Beneficiary entitled to receive any benefit under the
Plan is, at the time when such benefit becomes payable, a minor, or is
physically or mentally incompetent to receive such benefit and to give a valid
release therefor, and that another person or an institution is then maintaining
or has custody of the Participant or Beneficiary and that no guardian, committee
or other representative of the estate of the Participant or Beneficiary shall
have been duly appointed, the Participating Funds may make payment of such
benefit otherwise payable to the Participant or Beneficiary to such other person
or institution and the release of such other person or institution shall be a
valid and complete discharge for the payment of such benefit.

           4.7        Payments Due Missing Persons.

           The Participating Funds shall make a reasonable effort to locate all
persons entitled to benefits under the Plan. However, notwithstanding any
provisions of the Plan to the contrary, if, after a period of five (5) years
from the date such benefit shall be due, any such persons entitled to benefits
have not been located, their rights under the Plan shall stand suspended. Before
this provision becomes operative, the Participating Funds shall send a certified
letter to all such persons to their last known address advising them that their
benefits under the Plan shall be suspended. Any such suspended amounts shall be
held by the Participating Funds for a period of three (3) additional years (or a
total of eight (8) years from the time the benefits first become payable) and
thereafter, if unclaimed, such amounts shall be forfeited, subject to applicable
laws in the jurisdiction in which the respective Participating Fund is
organized.

           4.8        Agents.

           The Participating Funds may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as they deem
necessary to perform their duties under the Plan. The Participating Funds shall
bear the cost of such services and all other expenses incurred in connection
with the administration of the Plan.

           4.9        Governing Law.

           All matters concerning the validity, construction and administration
of the Plan shall be governed by the laws of the state in which the respective
Participating Fund is organized.

           4.10       Non-Guarantee of Status.

           Nothing contained in the Plan shall be construed as a contract or
guarantee of the right of the Participant to be, or remain as, a Trustee of any
of the Participating



                                       11
<PAGE>

Funds or to receive any, or any particular rate of, compensation from any of the
Participating Funds.

           4.11       Counsel.

           The Participating Funds may consult with legal counsel with respect
to the meaning or construction of the Plan, their obligations or duties
hereunder or with respect to any action or proceeding or any question of law,
and they shall be fully protected with respect to any action taken or omitted by
them in good faith pursuant to the advice of legal counsel.

           4.12       Entire Plan.

           The Plan contains the entire understanding between the Participating
Funds and the Participant with respect to the payment of non-qualified elective
deferred compensation by the Participating Funds to the Participant.

           4.13       Non-liability of Administrator and Participating Funds.

           Interpretations of, and determinations (including factual
determinations) related to, the Plan made by the Administrator or Participating
Funds in good faith, including any determinations of the amounts of the Deferral
Share Accounts, shall be conclusive and binding upon all parties; and the
Administrator, the Participating Funds and their officers and Trustees shall not
incur any liability to the Participant for any such interpretation or
determination so made or for any other action taken by it in connection with the
Plan in good faith.

           4.14       Successors and Assigns.

           The Plan shall be binding upon, and shall inure to the benefit of,
the Participating Funds and their successors and assigns and to the Participants
and their heirs, executors, administrators and personal representatives.

           4.15       Severability.

           In the event any one or more provisions of the Plan are held to be
invalid or unenforceable, such illegality or unenforceability shall not affect
the validity or enforceability of the other provisions hereof and such other
provisions shall remain in full force and effect unaffected by such invalidity
or unenforceability.

           4.16       Rule 16b-3 Compliance.

           It is the intention of the Participating Fund that all transactions
under the Plan be exempt from liability imposed by Section 16(b) of the
Securities Exchange Act of



                                       12
<PAGE>

1934, as amended. Therefore, if any transaction under the Plan is found not to
be in compliance with Section 16(b), the provision of the Plan governing such
transaction shall be deemed amended so that the transaction does so comply and
is so exempt, to the extent permitted by law and deemed advisable by the
Participating Fund, and in all events the Plan shall be construed in favor of
its meeting the requirements of an exemption.



                                       13
<PAGE>



           IN WITNESS WHEREOF, each Participating Fund has caused this Plan to
be executed by one of its duly authorized officers, as of this 27th day of
September, 2002.




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




Witness:
        -----------------------------------
Name:
Title:


                                       14
<PAGE>


                                                                      SCHEDULE A


                                 BLACKROCK FUNDS
                           DEFERRED COMPENSATION PLAN

                               PARTICIPATING FUNDS

BlackRock Advantage Term Trust
BlackRock Broad Investment Grade 2009 Term Trust
BlackRock California Insured Municipal 2008 Term Trust
BlackRock California Investment Quality Municipal Trust
BlackRock California Municipal 2018 Term
Trust BlackRock California Municipal Bond Trust
BlackRock California Municipal
Income Trust BlackRock California Municipal Income Trust II
BlackRock Core Bond Trust
BlackRock Florida Insured Municipal 2008 Term Trust
BlackRock Florida Investment Quality Municipal Trust
BlackRock Florida Municipal Bond Trust
BlackRock Florida Municipal Income Trust
BlackRock High Yield Trust BlackRock
Income Opportunity Trust
BlackRock Income Trust
BlackRock Insured Municipal 2008 Term Trust Inc,
BlackRock Insured Municipal Term Trust
BlackRock Investment Quality Municipal Trust
BlackRock Investment Quality Term Trust
BlackRock Maryland Municipal Bond Trust
BlackRock Municipal 2018 Term Trust
BlackRock Municipal Bond Trust
BlackRock Municipal Income Trust
BlackRock Municipal Income Trust II
BlackRock Municipal Target Term Trust
BlackRock New Jersey Investment Quality Municipal Trust
BlackRock New Jersey Municipal Bond Trust
BlackRock New Jersey Municipal Income Trust
BlackRock New York Insured Municipal 2008 Term Trust
BlackRock New York Investment Quality Municipal Trust
BlackRock New York Municipal 2018 Term Trust
BlackRock New York Municipal Bond Trust
BlackRock New York Municipal Income Trust
BlackRock New York Municipal Income Trust II
BlackRock Pennsylvania Strategic Municipal Trust
BlackRock Strategic Bond Trust
BlackRock Strategic Municipal Trust
BlackRock Virginia Municipal Bond Trust


<PAGE>



                                                                      SCHEDULE B

                              ELIGIBLE INVESTMENTS


You may choose from the following eligible investments:



BlackRock Advantage Term Trust
BlackRock Broad Investment Grade 2009 Term Trust
BlackRock Core Bond Trust
BlackRock High Yield Trust
BlackRock Income Opportunity Trust
BlackRock Income Trust
BlackRock Investment Quality Term Trust
BlackRock Strategic Bond Trust



<PAGE>




                                 BLACKROCK FUNDS
                           DEFERRED COMPENSATION PLAN

                             Deferral Election Form

                  The undersigned hereby elects to participate in the Deferred
Compensation Plan ("Plan") in accordance with the elections made in this
Deferral Election Form.

1.         Amount Deferred

           I hereby elect to defer compensation earned as a Trustee which are
earned subsequent to the date of this election, as follows:


           [ ]  All fees; or

           [ ]             % of fees.
                 ----------

           [ ]             $ of fees.
                 ----------

2.         Investment Choice

           I hereby elect to have the deferred compensation valued by an
investment in the Eligible Investments as set forth on the attachment to this
Deferral Election Form. I understand that I may change this election by giving
written notice at least thirty (30) days prior to the end of each calendar year.


<PAGE>


3.         Time of Payment

           I hereby elect to be paid as follows:

           [ ] On the first business day in January of the calendar year
following the calendar year in which I cease to be a Trustee; or

           [ ] On the following other date or event:

4.         Number of Payments

           I hereby elect to receive payment as follows:

           [ ] Entire amount in a lump sum; or

           [ ] In               annual installments (not to exceed 10).
                  -------------

           I hereby relinquish and release any and all rights to receive payment
of the deferred amounts except in accordance with the Plan.


Executed this     day of,
             -----       ------



                                           --------------------------------
                                           Trustee's Signature

Received and accepted by the Participating Funds:

By:
   --------------------------------

Date:
     --------------------------------


<PAGE>



                                 BLACKROCK FUNDS
                           DEFERRED COMPENSATION PLAN

                           Designation of Beneficiary

The undersigned hereby designates the person or persons named below as the
beneficiary(ies) of any benefits which may become due according to the terms and
conditions of the BlackRock Funds Deferred Compensation Plan (the "Plan") in the
event of my death.

         [ ] To my Estate: or

         [ ] To the following beneficiaries:

         Primary:
                          ------------------------------------------------------

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

                          ------------------------------------------------------
                          (Name, address and relationship) if living, or if not
                          living at my my death, to my Estate.

         Secondary:
                          ------------------------------------------------------

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

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

                          (Name, address and relationship) if living, or if not
                          living at my my death, to

I hereby revoke all prior beneficiary designation(s) made under the terms of the
Plan by execution of this form.

Executed this           day of                           ,
                                                          ----------


                                          -----------------------------------
                                          Trustee's Signature



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)
<SEQUENCE>10
<FILENAME>file009.txt
<DESCRIPTION>CUSTODIAN AGREEMENT
<TEXT>



<PAGE>

                               CUSTODIAN CONTRACT
                               ------------------


           This Contract is made as of October 21, 2002 between BlackRock
Insured Municipal Income Trust, a business trust organized and existing under
the laws of the State of Delaware, having its principal place of business at 100
Bellevue Parkway, Wilmington, Delaware 19809 hereinafter called the "Fund", and
State Street Bank and Trust Company, a Massachusetts trust company, having its
principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",

           WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:


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

         The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Fund's agreement and declaration of trust (the
"Declaration of Trust"). The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Fund from time to time, and the cash consideration received by it
for such new or treasury shares of beneficial interest ("Shares") of the Fund as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of the Fund held or received by the Fund and not delivered to
the Custodian.

         Upon receipt of "Proper Instructions" (within the meaning of Article
4), the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the board of trustees of the Fund
(the "Board of Trustees"), and provided that the Custodian shall have no more or
less responsibility or liability to the Fund on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian.


2.       Duties of the Custodian with Respect to Property of the Fund Held By
         the Custodian

2.1      Holding Securities. The Custodian shall hold and physically segregate
         for the account of the Fund all non-cash property, including all
         securities owned by the Fund, other than (a) securities which are
         maintained pursuant to Section 2.8 in a clearing agency registered with
         the Securities and Exchange Commission (the "SEC") under Section 17A of
         the Securities Exchange Act of 1934 (the "Exchange Act"), which acts as
         a securities depository, or in the book-entry system authorized by the
         U.S. Department of the Treasury and certain federal agencies (each, a
         "Securities System") and (b) commercial paper of an issuer for which
         State Street Bank and Trust Company acts as issuing and paying agent
         ("Direct Paper") which is deposited and/or maintained in the Direct
         Paper System of the Custodian (the "Direct Paper System") pursuant to
         Section 2.9.


<PAGE>

2.2      Delivery of Securities. The Custodian shall release and deliver
         securities owned by the Fund held by the Custodian or in a Securities
         System account of the Custodian ("Securities System Account") or in the
         Custodian's Direct Paper book entry system account ("Direct Paper
         System Account") only upon receipt of Proper Instructions, which may be
         continuing instructions when deemed appropriate by the parties, and
         only in the following cases:

         1)       Upon sale of such securities for the account of the Fund and
                  receipt of payment therefor;

         2)       Upon the receipt of payment in connection with any repurchase
                  agreement related to such securities entered into by the Fund;

         3)       In the case of a sale effected through a Securities System, in
                  accordance with the provisions of Section 2.8 hereof;

         4)       To the depository agent in connection with tender or other
                  similar offers for securities of the Fund;

         5)       To the issuer thereof or its agent when such securities are
                  called, redeemed, retired or otherwise become payable;
                  provided that, in any such case, the cash or other
                  consideration is to be delivered to the Custodian;

         6)       To the issuer thereof, or its agent, for transfer into the
                  name of the Fund or into the name of any nominee or nominees
                  of the Custodian or into the name or nominee name of any agent
                  appointed pursuant to Section 2.7 or into the name or nominee
                  name of any sub-custodian appointed pursuant to Article 1; or
                  for exchange for a different number of bonds, certificates or
                  other evidence representing the same aggregate face amount or
                  number of units; provided that, in any such case, the new
                  securities are to be delivered to the Custodian;

         7)       Upon the sale of such securities for the account of the Fund,
                  to the broker or its clearing agent, against a receipt, for
                  examination in accordance with "street delivery" custom;
                  provided that in any such case, the Custodian shall have no
                  responsibility or liability for any loss arising from the
                  delivery of such securities prior to receiving payment for
                  such securities except as may arise from the Custodian's own
                  negligence or willful misconduct;

         8)       For exchange or conversion pursuant to any plan of merger,
                  consolidation, recapitalization, reorganization or
                  readjustment of the securities of the issuer of such
                  securities, or pursuant to provisions for conversion contained
                  in such securities, or pursuant to any deposit agreement;
                  provided that, in any such case, the new securities and cash,
                  if any, are to be delivered to the Custodian;

         9)       In the case of warrants, rights or similar securities, the
                  surrender thereof in the exercise of such warrants, rights or
                  similar securities or the surrender of interim


                                       2.
<PAGE>

                  receipts or temporary securities for definitive securities;
                  provided that, in any such case, the new securities and cash,
                  if any, are to be delivered to the Custodian;

         10)      For delivery in connection with any loans of securities made
                  by the Fund, but only against receipt of adequate collateral
                  as agreed upon from time to time by the Custodian and the
                  Fund, which may be in the form of cash or obligations issued
                  by the United States government, its agencies or
                  instrumentalities, except that in connection with any loans
                  for which collateral is to be credited to the Custodian's
                  account in the book-entry system authorized by the U.S.
                  Department of the Treasury, the Custodian will not be held
                  liable or responsible for the delivery of securities owned by
                  the Fund prior to the receipt of such collateral;

         11)      For delivery as security in connection with any borrowings by
                  the Fund requiring a pledge of assets by the Fund, but only
                  against receipt of amounts borrowed;

         12)      For delivery in accordance with the provisions of any
                  agreement among the Fund, the Custodian and a broker-dealer
                  registered under the Exchange Act and a member of The National
                  Association of Securities Dealers, Inc. ("NASD"), relating to
                  compliance with the rules of The Options Clearing Corporation
                  and of any registered national securities exchange, or of any
                  similar organization or organizations, regarding escrow or
                  other arrangements in connection with transactions by the
                  Fund;

         13)      For delivery in accordance with the provisions of any
                  agreement among the Fund, the Custodian, and a Futures
                  Commission Merchant registered under the Commodity Exchange
                  Act, relating to compliance with the rules of the Commodity
                  Futures Trading Commission (the "CFTC") and/or any Contract
                  Market, or any similar organization or organizations,
                  regarding account deposits in connection with transactions by
                  the Fund;

         14)      For any other proper purpose, but only upon receipt of Proper
                  Instructions specifying the securities of the Fund to be
                  delivered, setting forth the purpose for which such delivery
                  is to be made, declaring such purpose to be a proper purpose,
                  and naming the person or persons to whom delivery of such
                  securities shall be made.

2.3      Registration of Securities. Securities held by the Custodian (other
         than bearer securities) shall be registered in the name of the Fund or
         in the name of any nominee of the Fund or of any nominee of the
         Custodian which nominee shall be assigned exclusively to the Fund,
         unless the Fund has authorized in writing the appointment of a nominee
         to be used in common with other registered investment companies having
         the same investment adviser as the Fund, or in the name or nominee name
         of any agent appointed pursuant to Section 2.7 or in the name or
         nominee name of any sub-custodian appointed pursuant to Article 1. All
         securities accepted by the Custodian on behalf of the Fund under the
         terms of this Contract shall be in "street name" or other good delivery
         form. If, however, the Fund directs the


                                       3.
<PAGE>

         Custodian to maintain securities in "street name", the Custodian shall
         utilize its best efforts only to timely collect income due the Fund on
         such securities and to notify the Fund on a best efforts basis only of
         relevant corporate actions including, without limitation, pendency of
         calls, maturities, tender or exchange offers.

2.4      Bank Accounts. The Custodian shall open and maintain a separate bank
         account or accounts in the name of the Fund, subject only to draft or
         order by the Custodian acting pursuant to the terms of this Contract,
         and shall hold in such account or accounts, subject to the provisions
         hereof, all cash received by it from or for the account of the Fund,
         other than cash maintained by the Fund in a bank account established
         and used in accordance with Rule 17f-3 under the Investment Company Act
         of 1940, as amended (the "1940 Act"). Funds held by the Custodian for
         the Fund may be deposited by it to its credit as Custodian in the
         banking department of the Custodian or in such other banks or trust
         companies as it may in its discretion deem necessary or desirable;
         provided, however, that every such bank or trust company shall be
         qualified to act as a custodian under the 1940 Act and that each such
         bank or trust company and the funds to be deposited with each such bank
         or trust company shall be approved by vote of a majority of the Board
         of Trustees of the Fund. Such funds shall be deposited by the Custodian
         in its capacity as Custodian and shall be withdrawable by the Custodian
         only in that capacity.

2.5      Collection of Income. Subject to the provisions of Section 2.3, the
         Custodian shall collect on a timely basis all income and other payments
         with respect to registered securities held hereunder to which the Fund
         shall be entitled either by law or pursuant to custom in the securities
         business, and shall collect on a timely basis all income and other
         payments with respect to bearer securities if, on the date of payment
         by the issuer, such securities are held by the Custodian or its agent
         thereof and shall credit such income, as collected, to the Fund's
         custodian account. Without limiting the generality of the foregoing,
         the Custodian shall detach and present for payment all coupons and
         other income items requiring presentation as and when they become due
         and shall collect interest when due on securities held hereunder.
         Income due the Fund on securities loaned pursuant to the provisions of
         Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
         will have no duty or responsibility in connection therewith, other than
         to provide the Fund with such information or data as may be necessary
         to assist the Fund in arranging for the timely delivery to the
         Custodian of the income to which the Fund is properly entitled.

2.6      Payment of Fund Monies. Upon receipt of Proper Instructions, which may
         be continuing instructions when deemed appropriate by the parties, the
         Custodian shall pay out monies of the Fund in the following cases only:

         1)       Upon the purchase of securities, options, futures contracts or
                  options on futures contracts for the account of the Fund but
                  only (a) against the delivery of such securities or evidence
                  of title to such options, futures contracts or options on
                  futures contracts to the Custodian (or any bank, banking firm
                  or trust company doing business in the United States or abroad
                  which is qualified under the 1940 Act to act as a custodian
                  and has been designated by the Custodian as its agent for this


                                       4.
<PAGE>

                  purpose) registered in the name of the Fund or in the name of
                  a nominee of the Custodian referred to in Section 2.3 hereof
                  or in proper form for transfer; (b) in the case of a purchase
                  effected through a Securities System, in accordance with the
                  conditions set forth in Section 2.8 hereof; (c) in the case of
                  a purchase involving the Direct Paper System, in accordance
                  with the conditions set forth in Section 2.11; (d) in the case
                  of repurchase agreements entered into between the Fund and the
                  Custodian, or another bank, or a broker-dealer which is a
                  member of NASD, (i) against delivery of the securities either
                  in certificate form or through an entry crediting the
                  Custodian's account at the Federal Reserve Bank with such
                  securities or (ii) against delivery of the receipt evidencing
                  purchase by the Fund of securities owned by the Custodian
                  along with written evidence of the agreement by the Custodian
                  to repurchase such securities from the Fund or (e) for
                  transfer to a time deposit account of the Fund in any bank;
                  such transfer may be effected prior to receipt of a
                  confirmation from a broker and/or the applicable bank pursuant
                  to Proper Instructions as defined in Article 4;

         2)       In connection with conversion, exchange or surrender of
                  securities owned by the Fund as set forth in Section 2.2
                  hereof;

         3)       For the payment of any expense or liability incurred by the
                  Fund, including but not limited to the following payments for
                  the account of the Fund: interest, taxes, management fees,
                  accounting fees, transfer agent and legal fees, and operating
                  expenses of the Fund whether or not such expenses are to be in
                  whole or part capitalized or treated as deferred expenses;

         4)       For the payment of any dividends declared pursuant to the
                  governing documents of the Fund;

         5)       For payment of the amount of dividends received in respect of
                  securities sold short;

         6)       For any other proper purpose, but only upon receipt of Proper
                  Instructions specifying the amount of such payment, setting
                  forth the purpose for which such payment is to be made,
                  declaring such purpose to be a proper purpose, and naming the
                  person or persons to whom such payment is to be made.

2.7      Appointment of Agents. The Custodian may at any time or times in its
         discretion appoint (and may at any time remove) any other bank or trust
         company which is itself qualified under the 1940 Act to act as a
         custodian, as its agent to carry out such of the provisions of this
         Article 2 as the Custodian may from time to time direct; provided,
         however, that the appointment of any agent shall not relieve the
         Custodian of its responsibilities or liabilities hereunder.

2.8      Deposit of Securities in Securities Systems. The Custodian may deposit
         and/or maintain securities owned by the Fund in a Securities System in
         accordance with applicable Federal



                                       5.
<PAGE>

         Reserve Board and SEC rules and regulations, if any, and subject to the
         following provisions:

         1)       The Custodian may keep securities of the Fund in a Securities
                  System provided that such securities are represented in a
                  Securities System Account which shall not include any assets
                  of the Custodian other than assets held as a fiduciary,
                  custodian or otherwise for customers;

         2)       The records of the Custodian with respect to securities of the
                  Fund which are maintained in a Securities System shall
                  identify by book-entry those securities belonging to the Fund;

         3)       The Custodian shall pay for securities purchased for the
                  account of the Fund upon (i) receipt of advice from the
                  Securities System that such securities have been transferred
                  to the Securities System Account, and (ii) the making of an
                  entry on the records of the Custodian to reflect such payment
                  and transfer for the account of the Fund. The Custodian shall
                  transfer securities sold for the account of the Fund upon (i)
                  receipt of advice from the Securities System that payment for
                  such securities has been transferred to the Securities System
                  Account, and (ii) the making of an entry on the records of the
                  Custodian to reflect such transfer and payment for the account
                  of the Fund. Copies of all advices from the Securities System
                  of transfers of securities for the account of the Fund shall
                  identify the Fund, be maintained for the Fund by the Custodian
                  and be provided to the Fund at its request. Upon request, the
                  Custodian shall furnish the Fund confirmation of each transfer
                  to or from the account of the Fund in the form of a written
                  advice or notice and shall furnish to the Fund copies of daily
                  transaction sheets reflecting each day's transactions in the
                  Securities System for the account of the Fund;

         4)       The Custodian shall provide the Fund with any report obtained
                  by the Custodian on the Securities System's accounting system,
                  internal accounting control and procedures for safeguarding
                  securities deposited in the Securities System;

         5)       Anything to the contrary in this Contract notwithstanding, the
                  Custodian shall be liable to the Fund for any loss or damage
                  to the Fund resulting from use of the Securities System by
                  reason of any negligence, misfeasance or misconduct of the
                  Custodian or any of its agents or of any of its or their
                  employees or from failure of the Custodian or any such agent
                  to enforce effectively such rights as it may have against the
                  Securities System; at the election of the Fund, it shall be
                  entitled to be subrogated to the rights of the Custodian with
                  respect to any claim against the Securities System or any
                  other person which the Custodian may have as a consequence of
                  any such loss or damage if and to the extent that the Fund has
                  not been made whole for any such loss or damage.



                                       6.
<PAGE>

2.9      Fund Assets Held in the Custodian's Direct Paper System. The Custodian
         may deposit and/or maintain securities owned by the Fund in the Direct
         Paper System of the Custodian subject to the following provisions:

         1)       No transaction relating to securities in the Direct Paper
                  System will be effected in the absence of Proper Instructions;

         2)       The Custodian may keep securities of the Fund in the Direct
                  Paper System only if such securities are represented in Direct
                  Paper System Account which shall not include any assets of the
                  Custodian other than assets held as a fiduciary, custodian or
                  otherwise for customers;

         3)       The records of the Custodian with respect to securities of the
                  Fund which are maintained in the Direct Paper System shall
                  identify by book-entry those securities belonging to the Fund;

         4)       The Custodian shall pay for securities purchased for the
                  account of the Fund upon the making of an entry on the records
                  of the Custodian to reflect such payment and transfer of
                  securities to the account of the Fund. The Custodian shall
                  transfer securities sold for the account of the Fund upon the
                  making of an entry on the records of the Custodian to reflect
                  such transfer and receipt of payment for the account of the
                  Fund;

         5)       The Custodian shall furnish the Fund confirmation of each
                  transfer to or from the account of the Fund, in the form of a
                  written advice or notice, of Direct Paper on the next business
                  day following such transfer and shall furnish to the Fund
                  copies of daily transaction sheets reflecting each day's
                  transaction in the Securities System for the account of the
                  Fund;

         6)       The Custodian shall provide the Fund with any report on its
                  system of internal accounting control as the Fund may
                  reasonably request from time to time.

2.10     Segregated Account. The Custodian shall upon receipt of Proper
         Instructions from the Fund establish and maintain a segregated account
         or accounts for and on behalf of the Fund, into which account or
         accounts may be transferred cash and/or securities, including
         securities maintained in an account by the Custodian pursuant to
         Section 2.8 hereof, (i) in accordance with the provisions of any
         agreement among the Fund, the Custodian and a broker-dealer registered
         under the Exchange Act and a member of the NASD (or any futures
         commission merchant registered under the Commodity Exchange Act),
         relating to compliance with the rules of The Options Clearing
         Corporation and of any registered national securities exchange (or the
         CFTC or any registered contract market), or of any similar organization
         or organizations, regarding escrow or other arrangements in connection
         with transactions by the Fund, (ii) for purposes of segregating cash or
         government securities in connection with options purchased, sold or
         written by the Fund or commodity futures contracts or options thereon
         purchased or sold by the Fund, (iii) for the purposes of compliance by
         the Fund with



                                       7.
<PAGE>

         the procedures required by Investment Company Act Release No. 10666, or
         any subsequent release or releases of the SEC relating to the
         maintenance of segregated accounts by registered investment companies
         and (iv) for other proper purposes, but only, in the case of clause
         (iv), upon receipt of Proper Instructions from the Fund setting forth
         the purpose or purposes of such segregated account and declaring such
         purposes to be proper purposes.

2.11     Ownership Certificates for Tax Purposes. The Custodian shall execute
         ownership and other certificates and affidavits for all federal and
         state tax purposes in connection with receipt of income or other
         payments with respect to securities of the Fund held by it and in
         connection with transfers of such securities.

2.12     Proxies. The Custodian shall, with respect to the securities held
         hereunder, cause to be promptly executed by the registered holder of
         such securities, if the securities are registered otherwise than in the
         name of the Fund or a nominee of the Fund, all proxies, without
         indication of the manner in which such proxies are to be voted, and
         shall promptly deliver to the Fund such proxies, all proxy soliciting
         materials and all notices relating to such securities.

2.13     Communications Relating to Fund Securities. Subject to the provisions
         of Section 2.3, the Custodian shall transmit promptly to the Fund all
         written information (including, without limitation, pendency of calls
         and maturities of securities and expirations of rights in connection
         therewith and notices of exercise of call and put options written by
         the Fund and the maturity of futures contracts purchased or sold by the
         Fund) received by the Custodian from issuers of the securities being
         held for the Fund. With respect to tender or exchange offers, the
         Custodian shall transmit promptly to the Fund all written information
         received by the Custodian from issuers of the securities whose tender
         or exchange is sought and from the party (or his agents) making the
         tender or exchange offer. If the Fund desires to take action with
         respect to any tender offer, exchange offer or any other similar
         transaction, the Fund shall notify the Custodian at least three
         business days prior to the date on which the Custodian is to take such
         action.

2.14     Reports to Fund by Independent Public Accountants The Custodian shall
         provide the Fund, at such times as the Fund may reasonably require,
         with reports by independent public accountants on the accounting
         system, internal accounting control and procedures for safeguarding
         securities, futures contracts and options on futures contracts,
         including securities deposited and/or maintained in a Securities
         System, relating to the services provided by the Custodian under this
         Contract; such reports, shall be of sufficient scope and in sufficient
         detail, as may reasonably be required by the Fund, to provide
         reasonable assurance that any material inadequacies would be disclosed
         by such examination, and, if there are no such inadequacies, the
         reports shall so state.



                                       8.
<PAGE>

3.       Payments for Sales or Repurchases or Redemptions of Shares

         The Custodian shall receive from the distributor of the Shares or from
the Fund's Transfer Agent (the "Transfer Agent") and deposit into the account of
the Fund such payments as are received for Shares thereof issued or sold from
time to time by the Fund. The Custodian will provide timely notification to the
Fund and the Transfer Agent of any receipt by it of payments for Shares of the
Fund.

         From such funds as may be available for the purpose, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make funds
available for payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian
by a holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time between
the Fund and the Custodian.


4.       Proper Instructions

         Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
instructions are consistent with the security procedures agreed to by the Fund
and the Custodian including, but not limited to, the security procedures
selected by the Fund on the Funds Transfer Addendum to this Contract. For
purposes of this Article, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.10.


5.       Actions Permitted without Express Authority

         The Custodian may in its discretion, without express authority from the
Fund:

         1)       make payments to itself or others for minor expenses of
                  handling securities or other similar items relating to its
                  duties under this Contract, provided that all such payments
                  shall be accounted for to the Fund;


                                       9.
<PAGE>

         2)       surrender securities in temporary form for securities in
                  definitive form;

         3)       endorse for collection, in the name of the Fund, checks,
                  drafts and other negotiable instruments; and

         4)       in general, attend to all non-discretionary details in
                  connection with the sale, exchange, substitution, purchase,
                  transfer and other dealings with the securities and property
                  of the Fund except as otherwise directed by the Board of
                  Trustees.


6.       Evidence of Authority

         The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Trustees as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by the
Board of Trustees pursuant to the Declaration of Trust as described in such
vote, and such vote may be considered as in full force and effect until receipt
by the Custodian of written notice to the contrary.

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

         The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees to keep the books of
account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate weekly the net income
of the Fund as described in the Fund's registration statement on Form N-2 under
the 1940 Act as filed with the SEC (the "Registration Statement") and shall
advise the Fund and the Transfer Agent weekly of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the weekly income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective Registration Statement.


8.       Records

         The Custodian shall with respect to the Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the SEC. The Custodian shall, at the



                                      10.
<PAGE>

Fund's request, supply the Fund with a tabulation of securities owned by the
Fund and held by the Custodian and shall, when requested to do so by the Fund
and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.


9.       Opinion of Fund's Independent Accountants

         The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Registration Statement, and Form
N-SAR or other annual reports to the SEC and with respect to any other
requirements of the SEC.


10.      Compensation of Custodian

         The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.


11.      Responsibility of Custodian

         So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.

         If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

         If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements and assumed settlement) or in the event that the
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure



                                      11.
<PAGE>

to act or willful misconduct, any property at any time held for the account of
the Fund shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize available cash
and to dispose of the Fund's assets to the extent necessary to obtain
reimbursement.

         In no event shall the Custodian be liable for indirect, special or
consequential damages.


12.      Effective Period, Termination and Amendment

         This Contract shall become effective as of the date of its execution,
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such delivery or mailing;
provided, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any time
by action of its Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.

         Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.


13.      Successor Custodian

         If a successor custodian shall be appointed by the Board of Trustees,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.

         If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.

         In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other



                                      12.
<PAGE>

properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.

         In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.


14.      Interpretive and Additional Provisions

         In connection with the operation of this Contract, the Custodian and
the Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Contract.


15.      Massachusetts Law to Apply

         This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.


16.      Prior Contracts

         This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund and the Custodian relating to the custody of
the Fund's assets.


17.      Reproduction of Documents

         This Contract and all schedules, exhibits, attachments, addenda and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a


                                      13.
<PAGE>

party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.


18.      Notices

         Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or facsimile to the parties at the following addresses or such
other addresses as may be notified by any party from time to time.

