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<SEC-DOCUMENT>0000950136-02-001192.txt : 20020425
<SEC-HEADER>0000950136-02-001192.hdr.sgml : 20020425
ACCESSION NUMBER:		0000950136-02-001192
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		15
FILED AS OF DATE:		20020425

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLACKROCK VIRGINIA MUNICIPAL BOND TRUST
		CENTRAL INDEX KEY:			0001169034
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-84538
		FILM NUMBER:		02620815

	BUSINESS ADDRESS:	
		STREET 1:		345 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154
		BUSINESS PHONE:		2127545300

	MAIL ADDRESS:	
		STREET 1:		345 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLACKROCK VIRGINIA MUNICIPAL BOND TRUST
		CENTRAL INDEX KEY:			0001169034
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-21053
		FILM NUMBER:		02620816

	BUSINESS ADDRESS:	
		STREET 1:		345 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154
		BUSINESS PHONE:		2127545300

	MAIL ADDRESS:	
		STREET 1:		345 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>file001.txt
<DESCRIPTION>PRE-EFFECTIVE AMENDMENT NO. 2
<TEXT>
<PAGE>




    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 2002
                                      SECURITIES ACT REGISTRATION NO. 333-84538
                                  INVESTMENT COMPANY REGISTRATION NO. 811-21053

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

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                   FORM N-2
          REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

                        PRE-EFFECTIVE AMENDMENT NO. 2             [X]

                        POST-EFFECTIVE AMENDMENT NO.              [ ]
                                    AND/OR
                         REGISTRATION STATEMENT UNDER
                       THE INVESTMENT COMPANY ACT OF 1940         [X]

                                 AMENDMENT NO. 2                  [X]

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

                    BLACKROCK VIRGINIA MUNICIPAL BOND 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)


                        RALPH L. SCHLOSSTEIN, PRESIDENT
                    BLACKROCK VIRGINIA MUNICIPAL BOND TRUST
                              40 EAST 52ND STREET
                           NEW YORK, NEW YORK 10022
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)

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

                                  COPIES 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(1)   REGISTRATION FEE
- --------------------------------------- ------------------ ------------------ ------------------- -----------------
<S>                                     <C>                <C>                <C>                 <C>
Common Shares, $.001 par value......... 4,000,000 shares   $ 15.00            $60,000,000         $5,520(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 VIRGINIA MUNICIPAL BOND 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]


                               [4,000,000] SHARES

                    BLACKROCK VIRGINIA MUNICIPAL BOND TRUST

                                 COMMON SHARES
                                $15.00 PER SHARE

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

     Investment Objective. BlackRock Virginia Municipal Bond Trust (the
"Trust") is a newly organized, non-diversified, closed-end management
investment company. The Trust's investment objective is to provide current
income exempt from regular Federal income tax and Virginia personal income tax.


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

     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 will be listed on
the American Stock Exchange under the symbol "BHV".


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

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

INVESTING IN THE COMMON SHARES INVOLVES CERTAIN RISKS. SEE "RISKS" ON PAGE 19
OF THIS PROSPECTUS.

     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                       $ 15.000       $
     Sales Load                                  $  0.675       $
     Proceeds, before expenses, to the Trust     $ 14.325       $
</TABLE>

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

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

                             SALOMON SMITH BARNEY

A.G. EDWARDS & SONS, INC.    PRUDENTIAL SECURITIES               UBS WARBURG



April 25, 2002

<PAGE>


     You should read the 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 April 25,
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 39 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.

     The Underwriters named in this prospectus may 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.


                                       2
<PAGE>

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT, AND THE UNDERWRITERS HAVE NOT,
AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT. WE ARE NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE ONLY AS
OF THE DATE OF THIS PROSPECTUS. OUR BUSINESS, FINANCIAL CONDITION AND PROSPECTS
MAY HAVE CHANGED SINCE THAT DATE.

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

                               TABLE OF CONTENTS

<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 .......................................... 17
Risks .................................................................. 19
How the Trust Manages Risk ............................................. 22
Management of the Trust ................................................ 24
Net Asset Value ........................................................ 27
Distributions .......................................................... 28
Dividend Reinvestment Plan ............................................. 28
Description of Shares .................................................. 29
Certain Provisions in the Agreement and Declaration of Trust ........... 32
Closed-End Trust Structure ............................................. 33
Repurchase of Common Shares ............................................ 34
Tax Matters ............................................................ 34
Underwriting ........................................................... 36
Custodian and Transfer Agent ........................................... 38
Legal Opinions ......................................................... 38
Table of Contents for the Statement of Additional Information .......... 39
</TABLE>

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

     UNTIL MAY 20, 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 Virginia Municipal Bond Trust is a
                               newly organized, non-diversified, closed-end
                               management investment company. Throughout the
                               prospectus, we refer to BlackRock Virginia
                               Municipal Bond 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., A.G. Edwards & Sons,
                               Inc., Prudential Securities Incorporated and UBS
                               Warburg LLC. 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 share. See "Underwriting."

INVESTMENT OBJECTIVE........   The Trust's investment objective is to provide
                               current income exempt from regular Federal income
                               tax and Commonwealth of Virginia personal income
                               tax.


INVESTMENT POLICIES.........   The Trust will invest primarily in municipal
                               bonds that pay interest that is exempt from
                               regular Federal income tax and Commonwealth of
                               Virginia personal income tax. The Trust will
                               invest in municipal bonds that, in the opinion of
                               BlackRock Advisors, Inc. ("BlackRock Advisors" or
                               the "Advisor") and BlackRock Financial
                               Management, Inc. ("BlackRock Financial
                               Management" or the "Sub-Advisor") are underrated
                               or undervalued. Underrated municipal bonds are
                               those whose ratings do not, in the Advisor's or
                               Sub-Advisor's opinion, reflect their true
                               creditworthiness. Undervalued municipal bonds are
                               bonds that, in the Advisor's or Sub-Advisor's
                               opinion, are worth more than the value assigned
                               to them in the marketplace. Under normal market
                               conditions, the Trust expects to be fully
                               invested in these tax-exempt municipal bonds. The
                               Trust will invest at least 80% of its Managed
                               Assets in municipal bonds that at the time of
                               investment are investment grade quality.
                               Investment grade quality bonds are bonds rated
                               within the four highest grades (Baa or BBB or
                               better by Moody's, S&P or Fitch) or bonds that
                               are unrated but judged to be of comparable
                               quality by the Advisor or the Sub-Advisor. The
                               Trust may invest up to 20% of its Managed Assets
                               in municipal bonds



                                       4
<PAGE>

                               that at the time of investment are rated Ba/BB
                               or B by Moody's, S&P or Fitch or bonds that are
                               unrated but judged to be of comparable quality
                               by the Advisor or the Sub-Advisor. Bonds of
                               below investment grade quality are regarded as
                               having predominately speculative characteristics
                               with respect to the issuer's capacity to pay
                               interest and repay principal, and are commonly
                               referred to as "junk bonds." The Trust intends
                               to invest primarily in long-term bonds and
                               expects bonds in its portfolio to have a dollar
                               weighted average maturity of 15 years or more
                               under current market conditions. The Trust
                               cannot ensure that it will achieve its
                               investment objective. See "The Trust's
                               Investments."