             To the Fund:          BlackRock Insured Municipal Income Trust
                                   c/o BlackRock, Inc.
                                   100 Bellevue Parkway
                                   Wilmington, Delaware  19809
                                   Attention:  Jeff Wing, Vice President
                                   Telephone:  302-797-2134
                                   Facsimile:   302-797-2459

             To the Custodian: State Street Bank and Trust Company
                                   One Heritage Drive/JPB 2S
                                   North Quincy, Massachusetts  02171
                                   Attention:  William M. Marvin, Vice President
                                   Telephone:  617-985-6829
                                   Facsimile:   617-985-5271

         Such notice, instruction or other instrument shall be deemed to have
been served in the case of a registered letter at the expiration of five
business days after posting, in the case of cable twenty-four hours after
dispatch and, in the case of telex, immediately on dispatch and if delivered
outside normal business hours it shall be deemed to have been received at the
next time after delivery when normal business hours commence and in the case of
cable, telex or facsimile on the business day after the receipt thereof.
Evidence that the notice was properly addressed, stamped and put into the post
shall be conclusive evidence of posting.


19.      Remote Access Services Addendum

         The Custodian and the Fund each agree to abide by the terms of the
Remote Access Services Addendum attached hereto.


20.      Shareholder Communications Election

         SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial



                                      14.
<PAGE>

owners of securities of that issuer held by the bank unless the beneficial owner
has expressly objected to disclosure of this information. In order to comply
with the rule, the Custodian needs the Fund to indicate whether it authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose securities the Fund owns. If the Fund tells the
Custodian "no", the Custodian will not provide this information to requesting
companies. If the Fund tells the Custodian "yes" or does not check either "yes"
or "no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund or any funds or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's name
and address for any purpose other than corporate communications. Please indicate
below whether the Fund consents or objects by checking one of the alternatives
below.


       YES [ ]  The Custodian is authorized to release the Fund's name, address,
                and share positions.

       NO  [X]  The Custodian is not authorized to release the Fund's name,
                address, and share positions.




                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK



                                      15.
<PAGE>



                                 SIGNATURE PAGE


         IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the date first above-written.


ATTEST:                            BLACKROCK INSURED MUNICIPAL INCOME TRUST



 /s/ Henry Gabbay                  By: Anne F. Ackerley
- -----------------------------------   --------------------------------
Name: Henry Gabbay, Treasurer         Anne F. Ackerley, Secretary



ATTEST:                            STATE STREET BANK AND TRUST COMPANY



/s/ Stephanie L. Poster            By: /s/ Joseph L. Hooley
- -----------------------------------   ------------------------------
Stephanie L. Poster, Vice President   Joseph L. Hooley, Executive Vice President


                                      16.
<PAGE>


                             FUNDS TRANSFER ADDENDUM

                                                               [GRAPHIC OMITTED]
                                                                  [STATE STREET]
                                  [Serving Institutional Investors Worldwide SM]

OPERATING GUIDELINES
- --------------------


1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit
Client's account(s) upon the receipt of a payment order in compliance with the
selected Security Procedure chosen for funds transfer and in the amount of money
that State Street has been instructed to transfer. State Street shall execute
payment orders in compliance with the Security Procedure and with the Client's
instructions on the execution date provided that such payment order is received
by the customary deadline for processing such a request, unless the payment
order specifies a later time. All payment orders and communications received
after this time will be deemed to have been received on the next business day.

2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure it
has designated on the Selection Form was selected by the Client from Security
Procedures offered by State Street. The Client agrees that the Security
Procedures are reasonable and adequate for its wire transfer transactions and
agrees to be bound by any payment orders, amendments and cancellations, whether
or not authorized, issued in its name and accepted by State Street after being
confirmed by any of the selected Security Procedures. The Client also agrees to
be bound by any other valid and authorized payment order accepted by State
Street. The Client shall restrict access to confidential information relating to
the Security Procedure to authorized persons as communicated in writing to State
Street. The Client must notify State Street immediately if it has reason to
believe unauthorized persons may have obtained access to such information or of
any change in the Client's authorized personnel. State Street shall verify the
authenticity of all instructions according to the Security Procedure.

3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis
of the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern. Financial
institutions that receive payment orders initiated by State Street at the
instruction of the Client may also process payment orders on the basis of
account numbers, regardless of any name included in the payment order. State
Street will also rely on any financial institution identification numbers
included in any payment order, regardless of any financial institution name
included in the payment order.

4. REJECTION: State Street reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of State Street's receipt of such payment
order; (b) if initiating such payment order would cause State Street, in State
Street's sole judgment, to exceed any volume, aggregate dollar, network, time,
credit or similar limits upon wire transfers which are applicable to State
Street; or (c) if State Street, in good faith, is unable to satisfy itself that
the transaction has been properly authorized.

5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act
on all authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are received
in a timely manner affording State Street reasonable opportunity to act.
However, State Street assumes no liability if the request for amendment or
cancellation cannot be satisfied.

6. ERRORS: State Street shall assume no responsibility for failure to detect any
erroneous payment order provided that State Street complies with the payment
order instructions as received and State Street complies with the Security
Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.

7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility
for lost interest with respect to the refundable amount of any unauthorized
payment order, unless State Street is notified of the unauthorized payment order
within thirty (30) days of notification by State Street of the acceptance of
such payment order. In no event shall State Street be liable for special,
indirect or consequential damages, even if advised of the possibility of such
damages and even for failure to execute a payment order.

8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When a
Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the New England Clearing House Association, State Street will act as an
Originating Depository Financial Institution and/or Receiving Depository
Institution, as the case may be, with respect to such entries. Credits given by
State Street with respect to an ACH credit entry are provisional until State
Street receives final settlement for such entry from the Federal Reserve Bank.
If State Street does not receive such final settlement, the Client agrees that
State Street shall receive a refund of the amount credited to the Client in
connection with such entry, and the party making payment to the Client via such
entry shall not be deemed to have paid the amount of the entry.

9. CONFIRMATION STATEMENTS: Confirmation of State Street's execution of payment
orders shall ordinarily be provided within 24 hours. Notice may be delivered
through State Street's proprietary information systems, such as, but not limited
to Horizon and GlobalQuest(R), account statements, advices, or by facsimile or
callback. The Client must report any objections to the execution of a payment
order within 30 days.


<PAGE>

                             FUNDS TRANSFER ADDENDUM

                                                               [GRAPHIC OMITTED]
                                                                  [STATE STREET]
                                  [Serving Institutional Investors Worldwide SM]

10. LIABILITY ON FOREIGN ACCOUNTS: State Street shall not be required to repay
any deposit made at a non-U.S. branch of State Street, or any deposit made with
State Street and denominated in a non-U.S. dollar currency, if repayment of such
deposit or the use of assets denominated in the non-U.S. dollar currency is
prevented, prohibited or otherwise blocked due to: (a) an act of war,
insurrection or civil strife; (b) any action by a non-U.S. government or
instrumentality or authority asserting governmental, military or police power of
any kind, whether such authority be recognized as a defacto or a dejure
government, or by any entity, political or revolutionary movement or otherwise
that usurps, supervenes or otherwise materially impairs the normal operation of
civil authority; or(c) the closure of a non-U.S. branch of State Street in order
to prevent, in the reasonable judgment of State Street, harm to the employees or
property of State Street. The obligation to repay any such deposit shall not be
transferred to and may not be enforced against any other branch of State Street.

The foregoing provisions constitute the disclosure required by Massachusetts
General Laws, Chapter 167D, Section 36.

While State Street is not obligated to repay any deposit made at a non-U.S.
branch or any deposit denominated in a non-U.S. currency during the period in
which its repayment has been prevented, prohibited or otherwise blocked, State
Street will repay such deposit when and if all circumstances preventing,
prohibiting or otherwise blocking repayment cease to exist.

11. MISCELLANEOUS: State Street and the Client agree to cooperate to attempt to
recover any funds erroneously paid to the wrong party or parties, regardless of
any fault of State Street or the Client, but the party responsible for the
erroneous payment shall bear all costs and expenses incurred in trying to effect
such recovery. These Guidelines may not be amended except by a written agreement
signed by the parties.


<PAGE>

                             FUNDS TRANSFER ADDENDUM

                                                               [GRAPHIC OMITTED]
                                                                  [STATE STREET]
                                  [Serving Institutional Investors Worldwide SM]


Security Procedure(s) Selection Form
- ------------------------------------

Please select one or more of the funds transfer security procedures indicated
below.

[ ] SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunication services for its membership. Participation is limited
to securities brokers and dealers, clearing and depository institutions,
recognized exchanges for securities, and investment management institutions.
SWIFT provides a number of security features through encryption and
authentication to protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent changes to
messages. SWIFT is considered to be one of the most secure and efficient
networks for the delivery of funds transfer instructions.
Selection of this security procedure would be most appropriate for existing
SWIFT members.

[ ] STANDING INSTRUCTIONS
Standing Instructions may be used where funds are transferred to a broker on the
Client's established list of brokers with which it engages in foreign exchange
transactions. Only the date, the currency and the currency amount are variable.
In order to establish this procedure, State Street will send to the Client a
list of the brokers that State Street has determined are used by the Client. The
Client will confirm the list in writing, and State Street will verify the
written confirmation by telephone. Standing Instructions will be subject to a
mutually agreed upon limit. If the payment order exceeds the established limit,
the Standing Instruction will be confirmed by telephone prior to execution.

[ ] REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data
communications between the Client and State Street. Security procedures include
encryption and or the use of a test key by those individuals authorized as
Automated Batch Verifiers.
Clients selecting this option should have an existing facility for completing
CPU-CPU transmissions. This delivery mechanism is typically used for high-volume
business.

[ ] GLOBAL HORIZON INTERCHANGE(SM) FUNDS TRANSFER SERVICE
Global Horizon Interchange Funds Transfer Service (FTS) is a State Street
proprietary microcomputer-based wire initiation system. FTS enables Clients to
electronically transmit authenticated Fedwire, CHIPS or internal book transfer
instructions to State Street.
This delivery mechanism is most appropriate for Clients with a low-to-medium
number of transactions (5-75 per day), allowing Clients to enter, batch, and
review wire transfer instructions on their PC prior to release to State Street.

[ ] TELEPHONE CONFIRMATION (CALLBACK)
Telephone confirmation will be used to verify all non-repetitive funds transfer
instructions received via untested facsimile or phone. This procedure requires
Clients to designate individuals as authorized initiators and authorized
verifiers. State Street will verify that the instruction contains the signature
of an authorized person and prior to execution, will contact someone other than
the originator at the Client's location to authenticate the instruction.
Selection of this alternative is appropriate for Clients who do not have the
capability to use other security procedures.

[ ] REPETITIVE WIRES
For situations where funds are transferred periodically (minimum of one
instruction per calendar quarter) from an existing authorized account to the
same payee (destination bank and account number) and only the date and currency
amount are variable, a repetitive wire may be implemented. Repetitive wires will
be subject to a mutually agreed upon limit. If the payment order exceeds the
established limit, the instruction will be confirmed by telephone prior to
execution. Telephone confirmation is used to establish this process. Repetitive
wire instructions must be reconfirmed annually.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts.

[ ] TRANSFERS INITIATED BY FACSIMILE
The Client faxes wire transfer instructions directly to State Street Mutual Fund
Services. Standard security procedure requires the use of a random number test
key for all transfers. Every six months the Client receives test key logs from
State Street. The test key contains alpha-numeric characters, which the Client
puts on each document faxed to State Street. This procedure ensures all wire
instructions received via fax are authorized by the Client.
We provide this option for Clients who wish to batch wire instructions and
transmit these as a group to State Street Mutual Fund Services once or several
times a day.


<PAGE>

                             FUNDS TRANSFER ADDENDUM

                                                               [GRAPHIC OMITTED]
                                                                  [STATE STREET]
                                  [Serving Institutional Investors Worldwide SM]

[ ] AUTOMATED CLEARING HOUSE (ACH)
State Street receives an automated transmission or a magnetic tape from a Client
for the initiation of payment (credit) or collection (debit) transactions
through the ACH network. The transactions contained on each transmission or tape
must be authenticated by the Client. Clients using ACH must select one or more
of the following delivery options:

[ ] GLOBAL HORIZON INTERCHANGE AUTOMATED CLEARING HOUSE SERVICE
Transactions are created on a microcomputer, assembled into batches and
delivered to State Street via fully authenticated electronic transmissions in
standard NACHA formats.

[ ] Transmission from Client PC to State Street Mainframe with Telephone
Callback

[ ] Transmission from Client Mainframe to State Street Mainframe with Telephone
Callback

[ ] Transmission from DST Systems to State Street Mainframe with Encryption

[ ] Magnetic Tape Delivered to State Street with Telephone Callback



State Street is hereby instructed to accept funds transfer instructions only via
the delivery methods and security procedures indicated. The selected delivery
methods and security procedure(s) will be effective
for payment orders initiated by our organization.  ----------------------------



KEY CONTACT INFORMATION

Whom shall we contact to implement your selection(s)?

CLIENT OPERATIONS CONTACT                   ALTERNATE CONTACT


- ----------------------------         -----------------------------------
     Name                                 Name


- ----------------------------         -----------------------------------
     Address                              Address


- ----------------------------         -----------------------------------
     City/State/Zip Code                  City/State/Zip Code


- ----------------------------         -----------------------------------
     Telephone Number                     Telephone Number


- ----------------------------         -----------------------------------
     Facsimile Number                     Facsimile Number


- ----------------------------         -----------------------------------
     SWIFT Number


- ----------------------------         -----------------------------------
     Telex Number


<PAGE>
                             FUNDS TRANSFER ADDENDUM


                                                               [GRAPHIC OMITTED]
                                                                  [STATE STREET]
                                  [Serving Institutional Investors Worldwide SM]


                             FUNDS TRANSFER ADDENDUM

INSTRUCTION(S)
- --------------

TELEPHONE CONFIRMATION
- ----------------------

FUND:  BLACKROCK INSURED MUNICIPAL INCOME TRUST
       ----------------------------------------

INVESTMENT ADVISOR:  BLACKROCK ADVISORS, INC.
                     ------------------------

SUB-ADVISOR:  BLACKROCK FINANCIAL MANAGEMENT, INC.
              ------------------------------------
AUTHORIZED INITIATORS

    Please Type or Print

Please provide a listing of Fund officers or other individuals who are currently
authorized to INITIATE wire transfer instructions to State Street:

NAME               TITLE (Specify whether position    SPECIMEN SIGNATURE
                   is with Fund or Investment
                   Adviser)

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

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

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

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

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

AUTHORIZED VERIFIERS

    Please Type or Print

Please provide a listing of Fund officers or other individuals who will be
CALLED BACK to verify the initiation of repetitive wires of $10 million or more
and all non-repetitive wire instructions:

NAME                CALLBACK PHONE NUMBER             DOLLAR LIMITATION (IF ANY)

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

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

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

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

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


<PAGE>


             REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
             ------------------------------------------------------


         ADDENDUM to that certain Custodian Contract dated as of October 21,
2002 (the "Custodian Agreement") between BlackRock Insured Municipal Income
Trust (the "Customer") and State Street Bank and Trust Company, including its
subsidiaries and affiliates ("State Street").


         State Street has developed and utilizes proprietary accounting and
other systems in conjunction with the custodian services which State Street
provides to the Customer. In this regard, State Street maintains certain
information in databases under its control and ownership which it makes
available to its customers (the "Remote Access Services").


The Services
- ------------

State Street agrees to provide the Customer, and its designated investment
advisors, consultants or other third parties authorized by State Street
("Authorized Designees") with access to In~Sight(SM) as described in Exhibit A
or such other systems as may be offered from time to time (the "System") on a
remote basis.

Security Procedures
- -------------------

The Customer agrees to comply, and to cause its Authorized Designees to comply,
with remote access operating standards and procedures and with user
identification or other password control requirements and other security
procedures as may be issued from time to time by State Street for use of the
System and access to the Remote Access Services. The Customer agrees to advise
State Street immediately in the event that it learns or has reason to believe
that any person to whom it has given access to the System or the Remote Access
Services has violated or intends to violate the terms of this Addendum and the
Customer will cooperate with State Street in seeking injunctive or other
equitable relief. The Customer agrees to discontinue use of the System and
Remote Access Services, if requested, for any security reasons cited by State
Street.


Fees
- ----

Fees and charges for the use of the System and the Remote Access Services and
related payment terms shall be as set forth in the custody fee schedule in
effect from time to time between the parties. The Customer shall be responsible
for any tariffs, duties or taxes imposed or levied by any government or
governmental agency by reason of the transactions contemplated by this Addendum,
including, without limitation, federal, state and local taxes, use, value added
and personal property taxes (other than income, franchise or similar taxes which
may be imposed or assessed against State Street). Any claimed exemption from
such tariffs, duties or taxes shall be supported by proper documentary evidence
delivered to State Street.


Proprietary Information/Injunctive Relief
- -----------------------------------------

The System and Remote Access Services described herein and the databases,
computer programs, screen formats, report formats, interactive design
techniques, formulae, processes, systems, software, know- how, algorithms,
programs, training aids, printed materials, methods, books, records, files,
documentation and other information made available to the Customer by State
Street as part of the Remote Access Services and through the use of the System
and all copyrights, patents, trade secrets and other proprietary rights of State
Street related thereto are the exclusive, valuable and confidential property of
State Street and its relevant licensors (the "Proprietary Information"). The
Customer agrees


                                       i
<PAGE>

on behalf of itself and its Authorized Designees to keep the Proprietary
Information confidential and to limit access to its employees and Authorized
Designees (under a similar duty of confidentiality) who require access to the
System for the purposes intended. The foregoing shall not apply to Proprietary
Information in the public domain or required by law to be made public.

The Customer agrees to use the Remote Access Services only in connection with
the proper purposes of this Addendum. The Customer will not, and will cause its
employees and Authorized Designees not to, (i) permit any third party to use the
System or the Remote Access Services, (ii) sell, rent, license or otherwise use
the System or the Remote Access Services in the operation of a service bureau or
for any purpose other than as expressly authorized under this Addendum, (iii)
use the System or the Remote Access Services for any fund, trust or other
investment vehicle without the prior written consent of State Street, or (iv)
allow or cause any information transmitted from State Street's databases,
including data from third party sources, available through use of the System or
the Remote Access Services, to be published, redistributed or retransmitted for
other than use for or on behalf of the Customer, as State Street's customer.

The Customer agrees that neither it nor its Authorized Designees will modify the
System in any way; enhance or otherwise create derivative works based upon the
System, nor will your or your Authorized Designees reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
System.

The Customer acknowledges that the disclosure of any Proprietary Information, or
of any information which at law or equity ought to remain confidential, will
immediately give rise to continuing irreparable injury to State Street
inadequately compensable in damages at law and that State Street shall be
entitled to obtain immediate injunctive relief against the breach or threatened
breach of any of the foregoing undertakings, in addition to any other legal
remedies which may be available.

Limited Warranties
- ------------------

State Street represents and warrants that it is the owner of and has the right
to grant access to the System and to provide the Remote Access Services
contemplated herein. Because of the nature of computer information technology
including, but not limited to, the use of the Internet, and the necessity of
relying upon third party sources, and data and pricing information obtained from
third parties, the System and Remote Access Services are provided "AS IS", and
the Customer and its Authorized Designees shall be solely responsible for the
investment decisions, results obtained, regulatory reports and statements
produced using the Remote Access Services. State Street and its relevant
licensors will not be liable to the Customer or its Authorized Designees for any
direct or indirect, special, incidental, punitive or consequential damages
arising out of or in any way connected with the System or the Remote Access
Services, nor shall either party be responsible for delays or nonperformance
under this Addendum arising out of any cause or event beyond such party's
control.

State Street will take reasonable steps to ensure that its products (and those
of its third-party suppliers) reflect the available state of the art technology
to offer products that are Year 2000 compliant, including, but not limited to,
century recognition of dates, calculations that correctly compute same century
and multi century formulas and date values, and interface values that reflect
the date issues arising between now and December 31, 2099, and if any changes
are required, State Street will make the changes to its products at no cost to
you and in a commercially reasonable time frame and will require third-party
suppliers to do likewise. The Customer will do likewise for its systems.

EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET, FOR ITSELF AND ITS
RELEVANT LICENSORS, EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES

                                       ii
<PAGE>

CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS
OR IMPLIED INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTIBILITY OR
FITNESS FOR A PARTICULAR PURPOSE.

Infringement
- ------------

State Street will defend or, at our option, settle any claim or action brought
against the Customer to the extent that it is based upon an assertion that
access to the System or use of the Remote Access Services by the Customer under
this Addendum constitutes direct infringement of any patent or copyright or
misappropriation of a trade secret, provided that the Customer notifies State
Street promptly in writing of any such claim or proceeding and cooperates with
State Street in the defense of such claim or proceeding. Should the System or
the Remote Access Services or any part thereof become, or in State Street's
opinion be likely to become, the subject of a claim of infringement or the like
under any applicable patent or copyright or trade secret laws, State Street
shall have the right, at State Street's sole option, to (i) procure for the
Customer the right to continue using the System or the Remote Access Services,
(ii) replace or modify the System or the Remote Access Services so that the
System or the Remote Access Services becomes noninfringing, or (iii) terminate
this Addendum without further obligation.

Termination
- -----------

Either party to the Custodian Agreement may terminate this Addendum (i) for any
reason by giving the other party at least one-hundred and eighty (180) days
prior written notice in the case of notice of termination by State Street to the
Customer or thirty (30) days notice in the case of notice from the Customer to
State Street of termination, or (ii) immediately for failure of the other party
to comply with any material term and condition of the Addendum by giving the
other party written notice of termination. This Addendum shall in any event
terminate within ninety (90) days after the termination of the Custodian
Agreement. In the event of termination, the Customer will return to State Street
all copies of documentation and other confidential information in its possession
or in the possession of its Authorized Designees. The foregoing provisions with
respect to confidentiality and infringement will survive termination for a
period of three (3) years.

Miscellaneous
- -------------

This Addendum and the exhibit hereto constitute the entire understanding of the
parties to the Custodian Agreement with respect to access to the System and the
Remote Access Services. This Addendum cannot be modified or altered except in a
writing duly executed by each of State Street and the Customer and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts.

By its execution of the Custodian Agreement, the Customer (a) confirms to the
Custodian that it informs all Authorized Designees of the terms of this
Addendum; (b) accepts responsibility for its and its Authorized Designees'
compliance with the terms of this Addendum; and (c) indemnifies and holds the
Custodian harmless from and against any and all costs, expenses, losses,
damages, charges, counsel fees, payments and liabilities arising from any
failure of the Customer or any of its Authorized Designees to abide by the terms
of this Addendum.

                                      iii
<PAGE>


                                    EXHIBIT A
                                       TO
             REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
             ------------------------------------------------------


                                   IN~SIGHT (SM)
                           System Product Description

In~Sight(SM) provides bilateral information delivery, interoperability, and
on-line access to State Street. In~Sight(SM) allows users a single point of
entry into State Street's diverse systems and applications. Reports and data
from systems such as Investment Policy Monitor(SM), Multicurrency Horizon(SM),
Securities Lending, Performance & Analytics and Electronic Trade Delivery can be
accessed through In~Sight(SM). This Internet-enabled application is designed to
run from a Web browser and perform across low-speed data lines or corporate
high-speed backbones. In~Sight(SM) also offers users a flexible toolset,
including an ad-hoc query function, a custom graphics package, a report
designer, and a scheduling capability. Data and reports offered through
In~Sight(SM) will continue to increase in direct proportion with the customer
roll out, as it is viewed as the information delivery system will grow with
State Street's customers.

                                       iv



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)
<SEQUENCE>11
<FILENAME>file010.txt
<DESCRIPTION>TRANSFER AGENCY AGREEMENT
<TEXT>


<PAGE>

[GRAPHIC OMITTED]
[EQUISERVE
150 Royall Street
Canton, MA 02021]






                                   REGISTRAR,

                      TRANSFER AGENCY AND SERVICE AGREEMENT

                                     between

                    BLACKROCK INSURED MUNICIPAL INCOME TRUST

                                       and

                          EQUISERVE TRUST COMPANY, N.A.


                                                                               3

<PAGE>



                                Table of Contents

<TABLE>
<CAPTION>
<S>     <C>                                                                              <C>
Article 1. Terms of Appointment; Duties of the Bank.......................................3

Article 2. Fees and Expenses..............................................................5

Article 3. Representations and Warranties of the Bank.....................................6

Article 4. Representations and Warranties of the Fund.....................................6

Article 5. Data Access and Proprietary Information........................................7

Article 6. Indemnification................................................................9

Article 7. Standard of Care..............................................................11

Article 8. Covenants of the Fund and the Bank............................................11

Article 9. Termination of Agreement......................................................12

Article 10. Assignment...................................................................13

Article 11. Amendment....................................................................13

Article 12. Massachusetts Law to Apply...................................................14

Article 13. Force Majeure................................................................14

Article 14. Consequential Damages........................................................14

Article 15. Merger of Agreement..........................................................14
</TABLE>


                                                                               4
<PAGE>


                REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT

           AGREEMENT made as of the 31 day of October 2002, by and between
BlackRock Insured Municipal Income Trust, a Delaware business trust, having its
principal office and place of business at 100 Bellevue Avenue, Wilmington,
Delaware 19809 (the "Trust"), and EQUISERVE TRUST COMPANY, N.A., a national
banking association having its principal office and place of business at 150
Royall Street Canton, MA 02021 (the "Bank").

           WHEREAS, the Trust desires to appoint the Bank as its registrar,
transfer agent, dividend disbursing agent and agent in connection with certain
other activities and the Bank desires to accept such appointment;

           NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

           ARTICLE 1 Terms of Appointment Duties of the Bank
           -------------------------------------------------

           1.01 Subject to the terms and conditions set forth in this Agreement,
the Trust hereby employs and appoints the Bank to act as, and the Bank agrees to
act as registrar, transfer agent for the Trust's authorized and issued shares of
its beneficial interest ("Shares"), dividend disbursing agent and agent in
connection with any dividend reinvestment plan as set out in the prospectus of
the Trust, corresponding to the date of this Agreement.

           1.02 The Bank agrees that it will perform the following services: (a)
In accordance with procedures established from time to time by agreement between
the Trust and the Bank, the Bank shall:

           (i)        Issue and record the appropriate number of shares as
                      authorized and hold such Shares in the appropriate
                      Shareholder account;

           (ii)       Effect transfers of Shares by the registered owners
                      thereof upon receipt of




                                                                               5
<PAGE>

                      appropriate documentation;

           (iii)      Prepare and transmit payments for dividends and
                      distributions declared by the Trust;

           (iv)       Act as agent for Shareholders pursuant to the dividend
                      reinvestment and cash purchase plan as amended from time
                      to time in accordance with the terms of the agreement to
                      be entered into between the Shareholders and the Bank in
                      substantially the form attached as Exhibit A hereto;

           (v)        Issue replacement certificates for those certificates
                      alleged to have been lost, stolen or destroyed upon
                      receipt by the Bank of indemnification satisfactory to the
                      Bank and protecting the Bank and the Trust, and the Bank
                      at its option, may issue replacement certificates in place
                      of mutilated stock certificates upon presentation thereof
                      and without such indemnity.

           (b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i) perform all
of the customary services of a registrar, transfer agent, dividend disbursing
agent and agent of the dividend reinvestment and cash purchase plan as described
in Article 1 consistent with those requirements in effect as of the date of this
Agreement. The detailed definition, frequency, limitations and associated costs
(if any) set out in the attached fee schedule, include but are not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, and mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all registered Shareholders.

           (c) The Bank shall provide additional services on behalf of the Trust
(i.e., escheatment services) which may be agreed upon in writing between the
Trust and the Bank.

         ARTICLE 2 Fees and Expenses
         ---------------------------

         2.01 For the performance by the Bank pursuant to this Agreement, the
Trust agrees to pay the Bank



                                                                               6
<PAGE>

an annual maintenance fee as set out in the initial fee schedule attached
hereto. Such fees and out-of-pocket expenses and advances identified under
Section 2.02 below may be changed from time to time subject to mutual written
agreement between the Trust and the Bank.

         2.02 In addition to the fee paid under Section 2.01 above, the Trust
agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Trust, will be reimbursed by the Trust.

           2.03 The Trust agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
and the cost of materials for mailing of dividends, proxies, Trust reports and
other mailings to all Shareholder accounts shall be advanced to the Bank by the
Trust at least seven (7) days prior to the mailing date of such materials.

         ARTICLE 3 Representations and Warranties of the Bank
         ----------------------------------------------------

           The Bank represents and warrants to the Trust that:

           3.01 It is a trust company and national banking association existing
and in good standing under the laws of the United States.

           3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.

           3.03 It is empowered under applicable laws and by its Charter and
ByLaws to enter into and perform this Agreement.

           3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.

           3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.


         ARTICLE 4 Representations and Warranties of the Trust
         -----------------------------------------------------

                                                                               7
<PAGE>

           The Trust represents and warrants to the Bank that:

         4.01 It is a business trust duly organized and existing and in good
         standing under the laws of Delaware.

           4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and By-Laws to enter into and perform this Agreement.

         4.03 All corporate proceedings required by said Agreement and
Declaration of Trust and By-Laws have been taken to authorize it to enter into
and perform this Agreement.

           4.04 It is a closed-end, diversified investment company registered
under the Investment Company Act of 1940, as amended.

           4.05 To the extent required by federal securities laws a registration
statement under the Securities Act of 1933, as amended is currently effective
and appropriate state securities law filings have been made with respect to all
Shares of the Trust being offered for sale; information to the contrary will
result in immediate notification to the Bank.

           4.06 It shall make all required filings under federal and state
securities laws.

         ARTICLE 5 Data Access and Proprietary Information
        -------------------------------------------------


           5.01 The Trust acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and other
information furnished to the Trust by the Bank are provided solely in connection
with the services rendered under this Agreement and constitute copyrighted trade
secrets or proprietary information of substantial value to the Bank. Such
databases, programs, formats, designs, techniques and other information are
collectively referred to below as "Proprietary Information." The Trust agrees
that it shall treat all Proprietary Information as proprietary to the Bank and
further agrees that it shall not divulge any Proprietary Information to any
person or organization except as expressly permitted hereunder. The Trust agrees
for itself and its employees and agents:


                                                                               8
<PAGE>

           (a) to use such programs and databases (i) solely on the Trust
computers, or (ii) solely from equipment at the locations agreed to between the
Trust and the Bank and (iii) in accordance with the Bank's applicable user
documentation;

           (b) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Trusts' computers) any part of
any Proprietary Information;


           (c) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Trust, and if such access is
accidentally obtained, to respect and safeguard the same Proprietary
Information;

           (d) to refrain from causing or allowing information transmitted from
the Bank's computer to the Trusts' terminal to be retransmitted to any other
computer terminal or other device except as expressly permitted by the Bank
(such permission not to be unreasonably withheld);

           (e) that the Trust shall have access only to those authorized
transactions as agreed to between the Trust and the Bank; and

           (f) to honor reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary Information at
common law and under applicable statues.



           5.02 If the transactions available to the Trust include the ability
to originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Bank from time to time.


ARTICLE 6 Indemnification
- -------------------------

         6.01 The Bank shall not be responsible for, and the Trust shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability

                                                                               9
<PAGE>

arising out of or attributable to:

           (a) All actions of the Bank or its agents or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.

           (b) The Trust's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the Trust
hereunder.

           (c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Trust or any other person or firm on
behalf of the Trust including but not limited to any previous transfer agent
registrar.

           (d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Trust.

           (e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.

           6.02 At any time the Bank may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Trust, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Bank or its agents or subcontractors by telephone, in person, machine readable
input, telex, CRT data entry or other similar means authorized by the Trust, and
shall not be held to have notice of



                                                                              10
<PAGE>

any change of authority of any person, until receipt of written notice thereof
from the Trust. The Bank, its agents and subcontractors shall also be protected
and indemnified in recognizing stock certificates which are reasonably believed
to bear the proper manual or facsimile signatures of the officers of the Trust,
and the proper countersignature of any former transfer agent or former
registrar, or of a cotransfer agent or co-registrar.

         6.03 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which the Trust may be
required to indemnify the Bank, the Bank shall promptly notify the Trust in
writing of such assertion, and shall keep the Trust advised with respect to all
developments concerning such claim. The Trust shall have the option to
participate with the Bank in the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The Bank shall in no case
confess any claim or make any compromise in any case in which the Trust may be
required to indemnify the Bank except with the Trust's prior written consent.

           ARTICLE 7 Standard of Care
           --------------------------

           7.01 The Bank shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its employees.

         ARTICLE 8 Covenants of the Trust and the Bank
         ---------------------------------------------

           8.01 The Trust shall promptly furnish to the Bank the following:

           (a) A certified copy of the resolution of the Board of Trustees of
the Trust authorizing the appointment of the Bank and the execution and delivery
of this Agreement.

           (b) A copy of the Agreement and Declaration of Trust and By-Laws of
the Trust and all amendments thereto.

           8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trust for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if


                                                                              11
<PAGE>

any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.

         8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Trust and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Trust on and in accordance with its request.

         8.04 The Bank and the Trust agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be requested by a governmental entity or as may be required by
law.
         8.05 In cases of any requests or demands for the inspection of the
Shareholder records of the Trust, the Bank will endeavor to notify the Trust and
to secure instructions from an authorized officer of the Trust as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.

         ARTICLE 9 Termination of Agreement
         ----------------------------------

           9.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days' written notice to the other.

           9.02 Should the Trust exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Trust. In the event that in connection with termination of this
Agreement, a successor to any of the Bank's duties or responsibilities under
this Agreement is designated by the Trust by written notice to the Bank, the
Bank shall, promptly upon such termination and at the expense of the Trust,
transfer all records and shall cooperate in the transfer of



                                                                              12
<PAGE>

such duties and responsibilities. Additionally, the Bank reserves the right to
charge for any other reasonable expenses associated with such termination and/or
a charge equivalent to the average of three (3) month's fees.

         ARTICLE 10 Assignment
         ---------------------

           10.01 Except as provided in Section 10.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.

           10.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.

           10.03 The Bank may, without further consent on the part of the Trust,
subcontract for the performance hereof with (i) EquiServe Limited Partnership, a
Delaware limited partnership ("EquiServe"), which is duly registered as a
transfer agent pursuant to Section 17A(c)(2) of the Securities Exchange Act of
1934 ("Section 17A(c)(2)"), or (ii) an EquiServe affiliate duly registered as a
transfer agent pursuant to Section 17A(c)(2), provided, however, that the Bank
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as it is for its own acts and omissions.

         ARTICLE 11 Article 11 Amendment
         -------------------------------

         11.01 This Agreement maybe amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Trust.

         ARTICLE 12 Massachusetts Law to Apply
         -------------------------------------

           12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.

         ARTICLE 13 Force Maieure
         ------------------------

           13.01 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.

         ARTICLE 14 Consequential Damages
         --------------------------------


                                                                              13
<PAGE>

           14.01 Neither party to this Agreement shall be liable to the other
party for damages under any provision of this Agreement or for any consequential
damages arising out of any act or failure to act hereunder.

         ARTICLE 15 Merger of Agreement
         ------------------------------

           15.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.


           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.

                                        BLACKROCK INSURED MUNICIPAL INCOME TRUST


                                        BY:
                                           ---------------------------------
                                        Name:  Anne Ackerley
                                        Title:    Secretary


                                        EQUISERVE TRUST COMPANY, N.A.


                                        BY:
                                           ---------------------------------
                                        Name:  Margaret Prentice
                                        Title:    Managing Director


                                                                              14



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(L)
<SEQUENCE>12
<FILENAME>file011.txt
<DESCRIPTION>OPINION AND CONSENT OF COUNCIL
<TEXT>


<PAGE>

                    SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
                                FOUR TIMES SQUARE
                             NEW YORK, NY 10036-6522

                                     -------
                                 (212) 735-3000


                                October 28, 2002



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

                           Re:      BlackRock Insured Municipal Income Trust
                                    Registration Statement on Form N-2
                                    --------------------------------------------

Ladies and Gentlemen:

           We have acted as special counsel to BlackRock Insured Municipal
Income Trust, a statutory trust created under the Delaware Statutory Trust Act
(the "Trust"), in connection with the initial public offering by the Trust of up
to 27,000,000 shares (including shares subject to an over-allotment option) of
the Trust's common shares (the "Shares") of beneficial interest, par value
$0.001 per share (the "Common Shares").

           This opinion is being furnished in accordance with the requirements
of Item 24 of the Form N-2 Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act").

           In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Notification of Registration of the Trust as an investment company under the
1940 Act, on Form N-8A, dated August 19, 2002, as filed with the Securities and
Exchange Commission (the "Commission") on August 19, 2002, (ii) the Registration
Statement of the Trust on Form N-2 (File Nos. 333-98357 and 811-21178), as filed
with the Commission on August 19, 2002 under the Securities Act of 1933, as
amended (the "1933 Act") and the 1940 Act, Pre-Effective Amendment No. 1
thereto, as filed with the Commission on September 5, 2002, Pre-Effective
Amendment No. 2 thereto, as filed with the Commission on September 24, 2002, and
Pre-Effective Amendment No. 3 thereto, to be filed with the Commission on
October 28, 2002, under the 1933 Act (such Registration Statement, as so amended
and proposed to be amended, being hereinafter referred to as the "Registration
Statement"); (iii) the form of the Underwriting Agreement (the "Underwriting
Agreement") proposed to be entered into between the Trust, as issuer, BlackRock
Advisors, Inc., as investment adviser to the Trust, BlackRock Financial
Management, Inc., as investment sub-adviser to the Trust, and Salomon Smith
Barney Inc., as representative of the several underwriters named



<PAGE>
BlackRock Insured Municipal Income Trust
October 28, 2002
Page 2

therein (the "Underwriters"), filed as an exhibit to the Registration Statement;
(iv) a specimen certificate representing the Common Shares; (v) the Corrected
Certificate of Trust, as filed with the Secretary of State of Delaware, and the
Amended and Restated Agreement and Declaration of Trust of the Trust, as
currently in effect; (vi) the Amended and Restated By-Laws of the Trust, as
currently in effect; (vii) certain resolutions of the Board of Trustees of the
Trust relating to the issuance and sale of the Shares and related matters; and
(viii) certain resolutions of the shareholders of the Trust adopted on October
21, 2002. We also have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Trust and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Trust and others, and such other documents, certificates
and records as we have deemed necessary or appropriate as a basis for the
opinions set forth herein.

           In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents, we have assumed that the parties thereto, other than the Trust, had
or will have the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
of such documents and the validity and binding effect thereof on such parties.
In rendering the opinion set forth below, we have assumed that the share
certificates representing the Shares will conform to the specimen examined by us
and will have been manually signed by an authorized officer of the transfer
agent and registrar for the Common Shares and registered by such transfer agent
and registrar. As to any facts material to the opinions expressed herein which
we have not independently established or verified, we have relied upon
statements and representations of officers and other representatives of the
Trust and others.

           Members of our firm are admitted to the bar in the State of Delaware
and we do not express any opinion as to the laws of any jurisdiction other than
the Delaware Statutory Trust Act.

           Based upon and subject to the foregoing, we are of the opinion that
the issuance and sale of the Shares will have been duly authorized when (i) the
Registration Statement becomes effective; (ii) the Underwriting Agreement has
been duly executed and delivered; (iii) certificates representing the Shares in
the form of the specimen certificate examined by us have been manually signed by
an authorized officer of the transfer agent and registrar for the Common Shares
and registered by such transfer agent and registrar; and (iv) the Shares have
been delivered to and paid for by the Underwriters at a price per share not less
than the per share par



<PAGE>
BlackRock Insured Municipal Income Trust
October 28, 2002
Page 3



value of the Common Shares as contemplated by the Underwriting Agreement, the
Shares will be validly issued, fully paid and nonassessable (except as provided
in the last sentence of Section 3.8 of the Agreement and Declaration of Trust).

           We hereby consent to the filing of this opinion with the Commission
as an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Opinions" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the 1933 Act or
the rules and regulations of the Commission.

                              Very truly yours,

                              /s/ Skadden, Arps, Slate, Meagher & Flom LLP



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(N)
<SEQUENCE>13
<FILENAME>file012.txt
<DESCRIPTION>CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
<TEXT>

<PAGE>














INDEPENDENT AUDITORS' CONSENT


We consent to the use in this Pre-Effective Amendment No. 3 to the Registration
Statement of BlackRock Insured Municipal Income Trust (Securities Act
Registration No. 333-98357) of our report dated October 25, 2002, relating to
the financial statements of BlackRock Insured Municipal Income Trust as of
October 21, 2002 and for the period then ended in the Statement of Additional
Information which is part of such registration statement.

We also consent to the reference to our Firm under the heading "Experts" in the
Registration Statement.



/s/ Deloitte & Touche LLP
- ------------------------------
Deloitte & Touche LLP
Boston, Massachusetts
October 28, 2002







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(P)
<SEQUENCE>14
<FILENAME>file013.txt
<DESCRIPTION>SUBSCRIPTION AGREEMENT
<TEXT>

<PAGE>


                             SUBSCRIPTION AGREEMENT

           THIS SUBSCRIPTION AGREEMENT is entered into as of the 21st day of
October, 2002, between BlackRock Insured Municipal Income Trust, a business
trust organized and existing under the laws of Delaware (the "Trust"), and
BlackRock Advisors, Inc. or one of its affiliates (the "Purchaser").

           THE PARTIES HEREBY AGREE AS FOLLOWS:


           1. PURCHASE AND SALE OF THE SHARES

           1.1 SALE AND ISSUANCE OF SHARES. Subject to the terms and conditions
of this Agreement, the Trustees agree to sell to the Purchaser, and the
Purchaser agrees to purchase from the Trustees 8,028 common shares of beneficial
interest, par value $0.001, representing undivided beneficial interests in the
Trust (the "Shares") at a price per Share of $14.325 for an aggregate purchase
price of $115,001.

           2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The
Purchaser hereby represents and warrants to, and covenants for the benefit of,
the Trust that:

           2.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made by the
Trustees with the Purchaser in reliance upon the Purchaser's representation to
the Trustees, which by the Purchaser's execution of this Agreement the Purchaser
hereby confirms, that the Shares are being acquired for investment for the
Purchaser's own account, and not as a nominee or agent and not with a view to
the resale or distribution by the Purchaser of any of the Shares, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the Shares, in either case in violation of any securities
registration requirement under applicable law, but subject nevertheless, to any
requirement of law that the disposition of its property shall at all times by
within its control. By executing this Agreement, the Purchaser further
represents that the Purchaser does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Shares.

<PAGE>

           2.2 INVESTMENT EXPERIENCE. The Purchaser acknowledges that it can
bear the economic risk of the investment for an indefinite period of time and
has such knowledge and experience in financial and business matters (and
particularly in the business in which the Trust operates) as to be capable of
evaluating the merits and risks of the investment in the Shares. The Purchaser
is an "accredited investor" as defined in Rule 501(a) of Regulation D under the
Securities Act of 1933 (the "1933 Act").

           2.3 RESTRICTED SECURITIES. The Purchaser understands that the Shares
are characterized as "restricted securities" under the United States securities
laws inasmuch as they are being acquired from the Trustees in a transaction not
involving a public offering and that under such laws and applicable regulations
such Shares may be resold without registration under the 1933 Act only in
certain circumstances. In this connection, the Purchaser represents that it
understands the resale limitations imposed by the 1933 Act and is generally
familiar with the existing resale limitations imposed by Rule 144.

           2.4 FURTHER LIMITATIONS ON DISPOSITION. The Purchaser further agrees
not to make any disposition directly or indirectly of all or any portion of the
Shares unless and until:

           (a) There is then in effect a registration statement under the 1933
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

           (b) The Purchaser shall have furnished the Trustees with an opinion
of counsel, reasonably satisfactory to the Trustees, that such disposition will
not require registration of such Shares under the 1933 Act.

           (c) Notwithstanding the provisions of subsections (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by the Purchaser to any affiliate of the Purchaser, if the transferee
agrees in writing to be subject to the terms hereof to the same extent as if it
were the original Purchaser hereunder.

           2.5 LEGENDS. It is understood that the certificate evidencing the
Shares may bear either or both of the following legends:

           (a) "These securities have not been registered under the Securities
Act of 1933. They may not be sold, offered for sale, pledged or hypothecated

                                       2

<PAGE>

in the absence of a registration statement in effect with respect to the Shares
under such Act or an opinion of counsel reasonably satisfactory to the Trustees
of BlackRock Insured Municipal Income Trust that such registration is not
required."

           (b) Any legend required by the laws of any other applicable
jurisdiction.

           The Purchaser and the Trustees agree that the legend contained in the
paragraph (a) above shall be removed at a holder's request when they are no
longer necessary to ensure compliance with federal securities laws.

           2.6 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.



                                       3
<PAGE>

           IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.


                                        BLACKROCK INSURED MUNICIPAL
                                        INCOME TRUST



                                        By:/s/ Anne F. Ackerley
                                           ------------------------------------
                                               Name: Anne F. Ackerley
                                               Title: Secretary




                                        BLACKROCK ADVISORS, Inc.



                                        By:/s/ Anne F. Ackerley
                                           ------------------------------------
                                               Name: Anne F. Ackerley
                                               Title: Managing Director

                                       4



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(R)(1)
<SEQUENCE>15
<FILENAME>file014.txt
<DESCRIPTION>CODE OF ETHICS OF TRUST
<TEXT>
<PAGE>

                                                                   EX-99.(r)(1)

                         THE BLACKROCK CLOSED END TRUSTS

                                 CODE OF ETHICS

I.       Introduction.
         ------------

         The purpose of this Code of Ethics is to prevent Access Persons (as
defined below) of The BlackRock Closed End Trusts (the "Trusts") from engaging
in any act, practice or course of business prohibited by paragraph (b) of Rule
17j-l (the "Rule") under the Investment Company Act of 1940, as amended (the
"Act"). This Code of Ethics is required by paragraph (c) of the Rule. A copy of
the Rule is attached to this Code of Ethics as Appendix 1.

         Access Persons of the Trusts, in conducting their personal securities
transac tions, owe a fiduciary duty to the shareholders of the Trusts. The
fundamental standard to be followed in personal securities transactions is that
Access Persons may not take inappropriate advantage of their positions. All
personal securities transac tions by Access Persons must be conducted in such a
manner as to avoid any actual or potential conflict of interest between the
Access Person's interest and the interests of the Trusts, or any abuse of an
Access Person's position of trust and responsibility. Potential conflicts
arising from personal investment activities could include buying or selling
securities based on knowledge of the Trust's trading position or plans
(sometimes referred to as front-running), and acceptance of personal favors that
could influence trading judgments on behalf of the Trusts. While this Code of
Ethics is designed to address identified conflicts and potential conflicts, it
cannot possibly be written broadly enough to cover all potential situations and,
in this regard, Access Persons are expected to adhere not only to the letter,
but also the spirit, of the policies contained herein.

II.      Definitions.
         -----------

         In order to understand how this Code of Ethics applies to particular
persons and transactions, familiarity with the key terms and concepts used in
this Code of Ethics is necessary. Those key terms and concepts are:


<PAGE>



         1. "Access Person" means any trustee, officer or "advisory person" of
the Trusts. A list of the Trust's Access Persons is attached as Appendix 2 to
this Code of Ethics and will be updated from time to time.

         2. "Advisory person" means (a) any employee of the Trusts or of any
company in a control relationship to the Trusts, who, in connection with his
regular functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a "Covered Security" by the Trusts, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales; and (b) any natural person in a control relationship to the
Trusts who obtains information concerning recommendations made to the Trusts
with regard to the purchase or sale of "Covered Securities".

         3. "Beneficial ownership" has the meaning set forth in Rule 16a-1(a)(2)
of the Securities Exchange Act of 1934, as amended, a copy of which is included
as Appendix 3. The determination of direct or indirect beneficial ownership
shall apply to all securities which an Access Person has or acquires.

         4. "BlackRock" means BlackRock Advisors, Inc. the investment advisor of
the Trusts.

         5. "BlackRock Code" means the Employee Investment Transaction Policy
adopted by BlackRock and approved by the Board.

         6. "Control" has the meaning set forth in Section 2(a)(9) of the Act.

         7. "Covered Security" has the meaning set forth in Section 2(a)(36) of
the Act, except that it shall not include: direct obligations of the Government
of the United States; bankers' acceptances, bank certificates of deposit,
commercial paper, and high-quality short-term debt instruments, including
repurchase agreements; and shares issued by registered open-end investment
companies. A high-quality short- term debt instrument is one with a maturity at
issuance of less than 366 days and that is rated in one of the two highest
rating categories by a nationally recognized statistical rating organization.

         8. "Independent trustee" means a trustee of the Trusts who is not an
"interested person" of the Trusts within the meaning of Section 2(a)(19) of the
Act.

         9. "Investment Personnel" of the Trusts means (a) any employee of the
Trusts (or of any company in a control relationship to the Trusts) who, in
connection with his or her regular functions or duties, makes or participates in
making recom-



<PAGE>



mendations regarding the purchase or sale of securities by the Trusts and (b)
any natural person who controls the Trusts and who obtains information
concerning recommendations made to the Trusts regarding the purchase or sale of
securities by the Trusts.

         10. "IPO" means an offering of securities registered under the
Securities Act of 1933, the issuer or which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act.

         11. "Limited Offering" means an offering exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2), 4(6) or Rule 504, 505 or
506 under the Securities Act of 1933.

         12. "Purchase or sale of a Covered Security" includes, among other
things, the writing of an option to purchase or sell a Covered Security.


III.     Restrictions Applicable to Directors, Officers and Employees of
         BlackRock.
         ---------------------------------------------------------------

         1. All Directors, officers and employees of BlackRock's investment
advisory companies shall be subject to the restrictions, limitations and
reporting responsibilities set forth in the BlackRock Code, respectively, as if
fully set forth herein.

         2. Persons subject to this Section III shall not be subject to the
restric tions, limitations and reporting responsibilities set forth in Sections
IV. and V. below.


IV.      Prohibitions; Exemptions.
         ------------------------

         1. Prohibited Purchases and Sales.
            ------------------------------

         A. No Access Person may purchase or sell, directly or indirectly, any
Covered Security in which that Access Person has, or by reason of the
transaction would acquire, any direct or indirect beneficial ownership and which
to the actual knowledge of that Access Person at the time of such purchase or
sale:

         (1) is being considered for purchase or sale by the Trusts; or


<PAGE>




         (2) is being purchased or sold by the Trusts.

         2. Exemptions From Certain Prohibitions.
            ------------------------------------

         A. The prohibited purchase and sale transactions described in paragraph
IV.1 above do not apply to the following personal securities transactions:

         (1) purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;

         (2) purchases or sales which are non-volitional on the part of either
the Access Person or the Trusts;

         (3) purchases which are part of an automatic dividend reinvestment plan
(other than pursuant to a cash purchase plan option);

         (4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent the rights
were acquired from that issuer, and sales of the rights so acquired;

         (5) any purchase or sale, or series of related transactions, involving
500 shares or less in the aggregate, if the issuer has a market capitalization
(outstanding shares multiplied by the current price per share) greater than $1
billion;

         (6) any purchase or sale which the Compliance Officer of BlackRock (as
defined in the BlackRock Code) approves on the grounds that its potential harm
to the Trusts is remote.

         3. Prohibited Recommendations.
            --------------------------

         An Access Person may not recommend the purchase or sale of any Covered
Security to or for the Trusts without having disclosed his or her interest, if
any, in such security or the issuer thereof, including without limitation:

         A. any direct or indirect beneficial ownership of any Covered Security
of such issuer, including any Covered Security received in a private securities
transac tion;

         B. any contemplated purchase or sale by such person of a Covered
Security;


<PAGE>


         C. any position with such issuer or its affiliates; or

         D. any present or proposed business relationship between such issuer or
its affiliates and such person or any party in which such person has a
significant interest.

         4. Pre-approval of Investments in Initial
            Public Offerings or Limited Offerings.
            -------------------------------------

         A. No Investment Personnel shall purchase any security (including, but
not limited to, any Covered Security) issued in an initial public offering
("IPO") or a Limited Offering unless an officer of the Trusts approves the
transaction in advance. The Secretary shall maintain a written record of any
decisions to permit these transactions, along with the reasons supporting the
decision.

V.       Reporting.
         ---------

         1. Initial Holdings Reports.
            ------------------------

         No later than ten (10) days after a person becomes an Access Person, he
or she must report to the Trusts the following information:

                  (i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or indirect benefi
cial ownership when the person became an Access Person;

                  (ii) the name of any broker, dealer or bank with whom the
Access Person maintained an account in which any securities were held for the
direct or indirect benefit of the Access Person as of the date the person became
an Access Person; and

                  (iii) the date that the report is submitted by the Access
Person.

         2. Quarterly Reporting.
            -------------------

         A. Every Access Person shall either report to the Trusts the
information described in paragraphs B and C below with respect to transactions
in any Covered


<PAGE>



Security in which the Access Person has, or by reason of the transaction
acquires, any direct or indirect beneficial ownership in the security or, in the
alternative, make the representation in paragraph D below.

         B. Every report shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which the report relates was
effected and shall contain the following information:

         (1) the date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the principal amount of
each Covered Security involved;

         (2) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);

         (3) the price at which the transaction was effected;

         (4) the name of the broker, dealer or bank with or through whom the
transaction was effected;

         (5) the date that the report is submitted by the Access Person; and

         (6) a description of any factors potentially relevant to an analysis of
whether the Access Person may have a conflict of interest with respect to the
transaction, including the existence of any substantial economic relationship
between the transaction and securities held or to be acquired by the Trusts.

         C. With respect to any account established by the Access Person in
which any securities were held during the quarter for the direct or indirect
benefit of the Access Person, no later than 10 days after the end of a calendar
quarter, an Access Person shall provide a report to the Trusts containing the
following informa tion:

         (1) the name of the broker, dealer or bank with whom the Access Person
established the account;

         (2) the date the account was established; and

         (3) the date that the report is submitted by the Access Person.


<PAGE>



         D. If no transactions were conducted by an Access Person during a
calendar quarter that are subject to the reporting requirements described above,
such Access Person shall, not later than 10 days after the end of that calendar
quarter, provide a written representation to that effect to the Trusts.

         3. Annual Reporting.
            ----------------

         A. Every Access Person shall report to the Trusts the information
described in paragraph B below with respect to transactions in any Covered
Security in which the Access Person has, or by reason of the transaction
acquires, any direct or indirect beneficial ownership in the security.

         B. Annually, within 30 days of the end of each calendar year, the
following information (which information must be current as of a date no more
than 30 days before the report is submitted):

         (1) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership;

         (2) The name of any broker, dealer or bank with whom the Access Person
maintains an account in which any securities are held for the direct or indirect
benefit of the Access Person; and

         (3) The date that the report is submitted by the Access Person.

         4. Exceptions to Reporting Requirements.
            ------------------------------------

         A. An Access Person is not required to make a report otherwise required
under paragraphs 1, 2 or 3 above with respect to any transaction effected for
any account over which the Access Person does not have any direct or indirect
influence or control; provided, (however, that if the Access Person is relying
upon the provi sions of this paragraph 4(A) to avoid making such a report, the
Access Person shall, not later than 10 days after the end of each calendar
quarter, identify any such account in writing and certify in writing that he or
she had no direct or indirect influence over any such account.

         B. An independent trustee of the Trusts who would be required to make a
report pursuant to paragraphs 1, 2 or 3 above solely by reason of being a
trustee of the Trusts is not required to make an initial holdings report under
paragraph 1 above and an annual report under paragraph 3 above, and is only
required to make a


<PAGE>


quarterly report under paragraph 2 above if the independent trustee, at the time
of the transaction, knew or, in the ordinary course of fulfilling the
independent trustee's official duties as a trustee of the Trusts, should have
known that (a) the Trusts has engaged in a transaction in the same security
within the last 15 days or is engaging or going to engage in a transaction in
the same security within the next 15 days, or (b) the Trusts or BlackRock has
within the last 15 days considered a transaction in the same security or is
considering a transaction in the same security or within the next 15 days is
going to consider a transaction in the same security.

         5. Annual Certification.
            --------------------

         A. All Access Persons are required to certify that they have read and
understand this Code of Ethics and recognize that they are subject to the
provisions hereof and will comply with the policy and procedures stated herein.
Further, all Access Persons are required to certify annually that they have
complied with the requirements of this Code of Ethics and that they have
reported all personal securities transactions required to be disclosed or
reported pursuant to the requirements of such policies. A copy of the
certification form to be used in complying with this paragraph A is attached to
this Code of Ethics as Appendix 4.

         B. The Trusts and BlackRock shall prepare an annual report to the Board
of Trustees of the Trusts to be presented at the first regular meeting of the
Board after March 31 of each year and which shall:

         (1) Summarize existing procedures concerning personal investing,
including pre-clearance policies and the monitoring of personal investment
activity after pre-clearance has been granted, and any changes in the procedures
during the past year;

         (2) describe any issues arising under the Code of Ethics or procedures
since the last report to the Board including, but not limited to, information
about any material violations of the Code of Ethics or procedures and the
sanctions imposed during the past year;

         (3) identify any recommended changes in existing restrictions or proce
dures based upon experience under this Code of Ethics, evolving industry
practice or developments in applicable laws and regulations;

         (4) contain such other information, observations and recommendations as
deemed relevant by the Trusts or BlackRock; and


<PAGE>


         (5) certify that the Trusts, BlackRock have adopted Codes of Ethics
with procedures reasonably necessary to prevent Access Persons from violating
the provisions of Rule 17j-1(b) or this Code.

         6. Notification of Reporting Obligation and Review of Reports.
            ----------------------------------------------------------

         Each Access Person shall receive a copy of this Code of Ethics and be
notified of his or her reporting obligations. All reports shall be promptly
submitted upon completion to the Trust's Secretary who shall review such
reports.

         7. Miscellaneous.
            -------------

         A. Any report under this Code of Ethics may contain a statement that
the report shall not be construed as an admission by the person making the
report that the person has any direct or indirect beneficial ownership in the
securities to which the report relates.

VI.      Confidentiality.
         ---------------

         No Access Person shall reveal to any other person (except in the normal
course of his or her duties on behalf of the Trusts) any information regarding
securities transactions by the Trusts or consideration by the Trusts or
BlackRock of any such securities transaction.

         All information obtained from any Access Person hereunder shall be kept
in strict confidence, except that reports of securities transactions hereunder
will be made available to the Securities and Exchange Commission or any other
regulatory or self-regulatory organization to the extent required by law or
regulation.

VII.     Sanctions.
         ---------

         Upon discovering a violation of this Code of Ethics, the Board of
Trustees of the Trusts may impose any sanctions it deems appropriate, including
a letter of censure, the suspension or termination of any trustee, officer or
employee of the Trusts, or the recommendation to the employer of the violator of
the suspension or termination of the employment of the violator.



Dated:   May 18, 2000



<PAGE>



                                   Appendix 1
                                   ----------

               Rule 17j-l under the Investment Company Act of 1940
               ---------------------------------------------------






















<PAGE>

                                   Appendix 2
                                   ----------


         The following are "Access Persons" for purposes of the foregoing Code
of Ethics:


NAME                                        TITLE
- ----                                        -----
DIRECTORS

Ralph L.Schlosstein                         Chairman/Director
Andrew F. Brimmer                           Director
Richard E. Cavanagh                         Director
Kent Dixon                                  Director
Robert S. Kapito                            Director
James Clayburn La Force, Jr.                Director
Walter F. Mondale                           Director
                                            Director


OFFICERS

Robert S. Kapito                            President
Kevin Klingert                              Vice President (Municipals Only)
Dennis Schaney                              Vice President (BHY Only)
Richard M. Shea                             Vice President/Tax
Henry Gabbay                                Treasurer
James Kong                                  Assistant Treasurer
Anne Ackerley                               Secretary




<PAGE>



                                   Appendix 3
                                   ----------

           Rule 16a-l(a)(2) under the Securities Exchange Act of 1934
           ----------------------------------------------------------




















<PAGE>


                                   Appendix 4
                                   ----------

                               CERTIFICATION FORM


         This is to certify that I have read and understand the Code of Ethics
of the BlackRock Closed End Trusts dated May 18, 2000, and that I recognize that
I am subject to the provisions thereof and will comply with the policy and
procedures stated therein.

         This is to further certify that I have complied with the requirements
of such Code of Ethics and that I have reported all personal securities
transactions required to be disclosed or reported pursuant to the requirements
of such Code of Ethics.



         Please sign your name here: --------------------------



         Please print your name here:--------------------------



         Please date here:           --------------------------





         Please sign two copies of this Certification Form, return one copy to
Mr. Bart Battista, Chief Compliance Officer, BlackRock Advisors, Inc., 345 Park
Avenue, New York, NY 10154, and retain the other copy, together with a copy of
the Code of Ethics, for your records.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(R)(2)
<SEQUENCE>16
<FILENAME>file015.txt
<DESCRIPTION>CODE OF ETHICS OF ADVISOR AND SUB-ADVISOR
<TEXT>
<PAGE>










                     EMPLOYEE INVESTMENT TRANSACTION POLICY
                     --------------------------------------

                                       FOR

                     BLACKROCK INVESTMENT ADVISER COMPANIES













                                                         EFFECTIVE MARCH 1, 2000



<PAGE>




                     EMPLOYEE INVESTMENT TRANSACTION POLICY
                     --------------------------------------

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
TABLE OF CONTENTS...............................................................................................-i-

I.       PREAMBLE.................................................................................................1

         A.       General Principles..............................................................................1

         B.       The General Scope Of The Policy's Application To Personal
                  Investment Transactions.........................................................................3

         C.       The Organization Of This Policy.................................................................4

         D.       Questions.......................................................................................4

II.      PERSONAL INVESTMENT TRANSACTIONS.........................................................................5

         A.       In General......................................................................................5

         B.       Reporting Obligations...........................................................................5

                  1.       Use Of Broker-Dealers And Futures Commission Merchants.................................5

                  2.       Initial Report.........................................................................5

                  3.       New Accounts...........................................................................7

                  4.       Timely Reporting Of Investment Transactions............................................7

                  5.       Related Accounts.......................................................................7

                  6.       Exemptions From Reporting..............................................................7

         C.       Prohibited Or Restricted Investment Transactions................................................8

                  1.       Initial Public Offerings...............................................................8

                  2.       Private Placements.....................................................................9

</TABLE>

                                                        -i-

<PAGE>


<TABLE>
<CAPTION>


                                                                                                             Page
                                                                                                             ----
<S>                                                                                                            <C>
         D.       Investment Transactions Requiring Prior Notification............................................9

                  1.       Prior Notification Procedure...........................................................9

                  2.       Exemptions From Prior Notification....................................................10
                           (a)      Transactions Exempt From Prior Notification..................................10
                           (b)      Securities Exempt From Prior Notification....................................11
                           (c)      Futures Contracts Exempt From Prior Notification.............................11

         E.       Ban On Short-Term Trading Profits..............................................................12

         F.       Blackout Periods...............................................................................12

                  1.       Specific Blackout Periods.............................................................12

                  2.       Exemptions From Blackout Restrictions.................................................13

III.     INSIDE INFORMATION AND SERVICE AS A DIRECTOR............................................................14

         A.       Inside Information.............................................................................14

         B.       Service As A Director..........................................................................14

IV.     EXEMPTIONS..............................................................................................15

V.      COMPLIANCE..............................................................................................15

         A.      Certifications.................................................................................15

                  1.       Upon Receipt Of This Policy..........................................................15

                  2.       Annual Certificate Of Compliance.....................................................16

         B.       Supervisory Procedures........................................................................16

                  1.       The Compliance Committee.............................................................16

                  2.       The Compliance Officer...............................................................17

                  3.       Post-Trade Monitoring And Investigations.............................................17

</TABLE>

                                                       -ii-

<PAGE>

<TABLE>
<CAPTION>


                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
                  4.       Remedial Actions......................................................................18

                  5.       Reports Of Violations Requiring Significant Remedial Action...........................18

                  6.       Annual Reports........................................................................19

VI.      EFFECTIVE DATE..........................................................................................19
</TABLE>


APPENDICES
- ----------

I.       Definitions Of Capitalized Terms

II.      Acknowledgment Of Receipt Of The Policy

III.     Annual Certification Of Compliance With The Policy

IV.      Initial Report of Accounts

V.       Request For Duplicate Broker Reports

VI.      Investment Transaction Prior Notification Form

VII.     Fully Discretionary Account Form










                                      -iii-

<PAGE>



                     EMPLOYEE INVESTMENT TRANSACTION POLICY
                     --------------------------------------

                   FOR BLACKROCK, INVESTMENT ADVISER COMPANIES


I.       PREAMBLE

         A.       GENERAL PRINCIPLES

         This Employee Investment Transaction Policy (the "Policy") is based on
the principle that you, as an officer, director or other Advisory Employee of an
Advisor affiliated with BlackRock, Inc. ("BlackRock"), owe a fiduciary duty of
undivided loyalty to the registered investment companies, institutional
investment clients, personal trusts and estates, guardianships, employee benefit
trusts, and other Advisory Clients which that Advisor serves.1 Accordingly, you
must avoid transactions, activities, and relationships that might interfere or
appear to interfere with making decisions in the best interests of those
Advisory Clients.