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

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


                                       5
<PAGE>

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 0.65% of the average weekly value of the
                               Trust's Managed Assets. "Managed Assets" means
                               the total assets of the Trust (including any
                               assets attributable to any Preferred Shares that
                               may be outstanding) minus the sum of accrued
                               liabilities (other than debt representing
                               financial leverage). The liquidation preference
                               of the Preferred Shares is not a liability.
                               BlackRock Advisors has voluntarily agreed to
                               waive receipt of a portion of the management fee
                               or other expenses of the Trust in the amount of
                               0.30% of the average weekly values of the Trust's
                               Managed Assets for the first five years of the
                               Trust's operations (through April 30, 2007), and
                               for a declining amount for an additional five
                               years (through April 30, 2012). See "Management
                               of the Trust."

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

                               The Trust will distribute to holders of its
                               common shares monthly dividends of all or a
                               portion of its tax-exempt interest income after
                               payment of dividends on any Preferred Shares of
                               the Trust which 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 will be listed on the
                               American Stock Exchange under the symbol "BHV".
                               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."


                                       6
<PAGE>

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

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

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

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


                               Credit Risk. Credit risk is the risk that one or
                               more municipal bonds in the Trust's portfolio
                               will decline in price, or fail to pay interest
                               or principal when due, because the issuer of the
                               bond experiences a decline in its financial
                               status. Under normal market conditions, the
                               Trust will invest at least 80% of its Managed
                               Assets in municipal bonds rated Baa/BBB or
                               higher or that are unrated but judged to be of
                               comparable quality by BlackRock. The Trust may
                               invest up



                                       7
<PAGE>


                               to 20% (measured at the time of investment) of
                               its Managed Assets in municipal bonds that are
                               rated Ba/BB or B or that are unrated but judged
                               to be of comparable quality by BlackRock. The
                               prices of these lower grade bonds are more
                               sensitive to negative developments, such as a
                               decline in the issuer's revenues or a general
                               economic downturn, than are the prices of higher
                               grade securities. Municipal bonds of below
                               investment grade quality are predominantly
                               speculative with respect to the issuer's
                               capacity to pay interest and repay principal
                               when due and therefore involve a greater risk of
                               default.

                               Concentration in Virginia Issuers. The Trust's
                               policy of investing primarily in municipal
                               obligations of issuers located in Virginia makes
                               the Trust more susceptible to adverse economic,
                               political or regulatory occurrences affecting
                               those issuers. The federal government has a
                               greater economic impact on the Commonwealth of
                               Virginia, with its proximity to Washington,
                               D.C., relative to its size than any state other
                               than Alaska or Hawaii. While the information
                               regarding the Commonwealth is presented as of
                               the latest dates for which official information
                               was available, the consequences of the general
                               economic downturn that began in the spring of
                               2001 and the acceleration thereof that occurred
                               as a result of the events of September 11, 2001
                               to employment in and the economy of the
                               Commonwealth are not fully reflected in the data
                               or discussion presented herein and such
                               consequences are of indeterminate duration. For
                               a discussion of economic and other conditions in
                               Virginia, see "The Trust's Investments--
                               Municipal Bonds--Economic and Other
                               Considerations in Virginia."

                               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



                                       8
<PAGE>

                               leveraged. If, however, long- and/or short-term
                               rates rise, the Preferred Share dividend rate
                               could exceed the rate of return on long-term
                               bonds held by the Trust that were acquired
                               during periods of generally lower interest
                               rates, reducing return to the holders of common
                               shares. Leverage creates two major types of
                               risks for the holders of common shares:

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

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

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

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

                               Non-Diversification. The Trust has registered as
                               a "non-diversified" investment company under the
                               Investment Company Act of 1940, as amended (the
                               "Investment


                                       9
<PAGE>

                               Company Act"). For Federal income tax purposes,
                               the Trust, with respect to up to 50% of its
                               total assets, will be able to invest more than
                               5% (but not, with respect to securities other
                               than United States government securities and
                               securities of other regulated investment
                               companies, more than 25%) of the value of its
                               total assets in the obligations of any single
                               issuer. To the extent the Trust invests a
                               relatively high percentage of its assets in the
                               obligations of a limited number of issuers, the
                               Trust may be more susceptible than a more widely
                               diversified investment company to any single
                               economic, political or regulatory occurrence.

                               High Yield Risk. The Trust may invest a portion
                               of its assets in high-risk, high yield
                               securities of lower grade quality, which are
                               commonly referred to as "junk bonds."
                               Investments in lower grade securities will
                               expose the Trust to greater risks than if the
                               Trust owned only higher grade securities.

                               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 tables show Trust expenses as a percentage of net assets
attributable to common shares.

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

                                                                       PERCENTAGE OF NET
                                                                      ASSETS ATTRIBUTABLE
                                                                      TO COMMON SHARES**
                                                                     --------------------
ANNUAL EXPENSES
Management Fees ....................................................        1.05%
Fee and Expense Waiver Years 1-5 ...................................       (0.48)%***
                                                                           -------
Net Management Fees Years 1-5 ......................................        0.57%***
Other Expenses .....................................................        0.40%
                                                                           -------
Total Net Annual Expenses Years 1-5 ................................        0.97%***
                                                                           =======
</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.


**    Stated as a percentage of the Trust's Managed Assets assuming the
      issuance of Preferred Shares in an amount equal to 38% of the Trust's
      capital (after their issuance), the Trust's expenses would be estimated
      as set out in the table below. The liquidation preference of the
      Preferred Shares is not a liability.



<TABLE>
<CAPTION>
                                                                          PERCENTAGE OF
                                                                         MANAGED ASSETS
                                                                       ------------------
<S>                                                                    <C>
ANNUAL EXPENSES
Management Fees ....................................................        0.65%
Fee and Expense Waiver Years 1-5 ...................................       (0.30)%***
                                                                           -------
Net Management Fees Years 1-5 ......................................        0.35%***
Other Expenses .....................................................        0.25%
                                                                           -------
Total Net Annual Expenses Years 1-5 ................................        0.60%***
                                                                           =======
</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
      0.48% of average weekly net assets attributable to common shares (0.30%
      of average weekly Managed Assets) for the first 5 years of the Trust's
      operations, 0.40% (0.25%) in year 6, 0.32% (0.20%) in year 7, 0.24%
      (0.15%) in year 8, 0.16% (0.10%) in year 9 and 0.08% (0.05%) in year 10.
      Without the waiver, "Total Net Annual Expenses Years 1-5" would be
      estimated to be 1.45% of average weekly net assets attributable to common
      shares and 0.90% 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 "Total Net Annual Expenses Years 1-5" are based on estimated
amounts for the Trust's first year of operations and assume that the Trust
issues 6,666,667 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."


                                       11
<PAGE>

     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 0.97% 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        $75         $96          $174
</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 0.40% of average weekly net assets
      attributable to common shares in year 6 (0.25% of average weekly Managed
      Assets), 0.32% (0.20%) in year 7, 0.24% (0.15%) in year 8, 0.16% (0.10%)
      in year 9 and 0.08% (0.05%) in year 10 and assumes that leverage remains
      38% of the Trust's capital throughout the periods reflected. BlackRock
      Advisors has not agreed to waive any portion of its fees and expenses
      beyond April 30, 2012. See "Management of the Trust--Investment
      Management Agreement."