         At all times, you must observe the following GENERAL PRINCIPLES:

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

(1)      This Policy uses a number of capitalized terms, e.g., Advisor,
         Advisory Client, Advisory Employee, Beneficial Ownership, Exempt
         Security, Fixed Income Security, Fully Discretionary Account, Futures
         Contract, Immediate Family, Investment Transaction, Personal Account,
         Portfolio Employee, Portfolio Manager, Related Account, and Security.
         The first time a capitalized term is used, a definition is stated in
         the text or in a footnote. The full definitions of these capitalized
         terms are set forth in Appendix L TO UNDERSTAND YOUR RESPONSIBILITIES
         UNDER THE POLICY, IT IS IMPORTANT THAT YOU REVIEW AND UNDERSTAND ALL OF
         THE DEFINITIONS OF CAPITALIZED TERMS IN APPENDIX I. AS INDICATED IN
         APPENDIX I:
                  The term "ADVISOR" means any entity affiliated with BlackRock,
                  whether now in existence or formed after the date hereof, that
                  is registered as (i) an investment advisor under the
                  Investment Advisers Act of 1940, as amended, or (ii) a
                  broker-dealer under the Securities Exchange Act of 1934, as
                  amended, other than any such investment advisor or
                  broker-dealer that has adopted its own employee investment
                  transaction policy.

                  The term "ADVISORY CLIENT" means a registered investment
                  company, an institutional investment client, a personal trust
                  or estate, a guardianship, an employee benefit trust, or
                  another client with which the Advisor by which you are
                  employed or with which you are associated has an invest ment
                  management, advisory or sub-advisory contract or relationship.

                  The term "ADVISORY EMPLOYEE" means an officer, director, or
                  employee of an Advisor, or any other person identified as a
                  "control person" on the Form ADV or the Form BD filed by the
                  Advisor with the U.S. Securities and Exchange Commission, (1)
                  who, in connection with his or her regular functions or
                  duties, generates, participates in, or obtains information
                  regarding that Advisor's purchase or sale of a Security by or
                  on behalf of an Advisory Client; (2) whose regular functions
                  or duties relate to the making of any recommendations with
                  respect to such purchases or sales; (3) who obtains
                  information or exercises influence concerning investment
                  recommendations made to an Advisory Client of that Advisor; or
                  (4) who has line oversight or management responsibilities over
                  employees described in (1), (2) or (3), above.




<PAGE>



                  1.       YOU MUST PLACE THE INTERESTS OF ADVISORY CLIENTS
                           FIRST. As a fiduciary you must scrupulously avoid
                           serving your own personal interests ahead of the
                           interests of Advisory Clients. You must adhere to
                           this general fidu ciary principle as well as comply
                           with the Policy's specific provisions. Technical
                           compliance with the Policy will not automatically
                           insulate from scrutiny any Investment Transaction(2)
                           that indicates an abuse of your fiduciary duties or
                           that creates an appearance of such abuse.

                           Your fiduciary obligation applies not only to your
                           personal Investment Transactions but also to actions
                           taken on behalf of Advisory Clients. In particular,
                           you may not cause an Advisory Client to take action,
                           or not to take action, for your personal benefit
                           rather than for the benefit of the Advisory Client.
                           For example, you would violate this Policy if you
                           caused an Advisory Client to purchase a Security you
                           owned for the purpose of

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

(2)      For purposes of this Policy, the term "INVESTMENT TRANSACTION" means
         any transaction in a Security or Futures Contract in which you have, or
         by reason of the transaction will acquire, a Beneficial Ownership
         interest.

                  As a GENERAL MATTER, the term "SECURITY" means any stock,
         note, bond, debenture or other evidence of indebtedness (including any
         loan participation or assignment), limited partnership interest or
         investment contract OTHER THAN AN EXEMPT SECURITY (as defined above).
         The term "Security" includes an OPTION on a Security, an index of
         Securities, a currency or a basket of currencies, including such an
         option traded on the Chicago Board of Options Exchange or on the New
         York, American, Pacific or Philadelphia Stock Exchanges as well as such
         an option traded in the over-the-counter market. The term "Security"
         does NOT include a physical commodity or a Futures Contract.

                  The term "FUTURES CONTRACT" includes (a) a futures contract
         and an option on a futures contract traded on a U.S. or foreign board
         of trade, such as the Chicago Board of Trade, the Chicago Mercantile
         Exchange, the New York Mercantile Exchange, or the London International
         Financial Futures Exchange (a "Publicly-Traded Futures Contract"), as
         well as (b) a forward contract, a "swap", a "cap", a "collar", a
         "floor" and an over-the-counter option (other than an option on a
         foreign currency, an option on a basket of currencies, an option on a
         Security or an option on an index of Securities) (a "Privately-Traded
         Futures Contract").

                  As a GENERAL MATTER, you are considered to have a "BENEFICIAL
         OWNERSHIP" interest in a Security or Futures Contract if you have the
         opportunity, directly or indirectly, to profit or share in any profit
         derived from a transaction in that Security or Futures Contract. YOU
         ARE PRESUMED TO HAVE A BENEFICIAL OWNERSHIP INTEREST IN ANY SECURITY OR
         FUTURES CONTRACT HELD, INDIVIDUALLY OR JOINTLY, BY YOU AND/OR BY A
         MEMBER OF YOUR IMMEDIATE FAMILY (AS DEFINED BELOW). In addition, unless
         specifically excepted by the Compliance Officer based on a showing that
         your interest or control is sufficiently attenuated to avoid the
         possibility of a conflict, you will be considered to have a Beneficial
         Ownership interest in a Security held by: (1) a JOINT ACCOUNT to which
         you are a party, (2) a PARTNERSHIP in which you are a general partner,
         (3) a LIMITED LIABILITY COMPANY in which you are a manager-member, (4)
         a TRUST in which you or a member of your Immediate Family has an
         interest or(5) an INVESTMENT CLUB in which you are a member.

                  See Appendix I for more complete definitions of the terms
         "Beneficial Ownership," "Futures Contract," and "Security."

                                        2


<PAGE>



                           increasing the value of that Security. If you are a
                           Portfolio Employee,(3) you would also violate this
                           Policy if you made a personal investment in a
                           Security that might be an appropriate investment for
                           an Advisory Client without first considering the
                           Security as an investment for the Advisory Client.

                  2.       YOU MUST CONDUCT ALL OF YOUR PERSONAL INVESTMENT
                           TRANSACTIONS IN FULL COMPLIANCE WITH THIS POLICY, THE
                           BLACKROCK, INC. INSIDER TRADING POLICY, THE PNC CODE
                           OF ETHICS, AND THE OTHER POLICIES OF PNC BANK CORP.
                           ("PNC") AND BLACKROCK (including the policies that
                           prohibit insider trading or that restrict trading in
                           PNC Securities). BlackRock encourages you and your
                           family to develop personal investment programs.
                           However, those investment programs must remain within
                           boundaries reasonably necessary to insure that
                           appropriate safeguards exist to protect the interests
                           of our Advisory Clients and to avoid even the
                           APPEARANCE of unfairness or impropriety. Doubtful
                           situations should be resolved in favor of our
                           Advisory Clients and against your personal Investment
                           Transactions.

                  3.       YOU MUST NOT TAKE INAPPROPRIATE ADVANTAGE OF YOUR
                           POSITION. The receipt of investment opportunities,
                           perquisites, gifts or gratuities from persons seeking
                           to do business, directly or indirectly, with
                           BlackRock, an affiliate, or an Advisory Client could
                           call into question the independence of your business
                           judgment. Doubtful situations should be resolved
                           against your personal interests.

         B.       THE GENERAL SCOPE OF THE POLICY'S APPLICATION TO PERSONAL
                  INVESTMENT TRANSACTIONS

         Rule 17j-l under the Investment Company Act of 1940, as amended,
requires REPORTING of all personal Investment Transactions in Securities (other
than certain "Exempt Securities") by Advisory Employees, whether or not they are
Securities that might be purchased or sold by or on behalf of an Advisory
Client. This Policy implements that reporting requirement.

         However, since a primary purpose of the Policy is to avoid conflicts of
interest arising from personal Investment Transactions in Securities and other
instruments that are held or might be acquired on behalf of Advisory Clients,
this Policy only places RESTRICTIONS on personal

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

(3)      The term "PORTFOLIO EMPLOYEE" means a Portfolio Manager or an Advisory
         Employee who provides information or advice to a Portfolio Manager, who
         helps execute a Portfolio Manager's decisions, or who directly
         supervises a Portfolio Manager. The term "PORTFOLIO MANAGER" means any
         employee of an Advisor who has the authority, whether sole or shared or
         only from time to time, to make investment decisions or to direct
         trades affecting an Advisory Client

                                        3


<PAGE>



         Investment Transactions in such investments. This Policy also requires
         reporting and restricts personal Investment Transactions in certain
         Futures Contracts which, although they are not Securities, are
         instruments that Advisors buy and sell for Advisory Clients.

         Although this Policy applies to all officers, directors and other
Advisory Employees of BlackRock, the Policy recognizes that Portfolio Managers,
and the other Portfolio Employees who provide them with advice and who execute
their decisions, occupy more sensitive positions than other Advisory Employees,
and that it is appropriate to subject their personal Investment Transactions to
greater restrictions.

         C.       THE ORGANIZATION OF THIS POLICY

         The remainder of this Policy is divided into four main topics. Section
II concerns PERSONAL INVESTMENT TRANSACTIONS. Section III describes restrictions
that apply to Advisory Employees who receive INSIDE INFORMATION or seek to serve
on a BOARD OF DIRECTORS OR SIMILAR GOVERNING BODY. Section IV outlines the
procedure for seeking case-by-case EXEMPTIONS from the Policy's requirements.
Section V summarizes the methods for ensuring COMPLIANCE under this Policy. In
addition, the following APPENDICES are also a part of this Policy:

I.       Definitions Of Capitalized Terms

II.      Acknowledgment Of Receipt Of The Policy

III.     Annual Certification Of Compliance With The Policy

IV.      Initial Report Of Accounts

V.       Request For Duplicate Broker Reports

VI.      Investment Transaction Prior Notification Form

VII.     Fully Discretionary Account Form

         D.       QUESTIONS

         Questions regarding this Policy should be addressed to the Compliance
Officer. If you have any question regarding the interpretation of this Policy or
its application to a potential Investment Transaction, you should consult the
Compliance Officer BEFORE you execute that transaction.

                                        4


<PAGE>



II.      PERSONAL INVESTMENT TRANSACTIONS

         A.       IN GENERAL

         Subject to the limited exceptions described below, you are required to
REPORT all Investment Transactions in Securities and Futures Contracts made by
you, a member of your Immediate Family, a trust or an investment club in which
you have an interest, or on behalf of any account in which you have an interest
or which you direct.(4) In addition, you must provide PRIOR NOTIFICATION of
certain Investment Transactions in Securities and Futures Contracts that an
Advisor holds or may acquire on behalf of an Advisory Client. (The exercise of
an option is an Investment Transaction for purposes of these requirements.) The
details of these reporting and prior notification requirements are described
below.

         B.       REPORTING OBLIGATIONS

                  1.       USE OF BROKER-DEALERS AND FUTURES COMMISSION
                           MERCHANTS

         YOU MUST USE A REGISTERED BROKER-DEALER OR FUTURES COMMISSION MERCHANT
to engage in any purchase or sale of a publicly traded Security or Futures
Contract. This requirement also applies to any purchase or sale of a Security or
Futures Contract in which you have, or by reason of the Investment Transaction
will acquire, a Beneficial Ownership interest. Thus, as a general matter, any
Securities or Futures Contract transactions by members of your Immediate Family
will need to be made through a registered broker-dealer or futures commission
merchant.

                  2.       INITIAL REPORT

         Within 10 days of commencing employment or within 10 days of any event
that causes you to become subject to this Policy, you must supply to the
Compliance Officer copies of the most recent statements for each and every
Personal Account and Related Account that holds or is likely to hold a Security
or Futures Contract in which you have a Beneficial Ownership interest, as well
as copies of confirmations for any and all transactions subsequent to the
effective dates of



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

(4)      The term "IMMEDIATE FAMILY" means any of the following persons who
         RESIDE IN YOUR HOUSEHOLD OR WHO DEPEND ON YOU FOR BASIC LIVING SUPPORT:
         your spouse, any child, stepchild, grandchild, parent, stepparent,
         grandparent, sibling, mother-in-law, father-in-law, son-in-law,
         daughter-in-law, brother- in-law, or sister-in-law, including any
         adoptive relationships.

                                        5


<PAGE>



those statements.(5) These documents should be supplied to the Compliance
Officer by attaching them to the form attached hereto as Appendix IV.

         On that same form you should supply the name of any registered
broker-dealer and/or futures commission merchant and the number for any Personal
Account and Related Account that holds or is likely to hold a Security or
Futures Contract in which you have a Beneficial Ownership interest for which you
CANNOT supply the most recent account statement. You must also certify, where
indicated on the form, that the contents of the form and the documents attached
thereto disclose all such Personal Accounts and Related Accounts.

         In addition, you must also supply, where indicated on the form, the
following information for each Security or Futures Contract in which you have a
Beneficial Ownership interest, to the extent that this information is not
available from the statements attached to the form:

                  1.       A description of the Security or Futures Contract,
                           including its name or title;

                  2.       The quantity (e.g., in terms of numbers of shares,
                           units or contracts) and value (in dollars) of the
                           Security or Futures Contract; and

                  3.       The custodian of the Security or Futures Contract.

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

(5)      The term "PERSONAL ACCOUNT" means the following accounts that hold or
         are likely to hold a Security or Futures Contract in which you have a
         Beneficial Ownership interest;

         o        any account in your individual name;

         o        any joint or tenant-in-common account in which you have an
                  interest or are a participant;

         o        any account for which you act as trustee, executor, or
                  custodian; and

         o        any account over which you have investment discretion or have
                  the power (whether or not exercised) to direct the acquisition
                  or disposition of Securities or Futures Contracts (other than
                  an Advisory Client's account that you manage or over which you
                  have investment discretion), including the accounts of any
                  individual or entity that is managed or controlled directly or
                  indirectly by or through you, such as the account of an
                  investment club to which you belong. There is a presumption
                  that you can control accounts held by members of your
                  Immediate Family sharing the same household. This presumption
                  may be rebutted only by convincing evidence.

                  The term "RELATED ACCOUNT" means any account, other than a
         Personal Account, that holds a Security or Futures Contract in which
         you have a direct or indirect Beneficial Ownership interest (other than
         an account over which you have no investment discretion and cannot
         otherwise exercise control) and any account (other than an Advisory
         Client's account) of any individual or entity to whom you give advice
         or make recommendations with regard to the acquisition or disposition
         of Securities or Futures Contracts (whether or not such advice is acted
         upon).

                                        6


<PAGE>



                  3.       NEW ACCOUNTS

         Upon the opening of a new Personal Account or a Related Account that
holds or is likely to hold a Security or a Futures Contract in which you have a
Beneficial Ownership interest, you must give written notice to the Compliance
Officer of the name of the registered broker-dealer or futures commission
merchant for that account, the identifying number for that Personal Account or
Related Account and the date that the account was established.

                  4.       TIMELY REPORTING OF INVESTMENT TRANSACTIONS

         You must cause each broker-dealer or futures commission merchant that
maintains a Personal Account or a Related Account that holds a Security or a
Futures Contract in which you have a Beneficial Ownership interest to provide to
the Compliance Officer, on a timely basis, duplicate copies of confirmations of
all transactions in that account and of periodic statements for that account
("Duplicate Broker Reports"). A form for that purpose is attached hereto as
Appendix V.

         In addition, you must report to the Compliance Officer, on a timely
basis, any transaction in a Security or Futures Contract in which you have or
acquired a Beneficial Ownership interest that was made without the use of a
registered broker-dealer or futures commission merchant.

                  5.       RELATED ACCOUNTS

         The reporting obligations described above also apply to any Related
Account (as defined in Appendix I) and to any Investment Transaction in a
Related Account.

         It is important that you recognize that the definitions of 'Personal
Account," "Related Account" and "Beneficial Ownership" in Appendix I probably
will require you to provide, or to arrange for the broker-dealer or futures
commission merchant to furnish, copies of reports for any account used by or for
a member of your Immediate Family or a trust in which you or a member of your
Immediate Family has an interest, as well as for any other accounts in which you
may have the opportunity, directly or indirectly, to profit or share in the
profit derived from any Investment Transaction in that account, including the
account of any investment club to which you belong.

                  6.       EXEMPTIONS FROM REPORTING

         You need not report Investment Transactions in any account, including a
Fully Discre tionary Account,(6) over which neither you nor an Immediate Family
Member has or had any direct


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

(6)      The term "FULLY DISCRETIONARY ACCOUNT" means a Personal Account or
         Related Account managed or held by a broker-dealer, futures commission
         merchant, investment advisor or trustee as to which neither you nor

                                                                 (continued....)

                                       7


<PAGE>



or indirect influence or control. For example, Investment Transactions in the
account of your spouse in an employee benefit plan would not have to be reported
if neither you nor your spouse has any influence or control over those
Investment Transactions.

         You also need not report Investment Transactions in Exempt Securities
nor need you furnish, or require a broker-dealer or futures commission merchant
to furnish, copies of confir mations or periodic statements for accounts that
hold ONLY Exempt Securities.(7) This includes accounts that only hold U.S.
Government securities, money market interests, or shares in registered open-end
investment companies (i.e., mutual funds). This exemption from reporting will
end immediately, however, at such time as there is an Investment Transaction in
that account in a Security that is not an Exempt Security.

         C.       PROHIBITED OR RESTRICTED INVESTMENT TRANSACTIONS

                  1.       INITIAL PUBLIC OFFERINGS

         As an Advisory Employee, you may not acquire Beneficial Ownership of
any Security in an initial public offering, except that, with the approval of
the Compliance Committee and the General Counsel of BlackRock, you may acquire
Beneficial Ownership of a Security in an initial public offering directed or
sponsored by BlackRock. For purposes of this Policy, an initial public offering
shall not include the purchase of a Security in an initial public offering by
(i) a savings bank to its depositors, (ii) a mutual insurance company to its
policyholders, (iii) an issuer of debt securities (other than debt securities
convertible into common or preferred stock) or (iv) with

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

(6)      (......continuesd)
         an Immediate Family Member: (a) exercises any investment discretion;
         (b) suggests or receives notice of transactions prior to their
         execution; and (c) you do not otherwise have any direct or indirect
         influence or control. In addition, to qualify as a Fully Discretionary
         Account, the individual broker, registered representative or merchant
         responsible for that account must not be responsible for nor receive
         advance notice of any purchase or sale of a Security or Futures
         Contract on behalf of an Advisory Client. To qualify an account as a
         Fully Discretionary Account, the Compliance Officer must receive and
         approve a written notice, in the form attached hereto as Appendix
         VIII, that the account meets the foregoing qualifications as a Fully
         Discretionary Account.

(7)      The term "EXEMPT SECURITY" means any Security (as defined in Appendix
         I) not included within the definition of Security in SEC Rule
         17j-l(e)(5) under the Investment Company Act of 1940, as amended,
         including:

         1.       A direct obligation of the Government of the United States;

         2.       Shares of registered open-end investment companies (i.e.,
                  mutual funds); and

         3.       High quality short-term debt instruments, including, but not
                  limited to, bankers' acceptances, bank certificates of
                  deposit, commercial paper and repurchase agreements.

         See Appendix I for a more complete definition of "Exempt Security".

                                        8


<PAGE>



respect to an Advisory Employee employed by BlackRock International, Ltd. a
building society to its depositors.

                  2.       PRIVATE PLACEMENTS

         If you are a Portfolio Employee, you may not acquire Beneficial
Ownership of any Security in a private placement, or subsequently sell that
interest, unless you have received the prior written approval of the Compliance
Officer and of any supervisor designated by the Compliance Officer. Approval
will not be given unless a determination is made that the investment opportunity
should not be reserved for one or more Advisory Clients, and that the
opportunity to invest has not been offered to you by virtue of your position
with an Advisor.

         If you have acquired Beneficial Ownership of Securities in a private
placement, you must disclose that investment to your supervisor when you play a
part in any consideration of any investment by an Advisory Client in the issuer
of the Securities, and any decision to make such an investment must be
independently reviewed by a Portfolio Manager who does not have a Beneficial
Ownership interest in any Securities of the issuer.

         D.       INVESTMENT TRANSACTIONS REQUIRING PRIOR NOTIFICATION

         You must give prior notification to the Compliance Officer of ANY
Investment Transac tion in Securities or Futures Contracts in a Personal Account
or Related Account, or in which you otherwise have or will acquire a Beneficial
Ownership interest, UNLESS that Investment Transaction, Security or Futures
Contract falls into one of the following categories that are identified as
"exempt from prior notification." The purpose of prior notification is to permit
the Compliance Officer and the Compliance Committee to take reasonable steps to
investigate whether that Investment Transaction is in accordance with this
Policy. Satisfaction of the prior notification requirement does not, however,
constitute approval or authorization of any Invest ment Transaction for which
you have given prior notification. As a result, the primary responsi bility for
compliance with this Policy rests with you.

                  1.       PRIOR NOTIFICATION PROCEDURE

         Prior notification must be given by completing and submitting to the
Compliance Officer a copy of the prior notification form attached hereto as
Appendix VII. No Investment Transac tion requiring prior notification may be
executed prior to notice by the Compliance Officer that the prior notification
process has been completed. The time and date of that notice will be reflected
on the prior notification form. Unless otherwise specified, an Investment
Transaction requiring prior notification must be placed and executed by the end
of trading in New York City or, in the case of Advisory Employees employed by
BlackRock International, Ltd., by the end of trading in the United Kingdom on
the day of notice from the Compliance Officer that the prior notification
process has been completed. If a proposed Investment Transaction is not executed
(with the exception of a limit order) within the time specified, you must repeat
the prior
                                        9


<PAGE>



notification process before executing the transaction. A notice from a
Compliance Officer that the prior notification process has been completed is no
longer effective if you discover, prior to executing your Investment
Transaction, that the information on your prior notification form is no longer
accurate, or if the Compliance Officer revokes his or her notice for any other
reason.

         The Compliance Officer may undertake such investigation as he or she
considers necessary to investigate whether an Investment Transaction for which
prior notification has been sought complies with the terms of this Policy and is
consistent with the general principles described at the beginning of this
Policy.

         As part of that investigation, the Compliance Officer or a designee of
the Compliance Officer will determine whether there is a pending buy or sell
order in the same equity Security or Futures Contract, or a Related Security, on
behalf of an Advisory Client.(8) If such an order exists, the Compliance Officer
will not provide notice that the prior notification process has been completed
UNTIL the Advisory Client's order is executed or withdrawn.

                  2.       EXEMPTIONS FROM PRIOR NOTIFICATION

         Prior notification will not be required for the following Investment
Transactions, Securities and Futures Contracts. They are exempt only from the
Policy's prior notification requirement, and, unless otherwise indicated, remain
subject to the Policy's other requirements, including its reporting
requirements.

                           (A)      TRANSACTIONS EXEMPT FROM PRIOR NOTIFICATION

                  Prior notification is not required for any of the following
Investment Transactions:

                  1.       Any Investment Transaction in a Fully Discretionary
                           Account that has been approved as such by the
                           Compliance Officer.

                  2.       Purchases of Securities under dividend reinvestment
                           plans.

                  3.       Purchases of Securities by an exercise of rights
                           issued to the holders of a class of Securities pro
                           rata, to the extent those rights are issued with
                           respect to Securities of which you have Beneficial
                           Ownership.

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

(8)      The term "RELATED SECURITY" means, as to any Security, any instrument
         related in value to that Security, including, but not limited to, any
         option or warrant to purchase or sell that Security, and any Security
         convertible into or exchangeable for that Security.

                                       10


<PAGE>



                  4.       Acquisitions or dispositions of Securities as the
                           result of a stock dividend, stock split, reverse
                           stock split, merger, consolidation, spin-off or other
                           similar corporate distribution or reorganization
                           applicable to all holders of a class of Securities of
                           which you have Beneficial Ownership.

                  5.       Purchases of common stock of PNC Bank Corp. under the
                           Employee Stock Purchase Plan.

                  6.       With respect to Advisory Employees who are employed
                           by BlackRock International, Inc., automatic
                           investments by direct debit into a personal equity
                           plan (PEP), or similar type of plan in Exempt
                           Securities if the pre- notification process was
                           completed for the first such investment.

                  7.       Investment Transactions made by a person who serves
                           on the Board of Directors of an Advisor and is not
                           involved with the Advisory operations of such Advisor
                           nor engages in the type of activities described under
                           (1) (2) or (3) under the term Advisory Employee as
                           defined in Appendix I.

                  (B)      SECURITIES EXEMPT FROM PRIOR NOTIFICATION

                  Prior notification is not required for an Investment
Transaction in an Exempt Security, as defined in Appendix I, e.g., U.S.
Government securities, shares in registered open- end investment companies
(i.e., mutual funds) and "high quality short-term debt instruments" (as defined
in Appendix I).

                  (C)      FUTURES CONTRACTS EXEMPT FROM PRIOR NOTIFICATION

                  Prior notification is not required for an Investment
Transaction in the following Futures Contracts:

                  1.       Currency futures.

                  2.       U.S. Treasury futures.

                  3.       Eurodollar futures.

                  4.       Physical commodity futures (e.g., contracts for
                           future delivery of grain, livestock, fiber or
                           metals).

                  5.       Futures contracts to acquire Fixed Income Securities
                           issued by a U.S. Government agency, a foreign
                           government, or an international or supranational
                           agency.

                                       11


<PAGE>



                  6.       Futures contracts on the Standard and Poor's 500 (S&P
                           500) or the Dow Jones Industrial Average or NASDAQ
                           100 stock indexes.

                  7.       For Advisory Employees who are employed by BlackRock
                           International, Ltd., futures contracts on the
                           Financial Times Stock Exchange 100 (FTSE) Index.

         E.       BAN ON SHORT-TERM TRADING PROFITS

         You may not profit from the purchase and sale, or the sale and
purchase, within 60 calendar days, of the same Securities and/or Related
Security. Any such short-term trade must be reversed or unwound, or if that is
not practical, the profits must be disgorged and distributed in a manner
determined by the Compliance Committee.

         This short-term trading ban does NOT apply to Investment Transactions
in Exempt Securities (as defined in Appendix I) or in Futures Contracts. This
ban also does NOT apply to a purchase or sale in connection with a Transaction
Exempt From Prior Notification (as described above in Section II.D.2.(a)), a
transaction in a Fully Discretionary Account or a transaction exempt from the
"blackout" periods pursuant to Section II.F.2 below.

         You are considered to profit from a short-term trade if Securities of
which you have Beneficial Ownership (including Securities held by Immediate
Family members) are sold for more than their purchase price, even though the
Securities purchased and the Securities sold are held of record or beneficially
by different persons or entities.

         F.       BLACKOUT PERIODS

         Your ability to engage in certain Investment Transactions may be
prohibited or restricted during the "blackout" periods described below:

                  1.       SPECIFIC BLACKOUT PERIODS

                           a.       You may not purchase or sell a Security, a
                                    Related Security, or Futures Contract at a
                                    time when you intend or know of another's
                                    intention to purchase or sell that same
                                    Security, a Related Security, or Futures
                                    Contract, on behalf of an Advisory Client of
                                    ANY Advi sor (the "Specific Knowledge
                                    Blackout Period").

                           b.       In addition, if you are a PORTFOLIO
                                    EMPLOYEE, you may not pur chase or sell a
                                    Security, a Related Security or a Futures
                                    Contract which you are actively considering
                                    or which you have actively considered and
                                    rejected for purchase or sale for an
                                    Advisory Client within the previous 15
                                    CALENDAR DAYS (the "15-Day Blackout

                                       12


<PAGE>



                                    Period") unless the Compliance Officer,
                                    after consultation with your supervisor, has
                                    approved your Investment Transaction.(9)

                           c.       Finally, if you are a PORTFOLIO MANAGER, you
                                    may not purchase or sell a Security, a
                                    Related Security, or Futures Contract within
                                    7 CALENDAR DAYS before or after a
                                    transaction in that Security, a Related
                                    Security, or Futures Contract, by an
                                    Advisory Client for which you are
                                    responsible (the "7-Day Blackout Period").

         For Portfolio Employees or Portfolio Managers, the Compliance Officer
will not give such notice until any applicable 15-Day Blackout Period or 7-Day
Blackout Period has expired or any required approvals or exemptions have been
obtained. An Investment Transaction that violates one of these Blackout
restrictions must be reversed or unwound, or if that is not practical, the
profits must be disgorged and distributed in a manner determined by the Compli
ance Committee.

                  2.       EXEMPTIONS FROM BLACKOUT RESTRICTIONS

         The foregoing blackout period restrictions do NOT apply to Investment
Transactions in:

                           a.       Exempt Securities, as defined in Appendix I.

                           b.       Securities of a company listed on the
                                    Standard & Poor's 100 (S & P 100) Index.

                           c.       A Futures Contract Exempt From Prior
                                    Notification under this Policy (as described
                                    above).

                           d.       A Fully Discretionary Account.

                           e.       With respect to Advisory Employees who are
                                    employed by BlackRock International, Ltd.,
                                    securities of a company listed on the
                                    Financial Times Stock Exchange 100 (FTSE
                                    100).

- ------------------
(9)      SEC Rule 17j-l places restrictions on the purchase or sale of any
         "security held or to be acquired" by a registered investment company.
         Rule 17j-l(e)(6) defines a "security held or to be acquired" by a
         registered investment company as including any security which, within
         the most recent 15 days, "is being or has been considered by such
         company or its investment advisor for purchase by such company."

                                       13


<PAGE>



III.     INSIDE INFORMATION AND SERVICE AS A DIRECTOR

         A.       INSIDE INFORMATION

         As an employee of a subsidiary of PNC and BlackRock, Inc., you must
comply with the PNC Insider Trading Policy and the BlackRock, Inc. Insider
Trading Policy. A copy of the PNC Insider Trading Policy is included in Section
E of the PNC Code of Ethics. A copy of the BlackRock, Inc. Insider Trading
Policy was furnished to all employees at the time of its adoption and is
furnished to all new employees at the commencement of their employment. In
addition, as an Advisory Employee, you must notify the General Counsel of
BlackRock if you receive or expect to receive material non-public information
about an entity that issues securities. The General Counsel will determine the
restrictions, if any, that will apply to your communications and activities
while in possession of that information. In general, those restrictions will
include:

                  1.       An undertaking not to trade, either on your own
                           behalf or on behalf of an Advisory Client, in the
                           securities of the entity about which you have
                           material non-public information.

                  2.       An undertaking not to disclose material non-public
                           information to other Advisory Employees.

                  3.       An undertaking not to participate in discussions with
                           or decisions by other Advisory Employees relating to
                           the entity about which you have material non-public
                           information.

The General Counsel, in cooperation with the Compliance Officer, will maintain a
"restricted list" of entities about which Advisory Employees may have material
non-public information. This "restricted list" will be available to the
Compliance Officer when he or she conducts investigations or reviews related to
the Prior Notification Procedure described previously in Section II(D)(1) or the
Post-Trade Monitoring process described below in Section V(B)(3).

         B.       SERVICE AS A DIRECTOR

         You may not serve on the board of directors or other governing board of
any entity unless you have received the prior written approval of the General
Counsel of PNC, to the extent such approval is required under the terms of the
PNC Code of Ethics, and the General Counsel of BlackRock. If permitted to serve
on a governing board, an Advisory Employee will be isolated from those Advisory
Employees who make investment decisions regarding the securities of that entity,
through a "Chinese wall" or other procedures determined by the General Counsel
of BlackRock. In general, the "Chinese wall" or other procedures will include:

                  1.       An undertaking not to trade or to cause a trade on
                           behalf of an Advisory Client in the securities of the
                           entity on whose board you serve.


                                       14


<PAGE>




                  2.       An undertaking not to disclose material non-public
                           information about that entity to other Advisory
                           Employees.

                  3.       An undertaking not to participate in discussions with
                           or decisions by other Advisory Employees relating to
                           the entity on whose board you serve.

Any entity on whose board an Advisory Employee serves will be included on the
"restricted list" referenced in subsection A, above.

IV.      EXEMPTIONS

         The Compliance Committee, in its discretion, may grant case-by-case
exceptions to any of the foregoing requirements, restrictions or prohibitions,
except that the Compliance Commit tee may not exempt any Investment Transaction
in a Security (other than an Exempt Security) or a Futures Contract from the
Policy's reporting requirements. Exemptions from the Policy's prior notification
requirements and from the Policy's restrictions on acquisitions in initial
public offerings, short-term trading and trading during blackout periods will
require a determination by the Compliance Committee that the exempted
transaction does not involve a realistic possibility of violating the general
principles described at the beginning of this Policy. An application for a
case-by-case exemption, in accordance with this paragraph, should be made in
WRITING to the Compliance Officer, who will promptly forward that written
request to the members of the Compliance Committee.

V.       COMPLIANCE

         A.       CERTIFICATIONS

                  1.       UPON RECEIPT OF THIS POLICY

         Upon commencement of your employment or the effective date of this
Policy, whichever occurs later, you will be required to acknowledge receipt of
your copy of this Policy by complet ing and returning to the Compliance Officer
a copy of the form attached hereto as Appendix II. By that acknowledgment, you
will also agree:

                  1.       To read the Policy, to make a reasonable effort to
                           understand its provi sions, and to ask the Compliance
                           Officer questions about those provisions you find
                           confusing or difficult to understand.

                  2.       To comply with the Policy, including its general
                           principles, its reporting requirements, its
                           prohibitions, its prior notification requirements,
                           its short- term trading and blackout restrictions.

                                       15


<PAGE>



                  3.       To advise the members of your Immediate Family about
                           the existence of the Policy, its applicability to
                           their personal Investment Transactions, and your
                           responsibility to assure that their personal
                           Investment Transactions comply with the Policy.

                  4.       To cooperate fully with any investigation or inquiry
                           by or on behalf of the Compliance Officer or the
                           Compliance Committee to determine your compliance
                           with the provisions of the Policy.

In addition, your acknowledgment will recognize that any failure to comply with
the Policy and to honor the commitments made by your acknowledgment may result
in disciplinary action, including dismissal

                  2.       ANNUAL CERTIFICATE OF COMPLIANCE

         You are required to certify on an annual basis, on a copy of the form
attached hereto as Appendix III, that you have complied with each provision of
your initial acknowledgment (see above). In particular, your annual
certification will require that you certify that you have read and that you
understand the Policy, that you recognize that you are subject to its
provisions, that you complied with the requirements of the Policy during the
year just ended, and that you have disclosed, reported, or caused to be reported
all Investment Transactions required to be disclosed or reported pursuant to the
requirements of the Policy and that you have disclosed, reported or caused to be
reported all Personal Accounts and Related Accounts that hold or are likely to
hold a Security or Futures Contract in which you have a Beneficial Ownership
interest. In addition, you will be required to confirm the accuracy of the
record of information on file with the Advisor with respect to such Personal
Accounts and Related Accounts.

         B.       SUPERVISORY PROCEDURES

                  1.       THE COMPLIANCE COMMITTEE

         The policy will be implemented, monitored and reviewed by the
Compliance Committee. The initial members of the Compliance Committee will be
appointed by the management committee of BlackRock. The Compliance Committee, by
a simple majority of its members, may appoint new members of the Committee, may
replace existing members of the Committee, and may fill vacancies on the
Committee. Among other responsibilities, the Compliance Committee will consider
requests for case-by-case exemptions (described above) and will conduct
investigations (described below) of any actual or suspected violations of the
Policy. The Compliance Committee will determine what remedial actions, if any,
should be taken by an Advisor in response to a violation of the Policy. The
Compliance Committee will also provide reports (described below) regarding
significant violations of the Policy and the procedures to implement the Policy.
The Compliance Committee may recommend changes to those procedures


                                       16

<PAGE>


or to the Policy to the management of the Advisors. Finally, the Compliance
Committee will designate one person to act as Compliance Officer for all
Advisors.

                  2.       THE COMPLIANCE OFFICER

         The Compliance Officer designated by the Compliance Committee will be
responsible for the day-to-day administration of the Policy for all Advisors,
subject to the direction and control of the Compliance Committee. Based on
information supplied by the management of each Advisor, the Compliance Officer
will forward a copy of the policy to each Advisory Employee subject to the
policy and will notify each such person of his or her designation as an Advisory
Employee, Portfolio Employee or Portfolio manager. The Compliance Officer will
also be responsible for administration of the reporting and prior notification
functions described in the Policy, and will maintain the reports required by
those functions. In addition, the Compliance Officer will attempt to answer any
questions from an Advisory Employee regarding the interpre tation or
administration of the Policy. When necessary or desirable, the Compliance
Officer will consult with the Compliance Committee about such questions. The
Compliance officer may designate one or more Assistant Compliance Officers to
whom the Compliance Officer may delegate any of the duties described in this
paragraph or in the succeeding paragraph, and who shall be empowered to act on
the Compliance Officer's behalf when the Compliance Officer is absent or
unavailable.

                  3.       POST-TRADE MONITORING AND INVESTIGATIONS

         The Compliance Officer will review the Duplicate Broker Reports and
other information supplied for each Advisory Employee so that the Compliance
Officer can detect and prevent potential violations of the Policy. This
information may also be disclosed to the Advisor's auditors, attorneys and
regulators. If, based on his or her review of information supplied for an
Advisory Employee, or based on other information, the Compliance Officer
suspects that the Policy may have been violated, the Compliance Officer will
perform such investigations and make such inquiries as he or she considers
necessary. You should expect that, as a matter of course, the Compliance Officer
will make inquiries regarding any personal Investment Transac tion in a Security
or Futures Contract that occurs on the same day as a transaction in the same
Security or Futures Contract on behalf of an Advisory Client. If the Compliance
Officer reaches a preliminary conclusion that an Advisory Employee may have
violated this Policy, the Compli ance Officer will report that preliminary
conclusion in a timely manner to the Compliance Committee and will furnish to
the Committee all information that relates to the Compliance Officer's
preliminary conclusion. The Compliance Officer may also report his or her
preliminary conclusions and the information relating to that preliminary
conclusion to the Advisor's auditors, attorneys and regulators.

         Promptly after receiving the Compliance Officer's report of a possible
violation of the Policy, the Compliance Committee, with the aid and assistance
of the Compliance Officer, will conduct an appropriate investigation to
determine whether the policy has been violated and will

                                       17


<PAGE>



determine what remedial action should be taken by the Advisor in response to any
such viola tion(s). For purposes of these determinations, a majority of the
Compliance Committee will constitute a quorum and action taken by a simple
majority of that quorum constitute action by the Committee.

                  4.       REMEDIAL ACTIONS

         The remedial actions that may be recommended by the Compliance
Committee may include, but are not limited to, disgorgement of profits,
imposition of a fine, censure, demotion, suspension or dismissal. As part of any
sanction e.g., for violation of the Policy's restrictions on short-term trading
or trading during blackout periods, you may be required to reverse or unwind a
transaction and to forfeit any profit or to absorb any loss from the
transaction. If an Investment Transaction may not be reversed or unwound, you
may be required to disgorge any profits associated with the transaction, which
profits will be distributed in a manner prescribed by the Compliance Committee
in the exercise of its discretion. Profits derived from Investment Transactions
in violation of this policy may not be offset by any losses from Investment
Transactions in violation of this Policy. Finally, evidence suggesting
violations of criminal laws will be reported to the appropriate authorities, as
required by applicable law.

         In determining what, if any, remedial action is appropriate in response
to a violation of the Policy, the Compliance Committee will consider, among
other factors, the gravity of your violation, the frequency of your violations,
whether any violation caused harm or the potential of harm to any Advisory
Client, whether you knew or should have known that your Investment Transaction
violated the Policy, whether you engaged in an Investment Transaction with a
view to making a profit on the anticipated market action of a transaction by an
Advisory Client, your efforts to cooperate with the Compliance Officer's
investigation, and your efforts to correct any conduct that led to a violation.
In rare instances, the Compliance Committee may find that, for equitable
reasons, no remedial action should be taken.

                  5.       REPORTS OF VIOLATIONS REQUIRING SIGNIFICANT REMEDIAL
                           ACTION

         In a timely manner, and not less frequently than annually, the
Compliance Committee will report to the management committee of BlackRock, and
to the directors or trustees of each investment company that is an Advisory
Client, any known Policy violation requiring significant remedial action (as
defined below) and the disposition of that violation. For this purpose, a
significant remedial action means any action that has a significant financial
effect on the violator. Evidence suggesting violations of criminal laws will be
reported to the appropriate authorities, as required by applicable law.

                                       18


<PAGE>



                  6.       ANNUAL REPORTS

         The Compliance Committee will furnish an annual report to the
management committee of BlackRock, and to the directors or trustees of each
investment company that is an Advisory Client, that, at a minimum, will:

                  1.       Summarize existing procedures and restrictions
                           concerning personal investing by Advisory Employees
                           and any changes in those procedures and restrictions
                           that were made during the previous year;

                  2.       Summarize any violations of the Policy that resulted
                           in significant reme dial action during the previous
                           year; and

                  3.       Describe any changes in existing procedures or
                           restrictions that the Com pliance Committee
                           recommends based upon its experience under the
                           Policy, evolving industry practices, or developments
                           in applicable laws or regulations.

VI.      EFFECTIVE DATE

         The provisions of this Policy will take effect on October 1, 1998.
Amendments to this Policy will take effect at the time such amendments are
promulgated and distributed to the Advisory Employees governed by this Policy.

                                       19


<PAGE>


                                   APPENDIX I

                        DEFINITIONS OF CAPITALIZED TERMS

         The following definitions apply to the capitalized terms used in the
Policy:

ADVISOR

         The term "Advisor" means any entity affiliated with BlackRock, whether
now in existence or formed after the date hereof, that is registered as (i) an
investment advisor under the Investment Advisers Act of 1940, as amended, or
(ii) a broker-dealer under the Securities Exchange Act of 1934, as amended,
other than any such investment advisor or broker-dealer that has adopted its own
employee investment transaction policy.

ADVISORY CLIENT

         The term "Advisory Client" means a registered investment company, an
institutional investment client, a personal trust or estate, a guardianship, an
employee benefit trust, or another client with which the Advisor by which you
are employed or with which you are associated has an investment management,
advisory or sub-advisory contract or relationship.

ADVISORY EMPLOYEE

         The term "Advisory Employee" means an officer, director, or employee of
an Advisor, or any other person identified as a "control person" on the Form ADV
or the Form BD filed by the Advisor with the U.S. Securities and Exchange
Commission, (1) who, in connection with his or her regular functions or duties,
generates, participates in, or obtains information regarding that Advisor's
purchase or sale of a Security by or on behalf of an Advisory Client; (2) whose
regular functions or duties relate to the making of any recommendations with
respect to such purchases or sales; or (3) who obtains information or exercises
influence concerning investment recommen dations made to an Advisory Client of
that Advisor or who has line oversight or management responsibilities over
employees who obtain such information or who exercise such influence.

BENEFICIAL OWNERSHIP

         As a GENERAL MATTER, you are considered to have a "Beneficial
Ownership" interest in a Security or Futures Contract if you have the
opportunity, directly or indirectly, to profit or share in any profit derived
from a transaction in that Security. YOU ARE PRESUMED TO HAVE A BENEFI CIAL
OWNERSHIP INTEREST IN ANY SECURITY OR FUTURES CONTRACT HELD, INDIVIDUALLY OR
JOINTLY, BY YOU AND/OR BY A MEMBER OF YOUR IMMEDIATE FAMILY (AS DEFINED BELOW).
In addition, unless specifically excepted by the Compliance Officer based on a
showing that your interest or control is sufficiently attenuated to avoid the
possibility of a conflict, you will be


                                       A-1

<PAGE>




considered to have a Beneficial Ownership interest in a Security or Futures
Contract held by: (1) a JOINT ACCOUNT to which you are a party, (2) a
PARTNERSHIP in which you are a general partner, (3) a LIMITED LIABILITY COMPANY
in which you are a manager-member, or (4) a TRUST in which you or a member of
your Immediate Family has a vested interest. Although you may have a Beneficial
Ownership interest in a Security or Futures Contract held in a Fully
Discretionary Account (as defined below), the application of this Policy to such
a Security or Futures Contract may be modified by the special exemptions
provided for Fully Discretionary Accounts.

         As a TECHNICAL MATTER, the term "Beneficial Ownership" for purposes of
this Policy will be interpreted in the same manner as it would be under SEC Rule
16a-1(a)(2) in determining whether a person has beneficial ownership of a
security for purposes of Section 16 of the Securities Exchange Act of 1934 and
the rules and regulations thereunder.

BLACKROCK

         The term "BlackRock" means BlackRock, Inc.

COMPLIANCE COMMITTEE

         The term "Compliance Committee" means the committee of persons who have
responsi bility for implementing, monitoring and reviewing the Policy, in
accordance with Section V(B)(1) of the Policy.

COMPLIANCE OFFICER

         The term "Compliance Officer" means the person designated by the
Compliance Committee as responsible for the day-to-day administration of the
Policy in accordance with Section V(B)(2) of the Policy.

DUPLICATE BROKER REPORTS

         The term "Duplicate Broker Reports" means duplicate copies of
confirmations of transactions in your Personal or Related Accounts and of
periodic statements for those accounts.

EXEMPT SECURITY

         The term "Exempt Security" means any Security (as defined below) not
included within the definition of Security in SEC Rule l7j-1(e)(5) under the
Investment Company Act of 1940, as amended, including:

                  1.       A direct obligation of the Government of the United
                           States;

                  2.       Shares of registered open-end investment companies;
                           and


                                       A-2

<PAGE>



                  3.       High quality short-term debt instruments, including,
                           but not limited to, bankers' acceptances, bank
                           certificates of deposit, commercial paper and
                           repurchase agreements. For these purposes, a "high
                           quality short-term debt instrument" means any
                           instrument having a maturity at issuance of less than
                           366 days and which is rated in one of the highest two
                           rating categories by a Nationally Recognized
                           Statistical Rating Organization, or which is unrated
                           but is of comparable quality.

                  4.       For Advisory Employees employed by BlackRock
                           International, Ltd., shares of authorized unit
                           trusts, open-ended investment companies (OEIC's) and
                           direct obligations of the Government of the United
                           King dom.

FIXED INCOME SECURITIES

         For purposes of this Policy, the term "Fixed Income Securities" means
fixed income Securities issued by agencies or instrumentalities of, or
unconditionally guaranteed by, the Government of the United States, corporate
debt Securities, mortgage-backed and other asset- backed Securities, fixed
income Securities issued by state or local governments or the political
subdivisions thereof, structured notes and loan participations, foreign
government debt Securi ties, and debt Securities of international agencies or
supranational agencies. For purposes of this Policy, the term "Fixed Income
Securities" will not be interpreted to include U.S. Government Securities or any
other Exempt Security (as defined above).

FULLY DISCRETIONARY ACCOUNT

         The term "Fully Discretionary Account" means a Personal Account or
Related Account (as defined below) managed or held by a broker-dealer, futures
commission merchant, invest ment advisor or trustee as to which neither you nor
an Immediate Family Member (as defined below): (a) exercises any investment
discretion; (b) suggests or receives notice of transactions prior to their
execution; and (c) otherwise has any direct or indirect influence or control. In
addition, to qualify as a Fully Discretionary Account, the individual broker,
registered represen tative or merchant responsible for that account must not be
responsible for nor receive advance notice of any purchase or sale of a Security
or Futures Contract on behalf of an Advisory Client. To qualify an account as a
Fully Discretionary Account, the Compliance Officer must receive and approve a
written notice, in the form attached hereto as Appendix VIII, that the account
meets the foregoing qualifications as a Fully Discretionary Account.

FUTURES CONTRACT

         The term "Futures Contract" includes (a) a futures contract and an
option on a futures contract traded on a U.S. or foreign board of trade, such as
the Chicago Board of Trade, the

                                       A-3

<PAGE>



Chicago Mercantile Exchange, the New York Mercantile Exchange, or the London
International Financial Futures Exchange (a "Publicly-Traded Futures Contract"),
as well as (b) a forward contract, a "swap", a "cap", a "collar", a "floor" and
an over-the-counter option (other than an option on a foreign currency, an
option on a basket of currencies, an option on a Security or an option on an
index of Securities, which fall within the definition of "Security") (a
"Privately- Traded Futures Contract"). You should consult with the Compliance
Officer if you have any doubt about whether a particular Investment Transaction
you contemplate involves a Futures Contract. For purposes of this definition, a
Publicly-Traded Futures Contract is defined by its expiration month, i.e., a
Publicly-Traded Futures Contract on a U.S. Treasury Bond that expires in June is
treated as a separate Publicly-Traded Futures Contract, when compared to a
Publicly- Traded Futures Contract on a U.S. Treasury Bond that expires in July.

IMMEDIATE FAMILY

         The term "Immediate Family" means any of the following persons who
RESIDE IN YOUR HOUSEHOLD OR WHO DEPEND ON YOU FOR BASIC LIVING SUPPORT: your
spouse, any child, stepchild, grandchild, parent, stepparent, grandparent,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including any adoptive relationships.

INVESTMENT TRANSACTION

         For purposes of this Policy, the term "Investment Transaction" means
any transaction in a Security or Futures Contract in which you have, or by
reason of the transaction will acquire, a Beneficial Ownership interest. The
exercise of an option to acquire a Security or Futures Contract is an Investment
Transaction in that Security or Futures Contract

PERSONAL ACCOUNT

         The term "Personal Account" means the following accounts that hold or
are likely to hold a Security or Futures Contract in which you have a Beneficial
Ownership interest:

        o         any account in your individual name;

        o         any joint or tenant-in-common account in which you have an
                  interest or are a participant;.

        o         any account for which you act as trustee, executor, or
                  custodian; and

         o        any account over which you have investment discretion or have
                  the power (whether or not exercised) to direct the acquisition
                  or disposition of Securities or Futures Contracts (other than
                  an Advisory Client's account that you manage or over which you
                  have investment discretion), including the accounts of any
                  individual or entity that is managed or controlled directly or
                  indirectly by or

                                       A-4

<PAGE>



                  through you. There is a presumption that you can control
                  accounts held by members of your Immediate Family sharing the
                  same household. This presump tion may be rebutted only by
                  convincing evidence.

POLICY

         The term 'Policy" means this Employee Investment Transaction Policy.

PORTFOLIO EMPLOYEE

         The term "Portfolio Employee" means a Portfolio Manager or an Advisory
Employee who provides information or advice to a Portfolio Manager, who helps
execute a Portfolio Manager's decisions, or who directly supervises a Portfolio
Manager.

PORTFOLIO MANAGER

         The term "Portfolio Manager" means any employee of an Advisor who has
the authority, whether sole or shared or only from time to time, to make
investment decisions or to direct trades affecting an Advisory Client.

RELATED ACCOUNT

         The term "Related Account" means any account, other than a Personal
Account, that holds a Security or Futures Contract in which you have a direct or
indirect Beneficial Ownership interest (other than an account over which you
have no investment discretion and cannot otherwise exercise control) and any
account (other than an Advisory Client's account) of any individual or entity to
whom you give advice or make recommendations with regard to the acquisition or
disposition of Securities or Futures Contracts (whether or not such advice is
acted upon).

RELATED SECURITY

         The term "Related Security" means, as to any Security, any instrument
related in value to that Security, including, but not limited to, any option or
warrant to purchase or sell that Security, and any Security convertible into or
exchangeable for that Security. For example, the purchase and exercise of an
option to acquire a Security is subject to the same restrictions that would
apply to the purchase of the Security itself.

SECURITY

         As a GENERAL MATTER, the term "Security" means any stock, note, bond,
debenture or other evidence of indebtedness (including any loan participation or
assignment), limited partnership interest, or investment contract, OTHER THAN AN
EXEMPT SECURITY (as defined above). The term

                                       A-5

<PAGE>


"Security" includes an OPTION on a Security, an index of Securities, a currency
or a basket of currencies, including such an option traded on the Chicago Board
of Options Exchange or on the New York, American, Pacific or Philadelphia Stock
Exchanges as well as such an option traded in the over-the-counter market. The
term "Security" does NOT include a physical commodity or a Futures Contract. The
term "Security" may include an interest in a limited liability company (LLC) or
in a private investment fund.

         As a TECHNICAL MATTER, the term "Security" has the meaning set forth in
Section 2(a)(36) of the Investment Company Act of 1940, which defines a Security
to mean:

         Any note, stock, treasury stock, bond debenture, evidence of
         indebtedness, certificate of interest or participation in any
         profit-sharing agreement, collateral-trust certificate, preorganization
         certificate or subscription, transferable share, investment contract,
         voting- trust certificate, certificate of deposit for a security,
         fractional undivided interest in oil, gas, or other mineral rights, any
         put, call, straddle, option, or privilege on any security (including a
         certificate of deposit) or on any group or index of securities
         (including any interest therein or based on the value thereof), or any
         put, call, straddle, option, or privilege entered into on a national
         securities exchange relating to foreign currency, or, in general, any
         interest or instrument commonly known as a "security", or any
         certificate of interest or instrument commonly known as a "security",
         or any certificate of interest or participation in, temporary or
         interim certificate for, receipt for, guarantee of, warrant or right to
         subscribe to or purchase any of the foregoing,

EXCEPT THAT the term "Security" does not include any Security that is an Exempt
Security (as defined above), a Futures Contract (as defined above), or a
physical commodity (such as foreign exchange or a precious metal).

310801.01-New York S5A

                                       A-6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(R)(3)
<SEQUENCE>17
<FILENAME>file016.txt
<DESCRIPTION>CODE OF ETHICS OF J.J.B. HILLIARD
<TEXT>
<PAGE>



       J.J.B. Hilliard, W.L. Lyons, Inc is an afilliate of PNC Bank Corp. It has
       adopted PNC Bank Corp's Code of Ethics.

       PNC CODE OF ETHICS

       INTRODUCTION

       The PNC Bank Code of Ethics ("Code") conveys key information to assist
       you in discharging your responsibilities on behalf of PNC Bank Corp. and
       its subsidiaries ("PNC Bank" or "PNC") in an ethical and legally proper
       manner.

       The PNC Code of Ethics (formerly known as the Guidelines for Corporate
       Conduct at PNC Bank) is based on the principles that PNC Bank believes
       in:

         o   We conduct business with the highest ethical standards;

         o   We obey the law;

         o   We follow the policies and procedures of PNC Bank;

         o   We maintain confidentiality;

         o   We have a work environment that is fair and bias-free; and

         o   We are honest and trustworthy.

       The Code applies to all employees and directors as well as to agents when
       acting on behalf of PNC. Certain provisions of the Code also apply to
       others (such as family members).

       Supervisors and managers should help their staff understand and apply the
       above principles and comply with the standards in the Code.

       The conduct of each of us reflects on our organization and affects how we
       are perceived. Whether inside or outside of work, your personal conduct
       should be an asset to PNC Bank.

       Use your good judgment, follow the standards set forth in the Code, and
       report your concerns as provided in the Code. By doing so, we can ensure
       that PNC Bank continues to stand for honesty, integrity and fairness.

       RESPONSIBILITIES AND STANDARDS OF CONDUCT

       1.00  RESPONSIBILITIES

       As part of your responsibilities, you must:

         o   understand and comply with the Code, other PNC policies and
             procedures, and applicable laws and regulations;

<PAGE>

         o   provide the required notifications and obtain the necessary
             approvals in accordance with the Code; and

         o   report any possible violations of the Code of which you are aware.

       You are not permitted to act in a way that violates the Code. Lines of
       business or departments may have supplemental policies or procedures with
       which employees also must comply.

       1.01  ADMINISTRATION

       The PNC Code of Ethics is administered by PNC's Director of Compliance or
       a designee (referred to in the Code as "Director of Compliance"). A PNC
       Code of Ethics Policy Committee ("Ethics Policy Committee") has been
       established to determine policy issues relating to the Code, oversee
       resolution of major ethical issues, and receive and review reports
       relating to the Code's administration.

       1.02  NOTIFICATIONS/APPROVALS

       You should become familiar with the following situations in the Code that
       require you to provide notification or obtain prior approval:

                                                             CODE
       SITUATION                                             SECTION
         Insider Trading                                     2.02
         Corporate Property                                  2.04
         Inventions                                          2.04
         Conflicts of Interest                               2.05
         Gifts and Entertainment                             2.05.1
         Gifts to Public Officials                           2.05.2
         Inheritances; Fiduciary Compensation
           and Fees for Personal Services                    2.05.7
         Outside Activities                                  2.05.9
         Other Employment                                    2.05.9a
         Officer or Directorships                            2.05.9b/
                                                             Exhibit 7
         Public Office                                       2.05.10
         Expert Witnesses                                    2.05.11
         Antitrust                                           2.07
         Fair Competition                                    2.08
         Political Contributions                             2.10

     You can provide notification or obtain approval either (i) by contacting
     the Director of Compliance or (ii) through submission of the Code of Ethics
     Notification/Approval Form ("Notification/Approval Form")to your supervisor
     and market Human Resources ("HR") representative, as designated in the
     Code. A sample of the Notification/Approval Form is attached as Exhibit 1;
     the form is available from your Human Resources Department. If employees
     have any questions regarding how to provide notification or obtain
     approval, they should contact their market HR representative. Directors and
     agents should contact the Director of Compliance regarding notifications or
     approvals, questions or any other matters under the Code.

                                       2
<PAGE>


       1.03  REPORTING PROCEDURES

       Reports of any possible violations of the Code, including dishonest or
       fraudulent acts, or questions or concerns regarding matters covered by
       the Code, should be made immediately to any of the following people:

         o   your supervisor;

         o   your market HR representative;

         o   the Security Services representative;

         o   the Director of Compliance; or

         o   the General Counsel.

       You have been provided with several alternative people to whom you can
       report a possible violation so that you can choose a person with whom you
       feel comfortable. You may make an anonymous report if you wish.

       Note: Any supervisor who receives a report of a possible violation should
       refer it immediately to the market HR representative, the Security
       Services representative, the Director of Compliance, or the General
       Counsel.

       When you report a possible violation, you will be protected from any
       employment discrimination, retaliation, or retribution for good faith
       reporting.

       1.04  KEY CONTACTS

       Market HR representatives, the Security Services representative, the
       Director of Compliance, the General Counsel and others referenced in the
       Code are Key Contacts to assist you on Code matters for PNC Bank. Their
       telephone numbers can be found in the Key Contacts and Reference Guide
       attached as an Addendum to the Code or on the PNC intranet.

       1.05  EXCEPTIONS/QUESTIONS

       Exceptions to the Code and certain approvals will need to be made by the
       Ethics Policy Committee. If you would like to ask for an exception or
       have a question about any part of the Code, you should first discuss it
       with your supervisor and your market HR representative who will process
       your request, or you may contact the Director of Compliance. The Director
       of Compliance, as appropriate, will present requests for exceptions or
       approvals to the Ethics Policy Committee.

       1.06  ENFORCEMENT

       If an employee violates the Code, PNC policies and procedures or any
       applicable laws or regulations, the employee may be subject to
       disciplinary action, which may include termination of employment.
       Violation of laws could also result in legal proceedings and penalties,
       including, in some circumstances, criminal penalties.

                                       3
<PAGE>


       You are required to cooperate fully with investigations, audits,
       monitoring procedures, and other inquiries regarding Code matters,
       including requests to provide documentation. Refusal to comply may result
       in disciplinary action, which may include termination of employment.

       1.07  WRITTEN ACKNOWLEDGEMENT

       When you are hired, and at certain times during your employment, you will
       be required to sign a written acknowledgment certifying that you have
       received, have read, understand, and will comply with the Code. Refusal
       to complete the acknowledgment may result in disciplinary action, which
       may include termination of employment.

2.00   STANDARDS OF CONDUCT

       The following are standards of conduct for some specific issues that may
       arise in our business. We may amend or change these standards from time
       to time.

2.01   CONFIDENTIALITY

       FUNDAMENTAL PRINCIPLE

       Confidentiality is a fundamental principle in PNC Bank's business. You
       may deal with confidential, non-public information concerning PNC Bank,
       its clients, shareholders, employees and suppliers. You must protect all
       confidential information from unauthorized disclosure.

       DEFINITIONS

       The term "confidential information" includes, but is not limited to:

         o   PNC's business information, records, activities and plans;

         o   The identity, business information, records, activities and plans
             of clients and prospective clients;

         o   the identity of, or information relating to, merger and acquisition
             candidates;

         o   PNC's sources of supply, sales methods and sales proposals;

         o   PNC's computer programs, system documentation, special hardware,
             product hardware, software and technology developments;

         o   manuals, formulae, processes, methods, machines, compositions,
             ideas, improvements, inventions, or other confidential or
             proprietary information belonging to PNC or related to PNC's
             affairs;

         o   security information such as passwords, personal identification
             numbers (PIN's), and electronic keys;

         o   reports written to and by regulatory agencies; and

                                       4
<PAGE>


         o   any additional confidential information described in PNC's Insider
             Trading Policy (attached as Exhibit 2).

       YOUR RESPONSIBILITIES

       Your responsibilities with regard to confidential information are:

         o   You must not disclose confidential information to any person within
             PNC, unless that person has a need to know such information in
             connection with his or her employment responsibilities.

         o   You must not disclose confidential information to anyone outside of
             PNC, unless:

             o   such person is employed by an outside firm (i.e., a law,
                 accounting or other firm) retained by PNC and that person needs
                 to know the information in connection with the service to be
                 provided by the firm to PNC;

             o   pursuant to proper legal process or regulation. (PNC's Legal
                 Department has written guidelines for handling legal process.
                 If you receive a request for confidential information, or
                 subpoena or other legal process, you must immediately inform
                 your supervisor who will contact the Legal Department.); or

             o   the individual or organization to which the information relates
                 gives written consent, and release of the information is
                 approved by the Legal Department.

         o   You must never use confidential information for personal financial
             gain or to compete with PNC.

         o   You must keep in a secure way all files, records, or inquiries
             regarding clients and employees, and other records that contain
             confidential information.

         o   You must keep all identification and access codes, security
             equipment, security programs, and security procedures confidential.

         o   You must avoid discussing confidential information in public places
             (for example, elevators, restaurants or at social events).

         o   You must avoid discussing confidential information on cellular or
             car phones.

         o   You must be sensitive to whether information is confidential when
             using E-mail, or facsimile machines.

         o   You must not disclose confidential information, whether it is in
             written form or in your memory, even after you leave your
             employment or position with PNC.

       In addition, you must comply with all other PNC policies and procedures
       relating to confidentiality, including those that have been adopted for
       your line of business or department. All employees should also become
       familiar with and follow the standards relating to confidentiality of
       information set forth in the Information Security Policy Manual,
       available on the PNC Intranet and from Information Security.

2.02   INSIDER TRADING

       PNC has adopted an Insider Trading Policy which is attached as Exhibit 2
       to this Code. You should become familiar with the requirements of the
       Policy and must comply with its rules and standards.