                                       12
<PAGE>

                                   THE TRUST

     The Trust is a newly organized, non-diversified, closed-end management
investment company registered under the Investment Company Act. The Trust was
organized as a Delaware business trust on March 14, 2002, pursuant to an
Agreement and Declaration of Trust governed by the laws of the State of
Delaware. As a newly organized entity, the Trust has no operating history. The
Trust is designed to provide tax benefits to investors who are residents of
Virginia for tax purposes. 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 securities,
tax-exempt or taxable investment grade securities.


                            THE TRUST'S INVESTMENTS


INVESTMENT OBJECTIVE AND POLICIES

     The Trust's investment objective is to provide current income exempt from
regular Federal income tax and Commonwealth of Virginia personal income tax.


     The Trust will invest primarily in municipal bonds that pay interest that
is exempt from regular Federal income tax and Commonwealth of Virginia personal
income tax. Under normal market conditions, the Trust expects to be fully
invested in such tax-exempt municipal bonds. Under normal market conditions,
the Trust will invest at least 80% of its Managed Assets in investment grade
quality municipal bonds. Investment grade quality means that such bonds are
rated, at the time of investment, within the four highest grades (Baa or BBB or
better by Moody's, S&P or Fitch) or are unrated but judged to be of comparable
quality by BlackRock. Municipal bonds rated Baa by Moody's are investment
grade, but Moody's considers municipal bonds rated Baa to have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity for issues of municipal bonds that are
rated BBB or Baa (or that have equivalent ratings) to make principal and
interest payments than is the case for issues of higher grade municipal bonds.
The Trust may invest up to 20% of its Managed Assets in municipal bonds that
are rated, at the time of investment, Ba/BB or B by Moody's, S&P or Fitch or
that are unrated but judged to be of comparable quality by BlackRock. Bonds of
below investment grade quality (Ba/BB or below) are commonly referred to as
"junk bonds." Bonds of below investment grade quality are regarded as having
predominantly speculative characteristics with respect to the issuer's capacity
to pay interest and repay principal. These credit quality policies apply only
at the time a security is purchased, and the Trust is not required to dispose
of a security if a rating agency downgrades its assessment of the credit
characteristics of a particular issue. In determining whether to retain or sell
a security that a rating agency has downgraded, BlackRock may consider such
factors as BlackRock's assessment of the credit quality of the issuer of the
security, the price at which the security could be sold and the rating, if any,
assigned to the security by other rating agencies. Appendix A to the Statement
of Additional Information contains a general description of Moody's, S&P's and
Fitch's ratings of municipal bonds. See "Risks" below for a general description
of the economic and credit characteristics of municipal issuers in Virginia.
The Trust may also invest in securities of other open- or closed-end investment
companies that invest primarily in municipal bonds of the types in which the
Trust may invest directly and in tax-exempt preferred shares that pay dividends
exempt from regular Federal income tax. Subject to the Trust's policy of
investing at least 80% of its Managed Assets in municipal bonds



                                       13
<PAGE>

exempt from Commonwealth of Virginia personal income tax, the Trust may invest
in securities that pay interest that is not exempt from Commonwealth of
Virginia personal income tax when, in the judgment of BlackRock, the return to
the shareholders after payment of applicable Commonwealth of Virginia personal
income tax would be higher than the return available from comparable securities
that pay interest that is, or make other distributions that are, exempt from
Commonwealth of Virginia personal income tax. See "--Other Investment
Companies," "--Tax-Exempt Preferred Securities" and "--Initial Portfolio
Composition."

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

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


     During temporary defensive periods, including the period during which the
net proceeds of this offering are being invested, and in order to keep the
Trust's cash fully invested, the Trust may invest up to 100% of its 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 and Commonwealth of Virginia personal
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


                                       14
<PAGE>

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

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

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

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

     Economic and Other Considerations in Virginia. Except during defensive
periods, the Trust invests primarily in Virginia municipal securities, which
are municipal securities, the interest of which, in the opinion of bond counsel
or other counsel to the issuers of such securities, is, at the time of
issuance, exempt from Federal and Virginia income taxes. Because the Trust
invests primarily in Virginia municipal securities, the Trust is therefore
susceptible to political, economic, regulatory or other factors affecting
issuers of Virginia municipal obligations. In addition, the specific Virginia
municipal obligations in which the Trust invests are expected to change from
time to time.

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


     Investors should be aware of certain factors that might affect the
financial condition of the issuers of Virginia municipal securities. The rate
of economic growth in the Commonwealth of Virginia has generally increased over
the past decade. Per capita income has been consistently above national levels
during that time. In fiscal year 2001, the General Fund balance fell by $661.2
million, resulting in a 35.6 percent decrease over fiscal year 2000. Overall
revenue increased by 3.0 percent, mainly in individual income tax revenues, and
non-tax revenues grew by 13.7 percent. Overall expenditures grew at a rate of
9.4 percent in fiscal year 2001, compared to 9.8 percent in fiscal year 2000.



                                       15
<PAGE>


     Most recently, Moody's has rated the long-term general obligation bonds of
Virginia Aaa, and Standard & Poor's has rated such bonds AAA. There can be no
assurance that the economic conditions on which these ratings are based will
continue or that particular bond issues may not be adversely affected by
changes in economic or political conditions. While the information regarding
the Commonwealth is presented as of the latest dates for which official
information was available, the consequences of the general economic downturn
that began in the spring of 2001 and the acceleration thereof that occurred as
a result of the events of September 11, 2001 to employment in and the economy
of the Commonwealth are not fully reflected in the data or discussion presented
herein and such consequences are of indeterminate duration.


     For more information, see "Investment Policies and Techniques--Factors
Pertaining to Virginia" in the Statement of Additional Information.


WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES


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



OTHER INVESTMENT COMPANIES

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


TAX-EXEMPT PREFERRED SECURITIES

     The Trust may also invest up to 10% of its total assets in preferred
interests of other investment funds that pay dividends that are exempt from
regular Federal income tax. A portion of such dividends may be capital gain
distributions subject to Federal capital gains tax. Such funds in turn invest
in municipal bonds and other assets that generally pay interest or make
distributions that are exempt from regular Federal income tax, such as revenue
bonds issued by state or local agencies to fund the development of low-income,
multi-family housing. Investing in such tax-exempt preferred


                                       16
<PAGE>

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. 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 generally,
including that the underlying properties may not generate sufficient income to
pay expenses and interest costs. Such bonds are generally non-recourse against
the property owner, may be junior to the rights of others with an interest in
the properties, may pay interest that changes based in part on the financial
performance of the property, may be prepayable without penalty and may be used
to finance the construction of housing developments which, until completed and
rented, do not generate income to pay interest. Increases in interest rates
payable on senior obligations may make it more difficult for issuers to meet
payment obligations on subordinated bonds. The Trust will treat investments in
tax-exempt preferred shares as investments in municipal bonds.


HIGH YIELD SECURITIES


     The Trust may invest up to 20% of its Managed Assets in securities rated
below investment grade such as those rated Ba or B by Moody's and BB or B by
S&P or securities comparably rated by other rating agencies or in unrated
securities determined by BlackRock to be of comparable quality. These lower
grade securities are commonly known as "junk bonds." Securities rated below
investment grade are judged to have speculative characteristics with respect to
their interest and principal payments. Such securities may face 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.