                                       5
<PAGE>

2.03   CLIENTS' PROPERTY

       FUNDAMENTAL PRINCIPLE

       You must maintain the highest standards of honesty and integrity in
       handling clients' money and other property. You are not permitted to make
       unauthorized use of any client's money or property.

2.04   CORPORATE PROPERTY

       FUNDAMENTAL PRINCIPLE

       Corporate property may be used and removed from PNC premises only for
       business purposes, UNLESS APPROVED BY YOUR SUPERVISOR, or in accordance
       with policies adopted by the Board of Directors of PNC or a committee of
       the Board.

       Corporate property includes, but is not limited to:

              information;

              files;

              products;

              office supplies and furnishings;

              services;

              automobiles;

              technologies;

              concepts;

              client lists;

              policies and procedures manuals;

              computer and other equipment, such as facsimile machines;

              computer data bases, programs and software;

              data processing systems;

              voice mail;

              E-Mail; and

              any other electronic messaging systems or information about
              PNC's business.

                                       6
<PAGE>


       INSPECTIONS

       Corporate property and personal possessions that you may bring onto PNC
       premises are subject to inspection.

       INVENTIONS

       If you invent something, make a discovery, improve something or write
       something during your employment which is related to PNC's business or
       activities, you are required to:

         o   DISCLOSE YOUR WORK TO YOUR SUPERVISOR;

         o   assign any rights to the work to PNC, if appropriate; and

         o   assist PNC, either during or after your employment, in getting the
             use and benefits of the work, including anything necessary for PNC
             to get a patent or copyright or obtain other protection for the
             work.

2.05   CONFLICTS OF INTEREST

       FUNDAMENTAL PRINCIPLE

       You owe PNC Bank and its clients undivided loyalty. You should not have
       an interest that conflicts with, or may reasonably appear to conflict
       with PNC Bank or its clients, unless approved as set forth in this Code.

       DEFINITION

       A conflict of interest exists when:

         o   you engage in a personal activity or have a personal interest that
             may influence your decisions when acting for PNC or that may be at
             odds with PNC's interests; or

         o   you use your position with PNC or use PNC's confidential
             information to benefit yourself rather than PNC.

       A conflict of interest may be based on your financial, business, family
       or other personal relationships with clients, suppliers, competitors or
       others, or on some other factor.

       APPEARANCE OF CONFLICT

       The appearance of a conflict can be as damaging as an actual conflict and
       can erode trust and confidence in PNC. When faced with a situation
       involving a potential conflict of interest, you should ask yourself
       whether public disclosure of the matter would embarrass PNC or lead an
       outside observer to believe a conflict exists.

       DISCLOSURE REQUIREMENTS

       YOU MUST DISCLOSE IN WRITING TO YOUR SUPERVISOR AND YOUR MARKET HR
       REPRESENTATIVE ALL KNOWN OR POTENTIAL CONFLICTS OF INTEREST BY SUBMITTING
       A NOTIFICATION/APPROVAL FORM. The Director of Compliance should be
       contacted on how to handle a situation, if necessary.

       ILLUSTRATIONS

       Some illustrations of areas where potential conflicts of interests could
       occur and PNC's policies are:

                                       7
<PAGE>


       2.05.1   GIFTS AND ENTERTAINMENT

       FUNDAMENTAL PRINCIPLE

       You may not ask for or accept a gift or anything of value from anyone
       (before or after a transaction is discussed or concluded or a business
       decision is made) if you intend to be influenced or rewarded, or you
       believe the giver intends to exert influence, in connection with any
       business decision or transaction involving PNC. Where this is not the
       case, under certain circumstances, you may accept gifts or something of
       value from someone doing or seeking to do business with PNC. Examples of
       such circumstances are:

       PERMISSIBLE GIFTS

         o   accepting a gift that is based on obvious family or personal
             relationships (such as between you and your parents, children,
             spouse or close friend) and it is clear that the gift is being
             accepted because of the relationship rather than any PNC business;

         o   letting someone else occasionally pay for meals, refreshments,
             travel arrangements, accommodations, or entertainment to discuss
             business or foster business relationships if the expense is of
             reasonable value. In general, such items are of "reasonable value"
             if they involve a level of expense that customarily would be
             reimbursed by PNC as a reasonable business expense if not paid for
             by the other party;

         o   accepting loans from other banks or financial institutions on
             normal terms to finance usual activities, such as home mortgage
             loans, except where prohibited by law;

         o   occasionally accepting advertising or promotional material having a
             value not in excess of $100, such as pens, pencils, note pads, key
             chains, calendars and similar items;

         o   accepting discounts or rebates on merchandise or services that is
             not more than those available to other clients;

         o   accepting gifts having a value not in excess of $100 that are
             related to commonly recognized events or occasions, such as a
             promotion, new job, wedding, retirement, holiday, birthday, or bar
             or bat mitzvah; and

         o   accepting civic, charitable, educational or religious
             organizational awards for recognition of service and
             accomplishment.

       DISCLOSURE REQUIREMENTS

       You must make every effort to refuse or return a gift or something of
       value that goes beyond those permissible circumstances listed above. IN
       THE FOLLOWING CIRCUMSTANCES, YOU MUST PROMPTLY NOTIFY YOUR SUPERVISOR AND
       MARKET HR REPRESENTATIVE, OR THE DIRECTOR OF COMPLIANCE, TO DISCUSS HOW
       TO HANDLE THE SITUATION:

         o   if you are offered a gift or something of value that goes beyond
             those permissible circumstances above and you cannot refuse or
             return it; or

         o   you have any doubts about whether it is permissible to accept a
             gift or something of value.

       Only the Ethics Policy Committee can give approval to accept a gift or
       something of value outside of the permissible circumstances listed above.

       YOU CAN PROVIDE NOTIFICATION OR OBTAIN APPROVAL BY SUBMITTING THE
       NOTIFICATION/ APPROVAL FORM TO YOUR SUPERVISOR AND MARKET HR
       REPRESENTATIVE, OR YOU MAY CONTACT THE DIRECTOR OF COMPLIANCE.

                                       8
<PAGE>


       GIVING GIFTS

       The above standards for accepting gifts also apply to giving gifts,
       except that giving gifts to public officials is addressed separately in
       the next section.

       2.05.2   GIFTS TO PUBLIC OFFICIALS

       MONETARY GIFTS PROHIBITED

       You may not give a gift of money to a public official, except for
       legitimate personal campaign contributions to candidates for public
       office. (Certain employees must obtain prior written approval before
       making political contributions. See Section 2.10)

       GIFTS OF VALUE TO INFLUENCE PARTICULAR ACTS PROHIBITED

       You may not give anything of value (including, for example, gifts, meals,
       recreation, entertainment, flowers, transportation, lodging or sporting
       event tickets, which will be referred to in this section as "gifts") to a
       public official for the purpose of influencing a particular act by the
       official or his or her agency.

       LIMITATIONS ON OTHER TYPES OF GIFTS

       Limitations on giving items of value are discussed below with respect to
       different types of public officials with whom PNC employees are likely to
       have contact. These limitations, which should be interpreted as applying
       also to the spouse or family members of the public official, do not apply
       to gifts based on obvious family or close personal relationships.

       LIMITATIONS FOR DIFFERENT TYPES OF PUBLIC OFFICIALS

         o   FEDERAL OFFICIALS -- Gifts of over $20 in value may not be offered
             to officials in the executive branch of the federal government
             ("executive branch official"). For example, the value of an
             executive branch official's meal paid for by PNC may not be greater
             than $20. If all of the gifts to an executive branch official are
             added together in any calendar year, they may not be greater than
             $50. ANY GIFT TO AN EXECUTIVE BRANCH OFFICIAL MUST RECEIVE ADVANCE
             WRITTEN APPROVAL FROM THE DIRECTOR OF COMPLIANCE SO THAT THE $50
             LIMIT CAN BE MONITORED. ADVANCE APPROVAL OF EACH GIFT, REGARDLESS
             OF AMOUNT, IS IMPORTANT BECAUSE ---- GIFTS GIVEN BY ALL PNC
             OFFICERS TO ONE EXECUTIVE BRANCH OFFICIAL WILL BE AGGREGATED.

             Members of Congress and Congressional staff are subject to
             restrictions on gifts they may accept. ANY GIFT TO A MEMBER OF
             CONGRESS OR TO CONGRESSIONAL STAFF MEMBERS MUST RECEIVE ADVANCE
             WRITTEN APPROVAL FROM THE DIRECTOR OF COMPLIANCE.

         o   PENNSYLVANIA STATE OFFICIALS -- Gifts of more than nominal value
             may not be offered to officials in the executive branch of
             Pennsylvania government. Although nominal value does not have a
             specific dollar limit, you should be guided by the principles set
             forth in Section 2.05.1 above concerning PNC employees' receipt of
             gifts. ANY GIFT TO A PENNSYLVANIA STATE OFFICIAL MUST RECEIVE
             ADVANCE WRITTEN APPROVAL FROM THE DIRECTOR OF COMPLIANCE SO THAT
             REPORTING REQUIREMENTS IMPOSED BY THE LOBBYING DISCLOSURE ACT MAY
             BE SATISFIED.

         o   PENNSYLVANIA COUNTY OFFICIALS -- In counties in which PNC employees
             are likely to have significant activity, the rules for Pennsylvania
             state officials apply, except as follows. In Erie County, all gifts
             -D even of nominal value -D are prohibited. In Philadelphia County,
             the aggregate value of gifts may not exceed $100 annually. However,
             in Philadelphia County, gifts of food and beverage consumed at an
             event or meeting at which the official is attending are not
             restricted as to dollar amount and do not count against the
             aggregate annual limit.

                                       9
<PAGE>


         o   KENTUCKY STATE AND JEFFERSON COUNTY OFFICIALS -- Gifts, even of
             nominal value, may not be given to Kentucky state officials. Gifts
             to Jefferson County officials are prohibited if they are based on
             an understanding that they are given for the purpose of influencing
             the officer, directly or indirectly, in the discharge of his/her
             official duties.

         o   OHIO STATE AND COUNTY OFFICIALS -- Gifts of more than $20 in value
             may not be offered to Ohio state or county officials. Gifts of $20
             or less in value (for example, business lunches) may not be offered
             on a regular basis.

         o   DELAWARE STATE AND NEW CASTLE COUNTY OFFICIALS -- Gifts of more
             than nominal value may not be offered to officials in the executive
             branch of Delaware government. Although nominal value does not have
             a specific dollar limit, you should be guided by the principles set
             forth in Section 2.05.1 above concerning PNC employees' receipt of
             gifts.

         o   MASSACHUSETTS STATE AND COUNTY OFFICIALS -- Gifts of $50 or more
             may not be offered to Massachusetts state, county or municipal
             officials. Gifts of less than $50 in value (for example, business
             lunches) may not be offered on a regular basis or in a pattern.

         o   NEW JERSEY STATE OFFICIALS -- Gifts, even of nominal value, may not
             be given to officials in the executive branch of New Jersey
             government.

         o   INDIANA STATE OFFICIALS -- Gifts of more than $25 in value may not
             be offered to officials in the executive branch of Indiana
             government; in certain cases, the official may be required to
             obtain written approval from a designated state official before
             accepting the gift.

       In preparing this section, the laws and regulations of only the states
       and counties which are referred to above were reviewed. Check with the
       Director of Compliance before offering gifts to other public officials.

       The restrictions discussed above apply to gifts given to public officials
       directly or indirectly (for example, through another person).

       QUESTIONS

       IF YOU HAVE DOUBTS ABOUT WHETHER A GIFT TO A PUBLIC OFFICIAL IS ALLOWED
       UNDER THE CODE, YOU SHOULD EITHER NOT GIVE THE GIFT OR YOU SHOULD CONTACT
       THE DIRECTOR OF COMPLIANCE FOR AN INTERPRETATION OR TO OBTAIN APPROVAL
       FROM THE ETHICS POLICY COMMITTEE.

       2.05.3   BORROWING FROM CLIENTS OR SUPPLIERS/LENDING

       FUNDAMENTAL PRINCIPLE

       Employees cannot accept a loan from clients, suppliers or any other
       business contact of PNC unless the client, supplier or business contact
       is an immediate family member, or:

         o   the loan is given by those who lend money in the usual course of
             their business; and

         o   then only in accordance with the law and on terms offered to others
             who have similar credit standing, without special arrangements on
             interest rates, security, repayment terms and other conditions.

                                       10
<PAGE>


       ADDITIONAL RESTRICTIONS

       Employees must not lend personal funds to, or cosign, endorse, or
       guarantee, or otherwise assume responsibility for the borrowing of any
       client, supplier or any other business contact of PNC unless the client,
       supplier or business contact is an immediate family member.

       2.05.4   SELF-DEALING

       Self-dealing means using your employment or position for personal gain.
       Whether you are acting individually, through a business, or in a
       fiduciary capacity (a position of trust for another person), you are
       prohibited from self-dealing.

       PROHIBITIONS

         o   You may not accept from someone either doing business or trying to
             do business with PNC a business opportunity that is not available
             to other people on similar terms, or that is made available to you
             because of your position with PNC.

         o   You may not take for yourself a business opportunity that belongs
             to PNC Bank. An opportunity belongs to PNC when the company has
             pursued the opportunity, it has been offered to PNC, it is the kind
             of business PNC competes in, PNC has funded it, or PNC has devoted
             time, facilities, personnel, or other corporate resources to
             develop it.

       2.05.5   SALES/PURCHASES OF PROPERTY SERVICES TO/FROM EMPLOYEES

       You may not purchase property or services from PNC other than products or
       services offered:

         o   to the general public; and

         o   on terms that are available to all employees or similarly situated
             clients.

       Further, you may not sell any property or services to PNC.

       2.05.6   DEALING WITH SUPPLIERS

       MERIT BASED AWARDS

       Awards of orders, contracts and commitments for goods and services should
       always be made in the best interests of PNC. In your dealings with
       suppliers, you may not request or accept any kick-backs or other
       inducements.

                                       11
<PAGE>


       2.05.7   INHERITANCES; FIDUCIARY COMPENSATION AND FEES FOR PERSONAL
                SERVICES

       FUNDAMENTAL PRINCIPLE

       Neither you nor any member of your immediate family may accept any
       inheritance from any PNC client or the immediate family of any PNC
       client, unless the person giving you the inheritance is your relative or
       a relative of someone in your immediate family (through blood, marriage
       or adoption).

       APPLICATION OF RULE

       This rule applies only if the relationship between the client and you or
       your immediate family was established through your employment or position
       with PNC.

       PROHIBITED APPOINTMENTS

       Also, neither you nor any member of your immediate family may accept
       appointment as:

         o   executor;

         o   administrator;

         o   personal representative;

         o   attorney-in-fact;

         o   guardian;

         o   custodian under any Uniform Transfer or Gifts to Minors Act; or

         o   Trustee

       for any PNC client or the immediate family of any PNC client if the
       relationship between that person and you or your immediate family was
       established through your employment or position with PNC and you are to
       be compensated for the appointment through payment of fees or otherwise.

       IF THE APPOINTMENT IS TO BE UNCOMPENSATED, YOU MUST RECEIVE PRIOR
       APPROVAL FROM THE ETHICS POLICY COMMITTEE. YOU SHOULD CONTACT THE
       DIRECTOR OF COMPLIANCE TO OBTAIN APPROVAL.

       CLIENT RELATIONS

       If you have advance knowledge of any inheritance or appointment that may
       violate this rule, you must try to discourage the client from making the
       gift or appointment. YOU MUST ALSO NOTIFY THE DIRECTOR OF COMPLIANCE.

       2.05.8   USE OF POSITION OR AUTHORITY

       FUNDAMENTAL PRINCIPLES

       You may not act on behalf of PNC in any transaction involving a member of
       your immediate family or in any situation where you or a member of your
       immediate family has a personal or financial interest. You also may not
       act on behalf of PNC in connection with an organization with which you or
       a member of your immediate family is associated or has a personal or
       financial interest.

       NOTE: THIS SECTION DOES NOT APPLY TO YOUR ACTIONS RELATED TO PUBLICLY
       HELD PNC SUBSIDIARIES IN WHICH YOU OWN STOCK WHERE YOUR ACQUISITION OF
       THE STOCK WAS APPROVED BY THE ETHICS POLICY COMMITTEE OR PNC'S BOARD OF
       DIRECTORS AND YOU COMPLY WITH THE STOCK OWNERSHIP POLICY ADOPTED BY THE
       ETHICS POLICY COMMITTEE WHICH IS ATTACHED TO THIS POLICY AS EXHIBIT #6.

                                       12
<PAGE>


       2.05.9   OUTSIDE ACTIVITIES

       LIMITS ON OUTSIDE ACTIVITIES

       PNC encourages employees to participate in charitable or community
       activities outside of the company. These activities must not interfere
       with your ability to meet your employment responsibilities nor cause harm
       to PNC's reputation in the community or business interests.

       Some typical examples of outside activities are described below:

       A.       OTHER EMPLOYMENT

                RESTRICTIONS ON OUTSIDE EMPLOYMENT/POSITIONS

                You may not have any outside employment with a competitor or
                hold a position with a competitor while an employee of PNC.
                Nor may you be self-employed in competition with PNC.

                In addition, you may not engage in any outside employment
                (including self-employment) or hold any position which PNC
                determines may interfere with your PNC employment
                responsibilities. PNC may also determine that you are legally
                prohibited from or restricted in such outside employment while
                an employee of PNC, such as in the securities industry. You
                should be aware of your department's supplemental policies and
                procedures in this regard, if any.

                NOTIFICATION/APPROVAL

                ALL OUTSIDE EMPLOYMENT (INCLUDING SELF-EMPLOYMENT) FOR PNC
                EMPLOYEES MUST BE APPROVED IN ADVANCE AND IN WRITING BY
                SUBMITTING THE NOTIFICATION/APPROVAL FORM TO YOUR SUPERVISOR
                AND YOUR MARKET HR REPRESENTATIVE.

                In some instances where approval to engage in outside
                employment has been given, it may be necessary to revisit the
                issue. In particular, where PNC determines that the outside
                activity is interfering with your PNC responsibilities, or
                where PNC determines that the outside activity or position is
                in competition with PNC, authorization to continue such
                outside employment or in such position may be withdrawn.

       B.       OFFICER OR DIRECTORSHIPS
                IMPORTANCE TO PNC

                PNC has adopted a Policy for Employees Holding Director and
                Officer Positions in Outside Profit and Non-Profit
                Organizations which is attached as Exhibit #7 to the Code. You
                must become familiar and comply with this Policy.

       2.05.10 PUBLIC OFFICE

       GUIDELINES

       PNC has adopted a Public Office Policy which is attached as Exhibit #8 to
       this Code. You must become familiar and comply with this Policy.

                                       13
<PAGE>


       Except for lobbyists and other officers authorized to act on behalf of
       PNC, employees participating in political activities do so as individuals
       and not AT THE REQUEST OF or as representatives of PNC.

       2.05.11   EXPERT WITNESSES

       HANDLING REQUEST TO SERVE

       You may be asked to serve as an expert witness or to provide technical
       assistance in litigation or other proceedings not involving PNC. These
       activities generally take a lot of time and may be in conflict with PNC's
       policies and practices or with positions PNC has taken in other lawsuits.
       FOR THESE REASONS, IF YOU ARE ASKED TO SERVE AS AN EXPERT WITNESS OR
       PROVIDE TECHNICAL ASSISTANCE FOR A PARTY OTHER THAN PNC, YOU MUST RECEIVE
       ADVANCE WRITTEN APPROVAL. YOU SHOULD SUBMIT THE NOTIFICATION/APPROVAL
       FORM TO YOUR SUPERVISOR AND MARKET HR REPRESENTATIVE TO REQUEST SUCH
       APPROVAL.

       2.05.12  INSIDER LENDING

       REGULATORY REQUIREMENTS

       No PNC bank, under the requirements of Regulation O, may extend credit on
       preferential terms to:

         o   any of PNC's directors or executive officers; or

         o   any related interest of these individuals.

       REVIEWING REGULATION O POLICY

       PNC has adopted a Regulation O Policy to implement the provisions of the
       regulation in all PNC markets. You should contact your Compliance
       Department representative to obtain a copy of the policy if applicable to
       your line of business or department.

       2.05.13  INTEREST ON DEPOSITS OF DIRECTORS, OFFICERS, ATTORNEYS AND
                EMPLOYEES

       FUNDAMENTAL PRINCIPLE

       PNC Banks are not permitted to pay any of their directors, officers,
       attorneys or employees a greater rate of interest on their deposits than
       that paid to other depositors on similar deposits with such bank.

       2.05.14  SALES/PURCHASES OF PROPERTY AND SERVICES TO/FROM NON-OFFICER
                DIRECTORS

       Unless pre-approved by a majority of disinterested members of the Board
       of Directors of PNC Bank Corp. or the appropriate subsidiary PNC Bank,
       non-officer directors and their firms may not:

                                       14
<PAGE>

         o   purchase property or services from PNC unless such property or
             services are offered in the regular course of PNC's business, and
             on terms not more favorable to the director or his or her firm than
             those offered to other similarly situated clients who are not
             directors; or

         o   sell any property or services to PNC other than property or
             services that are sold in the regular course of the director's (or
             firm's) business and are sold upon terms not less favorable to PNC
             than those offered to similarly situated clients of the director
             (or firm).

2.06   DISCRIMINATION, BIAS AND HARASSMENT

       2.06.1   EQUAL EMPLOYMENT OPPORTUNITY POLICY

       It is the policy of PNC affirmatively to implement equal opportunity for
       all qualified applicants and existing employees without regard to race,
       religion, color, national origin, sex, age (over 40), disability, status
       as a Vietnam-era veteran or any other basis which would be in violation
       of any applicable ordinance or law. All personnel actions, including
       recruitment, selection, hiring, training, transfer, promotion,
       termination, compensation and benefits conform to this policy.

       A copy of the full Equal Employment Opportunity (EEO) policy may be
       obtained from your market HR representative.

       WHAT TO DO

       If you believe you have been denied equal employment opportunity because
       of discrimination, bias or harassment, you should report it to your
       supervisor or market HR representative or you may contact the Director of
       Compliance or the General Counsel. You will be protected from any
       employment discrimination, retaliation or retribution for good faith
       reporting.

       2.06.2   BIAS AND HARASSMENT

       You are entitled to a work environment free of racial, sexual, ethnic,
       and religious bias and harassment. Racial, sexual, ethnic or religious
       jokes or comments are subject to individual interpretation and may be
       offensive to some employees. Intimidation, coercion and threats, or
       actions leading to bodily harm are also unacceptable.

       2.06.3   SEXUAL HARASSMENT

       DEFINITION

       Sexual harassment is any unwelcome conduct of a sexual nature that is
       sufficiently severe or pervasive so as to unreasonably interfere with an
       individual's work performance or create an intimidating, hostile or
       offensive working environment.

                                       15
<PAGE>


       FORMS OF SEXUAL HARASSMENT

       Sexual harassment can take various forms, including:

         o   verbal (for example, sexual innuendo, sexual propositions, threats,
             suggestive or insulting comments or sounds and jokes of a sexual
             nature);

         o   non-verbal (sexually suggestive pictures or objects, graphic
             commentaries and obscene gestures); and

         o   physical (unwelcome physical contact).

       CRITERIA OF SEXUAL HARASSMENT

       Any one or a combination of three basic criteria determines whether
       conduct is sexual harassment:

         o   If you are required to submit to the conduct as either an express
             or implied qualification for a job or a requirement of your
             employment relationship;

         o   If submission to, or rejection of, the conduct is used as a basis
             for employment decisions affecting you; or

         o   If the conduct has the purpose or effect of unreasonably
             interfering with your work performance, or creating an
             intimidating, hostile or offensive working environment.

       COMPLIANCE REQUIREMENT

       Sexual harassment by a manager/supervisor, or other employee, or client,
       supplier or visitor will not be tolerated within PNC. All employees must
       comply with this policy and take appropriate measures to ensure that
       sexual harassment does not occur.

       WHAT TO DO

       If you are confronted with actions that may be sexual harassment, you
       should report it to your supervisor or your market HR representative, or
       you may contact the Director of Compliance or the General Counsel.

       2.07     ANTITRUST

       WHAT ARE THE ANTITRUST LAWS?

       You must obey the antitrust laws. The antitrust laws, which contain
       criminal and civil penalties, prohibit unfair methods of competition and
       agreements that restrain the way companies compete. The antitrust laws
       are most often enforced against agreements between separate businesses
       (for example, agreements between PNC and other companies) that limit
       competition. These agreements need not be in writing to raise a concern.

       As a general matter, all of PNC strategies and other decisions should be
       made independently, without consultation with PNC's competitors. You may
       not enter into any of the following three types of arrangements or
       agreements:

                                       16
<PAGE>


       TYPES OF ARRANGEMENTS

         o   PRICE-FIXING AGREEMENTS are agreements with competitors about the
             prices, terms, or conditions to be charged clients. To avoid even
             an allegation of price fixing, you should not discuss our prices,
             terms or conditions with a competitor, except as noted below.

             NOTE: WHERE WE ARE OPENLY WORKING JOINTLY WITH OUR COMPETITORS TO
             PROVIDE A LOAN OR OTHER PRODUCT OR SERVICE TO A CLIENT (FOR
             EXAMPLE, LOAN SYNDICATIONS), AGREEMENTS WITH SUCH COMPETITORS ON
             THE PRICE TO BE CHARGED TO THE CLIENT GENERALLY DO NOT CONSTITUTE
             PRICE FIXING. YOU SHOULD ONLY ENTER INTO SUCH AGREEMENTS IF WE HAVE
             LEGITIMATE BUSINESS REASONS FOR WORKING JOINTLY WITH OUR
             COMPETITORS RATHER THAN PROVIDING THE PRODUCT OR SERVICE ON OUR OWN
             (FOR EXAMPLE, IN LOAN SYNDICATIONS, BECAUSE OF UNDUE CREDIT RISK TO
             PNC).

         o   GROUP BOYCOTT AGREEMENTS are agreements among two or more companies
             to "boycott" or otherwise not do business with another company.

         o   MARKET, CLIENT, TERRITORY OR LOCATION ALLOCATION AGREEMENTS AMONG
             COMPETITORS are agreements with competitors not to compete in a
             particular line of business or product, not to "poach" competitors'
             clients, or not to compete in a particular geographic area.

       Because the following arrangements may raise antitrust concerns under
       certain circumstances, you should consult with the General Counsel before
       entering into any of them:

         o    TYING ARRANGEMENTS arise when a seller has a product or service
              buyers need, and requires buyers of that product or service to
              purchase a second product or service from the seller.

              o   Banking laws also prohibit certain ties. PNC Bank has adopted
                  a Policy Statement on Product Tying Restrictions that you can
                  obtain from your Compliance Department representative.

                  NOTE: MOST TYING ARRANGEMENTS THAT ARE LONG ESTABLISHED IN
                  BANKING (SUCH AS COMPENSATING BALANCES) THAT FACILITATE
                  REASONABLE ARRANGEMENTS INTENDED TO ASSURE THE SOUNDNESS OF
                  CREDIT DO NOT POSE A PROBLEM UNDER EITHER THE BANKING OR
                  ANTITRUST LAWS.

              o   PREDATORY PRICING is pricing at an unfairly low price for the
                  purpose of driving all competitors out of the marketplace to
                  reap the benefits of higher prices after the competitors are
                  gone.

              o   EXCLUSIVE DEALING involves agreements to do business with one
                  supplier or client that preclude PNC from doing business with
                  other suppliers or clients. You should consult with the
                  Director of Compliance if PNC's purchases or sales account for
                  a substantial portion of the market for the product or service
                  being purchased or sold.

              o   RECIPROCITY involves a company conditioning the purchase of
                  products or services from suppliers on those suppliers'
                  purchases of services from the company.

       OTHER INSTANCES IN WHICH YOU SHOULD CONSULT WITH THE GENERAL COUNSEL

       You should always consult the General Counsel:

              o   before a PNC unit that you manage merges with or acquires
                  another company (including a division of another company or
                  substantial assets of another company outside of the ordinary
                  course of business); or

              o   if you believe that any activity that may be undertaken by PNC
                  could be viewed as restraining fair or open competition, or if
                  you have any questions about whether any such activities may
                  fall within any of the categories of conduct described above.

                                       17
<PAGE>


       2.08     FAIR COMPETITION

       FUNDAMENTAL PRINCIPLE

       PNC Bank expects you to engage in vigorous, but fair competition with our
       competitors. Unfair ways to compete are not permitted. For example, you
       must never direct or encourage any applicant or new employee to violate
       any contractual or legal obligations to a former employer, such as a
       responsibility to protect confidential business information, technical
       information or trade secrets.

       REQUIREMENTS

       ALSO, YOU ARE REQUIRED TO NOTIFY YOUR SUPERVISOR AND MARKET HR
       REPRESENTATIVE BY SUBMITTING A NOTIFICATION/APPROVAL FORM IF YOU HAVE ANY
       OBLIGATIONS THAT MAY INTERFERE WITH YOUR ABILITY TO PERFORM YOUR JOB
       DUTIES AT PNC BANK. THESE OBLIGATIONS MAY INCLUDE AN AGREEMENT WITH A
       FORMER EMPLOYER, BUSINESS PARTNER OR OTHER PERSON OR ENTITY THAT SAYS:

              o   you may not compete with them for a certain time or in a
                  specific location;

              o   you may not ask their employees if they are interested in
                  working for PNC;

              o   you may not ask their clients to do business with PNC;

              o   you may not take work-related inventions, developments, or
                  writings to use at another business or place of employment;

              o   you may be limited in your use of trade secrets, business
                  information, materials, training or techniques that you
                  learned there; or

              o   you may have to notify them of any new employment or business
                  venture.

2.09   PERSONAL RESPONSIBILITIES OF EMPLOYEES

       2.09.1   DRUG ABUSE

       DRUG-FREE WORKPLACE

       PNC Bank is committed to promoting and maintaining a drug-free workplace.
       The illegal use of drugs interferes with effective and safe job
       performance. For this reason, PNC Bank has adopted a Drug Abuse Policy to
       prohibit employees from illegally using, possessing, distributing, or
       manufacturing drugs, or being under the illegal influence of drugs, while
       working or while on PNC property.

       CONSEQUENCE OF VIOLATION

       Employees who violate the Drug Abuse Policy (including the refusal to
       take a drug screening test) will be subject to disciplinary action.

       A summary of the Drug Abuse Policy is attached as Exhibit 3. PNC's Drug
       Abuse Policy is available from your market HR representative.


                                       18
<PAGE>


       2.09.2   ALCOHOL ABUSE

       FUNDAMENTAL PRINCIPLE

       The use of alcohol can have wide-ranging effects in the workplace,
       including declining job performance and diminished safety of co-workers
       and clients. For this reason, PNC prohibits any use of alcohol that may
       affect your fitness for work, the safety of co-workers or the public,
       your job performance or any operation of PNC.

       2.09.3   PERSONAL FINANCES

       EMPLOYEE RESPONSIBILITIES

       Because one of the primary functions of PNC Bank is the efficient and
       effective management of money, you must demonstrate trustworthiness and
       financial responsibility. You are expected to maintain your personal
       account relationships and financial affairs in the same responsible
       manner that is expected of clients and to manage debts in relation to
       income and net worth. Abuse of employee checking accounts, credit cards
       or loans obtained through PNC Bank is not in the best interest of PNC
       Bank and may result in revocation of these privileges.

       In addition, you must use your expense account in accordance with the
       guidelines set forth in the Employee Expense Reimbursement Guide,
       available from your market HR representative, as well as the standards
       set forth in the Code.

       2.09.4   SOLICITATION

       FUNDAMENTAL PRINCIPLE

       You are prohibited from soliciting other employees on behalf of any cause
       or organization during working time (that is, when the soliciting
       employee or the receiving employee is required to be performing work
       duties) or in client areas. Examples of prohibited solicitation include
       raffles, lotteries or memberships. You are also prohibited from
       distributing advertising materials, handbills, literature or other
       materials which are not prepared, supplied or approved by PNC, on PNC
       premises during working time or in any work area or any area where
       clients are routinely present to transact any business with PNC.

       It will not be a violation of this policy, however, if the solicitation
       or distribution is part of a campaign officially approved or sponsored by
       PNC, such as United Way.

       Non-employees of PNC are prohibited from soliciting or distributing
       literature on behalf of any cause or organization at any time on any of
       PNC's premises.

       2.10     POLITICAL CONTRIBUTIONS

       PROHIBITIONS

       PNC cannot make direct or indirect contributions to political candidates
       or office holders.

                                       19
<PAGE>


       You should abide by the following:

         o   no payment or thing of value may be made or given by or on behalf
             of PNC to any political party, candidate for public office in
             relation to his or her candidacy, or to any committee or group
             formed to support a party or candidate.

         o   PNC will not reimburse you for personal political contributions.

         o   you may not use PNC facilities or equipment in connection with any
             federal, state, or local election.

         o   you may not participate in political activities during your working
             hours or on PNC property. For example, branch offices may not be
             used by candidates running for election for fund raisers or other
             activities related to running for office.

         o   if you are a foreign national, you may not make a contribution in
             connection with any election (federal, state or local) or make a
             contribution to a PNC-affiliated political action committee. This
             prohibition does not apply to U.S. citizens living outside the
             United States. If you are not a U.S. citizen and if you have not
             been lawfully admitted for permanent residence in the United
             States, you should not make any political contributions, directly
             or indirectly, without first checking with the Director of
             Compliance.

       PERMITTED ACTIVITIES

       Except as prohibited by Rule G-37 of the Municipal Securities Rulemaking
       Board ("MSRB") and other related policies of PNC discussed below, the
       following activities are permissible:

         o   you may use your own funds to make contributions to political
             parties, candidates, or political action committees;

         o   you may participate in volunteer political activities during
             non-working time and away from PNC premises, as long as you do not
             use any PNC resources in connection with your activities; and

         o   PNC may make its facilities available to an affiliated political
             action committee ("PAC") for PAC-related functions, including
             speeches by political candidates. In addition, PNC may absorb
             administrative or other expenses incurred by an affiliated PAC.

       ADDITIONAL RULES FOR CERTAIN EMPLOYEES

       Employees of PNC Securities Corp, PNC Brokerage Corp, and certain other
       PNC employees associated with municipal securities or municipal finance,
       are subject to the following rules by MSRB Rule G-37 and PNC policies:

         o   you may not make contributions to PACs affiliated with PNC or PACs
             controlled by any municipal finance professional.

         o   you may not participate in the management of any PACs affiliated
             with PNC.

         o   YOU MUST OBTAIN PRIOR WRITTEN APPROVAL FOR ANY POLITICAL
             CONTRIBUTIONS TO CANDIDATES OR PACS. CONTACT YOUR COMPLIANCE
             DEPARTMENT OR CONSULT THE PNC POLICY IMPLEMENTING RULE G-37 FOR
             MORE INFORMATION ON OBTAINING APPROVAL.

         o   you must limit any contributions to $250 per election and per
             candidate, and you may only make contributions to candidates for
             whom you are eligible to vote.

                                       20
<PAGE>


         o   you may not make any direct or indirect political contribution for
             the purpose of influencing the award of municipal securities
             business to PNC.

       A copy of the PNC policy implementing MSRB Rule G-37 is located in the
       PNC Securities Corp and PNC Brokerage Corp Compliance Manuals.

       2.11     LOBBYING

       Specific laws apply to lobbying activities undertaken on behalf of PNC.
       You may obtain a summary of these laws and a copy of PNC's lobbying
       policy from the Director of Compliance.

       2.12     OTHER MATTERS

       CRIMES, SUSPECTED CRIMES, AND DISHONEST ACTS REPORTING REQUIREMENTS

       PNC Bank must file information with law enforcement agencies under
       certain circumstances when criminal acts involving PNC Bank have occurred
       or are suspected. If you have knowledge of a mysterious disappearance or
       loss or an unexplained shortage, or know or suspect that any criminal,
       dishonest, or fraudulent act has occurred that may affect PNC, its
       employees, officers or clients, you should immediately use any of the
       Reporting Procedures set forth in Section 1.03 of the Code.

       FIDELITY BOND COVERAGE

       PNC holds a fidelity bond that covers all employees of PNC. The bond
       coverage for any employee may end as soon as PNC learns of any dishonest
       or fraudulent act that was or may have been committed by the employee at
       any time, whether or not the act was committed while in PNC's employment.

       BONDING REQUIREMENT

       If an employee does not meet the standard for bonding, employment usually
       must be terminated. To comply with the bonding requirements and other
       requirements imposed by law, PNC reserves the right to investigate the
       personal history of any applicant or employee, including any law
       enforcement records.

       CONVICTIONS INVOLVING DISHONESTY OR BREACH OF TRUST

       Any person who at any time:

         o   has been convicted of or plead guilty to any criminal offense
             involving dishonesty or breach of trust or money laundering; or

         o   has agreed to enter into a pretrial diversion or similar program in
             connection with a prosecution for such an offense is prohibited
             from participating, directly or indirectly, in any manner in the
             conduct of the affairs of any PNC bank without prior written
             consent from the appropriate regulatory agency.

       CONSEQUENCES OF VIOLATION

       If any employee or officer of a PNC Bank is convicted of or pleads guilty
       to such an offense or enters into a pretrial diversion or similar program
       to avoid such a conviction, employment will be terminated in the absence
       of consent from the appropriate regulatory agency.

                                       21
<PAGE>


       2.13     MEDIA INQUIRIES

       MEDIA INQUIRIES

       You may be contacted by the media for information concerning PNC's
       position on various matters. You must always direct these inquiries to
       the Public Relations Department.

       PROHIBITIONS

       You also may not give information to the media about PNC activities, the
       activities of other employees, PNC clients or suppliers without the
       consent of the Public Relations Department. PNC (through the Public
       Relations Department) will speak out on issues of importance to PNC when
       appropriate. PNC will not, nor should you, without the consent of the
       Public Relations Department, identify clients or provide client
       information or do the following:

         o   comment on actions of any other company, entity or person;

         o   comment on issues that are in litigation or under governmental
             review;

         o   discuss financial projections;

         o   discuss plans, programs, products, or operations that have not been
             announced publicly;

         o   provide testimonials or endorsements; or

         o   describe the content of regulatory examination reports.

       2.14     RECORDKEEPING POLICY

       PNC maintains a record retention policy in accordance with legal,
       regulatory, and appropriate business requirements.

       PROHIBITIONS

       You may not dispose of or destroy any records that document or record the
       business of PNC, except in accordance with PNC's record retention policy.

       If there is threatened or pending litigation, an administrative charge, a
       subpoena or other legal process, or if a government audit or review is in
       process, you must not dispose of or destroy any relevant records.

       Intentional destruction of records to avoid disclosure is prohibited.

       QUESTIONS

       If you have questions about record retention, ask your supervisor.
       Supervisors may direct their questions to the Corporate Records Retention
       Coordinator.

                                       22
<PAGE>


       2.15     ACCOUNTING PRACTICES/FOREIGN CORRUPT PRACTICES ACT

       REQUIREMENTS

       PNC has established internal accounting controls and recordkeeping
       policies to meet legal and business requirements, including the
       following:

         o   all business transactions and payments will be recorded accurately
             in supporting records;

         o   no unrecorded fund or asset of PNC will be established or
             maintained for any reason;

         o   the use or transfer of PNC funds for any purpose that would be in
             violation of any law or regulation or that would be improper is
             prohibited; and

         o   the accounting records of PNC, and any public record, must be
             complete, accurate, and in reasonable detail, and no false,
             artificial, or misleading entries will be made for any reason.

       FOREIGN CORRUPT PRACTICES ACT OF 1977

       Any dealings that you may have with an official of a foreign government,
       a foreign political party or party official, or candidate for foreign
       political office, must comply with the requirements of the Foreign
       Corrupt Practices Act of 1977, as amended. The Act also applies to
       officials of public international organizations.

         o   This law requires the use of proper accounting procedures.

         o   You are prohibited from giving or promising anything of value to
             such foreign officials for the purpose of influencing any act or
             decision of the official in his/her official capacity, or to obtain
             or retain business, or direct business to, any person. Violations
             may result in criminal penalties.

       All laws of the applicable foreign country must be obeyed.

       2.16     BANK SECRECY/MONEY LAUNDERING CONTROL ACT

       POLICY

       It is the policy of PNC Bank to have an effective Bank Secrecy Act (BSA)
       and anti-money laundering program. You are responsible for knowing and
       carrying out your responsibilities under the company's BSA polices and
       procedures. In particular, you must be aware of your responsibility
       regarding:

         o   requirements to report cash transactions on Currency Transaction
             Reports (CTRs);

         o   the company's systems and procedures to avoid being used by persons
             who are laundering money through the bank from drug activities and
             other illegal activities;

         o   "Know Your Customer" procedures; and

         o   the procedures to identify a client's suspicious activities and
             transactions and to report such matters to Security Services.

       Your market's BSA Compliance Officer should be contacted regarding any
       BSA questions or concerns.

       2.17     COMMUNITY REINVESTMENT ACT/FAIR LENDING

       POLICY

       It is the policy of PNC to respond to the credit needs of the communities
       in which it has facilities, including those of low and moderate income
       neighbor-hoods. In addition, each PNC Bank is expected to devote


                                       23
<PAGE>


       human and financial resources, consistent with safe and sound banking
       practices, to the solution of community problems.

       It is the policy of PNC Bank to conduct its business in accordance with
       fair lending laws. It is your responsibility to treat all clients fairly.

       A copy of the Corporate Community Reinvestment Act (CRA) and Fair Lending
       Compliance Statements may be obtained from your Compliance Department
       representative or market CRA Officer.

       2.18     SAFETY, HEALTH AND ENVIRONMENT

       COMPLIANCE REQUIREMENT

       You must comply with safety and health requirements governed by federal,
       state, and local laws. You have a responsibility:

         o   to follow safe operating procedures;

         o   to promote your own and your co-workers' health; and

         o   to encourage regard for the environment among fellow employees and
             in the community.

       FIREARMS PROHIBITION

       You are not permitted to possess firearms or other dangerous weapons on
       PNC premises, in PNC-owned vehicles or on work time, unless this is
       required as part of your job.

       HOW TO REPORT

       Reports of any actual or potential safety, health, or environmental
       problems should be reported using the Reporting Procedures set forth in
       Section 1.03 of the Code.

                                   ----------

       This Code reflects principles PNC intends to abide by. It is not
       necessarily a statement of the law and in many instances may go beyond
       what the law and industry practice require. This Code is not intended to
       result in the imposition of legal liability on PNC, or on any employee or
       any person who becomes subject to provisions of the Code, if such
       liability would not exist under law or regulations in the absence of the
       Code.

       You are responsible for complying with the Code. This Code, however, does
       not, nor should it be construed to, imply an employment contract between
       you and PNC.

       EXHIBIT 1: FORMS

       Copy of the Notification/Approval Form

       EXHIBIT 2: INSIDER TRADING

       SUMMARY OF REQUIREMENTS

                                       24
<PAGE>


       This chart summarizes certain rules described in PNC Financial Services
       Group, Inc.'s Insider Trading Policy (the "Policy"). It is intended to be
       used as a reference to help you in your compliance with the Policy.
       However, you should not use this summary in place of the Policy because,
       in addition to containing more detailed information on the rules
       summarized below, the Policy contains other rules and standards on topics
       that are not included in the summary. THE POLICY ALSO APPLIES TO THE
       FOLLOWING MEMBERS OF YOUR IMMEDIATE FAMILY: YOUR SPOUSE, MINOR CHILDREN,
       OLDER CHILDREN WHO LIVE IN YOUR HOUSEHOLD OR WHO RELY PRIMARILY ON YOU
       FOR FINANCIAL SUPPORT, AND ANY OTHER RELATIVES (BY BLOOD, MARRIAGE, OR
       OTHERWISE) LIVING IN YOUR HOUSEHOLD. YOU ARE RESPONSIBLE FOR THESE FAMILY
       MEMBERS' COMPLIANCE WITH THE POLICY, AND YOU MUST SEEK APPROVAL OF AND
       REPORT THEIR PERSONAL SECURITIES TRANSACTIONS IN ACCORDANCE WITH THIS
       POLICY AS IF SUCH TRANSACTIONS WERE FOR YOUR OWN ACCOUNT.

       -----------------------------------------------------------------------
       SECURITIES TRANSACTIONS RESTRICTIONS FOR ALL EMPLOYEES, DIRECTORS AND
       FAMILY MEMBERS:
       -----------------------------------------------------------------------
       o  If you are aware of material, non-public information concerning any
          issuer or its securities, including but not limited to PNC, you are
          prohibited from buying, selling, or recommending securities of that
          issuer. Nor may you disclose such information to others except as
          set forth in this Policy.
       -----------------------------------------------------------------------
       o  You are prohibited from conducting the following activities
          regarding PNC securities:

          o  transactions in any derivative of a PNC security, including but
             not limited to puts, calls, and options (other than stock options
             granted by PNC), subject to certain exceptions for employees who
             received PNC securities in connection with an acquisition day
             trading (buying and selling the same security during one calendar
             day)

          o  short selling (selling the securities at a specified price and on
             a specified date without owning the securities on the trade date)
       -----------------------------------------------------------------------

       -----------------------------------------------------------------------
       PRE-CLEARANCE APPROVAL/REPORTING REQUIREMENTS FOR RESTRICTED EMPLOYEES
       AND THEIR FAMILY MEMBERS:
       -----------------------------------------------------------------------
       o  Restricted Employees include members of the senior officer committee
          (as of the date of this Policy, the Marketing Committee), Section 16
          officers, designated employees of Mergers and Acquisitions, and
          other employees designated by the Director of Corporate Compliance.
       -----------------------------------------------------------------------
       o  If you are a Restricted Employee, you must obtain the approval of
          the Corporate Secretary or designate before buying or selling PNC
          securities (including securities issued by PNC affiliates that are
          publicly traded), changing elections or making intra-plan transfers
          involving PNC securities or phantom shares, using PNC securities to
          secure a loan (including a margin account), or making a gift of PNC
          securities. Subject to certain exceptions, before buying or selling
          any publicly traded security other than securities issued by PNC or
          a PNC affiliate you must pre-clear through the Insider Transaction
          Authorization System. You also must provide to Corporate Compliance
          periodic statements at least quarterly of purchases or sales of any
          publicly traded securities.
       -----------------------------------------------------------------------
       PRE-CLEARANCE APPROVAL/REPORTING REQUIREMENTS FOR OUTSIDE DIRECTORS AND
       THEIR FAMILY MEMBERS:
       -----------------------------------------------------------------------
       o  Members of the Boards of Directors of PNC and PNC Bank, National
          Association must obtain the approval of the Corporate Secretary or
          designate before buying or selling PNC securities (including
          securities issued by PNC affiliates that are publicly traded), using
          PNC securities to secure a loan (including a margin account), making
          a gift of PNC securities, or reallocating investments within the
          Directors Deferred Compensation Plan. You must also have your
          broker(s) send duplicate copies of confirmations of all your
          purchases and sales of PNC securities (including securities issued
          by PNC affiliates) to the Corporate Secretary, and report to the
          Corporate Secretary within 7 calendar days any trade in PNC
          securities that was made other than through a broker.
       -----------------------------------------------------------------------

                                       25
<PAGE>

       -----------------------------------------------------------------------
       OTHER PRE-CLEARANCE APPROVAL/REPORTING REQUIREMENTS:
       -----------------------------------------------------------------------
       o  As a supplement to this Policy, there are special policies and
          procedures on personal securities transactions that are applicable
          to certain business units within PNC. Employees of these business
          units are subject to additional requirements as set forth in the
          special policies for their business unit, which may include
          pre-clearance and/or reporting requirements. You will be informed if
          you are in a business unit that has special policies applicable to
          you.
       -----------------------------------------------------------------------

       -----------------------------------------------------------------------
       SECURITIES OF CLIENTS
       -----------------------------------------------------------------------
       o  Employees of "Designated Units" are prohibited from purchasing or
          selling client securities. You will be informed if you are in a
          Designated Unit.
       -----------------------------------------------------------------------

       -----------------------------------------------------------------------
       SECURITIES OF AFFILIATES:
       -----------------------------------------------------------------------
       o  Certain PNC employees may be subject to different or additional
          restrictions with respect to their transactions in securities issued
          by PNC affiliates that are publicly traded companies. You will be
          informed of any such restrictions if they are applicable to you.
       -----------------------------------------------------------------------

       PNC INSIDER TRADING POLICY

       INTRODUCTION

       The purpose of this Insider Trading Policy ("Policy") is to further
       compliance by PNC Financial Services Group, Inc. ("PNC") and its
       subsidiaries, employees, and directors with the federal securities laws
       and regulations. The Policy is designed not only to protect us from
       civil or criminal liability under these laws, but also to protect our
       reputation for integrity.

       The Code of Ethics contains additional standards with respect to
       confidential information, and should be read in conjunction with this
       Policy. Further, your business unit may impose additional requirements.
       You may also be subject to Office of the Comptroller of the Currency
       requirements for fiduciary activities, Securities and Exchange
       Commission requirements, and other requirements of various
       self-regulatory organizations.

       Certain of the following standards and rules are, of necessity, general
       in nature. In practice, there may be situations that warrant exceptions
       or interpretations that must be approved by the General Counsel's
       office of PNC ("General Counsel").

       If you have questions regarding the Policy, you should contact the
       Director of Corporate Compliance or the General Counsel. Further, if
       you suspect a violation of this Policy, you should contact the Director
       of Corporate Compliance or the General Counsel, or use any of the
       reporting procedures set forth in the PNC Code of Ethics.

       You are required to be familiar with and abide by this Policy. You must
       read it carefully and retain it. New employees will be required to
       certify in writing that they understand and will comply with the
       Policy. From time to time employees may also be asked to re-certify in
       writing that they have followed the Policy.

       References to "PNC" apply to PNC Financial Services Group, Inc. and all
       organizations directly or indirectly under its control. References to
       an "affiliate" apply to the organization under the control of PNC with
       which an employee or director is associated.

                                       26
<PAGE>


         WHAT IS "INSIDER TRADING"?

         "Insider trading" generally involves the purchase or sale of securities
         while aware of material, non-public information ("inside information").
         A person who communicates inside information (a "tipper") to another
         person (a "tippee") may also be liable if the tippee purchases or sells
         a security while aware of such information.

         Penalties for insider trading violations are substantial. Civil
         penalties may be as high as three times the profit gained or loss
         avoided as a result of an unlawful purchase or sale of a security. For
         controlling persons who knowingly or recklessly fail to take
         appropriate measures designed to prevent the occurrence of insider
         trading violations, civil penalties of up to the greater of three times
         the profit gained or loss avoided or $1,000,000 may be imposed. In
         addition, criminal fines and jail terms may be imposed.

         WHAT IS "MATERIAL INFORMATION"?

         Material information generally means information relating to a company
         that issues securities (an "issuer"), such as information about its
         business operations or securities, the public dissemination of which
         would likely affect the market price of any of its securities, or which
         would likely be considered important by a reasonable investor in
         determining whether to buy, sell, or hold such securities.

         WHAT IS "NON-PUBLIC INFORMATION"?

         Information that has not been disclosed to the public is generally
         non-public. To show that information is public, there must be evidence
         that it is widely disseminated. Information would generally be
         considered widely disseminated if it has been disclosed, for example on
         the Dow Jones broad tape, news wire services such as AP or Reuters,
         radio or television; or in newspapers or magazines, or public
         disclosure documents filed with the Securities and Exchange Commission,
         such as prospectuses, proxy statements, and periodic reports.

         EXAMPLES OF INSIDE INFORMATION

         It is impossible to provide a complete list of information that may
         constitute inside information, but it may include:

         o  Unpublished financial reports or projections;

         o  Information about current, proposed, or contemplated transactions,
            business plans, financial restructurings, or acquisition targets;

         o  Dividend increases or decreases;

         o  Extraordinary borrowings or liquidity problems;

         o  Material defaults under agreements or actions by creditors, clients,
            or suppliers relating to a company's credit standing;

         o  Proposed or contemplated issuance, redemption, or repurchase of
            securities or stock splits;

         o  Significant expansions or contractions of operations, including
            acquisitions, mergers, divestitures, and joint ventures, and
            purchases or sales of substantial assets;

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<PAGE>


         o  Major new product developments;

         o  Significant increase or decrease in business or information about
            major contracts;

         o  Institution of, or developments in, major litigation,
            investigations, or regulatory actions or proceedings; and

         o  Developments regarding a company's senior management.

         STATEMENT OF GENERAL POLICY APPLICABLE TO ALL EMPLOYEES AND DIRECTORS

         The following rules relate to your personal securities transactions.
         For purposes of these rules, your personal securities transactions
         include the securities transactions of your immediate family members,
         and the securities transactions of accounts in which you or your
         immediate family members have a beneficial interest or over which you
         or your immediate family members exercise investment discretion or
         control. If you or an immediate family member exercises investment
         discretion or control over non-related customer accounts in the normal
         course of employment responsibilities, those accounts are not subject
         to the pre-clearance and reporting requirements described below.
         However, transactions in such accounts may be subject to review by
         audit or compliance personnel.

         Immediate family members consist of your spouse, any minor children,
         older children living in your household, older children who rely
         primarily on you for financial support, and any other relatives (by
         blood, marriage, or otherwise) living in your household. THE PERSONAL
         SECURITIES TRANSACTIONS OF YOUR IMMEDIATE FAMILY MEMBERS ARE SUBJECT TO
         THIS POLICY. YOU ARE RESPONSIBLE FOR THEIR TRANSACTIONS BEING IN
         COMPLIANCE WITH THESE RULES, AND YOU MUST PRE-CLEAR AND REPORT THEIR
         PERSONAL SECURITIES TRANSACTIONS AS IF SUCH TRANSACTIONS WERE FOR YOUR
         OWN ACCOUNT.

         1. GENERAL PROHIBITION ON INSIDER TRADING:

            o  If you are aware of inside information concerning an issuer or
               its securities, including but not limited to PNC, you are
               prohibited from buying, selling, or recommending securities of
               that issuer. You also may not disclose such information to any
               other person, unless:

                  o  that person is employed by PNC and has a need to know such
                     information in connection with his or her employment or
                     supervisory responsibilities;

                  o  that person is employed by an outside firm (such as a law,
                     accounting, or investment banking firm) retained by PNC and
                     needs to know the information in connection with the
                     service to be provided by the firm to PNC; or

                  o  disclosure is otherwise authorized by the General Counsel.

            o  Once the inside information is released to the public and has
               been widely disseminated, then you may buy, sell, or recommend
               securities of that issuer unless otherwise restricted in this
               Policy.

            o  Unless you are sure that information is not inside information,
               you should presume that it is or consult with the General
               Counsel.

         2. SPECIAL RULES REGARDING PNC FINANCIAL SERVICES GROUP, INC.
            SECURITIES:

            o  You are prohibited from purchasing or selling PNC securities
               beginning 15 days before the end of a calendar quarter until the
               second business day after PNC releases its earnings results for
               that

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<PAGE>


               quarter (the "Blackout Period"). This prohibition does not
               include exercising with cash or already-owned PNC securities an
               option on PNC securities granted by PNC and holding the
               underlying securities received as a result of the option
               exercise. All pending purchase and sale orders regarding PNC
               securities that could be executed during a Blackout Period must
               be canceled before the beginning of the Blackout Period.

            o  You are prohibited from engaging in transactions in any
               derivative of PNC securities, including but not limited to puts,
               calls, and options. You are also prohibited from day trading
               (buying and selling the same securities during one calendar day)
               and short selling (selling the securities at a specified price on
               a specified date without owning the securities on the trade date)
               PNC securities. The receipt or exercise of an option grant or
               other derivative security pursuant to a PNC compensation plan is
               not a violation of the Policy.

               NOTE: THERE IS A LIMITED EXCEPTION TO THE PROHIBITION ON
               DERIVATIVE TRANSACTIONS FOR EMPLOYEES WHO HAVE RECEIVED PNC
               SECURITIES IN CONNECTION WITH AN ACQUISITION. THIS EXCEPTION IS
               NOT AVAILABLE TO PNC EXECUTIVE OFFICERS WHO ARE SUBJECT TO
               SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934. YOU WILL BE
               INFORMED IF THIS EXCEPTION APPLIES TO YOU. IF THIS EXCEPTION
               APPLIES:

               o  YOU MAY SELL OR "WRITE" COVERED CALL OPTIONS, OR PURCHASE
                  PROTECTIVE PUTS (EITHER ALONE OR IN COMBINATION, AS, FOR
                  EXAMPLE, IN ESTABLISHING A COLLAR), PROVIDED THAT SUCH
                  DERIVATIVE INSTRUMENTS RELATE ONLY TO THE NUMBER OF PNC SHARES
                  YOU ORIGINALLY ACQUIRED IN CONNECTION WITH THE ACQUISITION.

               o  YOU MAY NOT ENTER INTO THESE TRANSACTIONS DURING A BLACKOUT
                  PERIOD OR AT ANY TIME WHEN YOU ARE AWARE OF INSIDE INFORMATION
                  REGARDING PNC.

               o  YOU MUST REMAIN "COVERED" (THAT IS, YOU MUST NOT SELL THE
                  UNDERLYING PNC SHARES WITH RESPECT TO WHICH YOU HAVE ENTERED
                  INTO THE DERIVATIVE TRANSACTION) AT ALL TIMES DURING THE TERM
                  OF THE DERIVATIVE INSTRUMENT.

               o  YOU MAY NOT EXERCISE ANY SUCH INSTRUMENT DURING A BLACKOUT
                  PERIOD OR AT ANY TIME WHEN YOU ARE AWARE OF INSIDE INFORMATION
                  REGARDING PNC. (THE EXERCISE BY A COUNTERPARTY TO SUCH A
                  DERIVATIVE TRANSACTION WOULD NOT BE DEEMED TO VIOLATE THIS
                  RESTRICTION.)

            o  If you fail to meet a margin call or otherwise default on a loan
               secured by PNC securities, and the PNC securities are liquidated
               during a Blackout Period or while you are aware of inside
               information, you may be deemed to be in violation of this Policy.

         PRE-CLEARANCE AND REPORTING REQUIREMENTS

         Restricted Employees and Directors (each as defined below) are subject
         to additional pre-clearance and reporting requirements. If you are
         subject to these requirements, under no circumstance may you effect a
         transaction in any securities while you are aware of inside
         information, even if you have received pre-clearance. The ultimate
         responsibility for determining whether you have inside information
         rests with you. Pre-clearance of any particular transaction under this
         Policy will not necessarily protect you from liability under the laws
         prohibiting insider trading.

         RESTRICTED EMPLOYEES

         Restricted Employees include members of PNC's senior officer committee
         (the Marketing Committee, as of the effective date of this Policy),
         executive officers who are subject to the reporting requirements of
         Section 16 of the Securities Exchange Act of 1934, designated employees
         of Mergers and Acquisitions,


                                       29
<PAGE>


         and other employees designated by the Director of Corporate Compliance.
         You will be informed if you have been designated a Restricted Employee.

         If you are a Restricted Employee, you must obtain the approval of the
         Corporate Secretary or designate before:

            o  buying or selling PNC securities and securities issued by PNC
               affiliates that are publicly traded companies,

            o  making changes in elections or intra-plan transfers involving PNC
               securities or phantom shares under any PNC compensation or
               benefit plan,

            o  using PNC securities to secure a loan (including a margin
               account), or

            o  making a gift of PNC securities.

         You must also pre-clear through the Insider Transaction Authorization
         System before buying or selling any publicly traded security other than
         securities issued by PNC or a PNC affiliate.

         If you are a Restricted Employee, you must have your broker(s) send
         periodic statements at least quarterly of all of your purchases and
         sales of publicly traded securities to Corporate Compliance at the same
         time the broker sends such statements to you. In addition, you must
         provide periodic statements at least quarterly to Corporate Compliance
         of all of your purchases and sales of publicly traded securities other
         than through a broker-dealer.

         The pre-clearance and reporting requirements do not apply to security
         transactions involving open-end mutual funds (such as money market
         funds), unit investment trusts, and U.S. government or federal agency
         obligations; reinvestment of dividends pursuant to an issuer's dividend
         reinvestment plan (but do apply to additional voluntary purchases or
         sales effected through such a plan); purchases of PNC securities under
         the Employee Stock Purchase Plan; or other situations where the
         Director of Corporate Compliance determines that pre-clearance or
         reporting is not necessary.

         OUTSIDE DIRECTORS

         Members of the Boards of Directors of PNC and PNC Bank, National
         Association must obtain the approval of the Corporate Secretary before:

            o  buying or selling PNC securities and securities issued by PNC
               affiliates that are publicly traded companies,

            o  using PNC securities to secure a loan (including a margin
               account),

            o  making a gift of PNC securities, or

            o  reallocating investments within the Directors Deferred
               Compensation Plan.

         If you are a director, you must have your broker(s) send duplicate
         copies of trade confirmations of all of your purchases and sales of PNC
         securities (and PNC affiliates' publicly traded securities) to the
         Corporate Secretary at the same time the broker sends confirmations to
         you. In addition, you must report to the Corporate Secretary any
         transaction in PNC securities other than through a broker-dealer not
         later than 7 calendar days after such transaction.

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<PAGE>


         The pre-clearance and reporting requirements do not apply to the
         reinvestment of dividends pursuant to PNC's dividend reinvestment plan
         (but do apply to additional voluntary purchases or sales effected
         through the plan).

         OTHER PRE-CLEARANCE AND REPORTING REQUIREMENTS

         A business unit may have or adopt policies governing the personal
         securities transactions of some or all of the employees of that
         business unit. For example, certain fiduciary, investment advisory,
         securities brokerage, and similar business units have supplemental
         policies governing the personal securities transactions of their
         employees. Such additional restrictions may include the pre-clearance
         of securities transactions or reporting requirements. You will be
         informed if you are in a business unit that has special policies
         applicable to you, and you will be required to be familiar with and
         abide by these policies.

         SECURITIES OF CLIENTS

         Employees of certain business units ("Designated Units") are prohibited
         from purchasing or selling securities of their clients. Employees will
         be informed if they are in a Designated Unit to which this restriction
         applies.

         If you are in a designated unit and acquired securities of a client in
         a transaction permitted by the Insider Trading Policy in effect before
         this Policy, or before commencing employment in your business unit, you
         may continue to hold such securities, but may not acquire any
         additional securities of that client. You must disclose this investment
         to your business unit manager and Corporate Compliance, and must obtain
         clearance from your business unit manager and Corporate Compliance
         before selling any such client securities.

         SECURITIES OF AFFILIATES

         Certain PNC employees may be subject to different or additional
         restrictions with respect to their transactions in securities issued by
         PNC affiliates that are publicly-traded companies. You will be informed
         of any such restrictions if they are applicable to you.

         INFORMATION BARRIERS

         Because PNC is a diversified financial institution, one business unit
         may have inside information about an issuer while another business unit
         that does not have such information may wish to buy or sell that
         issuer's securities or recommend a purchase or sale of such securities.
         Information Barriers are policies and procedures designed to separate
         business units that are likely to receive inside information from
         business units that purchase, sell, or recommend the purchase or sale
         of securities. Information Barrier policies and procedures will be
         implemented for each applicable business unit.

         POLICY PRESENTATION

         A video tape that includes a summary of insider trading laws and review
         of this Policy will be shown to each new employee of PNC. All new
         employees will be required to certify in writing that they have seen or
         listened to the video tape, understand this Policy, and will comply
         with the rules and standards set forth in this Policy. Existing
         employees may from time to time also be required to provide a written
         certification


                                       31
<PAGE>


         that they have followed this Policy. Periodically, the rules set forth
         in this Policy will be reviewed with all employees through meetings,
         internal communications and publications, or other means.

         AUDIT

         The General Auditor of PNC has the authority to audit compliance with
         this Policy and the policies of the business units. Each employee must
         cooperate with such an audit, including requests to provide
         documentation.

         NONCOMPLIANCE

         If you fail to comply with this Policy (including the refusal to
         re-certify compliance with it upon request or cooperate with an audit),
         you will be subject to disciplinary action, which could include
         termination of employment. In addition, apparent or suspected
         violations of laws applicable to PNC's business may be reported to
         appropriate authorities.