     Lower grade securities, though high yielding, are characterized by high
risk. They may be subject to certain risks with respect to the issuing entity
and to greater market fluctuations than certain lower yielding, higher rated
securities. The retail secondary market for lower grade securities may be less
liquid than that of higher rated securities; adverse conditions could make it
difficult at times for the Trust to sell certain of these securities or could
result in lower prices than those used in calculating the Trust's net asset
value.


INITIAL PORTFOLIO COMPOSITION

     If current market conditions persist, the Trust expects that approximately
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
70% in Aaa/AAA and 30% in A). BlackRock generally expects to select obligations
that may not be redeemed at the option of the issuer for approximately ten
years from the date of purchase by the Trust. See "--Investment Objective and
Policies."


                         PREFERRED SHARES AND LEVERAGE

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


                                       17
<PAGE>

the Trust's portfolio is invested in securities that provide a higher rate of
return than the dividend rate of the Preferred Shares, after taking expenses
into consideration, the leverage will cause you to receive a higher current
rate of income than if the Trust were not leveraged.


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


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

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

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

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


                                       18
<PAGE>

     Assuming that the Preferred Shares will represent approximately 38% of the
Trust's capital and pay dividends at an annual average rate of 2.00%, the
income generated by the Trust's portfolio (net of estimated expenses) must
exceed 0.76% in order to cover the dividend payments and other expenses
specifically related to the Preferred Shares. Of course, these numbers are
merely estimates used for illustration. Actual Preferred Share dividend rates
will vary frequently and may be significantly higher or lower than the rate
estimated above.

     The following table is furnished in response to requirements of the
Securities and Exchange Commission. It is designed to illustrate the effect of
leverage on common share total return, assuming investment portfolio total
returns (comprised of income and changes in the value of bonds held in the
Trust's portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment
portfolio returns are hypothetical figures and are not necessarily indicative
of the investment portfolio returns experienced or expected to be experienced
by the Trust. See "Risks." The table further reflects the issuance of Preferred
Shares representing 38% of the Trust's capital, a 3.73% yield on the Trust's
investment portfolio, net of expenses, and the Trust's currently projected
annual Preferred Share dividend rate of 2.00%.

<TABLE>
<S>                                           <C>             <C>            <C>           <C>         <C>
 Assumed Portfolio Total Return (Net of
  Expenses) ...........................          (10)%           (5)%            0%           5%          10%
 Common Share Total Return ............       (17.35)%        (9.29)%        (1.23)%       6.84%       14.90%
</TABLE>

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

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


                                     RISKS

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

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

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


     Interest Rate Risk. Interest rate risk is the risk that bonds, and the
Trust's assets, will decline in value because of changes in interest rates.
Generally, municipal bonds will decrease in value when interest rates rise and
increase in value when interest rates decline. This means that the net asset
value of the common shares will fluctuate with interest rate changes and the
corresponding changes in the value of the Trust's municipal bond holdings. The
value of the longer-term bonds in



                                       19
<PAGE>

which the Trust generally invests fluctuates more in response to changes in
interest rates than does the value of shorter-term bonds. Because the Trust
will invest primarily in long-term bonds, the net asset value and market price
per share of the common shares will fluctuate more in response to changes in
market interest rates than if the Trust invested primarily in shorter-term
bonds. The Trust's use of leverage, as described below, will tend to increase
common share interest rate risk.


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


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

     For a discussion of economic and other considerations in Virginia, see
"The Trust's Investments-- Municipal Bonds--Economic and Other Considerations
in Virginia."

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

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

     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.


                                       20
<PAGE>

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

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

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

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

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


     Economic Sector and Geographic Risk. The Trust may invest 25% or more of
its Managed Assets in municipal obligations of issuers in the same state (or
U.S. territory) or in municipal obligations in the same economic sector,
including without limitation the following: lease rental obligations of state
and local authorities; obligations dependent on annual appropriations by a
state's legislature for payment; obligations of state and local housing finance
authorities, municipal utilities



                                       21
<PAGE>

systems or public housing authorities; obligations of hospitals or life care
facilities; and industrial development or pollution control bonds issued for
electrical utility systems, steel companies, paper companies or other purposes.
This may make the Trust more susceptible to adverse economic, political or
regulatory occurrences affecting a particular state or economic sector. For
example, health care related issuers are susceptible to Medicare, Medicaid and
other third party payor reimbursement policies, and national and state health
care legislation. As concentration increases, so does the potential for
fluctuation in the net asset value of the Trust's common shares.

     High Yield Risk. Investing in high yield bonds involves additional risks,
including credit risk. The value of high yield, lower quality bonds is affected
by the creditworthiness of the issuers of the securities and by general
economic and specific industry conditions. Issuers of high-yield bonds are not
as strong financially as those with higher credit ratings, so their bonds are
usually considered speculative investments. These issuers are more vulnerable
to financial setbacks and recession than more creditworthy issuers which may
impair their ability to make interest and principal payments. Investments in
lower grade securities will expose the Trust to greater risks than if the Trust
owned only higher grade securities.

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


                           HOW THE TRUST MANAGES RISK

INVESTMENT LIMITATIONS


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


     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


     The Trust will invest at least 80% of its Managed Assets in bonds of
investment grade quality at the time of investment. Investment grade quality
means that such bonds are rated by national rating agencies within the four
highest grades (Baa or BBB or better by Moody's, S&P or Fitch) or are unrated
but judged to be of comparable quality by BlackRock.



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


                                       22
<PAGE>

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


MANAGEMENT OF INVESTMENT PORTFOLIO AND CAPITAL STRUCTURE TO LIMIT LEVERAGE RISK

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

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

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


HEDGING STRATEGIES

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


                                       23
<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 $238 billion of assets under management as of March 31, 2002.
BlackRock, Inc. and its affiliates manage assets on behalf of institutional and
individual investors worldwide through a variety of equity, fixed income,
liquidity and alternative investment separate accounts and mutual funds,
including 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 advised a closed-end family of 30 funds, with
approximately $8.6 billion in assets as of March 31, 2002. BlackRock has 21
leveraged municipal closed-end funds and six open-end municipal funds under
management and approximately $17 billion in municipal assets firm-wide. Clients
are served from the company's headquarters in New York City, as well as offices
in Wilmington, San Francisco, Boston, Edinburgh, Tokyo and Hong Kong.
BlackRock, Inc. is a member of The PNC Financial Services Group, Inc. ("PNC"),
one of the largest diversified financial services organizations in the United
States, and is majority-owned by PNC and by BlackRock employees.


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

     BlackRock uses a relative value strategy that evaluates the trade-off
between risk and return to seek to achieve the Trust's investment objective of
generating current income exempt from Federal income tax and Commonwealth of
Virginia personal income 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 with an
average experience of 17 years and 5 credit research analysts with an average
experience of 13 years. Kevin M. Klingert, senior portfolio manager and head of
municipal bonds at BlackRock, leads the team, a position he has held since
joining BlackRock in 1991. A Managing Director since 1996, Mr. Klingert was a
Vice President from 1991 through 1993 and a Director in 1994 and 1995. Mr.
Klingert has over 18 years of experience in the municipal market. Prior to
joining BlackRock in 1991, Mr. Klingert was an Assistant Vice President at
Merrill Lynch, Pierce, Fenner & Smith Incorporated, which he joined in 1985.
The portfolio management team also includes James McGinley, F. Howard Downs and
Anthony Pino. Mr. McGinley has been a portfolio manager and a member of the
Investment Strategy Group at


                                       24
<PAGE>

BlackRock since 1999. Prior to joining BlackRock in 1999, Mr. McGinley was Vice
President of Municipal Trading from 1996 to 1999 and Manager of the Municipal
Strategy Group from 1995 to 1999 with Prudential Securities Incorporated. Mr.
McGinley joined Prudential Securities Incorporated in 1993 as an Associate in
Municipal Research. F. Howard Downs has been a portfolio manager since joining
BlackRock in 1999. Prior to joining BlackRock in 1999, Mr. Downs was a Vice
President, Institutional Salesman and Sales Manager from 1990 to 1999 at
William E. Simon & Sons Municipal Securities, Inc. Mr. Downs was one of the
original employees of William E. Simon & Sons Municipal Securities, Inc.,
founded in 1990, and was responsible for sales of municipal bonds. Anthony Pino
has been a portfolio manager since joining BlackRock in 1999. Prior to joining
BlackRock in 1999, he was a Brokerage Coordinator at CPI Capital. From 1996 to
1999, Mr. Pino was an Assistant Vice President and trader in the Municipal
Strategy Group at Prudential Securities Incorporated.


     BlackRock's municipal bond portfolio managers are responsible for over 85
municipal bond portfolios, valued at approximately $12 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 13 municipal liquidity
accounts valued at approximately $5.2 billion. The team managed 21 closed-end
municipal funds, with approximately $5.9 billion in assets as of March 31,
2002.


     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 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


                                       25
<PAGE>


Disclosure Handbook for Municipal Securities--1992 Update, published in January
1993. Dr. Heide has authored a number of articles on municipal finance and
edited The Handbook of Municipal Bonds published in the fall of 1994. Dr. Heide
was selected by the Bond Buyer as a first team All-American Municipal Analyst
in 1990 and was recognized in subsequent years.



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


INVESTMENT MANAGEMENT AGREEMENT

     Pursuant to an investment management agreement between BlackRock Advisors
and the Trust, the Trust has agreed to pay for the investment advisory services
and facilities provided by BlackRock Advisors a fee payable monthly in arrears
at an annual rate equal to 0.65% 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 0.30% of the
average weekly value of the Trust's Managed Assets for the first five years of
the Trust's operations (through April 30, 2007), and for a declining amount for
an additional five years (through April 30, 2012). The Trust will also
reimburse BlackRock Advisors for certain expenses BlackRock Advisors incurs in
connection with performing certain services for the Trust. In addition, with
the approval of the board of trustees, a pro rata portion of the salaries,
bonuses, health insurance, retirement benefits and similar employment costs for
the time spent on Trust operations (other than the provision of services
required under the investment management agreement) of all personnel employed
by BlackRock Advisors who devote substantial time to Trust operations may be
reimbursed to BlackRock Advisors. Managed Assets are the total assets of the
Trust, which includes any proceeds from the Preferred Shares, minus the sum of
accrued liabilities (other than indebtedness attributable to leverage). This
means that during periods in which the Trust is using leverage, the fee paid to
BlackRock Advisors will be higher than if the Trust did not use leverage
because the fee is calculated as a percentage of the Trust's Managed Assets,
which include those assets purchased with leverage.

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


                                       26
<PAGE>

     For the first 10 years of the Trust's operation, BlackRock Advisors has
undertaken to waive its investment advisory fees and expenses payable by the
Trust in the amounts, and for the time periods, set forth below:


<TABLE>
<CAPTION>
                                               PERCENTAGE WAIVED
          TWELVE MONTH                         (AS A PERCENTAGE
          PERIOD ENDING                        OF AVERAGE WEEKLY
          APRIL 30                             MANAGED ASSETS*)
          ----------------------------------- ------------------
          <S>                                 <C>
            2003** ..........................         0.30%
            2004 ............................         0.30%
            2005 ............................         0.30%
            2006 ............................         0.30%
            2007 ............................         0.30%
            2008 ............................         0.25%
            2009 ............................         0.20%
            2010 ............................         0.15%
            2011 ............................         0.10%
            2012 ............................         0.05%
</TABLE>

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

**    From the commencement of operations.


     BlackRock Advisors has not undertaken to waive any portion of the Trust's
fees and expenses beyond April 30, 2012 or after termination of the investment
management agreement.


                                NET ASSET VALUE


     The net asset value of the common shares of the Trust will be computed
based upon the value of the Trust's portfolio securities and other assets. Net
asset value per common share will be determined as of the close of the regular
trading session on the American 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.


                                       27
<PAGE>

                                 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 for your common
shares of the Trust will be automatically reinvested by EquiServe Trust
Company, N.A. (the "Plan Administrator"), Administrator for shareholders in
administering the Trust's Dividend Reinvestment Plan (the "Plan"), in
additional common shares of the Trust. Shareholders who elect not to
participate in the Plan will receive all dividends and other distributions in
cash paid by check mailed directly to the shareholder of record (or, if the
common shares are held in street or other nominee name, then to such nominee)
by EquiServe Trust Company, N.A., as dividend disbursing agent. You may elect
not to participate in the Plan and to receive all dividends in cash by
contacting EquiServe Trust Company, N.A., as dividend disbursing agent, at the
address set forth below. Participation in the Plan is completely voluntary and
may be terminated or resumed at any time without penalty by notice if received
and processed by the Plan Administrator prior to the dividend record rate;
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
American 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



                                       28
<PAGE>


Dividend will be divided by 95% of the closing market price per common share on
the payment date. If, on the payment date for any Dividend, the net asset value
per common share is greater than the closing market value plus estimated
brokerage commissions, the Plan Administrator will invest the Dividend amount
in common shares acquired on behalf of the participants in Open-Market
Purchases. In the event of a market discount on the payment date for any
Dividend, the Plan Administrator will have until the last business day before
the next date on which the common shares trade on an "ex-dividend" basis or 30
days after the payment date for such Dividend, whichever is sooner (the "Last
Purchase Date"), to invest the Dividend amount in common shares acquired in
Open-Market Purchases. It is contemplated that the Trust will pay monthly
income Dividends. Therefore, the period during which Open-Market Purchases can
be made will exist only from the payment date of each Dividend through the date
before the next "ex-dividend" date which typically will be approximately ten
days. If, before the Plan Administrator has completed its Open-Market
Purchases, the market price per common share exceeds the net asset value per
common share, the average per common share purchase price paid by the Plan
Administrator may exceed the net asset value of the common shares, resulting in
the acquisition of fewer common shares than if the Dividend had been paid in
Newly Issued Common Shares on the Dividend payment date. Because of the
foregoing difficulty with respect to Open-Market Purchases, the Plan provides
that if the Plan Administrator is unable to invest the full Dividend amount in
Open-Market Purchases during the purchase period or if the market discount
shifts to a market premium during the purchase period, the Plan Administrator
may cease making Open-Market Purchases and may invest the uninvested portion of
the Dividend amount in Newly Issued Common Shares at the net asset value per
common share at the close of business on the Last Purchase Date provided that,
if the net asset value is less than or equal to 95% of the then current market
price per common share; the dollar amount of the Dividend will be divided by
95% of the market price on the payment date.