         This Policy is not intended to result in the imposition of legal
         liability that would not exist in the absence of the Policy.

         EXHIBIT 3: DRUG ABUSE POLICY SUMMARY

         SUMMARY

         We are committed to promoting and maintaining a drug-free workplace. An
         employee's illegal use of drugs interferes with effective and safe job
         performance, which is a matter of company concern. For this reason, it
         is our policy to prohibit employees from illegally using, possessing,
         distributing, selling or manufacturing, or being under the illegal
         influence of drugs while working or while on company property.

         "Drugs" refer to, but are not limited to, controlled substances and any
         potentially mind-altering chemicals. This includes, but is not limited
         to, depressants (barbiturates); stimulants (amphetamines); cocaine;
         narcotics (opiates, such as heroin, morphine and codeine);
         hallucinogens (PCP, LSD); methadone, marijuana and other cannabinoids;
         legally obtainable drugs, with prescriptions (Darvon, Valium, Librium);
         and over-the-counter drugs.

         According to the PNC Bank Drug Abuse Policy, a job applicant who is
         offered employment must successfully pass a drug screening test as a
         condition of employment. Failure to pass the test will render the offer
         null and void. In addition, an employee may be asked to submit to a
         drug screening test where there is reason to believe that he or she may
         have violated the Drug Abuse Policy. Further, in the future, drug
         screening tests may be conducted on those employees whose jobs are of a
         sensitive nature and whose use of drugs, therefore, would pose a risk
         to the company or the security or safety of co-workers and the public.

         We have developed procedures and guidelines for determining whether to
         require an employee to take a drug test. The procedures include
         possible consultation with designated legal and Human Resources
         personnel and/or a medical evaluation. Because employees will only be
         required to take a test when there is reasonable cause to believe that
         the employee may have violated the Drug Abuse Policy, and after
         specified procedures have been followed, the employment of an employee
         who refuses to take a drug test will be terminated.

         All drug screening tests will be conducted by an independent, certified
         toxicology laboratory, and all test results will be reviewed by an
         independent Medical Review Officer.

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<PAGE>


         We have the right to search all company property assigned to employees
         and personal possessions brought onto company property or premises. The
         privacy of employees will be preserved to the extent possible.

         Employees who violate the Drug Abuse Policy will be subject to
         disciplinary action up to and including employment termination.

         Employees are encouraged to seek help with any drug abuse problem and
         are reminded of the availability of the various corporate benefit
         programs. Any eligible employee may voluntarily participate in a
         recognized drug rehabilitation and/or other appropriate counseling
         program to treat an existing drug use problem provided that he or she
         has not previously violated the Drug Abuse Policy. In that event,
         admitting to drug use and participating in a drug rehabilitation and/or
         other appropriate counseling program will not be considered a violation
         of the Drug Abuse Policy as long as the employee successfully completes
         the program and agrees to be subject to random drug screening tests for
         a period of two years and one month following initiation of the
         program.

         Any employee who participates in a drug rehabilitation and/or
         counseling program, whether voluntarily or as a result of disciplinary
         action, will be subject to random drug screening tests for a period of
         two years and one month following initiation of the program.

         Employees who are convicted in a court of law or plead guilty to the
         use, possession, manufacture, distribution and/or sale of drugs
         occurring on company premises are required to notify us in writing
         within five days of such conviction or plea.

         Notwithstanding the foregoing, management has the right to take
         whatever disciplinary action it deems advisable, and deny any or all
         benefits under the Drug Abuse Policy, if such employee has violated any
         other PNC Bank and/or company policy or procedure.

         Any employee who wishes to review the PNC Bank Drug Abuse Policy should
         contact his or her market Human Resources representative.

         EXHIBIT 4: PNC BANK ELECTRONIC MEDIA POLICY

         INTRODUCTION

         PNC Bank ("PNC") employees have access to and use one or more forms of
         electronic media, for example, e-mail products such as OfficeVision and
         Lotus Notes, online services, the Internet, the World Wide Web, PNC
         Intranet, and electronic devices such as cellular phones and facsimile
         machines. PNC encourages proper use of these media because they make
         communication more efficient and effective and because they are
         valuable sources of information.

         The purpose of this Electronic Media Policy ("Policy") is to summarize
         key elements of what constitutes the proper use of electronic media by
         PNC employees. The Policy applies to your use of all electronic media
         and services when:

            o  accessed on, or from, company premises;

            o  accessed using company computers, facsimile machines or other
               equipment;

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<PAGE>


            o  using PNC's leased or purchased services (E.G., the PNC corporate
               network, the company's Internet connection or external service
               providers); or

            o  the media is used in a manner that identifies the employee with
               PNC Bank (E.G., you join a chat room or publish a comment on the
               Internet referencing PNC).

         You should be aware that the Policy applies even when using your own
         personal computer, cellular phone or other resources, if one of the
         above factors applies.

         This Policy is part of the PNC Bank Code of Ethics. Other PNC policies
         and procedures may also be applicable and should be considered.

         ELECTRONIC MEDIA: COMPANY PROPERTY AND BUSINESS USE

         Electronic media and services are resources provided by the company to
         facilitate company-related business. Employees need to demonstrate a
         sense of responsibility and good judgment, just as with any company
         resource.

            o  You may not create, scan, fax, download, copy, or send articles,
               jokes, stories, chain letters and other similar items of personal
               interest to another employee, person or entity.

            o  You may not use e-mail products for any purpose unrelated to
               performance of your job duties, such as to sell raffle tickets or
               tickets to personal dinner events, UNLESS DIRECTED BY YOUR
               SUPERVISOR OR MANAGER. Solicitations are governed by PNC's
               solicitation policy (ss.2.09.4, CODE OF ETHICS)

            o  You may never use electronic (or any other) media to communicate
               offensive, harassing, pornographic or other inappropriate
               material.

         Should you have questions on what is appropriate business use of
         electronic media, please contact your supervisor, your Human Resources
         representative or any other Key Contact as set forth in the Addendum to
         PNC's Code of Ethics.

         SOFTWARE AND COPYRIGHTS

         Only software developed, owned or licensed by PNC Bank may be installed
         on PNC computing resources and used for the purpose of promoting PNC's
         business. All employees are required to comply with software copyright
         laws and licensing agreements. UNAUTHORIZED DUPLICATION OF LICENSED
         SOFTWARE AND DOCUMENTATION IS STRICTLY PROHIBITED.

         ELECTRONIC MEDIA PRIVACY

         PNC Bank does not guarantee the privacy of communications transmitted
         over company established electronic media links. You should assume such
         communications are not private, and you should observe the
         CONFIDENTIALITY section of the PNC Bank Code of Ethics (ss. 2.01).
         Especially with cellular phones, you should assume that a third party
         may have the opportunity to overhear your conversation. Your use of
         electronic media, and the content of your communications, is subject to
         monitoring by PNC for operational, maintenance, security, business,
         legal or regulatory reasons.

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<PAGE>


         SYSTEM SECURITY

         PNC policies regarding system security are set forth in PNC'S
         INFORMATION SECURITY POLICY MANUAL; detailed Internet security controls
         and design requirements are provided at ss. 1100, No. 1104. Important
         considerations you should be aware of:

            o  Any business requirement resulting in file transfers over the
               Internet must be approved by your cost center manager. ALL FILES
               DOWNLOADED FROM THE INTERNET MUST BE FROM "KNOWN" RELIABLE
               SOURCES AND MUST BE SCANNED WITH PNC BANK STANDARD ANTI-VIRUS
               SOFTWARE.

            o  You may not use the Internet to communicate sensitive or
               confidential information unless management approved encryption
               standards are implemented. The CONFIDENTIALITY section of the
               Code of Ethics (ss.2.01) should be observed in any communications
               using electronic media.

            o  Access to the Internet from company resources (I.E., from PNC
               equipment or through PNC employees) must be approved through
               secured corporate gateways, approved and configured in accordance
               with PNC Information Technology Services standards. PASSWORDS
               MAINTAINED ON INTERNET-BASED SYSTEMS MUST BE DIFFERENT FROM
               PASSWORDS USED ON PNC BANK SYSTEMS.

            o  Certain Internet browsers and other similar technologies which
               are used to access World Wide Web-based resources and services,
               include the ability to store information locally in files that
               can be retained for an indefinite period. Browsers must be
               configured to ensure that any "temporary" information used during
               online sessions is not permanently stored on local user
               computers.

         You should be aware that the network services and World Wide Web sites
         can identify individuals and companies accessing their services, and
         can and do monitor access and usage.

         PNC PRODUCTS AND SERVICES: PUBLIC RELATIONS AND CUSTOMER INTERACTION

         Products and services provided by PNC, regardless of the media used,
         are subject to a variety of legal and regulatory restrictions
         applicable to such matters as advertising, product and service
         availability, costs and fees, and disclosures and descriptions.
         Existing guidelines regarding product functions and features need to be
         complied with by all employees. THE POLICIES AND PROCEDURES THAT GOVERN
         EMPLOYEE BEHAVIOR REGARDING CUSTOMER CONTACT ARE APPLICABLE TO ALL
         INTERACTIONS VIA ELECTRONIC MEDIA.

            o  Employees should not use their status as PNC employees to set
               forth opinions, comments or information that may be contrary to
               PNC's interests. THEREFORE, PARTICIPATION IN ONLINE CHAT ROOMS
               AND PUBLICATION OF INFORMATION INVOLVING PNC MUST BE CONDUCTED
               WITH CARE. YOU MAY NOT USE COMPANY RESOURCES TO CREATE YOUR OWN
               PESONAL WEB SITE.

            o  Any negative or misleading information found on electronic media
               concerning PNC Bank should be referred to Public Relations
               immediately. Individual employees should not respond to such
               items.

            o  The standards for the Internet apply the same basic, corporate
               identity standards as those used in print which meet the
               objectives of visual clarity and consistency.

            o  Lines of business creating a PNC Intranet must observe corporate
               standards, including those defined for the PNC logo.

         The Public Relations Department should be consulted if you have any
         questions.

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<PAGE>


         ENFORCEMENT

         In today's business environment, electronically distributed information
         can be transmitted much more quickly than in the past, so it is
         important to use caution and abide by the above principles in all
         stages of the use of electronic media.

         Any employee found to be abusing the privilege of company-facilitated
         access to electronic media or devices is subject to disciplinary
         action, which may include termination of employment. Please speak to
         your supervisor or manager if you have any questions or contact the
         resources identified above. You may also use your KEY CONTACTS AND
         REFERENCE GUIDE in your CODE OF ETHICS ADDENDUM to help you reach the
         appropriate person at PNC to assist you.

         (Note - there is no Exhibit 5)

         EXHIBIT 6: PNC STOCK OWNERSHIP POLICY

           (POLICY REGARDING OWNERSHIP OF STOCK IN PUBLICLY HELD SUBSIDIARIES)

         PURPOSE

         This is the stock ownership policy contemplated by Section 2.05.8 of
         the PNC Code of Ethics. The purpose of this policy is to avoid
         conflicts of interest or the appearance of conflicts of interest on the
         part of PNC personnel who are responsible for the relationship or
         transactions between PNC and its publicly held subsidiaries, while
         promoting ownership of stock in PNC and its publicly held subsidiaries.

         SCOPE

         This policy applies to PNC personnel who act, and exercise
         decision-making authority, on behalf of PNC with respect to the
         relationship or transactions between PNC and its publicly held
         subsidiaries. This policy does not apply to directors, officers and
         employees of a publicly held subsidiary whose principal employment or
         relationship is with that subsidiary.

         DEFINITIONS

         1. For purposes of this policy, PNC includes PNC Financial Services
            Group, Inc. and its subsidiaries other than the publicly held
            subsidiary in question.

         2. PNC personnel includes directors, officers and employees of PNC
            Financial Services Group, Inc. and any of its subsidiaries other
            than persons whose principal employment or relationship is with the
            publicly held subsidiary in question.

         3. Publicly held subsidiary means any entity in which PNC Financial
            Services Group, Inc. directly or indirectly owns at least 25% of the
            outstanding capital stock or other equity interest and that is
            subject to periodic reporting requirements under the federal
            securities laws.

         RELATIVE OWNERSHIP REQUIREMENT

         PNC personnel within the scope of this policy shall not acquire or hold
         an equity interest in a publicly held subsidiary of PNC that materially
         exceeds in value such person's equity interest in PNC Financial
         Services Group, Inc.

                                       36
<PAGE>


         Your equity interest will be based for this purpose on the fair market
         value of securities (including phantom stock units) owned directly or
         indirectly through employee benefit or deferred compensation plans,
         owned beneficially through trusts or other vehicles, or that may be
         acquired upon exercise of stock options, whether exercisable or not.

         Your equity interest includes securities owned by your spouse, any
         minor children, older children living in your household, older children
         who rely primarily on you for financial support, and other relatives
         (by marriage or otherwise) living in your household.

         MONITORING REQUIREMENTS

         PNC personnel within the scope of this policy should monitor their
         compliance with this Policy.

         PNC personnel subject to this policy have 90 days from discovering an
         instance of noncompliance to reestablish compliance with this policy,
         unless an exception is granted or, under applicable insider trading
         policy or law, securities transactions to reestablish compliance are
         restricted in this time frame. In the latter event, compliance must be
         reestablished promptly after such restriction lapses.

         QUESTIONS

         Questions regarding this policy should be directed to PNC's General
         Counsel or Corporate Secretary.

         EXHIBIT 7: PNC POLICY FOR EMPLOYEES HOLDING DIRECTOR AND OFFICER
                    POSITIONS IN OUTSIDE PROFIT AND NON-PROFIT ORGANIZATIONS

         INTRODUCTION

         The purpose of the PNC Policy for Employees Holding Director and
         Officer Positions in Outside Profit and Non-Profit Organizations
         ("Policy") is to establish certain rules and procedures for employees
         who hold or are considering taking a position as a director, trustee,
         officer or other similar position in a for-profit or non-profit
         corporation or other organization outside of PNC ("director/officer
         positions"). This Policy applies to all outside director/officer
         positions you currently hold as well as to any future positions and
         should be read together with the entire PNC Code of Ethics. It is your
         responsibility to understand and comply with this Policy and the PNC
         Code of Ethics.

         If you have any questions regarding this Policy, you should contact
         your manager, your Human Resources (HR) representative, the Corporate
         Ethics Office, or any of the Key Contacts identified in the Addendum to
         the PNC Code of Ethics. References to "PNC" apply to The PNC Financial
         Services Group, Inc. and/or its subsidiaries.

         SERVING AT THE REQUEST OF PNC

         Employees will be deemed to be serving in a director/officer position
         in an organization outside of PNC AT THE REQUEST OF PNC only if they
         obtain written approval from the CEO or the Vice Chairman of The PNC
         Financial Services Group, Inc. (or in the case of the CEO or the Vice
         Chairman, from the Board of Directors or its Corporate Governance
         Committee).

                                       37
<PAGE>


         NOTE: "AT THE REQUEST OF PNC" MEANS AT THE REQUEST OF THE PNC ENTITY BY
         WHICH THE EMPLOYEE IS EMPLOYED UNLESS OTHERWISE SPECIFIED ON THE
         WRITTEN APPROVAL FORM.

         APPROVAL REQUIREMENTS IF YOU ARE SERVING AT THE REQUEST OF PNC

         Employees who are asked to serve in a director/officer position in an
         outside organization AT THE REQUEST OF PNC must submit the "Form for
         Approval to Serve AT THE REQUEST OF PNC" to the Corporate Ethics
         Office. Prior to submission for final approval by the CEO or the Vice
         Chairman, the request must first be approved by the employee's Manager,
         Business CEO or Director of Staff Function, and Business HR Manager (as
         applicable). You can obtain a copy of this Form from PNC's internal
         website, from your HR representative, or from the Corporate Ethics
         Office.

         The CEO or the Vice Chairman will be deemed to be serving AT THE
         REQUEST OF PNC if the outside director/officer position is approved by
         The PNC Financial Services Group, Inc. Board of Directors or its
         Corporate Governance Committee.

         Approvals for all such requests will be based on the best interest of
         PNC. Approvals will be reviewed annually by the CEO or Vice Chairman
         or, in the case of the CEO or the Vice Chairman, by the Corporate
         Governance Committee, and may be modified or withdrawn at any time.

         Employees will be considered for possible coverage in their capacity as
         outside directors/officers under PNC's directors and officers liability
         insurance policy and for possible indemnification by the applicable PNC
         entity only with respect to outside director/officer positions approved
         as being AT THE REQUEST OF PNC in accordance with this Policy, subject
         in each case to applicable law and governing documents. Any exceptions
         must be approved by the CEO or the Vice Chairman of The PNC Financial
         Services Group, Inc. (or, in the case of the CEO or the Vice Chairman,
         by the Board of Directors or its Corporate Governance Committee).

         PUBLIC OFFICE DIRECTORS/OFFICERS

         Employees considering or accepting a director/officer position that is
         also a public office position (such as school board director) must
         comply with the PNC Public Office Policy, which is Exhibit 8 to the PNC
         Code of Ethics.

         ALL OTHER OUTSIDE DIRECTOR/OFFICER POSITIONS

         Employees otherwise wishing to serve in a director/officer position in
         an outside organization are not required to provide notification or to
         obtain approval from PNC. However, the fOLLOWING RULES APPLY:

         1. You may not serve if the outside organization is a PNC competitor.

         NOTE: FOR PURPOSES OF THIS POLICY, A COMPETITOR MEANS ANY ORGANIZATION,
         WHEREVER LOCATED, THAT ENGAGES IN ANY OF THE SAME BUSINESSES AS PNC.
         FURTHER, IF AN OUTSIDE ORGANIZATION IS OR HAS A BANK, THRIFT OR OTHER
         DEPOSITORY ORGANIZATION ANYWHERE WITHIN ITS GROUP OF AFFILIATES, ALL
         MEMBERS OF THAT GROUP ARE CONSIDERED COMPETITORS.

         2. You may not serve if your involvement with the outside organization
         would interfere with or impede your ability to perform your job duties
         and responsibilities at PNC.

         3. You may not serve if your involvement with the outside organization
         would create a conflict with, or be reasonably perceived as conflicting
         with, the interests of PNC. If you accept a director/officer position
         in

                                       38
<PAGE>


         an outside organization and a conflict of interest (actual or
         perceived) develops, you may be required to leave the outside
         organization or to resign your position with PNC.

         4. Under certain circumstances, you may not serve if PNC holds an
         equity interest in the outside organization. It is your responsibility
         to ask the outside organization if PNC holds such an interest. If so,
         you must contact the Corporate Ethics Office to determine whether or
         not you may accept the director/officer position.

         NOTE: EQUITY HELD BY PNC INCLUDES EQUITY HELD FOR PNC'S OWN ACCOUNT AND
         EQUITY PNC HOLDS AS A TRUSTEE OR OTHER FIDUCIARY. EQUITY INTERESTS MAY
         ALSO INCLUDE OPTIONS, CONVERTIBLE DEBT AND OTHER INSTRUMENTS.

         CERTAIN ADDITIONAL RESPONSIBILITIES

         By serving as a director/officer in an outside organization, you will
         also have certain responsibilities to that organization. You should be
         sure that you understand and comply with those responsibilities.

         There may be occasions where contracts or transactions involving PNC
         are discussed or decided by that outside organization (E.G., the
         outside organization is interested in obtaining a loan from PNC or in
         engaging PNC as a trustee of a plan, program or fund, such as a pension
         plan or an endowment fund). In these instances, after disclosing your
         relationship with PNC, you should not participate in such discussions
         or in the decision-making process. If you are a director of the outside
         organization, you should ask the Board secretary to reflect in the
         meeting minutes that you did not participate in the discussions and did
         not vote on that matter because of your relationship with PNC.

         DATA COLLECTION

         PNC may collect information related to director/officer positions held
         by PNC employees in outside organizations from you for marketing or
         other business purposes. Neither a request for information related to
         outside director/officer positions nor an employee response to such a
         request will mean or imply that the employee is serving in such
         position(s) AT THE REQUEST OF PNC.

         EXCEPTIONS

         Any exceptions or amendments to this Policy must be approved by the PNC
         Ethics Policy Committee or the Director of Compliance or as otherwise
         provided in this Policy.

         EXHIBIT 8: PNC PUBLIC OFFICE POLICY

         INTRODUCTION

         The purpose of the PNC Public Office Policy ("Policy") is to establish
         certain rules for employees who campaign for or seek appointment to a
         public office, who serve as public officials, or who serve as members
         of another candidate's political campaign committee ("public office
         positions"). This Policy applies to all public office positions you
         currently hold as well as to any future positions and should be read
         together with the entire PNC Code of Ethics. It is your responsibility
         to understand and comply with this Policy and the PNC Code of Ethics.

         If you have any questions regarding this Policy, you should contact
         your manager, your Human Resources (HR) representative, the Corporate
         Ethics Office, or any of the Key Contacts identified in the Addendum to
         the PNC Code of Ethics. References to "PNC" apply to The PNC Financial
         Services Group, Inc. and/or its subsidiaries.

                                       39
<PAGE>


         GENERAL RULES

         SERVICE IN A PUBLIC OFFICE POSITION IS NOT AT THE REQUEST OF PNC.
         EMPLOYEES WISHING TO SERVE IN A PUBLIC OFFICE POSITION ARE NOT REQUIRED
         TO PROVIDE NOTIFICATION TO OR OBTAIN APPROVAL FROM PNC. HOWEVER, THE
         FOLLOWING RULES APPLY.

         o  GENERAL

            o  You may not serve if your involvement would interfere with or
               impede your ability to perform your job duties and
               responsibilities at PNC.

            o  You may not serve if your involvement would create a conflict
               with, or be reasonably perceived as conflicting with, the
               interests of PNC. If you accept a public office position and a
               conflict of interest (actual or perceived) develops, you may be
               required to leave your public office position or to resign your
               position with PNC.

            o  You may not represent or act on behalf of PNC in connection with
               any matter or transaction between PNC and your campaign, the
               governmental entity you serve, or the campaign of any other
               political candidate for which you are a member of the political
               campaign committee.

         o  WHILE YOU ARE CAMPAIGNING FOR OR SEEKING APPOINTMENT TO A PUBLIC
            OFFICE OR SERVING AS A MEMBER OF ANOTHER CANDIDATE'S POLITICAL
            CAMPAIGN COMMITTEE

            Before beginning a campaign for public office or accepting such
            position, you must receive confirmation from the solicitor or other
            counsel for the governmental entity that your service as a public
            official would not prevent PNC from doing business with that
            governmental entity. All correspondence concerning campaign
            business, including but not limited to, campaign fundraising, must
            be on campaign letterhead exclusively and may not contain any
            reference to your status as a PNC employee other than to factually
            state your employment history.

            o  You may not engage in campaign business during working hours. To
               avoid any appearance of sponsorship or endorsement, PNC's name
               may not be used in any campaign material or in any fundraising
               activities, other than to factually state your employment
               history.

            o  You may not take a paid leave of absence to work on your or
               another candidate's campaign, except earned vacation time. If you
               take an unpaid leave of absence, either you or the campaign must
               promptly reimburse PNC for any benefits (E.G., insurance)
               provided by PNC to you during that leave of absence.

            o  You may not solicit contributions from any employee of PNC
               Capital Markets or any other PNC employee without first obtaining
               preclearance from the PNC Legal Department.

            o  Your campaign (or the campaign you are serving) may not use PNC's
               facilities, equipment, supplies or personnel in connection with
               the campaign effort. Volunteer efforts conducted after working
               hours off PNC premises are permitted, but PNC equipment and
               supplies may not be used in such efforts.

            o  You may not direct or coerce any PNC employee to provide services
               to a campaign, or make the provision of such services a condition
               of employment. You may not ask PNC employees to work on your or
               another candidate's campaign, even on a volunteer basis, unless
               you have obtained preclearance from the PNC Legal Department.

                                       40
<PAGE>


            o  PNC does not make political contributions to any candidate or
               campaign committee. You must therefore avoid any circumstance
               involving the use of PNC facilities or personnel that could be
               interpreted as an in-kind corporate contribution to the campaign.

         o  WHILE SERVING AS A PUBLIC OFFICIAL

            o  You may not solicit business between PNC and any governmental
               entity of which you are a public official.

            o  If at any time you are contemplating a change in your PNC duties
               that would involve the municipal securities business undertaken
               by a PNC affiliate, you must have your situation reviewed by the
               PNC Legal Department before accepting any such position.

         CERTAIN ADDITIONAL RESPONSIBILITIES

         By serving as a public official, you will also have certain
         responsibilities to the governmental entity you serve. You should be
         sure that you understand and comply with those responsibilities.

         There may be occasions where contracts or transactions involving PNC
         are discussed or decided by the governmental entity you serve. In these
         instances, after disclosing your relationship with PNC, you should not
         participate in such discussions or in the decision making process.

         DATA COLLECTION

         PNC may collect information related to public office positions held by
         PNC employees from you for various business purposes. Neither a request
         for information related to public office positions nor an employee
         response to such a request will mean or imply that the employee is
         serving in such position(s) AT THE REQUEST OF PNC.

         EXCEPTIONS

         Any exceptions or amendments to this Policy must be approved by the PNC
         Ethics Policy Committee or the Director of Compliance.

         KEY CONTACTS AND REFERENCE GUIDE

         Under the PNC Bank Code of Ethics, the Reporting Procedures outlined in
         the Code provide a number of individuals to contact to assist you
         regarding notifications, prior approvals, report a potential Code
         violation or a concern, or any questions regarding the Code. The Key
         Contacts and Reference Guide lists those persons you will be dealing
         with most frequently regarding Code matters and how to contact them, as
         well as resource materials and how to obtain them. You are encouraged
         to call anyone with whom you feel comfortable.

         KEY CONTACTS

                                       41
<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
 BUSINESS                         NAME                 PHONE                 FAX                MAILSTOP
- ---------------------------------------------------------------------------------------------------------------
<S>                       <C>                      <C>                  <C>                   <C>
HUMAN RESOURCES/ EMPLOYEE RELATIONS REPRESENTATIVES
EMPLOYEES WORKING IN:
- ---------------------------------------------------------------------------------------------------------------
 BlackRock                 Robert P. Connolly      (212) 409-3743       (212) 409-3744        XX-R345-30-1
- ---------------------------------------------------------------------------------------------------------------
 Corporate
 Bank/Treasury
 Management                     Jim Popp           (412) 768-2378       (412) 762-3985        P2-PTPP-02-1
- ---------------------------------------------------------------------------------------------------------------
 Employees in Other
 Areas                     Linda K. Williamson     (412) 762-5413       (412) 762-2256        P2-PTPP-02-1
- ---------------------------------------------------------------------------------------------------------------
 Regional Community Bank     Theresa Kiwior         570-961-6174         570-961-6340         N1-NADM-04-A
- ---------------------------------------------------------------------------------------------------------------
 PNC Advisors                  Vic Orriola          412-768-5983         412-762-3142         P1-POPP-29-1
- ---------------------------------------------------------------------------------------------------------------
 TPS
- ---------------------------------------------------------------------------------------------------------------
 Staff Services               Marilyn Crump        (412) 762-2193       (412) 762-2256        P2-PTPP-02-1
- ---------------------------------------------------------------------------------------------------------------
SECURITY SERVICES
- ---------------------------------------------------------------------------------------------------------------
 PNC Bank Helpline:       1-800-937-4445 When calling, select option #2 (Security Services), then
                          select #4 (Incident Reporting)
- ---------------------------------------------------------------------------------------------------------------
 Director of Corporate       John P.Ericksen       (412) 762-7761       (412) 762-0726        P2-PTPP-06-1
 Security Services
- ---------------------------------------------------------------------------------------------------------------
CORPORATE COMPLIANCE:  For Any Matter Under the Code
- ---------------------------------------------------------------------------------------------------------------
 Director, Corporate
 Compliance/Risk
 Management &
 Administrator
 of the Code                   Eva T. Blum         (412) 762-2748       (412) 705-0829        P1-POPP-22-2
- ---------------------------------------------------------------------------------------------------------------
 Senior Compliance
 Manager                   Michelle O. Manning     (412) 762-8234       (412) 705-0829        P1-POPP-22-2
- ---------------------------------------------------------------------------------------------------------------
 Code of Ethics Manager        Peg Holmes          (412) 762-8205       (412) 705-0829        P1-POPP-22-2
- ---------------------------------------------------------------------------------------------------------------
  GENERAL COUNSEL: For Any Matter Under the Code
- ---------------------------------------------------------------------------------------------------------------
     General Counsel         Helen P. Pudlin       (412) 762-7987       (412) 762-5920        P1-POPP-21-1
                                                   (215) 585-5174       (215) 585-8564        F5-F012-02-7
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

REFERENCE GUIDE

PNC BANK CODE OF ETHICS FORMS

All Code Forms are available on PNC's Intraweb, Lotus Notes, or from your Human
Resources Department. Sample copies of the Forms are attached as Exhibit 1 to
the Code.

- --------------------------------------------------------------------------------
 FORM                                           DESCRIPTION
- --------------------------------------------------------------------------------
 Notification/Approval      Form This Form is used to provide notification or
 (Exhibit 1A)               obtain approval under the Code. You should follow
                            the instructions on the reverse side. MATTERS WHICH
                            REQUIRE NOTIFICATION OR PRIOR APPROVAL ARE
                            SUMMARIZED IN SECTION 1.02 OF THE CODE.
- --------------------------------------------------------------------------------
Form for Approval           This Form is used to obtain all necessary approvals
to Serve at the Request     in accordance with the PNC Policy for Employees
of PNC (Exhibit 1-B)        Holding Director and Officer Positions in Outside
                            Profit and Non-Profit Organizations (attached as
                            Exhibit 7 to the Code).
- --------------------------------------------------------------------------------

                                       42

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(S)
<SEQUENCE>18
<FILENAME>file017.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>

<PAGE>

                               POWER OF ATTORNEY

           That each of the undersigned officers and trustees of BlackRock
Insured Municipal Income Trust, a business trust formed under the laws of the
State of Delaware (the "Trust"), do constitute and appoint Ralph L. Schlosstein,
Robert S. Kapito and Anne F. Ackerley, and each of them, his true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the other) to execute in the name and on behalf of each of the
undersigned as such officer or trustee, a Registration Statement on Form N-2,
including any pre-effective amendments and/or any post-effective amendments
thereto and any subsequent Registration Statement of the Trust pursuant to Rule
462(b) of the Securities Act of 1933, as amended (the "1933 Act") and any other
filings in connection therewith, and to file the same under the 1933 Act or the
Investment Company Act of 1940, as amended, or otherwise, with respect to the
registration of the Trust, the registration or offering of the Trust's common
shares of beneficial interest, par value $.001 per share, or the registration or
offering of the Trust's preferred shares, par value $.001 per share; granting to
such attorneys and agents and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or any of them, may do or cause to be done by virtue of these
presents.

           This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original, but which taken together shall constitute
one instrument.



<PAGE>



           IN WITNESS WHEREOF, each of the undersigned has executed this Power
of Attorney this 20th day of September, 2002.



                                     /s/  Dr. Andrew F. Brimmer
                                     -------------------------------------
                                            Dr. Andrew F. Brimmer
                                            Trustee


                                     /s/Richard E. Cavanagh
                                     -------------------------------------
                                            Richard E. Cavanagh
                                            Trustee


                                     /s/ Kent Dixon
                                     -------------------------------------
                                            Kent Dixon
                                            Trustee


                                     /s/ Frank J. Fabozzi
                                     -------------------------------------
                                            Frank J. Fabozzi
                                            Trustee


                                      /s/ James Clayburn La Force, Jr
                                     -------------------------------------
                                            James Clayburn La Force, Jr.
                                            Trustee


                                      /s/  Walter F. Mondale
                                     -------------------------------------
                                            Walter F. Mondale
                                            Trustee


                                      /s/ Ralph L. Schlosstein
                                     -------------------------------------
                                            Ralph L. Schlosstein
                                            Trustee

                                       2
<PAGE>



                                      /s/ Robert S. Kapito
                                     -------------------------------------
                                            Robert S. Kapito
                                            Trustee and President


                                      /s/ Henry Gabbay
                                     -------------------------------------
                                            Henry Gabbay
                                            Treasurer


                                       3



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