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

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

     There will be no brokerage charges with respect to common shares issued
directly by the Trust. However, each participant will pay a pro rata share of
brokerage commissions incurred in connection with Open-Market Purchases. The
automatic reinvestment of Dividends will not relieve participants of any
Federal, state or local income tax that may be payable (or required to be
withheld) on such dividends. See "Tax Matters." Participants that request a
sale of shares through the Plan Administrator are subject to $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., at P.O. Box 43011,
Providence, RI 02940-3011 or Equiserve Trust Company, N.A., 150 Royall Street,
Canton, MA 02021 Ph: (800) 699-1236.


                             DESCRIPTION OF SHARES
COMMON SHARES

     The Trust is an unincorporated business trust organized under the laws of
Delaware pursuant to an Agreement and Declaration of Trust dated as of March
14, 2002. The Trust is authorized to issue


                                       29
<PAGE>

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 will be listed on the American Stock Exchange
under the symbol "BHV".


     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 American 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.


                                       30
<PAGE>

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

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

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

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


                                       31
<PAGE>

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

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


          CERTAIN PROVISIONS IN THE AGREEMENT AND DECLARATION OF TRUST

     The Agreement and Declaration of Trust includes provisions that could have
the effect of limiting the ability of other entities or persons to acquire
control of the Trust or to change the composition of its board of trustees.
This could have the effect of depriving shareholders of an opportunity to sell
their shares at a premium over prevailing market prices by discouraging a third
party from seeking to obtain control over the Trust. Such attempts could have
the effect of increasing the expenses of the Trust and disrupting the normal
operation of the Trust. The board of trustees is divided into three classes,
with the terms of one class expiring at each annual meeting of shareholders. At
each annual meeting, one class of trustees is elected to a three-year term.
This provision could delay for up to two years the replacement of a majority of
the board of trustees. A trustee may be removed from office by the action of a
majority of the remaining trustees followed by a vote of the holders of at
least 75% of the shares then entitled to vote for the election of the
respective trustee.


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


     The 5% holder transactions subject to these special approval requirements
are:

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


    o the issuance of any securities of the Trust to any Principal Shareholder
      for cash (other than pursuant to 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.


                                       32
<PAGE>


     To convert the Trust to an open-end investment company, the Trust's
Agreement and Declaration of Trust requires the favorable vote of a majority of
the board of the trustees followed by the favorable vote of the holders of at
least 75% of the outstanding shares of each affected class or series of shares
of the Trust, voting separately as a class or series, unless such amendment has
been approved by at least 80% of the trustees, in which case "a majority of the
outstanding voting securities" (as defined in the Investment Company Act) of
the Trust shall be required. The foregoing vote would satisfy a separate
requirement in the Investment Company Act that any conversion of the Trust to
an open-end investment company be approved by the shareholders. If approved in
the foregoing manner, conversion of the Trust to an open-end investment company
could not occur until 90 days after the shareholders' meeting at which such
conversion was approved and would also require at least 30 days' prior notice
to all shareholders. Conversion of the Trust to an open-end investment company
would require the redemption of any outstanding Preferred Shares, which could
eliminate or alter the leveraged capital structure of the Trust with respect to
the common shares. Following any such conversion, it is also possible that
certain of the Trust's investment policies and strategies would have to be
modified to assure sufficient portfolio liquidity. In the event of conversion,
the common shares would cease to be listed on the American 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 amendment 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, non-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


                                       33
<PAGE>

sell shares of the fund, the mutual fund will redeem or buy back the shares at
"net asset value." Also, mutual funds generally offer new shares on a
continuous basis to new investors, and closed-end funds generally do not. The
continuous inflows and outflows of assets in a mutual fund can make it
difficult to manage the fund's investments. By comparison, closed-end funds are
generally able to stay more fully invested in securities that are consistent
with their investment objective, and also have greater flexibility to make
certain types of investments, and to use certain investment strategies, such as
financial leverage and investments in illiquid securities.

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


                          REPURCHASE OF COMMON SHARES

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

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


                                  TAX MATTERS

FEDERAL TAX MATTERS

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

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

     Although the Trust does not seek to realize taxable income or capital
gains, the Trust may realize and distribute taxable income or capital gains
from time to time as a result of the Trust's normal


                                       34
<PAGE>

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 and the portion of income that is subject to the Federal
alternative minimum tax. You will receive this statement from the firm where
you purchased your common shares if you hold your investment in street name;
the Trust will send you this statement if you hold your shares in registered
form.

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

     In order to avoid corporate taxation of its taxable income and be
permitted to pay tax-exempt dividends, the Trust must elect to be treated as a
regulated investment 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-free income is taken into
account in calculating the amount of these benefits that may be subject to
Federal income tax. If you borrow money to buy Trust shares, you may not 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.


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


VIRGINIA TAX MATTERS


     The discussion under this heading applies only to shareholders of the
Trust that are residents of Virginia for Virginia tax purposes. Dividends paid
by the Trust and derived from interest on obligations of the Commonwealth of
Virginia or of any political subdivision or instrumentality of the Commonwealth
or derived from interest or dividends on obligations of the United States
excludable from Virginia taxable income under the laws of the United States,
which obligations are issued in the exercise of the borrowing power of the
Commonwealth or the United States and are backed by the full faith and credit
of the Commonwealth or the United States, will generally be exempt from the
Virginia income tax. Dividends derived from interest on debt obligations of
certain territories and possessions of the United States backed by the full
faith and credit of the borrowing government (for example, those issued by
Puerto Rico, the Virgin Islands and Guam) will also be exempt from the Virginia
income tax. Dividends derived from interest on debt obligations other than
those described above will be subject to the Virginia income tax even though it
may be excludable from gross income for Federal income tax purposes.



                                       35
<PAGE>

     Shareholders are urged to consult their tax advisors regarding specific
questions as to Federal, foreign, state or local tax consequences of an
investment in the Trust.


     Please refer to the Statement of Additional Information for more detailed
information.



                                  UNDERWRITING

     Salomon Smith Barney Inc., A.G. Edwards & Sons, Inc., Prudential
Securities Incorporated and UBS Warburg LLC are acting as representatives of
the Underwriters named below. Subject to the terms and conditions stated in the
underwriting agreement dated           , 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>
                   UNDERWRITERS                     NUMBER OF COMMON SHARES
                   ------------                     -----------------------
<S>                                                <C>
      Salomon Smith Barney Inc. ..................
      A.G. Edwards & Sons, Inc. ..................
      Prudential Securities Incorporated .........
      UBS Warburg LLC ............................
      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 $0.45 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 $0.10 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 an incentive 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 additional fee will be reduced by an amount equal
to the fee paid to other qualifying Underwriters. The total amount of the
incentive fee payments, discounted to the closing date of this offering, 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.


     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


                                       36
<PAGE>

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 American Stock
Exchange under the symbol "BHV".


     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 American 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 American Stock Exchange. No Underwriter is, however, obligated
to conduct market-making activities and any such activities may be discontinued
at any time without notice, at the sole discretion of the Underwriter. No
assurance can be given as to the liquidity of, or the trading market for, the
common shares as a result of any market-making activities undertaken by any
Underwriter. This prospectus is to be used by any Underwriter in connection
with the offering and, during the period in which a prospectus must be
delivered, with offers and sales of the common shares in market-making
transactions in the over-the-counter market at negotiated prices related to
prevailing market prices at the time of the sale.


     The Underwriters have advised the Trust that, pursuant to Regulation M
under the Securities Exchange Act of 1934, as amended, certain persons
participating in the offering may engage in transactions, including stabilizing
bids, covering transactions or the imposition of penalty bids, which may have
the effect of stabilizing or maintaining the market price of the common shares
at a level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of common shares on behalf of an
Underwriter for the purpose of fixing or maintaining the price of the common
shares. A "covering transaction" is a bid for or purchase of the common shares
on behalf of an Underwriter to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is a contractual
arrangement whereby if, during a specified period after the issuance of the
common shares, the Underwriters purchase common shares in the open market for
the account of the underwriting syndicate and the common shares purchased can
be traced to a particular Underwriter or member of the selling group, the
underwriting syndicate may require the Underwriter or selling group member in
question to purchase the common shares in question at the cost to the syndicate
or may recover from (or decline to pay to) the Underwriter or selling group
member in question any or all compensation (including, with respect to a
representative, the applicable syndicate management fee) applicable to the
common shares in question. As a result, an Underwriter or selling group member
and, in turn, brokers may lose the fees that they otherwise would have earned
from a sale of common shares if their customer resells the common shares while


                                       37
<PAGE>


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 American
Stock Exchange or otherwise.


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

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

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

     The principal business address of Salomon Smith Barney Inc. is 388
Greenwich Street, New York, New York 10013.


                          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. Skadden, Arps,
Slate, Meagher & Flom LLP and Simpson Thacher & Bartlett may rely as to certain
matters of Virginia law on the opinion of McGuireWoods LLP.



                                       38
<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-18
Portfolio Transactions and Brokerage ..................................... B-26
Description of Shares .................................................... B-27
Repurchase of Common Shares .............................................. B-28
Tax Matters .............................................................. B-29
Performance Related and Comparative Information .......................... B-33
Experts .................................................................. B-36
Additional Information ................................................... B-36
Independent Auditors Report .............................................. F-1
Financial Statements ..................................................... F-2
APPENDIX A Ratings of Investments ........................................ A-1
APPENDIX B Taxable Equivalent Yield Table ................................ B-1
APPENDIX C General Characteristics and Risks of Hedging Transactions ..... C-1
</TABLE>















                                       39
<PAGE>


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









                                4,000,000 SHARES




                              BLACKROCK VIRGINIA
                             MUNICIPAL BOND TRUST




                                 COMMON SHARES





                            -----------------------
                              P R O S P E C T U S
                                April 25, 2002
                           -----------------------





                              SALOMON SMITH BARNEY

                           A.G. EDWARDS & SONS, INC.

                             PRUDENTIAL SECURITIES

                                  UBS WARBURG








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

<PAGE>


                    BLACKROCK VIRGINIA MUNICIPAL BOND TRUST

                      STATEMENT OF ADDITIONAL INFORMATION

     BlackRock Virginia Municipal Bond Trust (the "Trust") is a newly
organized, non-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 April 25, 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-18
Portfolio Transactions and Brokerage ...................................   B-26
Description of Shares ..................................................   B-27
Repurchase of Common Shares ............................................   B-28
Tax Matters ............................................................   B-29
Performance Related and Comparative Information ........................   B-33
Experts ................................................................   B-36
Additional Information .................................................   B-36
Independent Auditors Report ............................................   F-1
Financial Report .......................................................   F-2
APPENDIX A Ratings of Investments ......................................   A-1
APPENDIX B Taxable Equivalent Yield Table ..............................   B-1
APPENDIX C General Characteristics and Risks of Hedging Transactions ...   C-1
</TABLE>


              This Statement of Additional Information is dated April 25, 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 Commonwealth of Virginia personal 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 has not established any limit on the percentage of its portfolio
that may be invested in municipal bonds subject to the alternative minimum tax
provisions of Federal tax law, and the Trust expects that a portion of the
income it produces will be includable in alternative minimum taxable income.
Common shares therefore would not ordinarily be a suitable investment for
investors who are subject to the Federal alternative minimum tax or who would
become subject to such tax by purchasing common shares. The suitability of an
investment in common shares will depend upon a comparison of the after-tax
yield likely to be provided from the Trust with that from comparable tax-exempt
investments not subject to the alternative minimum tax, and from comparable
fully taxable investments, in light of each such investor's tax position.
Special considerations apply to corporate investors. See "Tax Matters."


INVESTMENT RESTRICTIONS

     Except as described below, the Trust, as a fundamental policy, may not,
without the approval 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) issue senior securities or borrow money other than as permitted by
   the Investment Company Act or pledge its assets other than to secure such
   issuances or in connection with hedging transactions, short sales,
   when-issued and forward commitment transactions and similar investment
   strategies;

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

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

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

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


                                      B-2
<PAGE>

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


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


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

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

     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;



                                      B-3
<PAGE>

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

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


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



     The restrictions and other limitations set forth above will apply only at
the time of purchase of securities and will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
the acquisition of securities.

     In addition, to comply with Federal tax requirements for qualification as
a "regulated investment company," the Trust's investments will be limited in a
manner such that at the close of each quarter of each taxable year, (a) no more
than 25% of the value of the Trust's total assets are invested in the
securities (other than United States government securities or securities of
other regulated investment companies) of a single issuer or two or more issuers
controlled by the Trust and engaged in the same, similar or related trades or
businesses and (b) with regard to at least 50% of the Trust's total assets, no
more than 5% of its total assets are invested in the securities (other than
United States government securities or securities of other regulated investment
companies) of a single issuer. These tax-related limitations may be changed by
the Trustees to the extent appropriate in light of changes to applicable tax
requirements.

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


                      INVESTMENT POLICIES AND TECHNIQUES

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


PORTFOLIO INVESTMENTS

     The Trust will invest primarily in a portfolio of investment grade
municipal bonds that are exempt from regular Federal income tax and
Commonwealth of Virginia personal income tax.

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


                                      B-4
<PAGE>

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

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

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

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


     Obligations of issuers of municipal bonds are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Bankruptcy Reform Act of 1978. In addition, the
obligations of such issuers may become subject to the laws enacted in the
future


                                      B-5
<PAGE>

by Congress, state legislatures or referenda extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or upon municipalities to levy taxes. There is also the
possibility that, as a result of legislation or other conditions, the power or
ability of any issuer to pay, when due, the principal of and interest on its
municipal bonds may be materially affected.

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


SHORT-TERM TAXABLE FIXED INCOME SECURITIES


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

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


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

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


                                      B-6
<PAGE>

   the collateral at the time the action is entered into and at all times
   during the term of the repurchase agreement. BlackRock does so in an effort
   to determine that the value of the collateral always equals or exceeds the
   agreed-upon repurchase price to be paid to the Trust. If the seller were to
   be subject to a Federal bankruptcy proceeding, the ability of the Trust to
   liquidate the collateral could be delayed or impaired because of certain
   provisions of the bankruptcy laws.

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


SHORT-TERM TAX-EXEMPT FIXED INCOME SECURITIES

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

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

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

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

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

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

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


                                      B-7
<PAGE>

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

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


FACTORS PERTAINING TO VIRGINIA


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

     The Virginia State Economy. The rate of economic growth in the
Commonwealth of Virginia has generally increased over the past decade. Per
capita income in Virginia has been consistently above national levels during
that time. The services sector in Virginia generates the largest number of
jobs, followed by wholesale and retail trade, state and local government and
manufacturing. Because of Northern Virginia, with its proximity to Washington,
D.C., and Hampton Roads, which has the nation's largest concentration of
military installations, the federal government has a greater economic impact on
Virginia relative to its size than any state other than Alaska and Hawaii.


     According to statistics published by the U.S. Department of Labor,
Virginia typically has one of the lowest unemployment rates in the nation. This
is generally attributed to the balance among the various sectors represented in
the economy. Virginia is one of twenty-one states with a right-to-work law and
is generally regarded as having a favorable business climate marked by few
strikes or other work stoppages. Virginia is also one of the least unionized
among the industrialized states.

     Virginia's state government operates on a two-year budget. The
Constitution vests the ultimate responsibility and authority for levying taxes
and appropriating revenue in the General Assembly, but the Governor has broad
authority to manage the budgetary process. Once an appropriation act becomes
law, revenue collections and expenditures are constantly monitored by the
Governor, assisted by the Secretary of Finance and the Department of Planning
and Budget, to ensure that a balanced budget is maintained. If projected
revenue collections fall below amounts appropriated at any time, the Governor
must reduce expenditures and withhold allotments of appropriations (other than
for debt service and other specified purposes) to restore balance. An amendment
to the Constitution, effective January 1, 1993, established a Revenue
Stabilization Fund. This Fund is used to offset a portion of anticipated
shortfalls in revenues in years when appropriations based on previous forecasts
exceed expected revenues in subsequent forecasts. The Revenue Stabilization
Fund consists of an amount not to exceed 10 percent of Virginia's average
annual tax revenues derived from taxes on income and retail sales for the three
preceding fiscal years.


                                      B-8
<PAGE>


     General Fund revenues are principally comprised of direct taxes. In recent
fiscal years, most of the total tax revenues have been derived from five major
taxes imposed by Virginia on individual and fiduciary income, sales and use,
corporate income, public service corporations and premiums of insurance
companies. Historically, balances in the General Fund have decreased in some
years, for example in fiscal year 1995, as a result of an increase in transfers
from the General Fund, and have increased at varying rates in other years, such
as fiscal years 1996, 1997, 1998, 1999 and 2000. In fiscal year 2001, the
General Fund balance fell by $661.2 million, resulting in a 35.6 percent
decrease over fiscal year 2000. Overall revenue increased by 3.0 percent,
mainly in individual income tax revenues, and non-tax revenues grew by 13.7
percent. Overall expenditures grew at a rate of 9.4 percent in fiscal year
2001, compared to 9.8 percent in fiscal year 2000.


     In September 1991, the Debt Capacity Advisory Committee was created by the
Governor through an executive order. The committee is charged with annually
estimating the amount of tax-supported debt that may prudently be authorized,
consistent with the financial goals, capital needs and policies of Virginia.
The committee annually reviews the outstanding debt of all agencies,
institutions, boards and authorities of Virginia for which Virginia has either
a direct or indirect pledge of tax revenues or moral obligation. The Committee
provides its recommendations on the prudent use of such obligations to the
Governor and the General Assembly.

     The Constitution of Virginia prohibits the creation of debt by or on
behalf of Virginia that is backed by Virginia's full faith and credit, except
as provided in Section 9 of Article X. Section 9 of Article X contains several
different provisions for the issuance of general obligation and other debt, and
Virginia is well within its limit for each:


     Section 9(a) provides that the General Assembly may incur general
obligation debt to meet certain types of emergencies, subject to limitations on
amount and duration; to meet casual deficits in the revenue or in anticipation
of the collection of revenues of Virginia; and to redeem a previous debt
obligation of Virginia. Total indebtedness issued pursuant to Section 9(a)(2)
may not exceed 30 percent of an amount equal to 1.15 times the annual tax
revenues derived from taxes on income and retail sales, as certified by the
Auditor of Public Accounts, for the preceding fiscal year.


     Section 9(b) provides that the General Assembly may authorize the creation
of general obligation debt for capital projects. Such debt is required to be
authorized by an affirmative vote of a majority of each house of the General
Assembly and approved in a statewide election. The outstanding amount of such
debt is limited to an amount equal to 1.15 times the average annual tax
revenues derived from taxes on income and retail sales, as certified by the
Auditor of Public Accounts for the three preceding fiscal years less the total
amount of bonds outstanding. The amount of 9(b) debt that may be authorized in
any single fiscal year is limited to 25 percent of the limit on all 9(b) debt
less the amount of 9(b) debt authorized in the current and prior three fiscal
years.

     Section 9(c) provides that the General Assembly may authorize the creation
of general obligation debt for revenue-producing capital projects (so called
"double-barrel" debt). Such debt is required to be authorized by an affirmative
vote of two-thirds of each house of the General Assembly and approved by the
Governor. The Governor must certify before the enactment of the authorizing
legislation and again before the issuance of the debt that the net revenues
pledged are expected to be sufficient to pay principal of and interest on the
debt. The outstanding amount of 9(c) debt is limited to an amount equal to 1.15
times the average annual tax revenues derived from taxes on income and retail
sales, as certified by the Auditor of Public Accounts for the three preceding
fiscal years. While the debt limits under Sections 9(b) and 9(c) are each
calculated as the same percentage of the same average tax revenues, these debt
limits are separately computed and apply separately to each type of debt.

     Section 9(d) provides that the restrictions of Section 9 are not
applicable to any obligation incurred by Virginia or any of its institutions,
agencies or authorities if the full faith and credit of Virginia is not pledged
or committed to the payment of such obligation. There are currently outstanding
various types of such 9(d) revenue bonds. Certain of these bonds, however, are
paid in part or in whole from revenues received as appropriations by the
General Assembly from general tax


                                      B-9
<PAGE>


revenues, while others are paid solely from revenues of the applicable project.
The repayment of debt issued by the Virginia Public Building Authority, the
Virginia College Building Authority Equipment Leasing Program, the Virginia
College Building Authority 21st Century Program. The Innovative Technology
Authority and the Virginia Biotechnology Research Park Authority is supported
in large part by General Fund appropriations.


     The Commonwealth Transportation Board is a substantial issuer of bonds for
highway projects. These bonds are secured by and are payable from funds
appropriated by the General Assembly from the Transportation Trust Fund for
such purpose. The Transportation Trust Fund was established by the General
Assembly in 1986 as a special non-reverting fund administered and allocated by
the Transportation Board to provide increased funding for construction, capital
and other needs of state highways, airports, mass transportation and ports. The
Virginia Port Authority has also issued bonds that are secured by a portion of
the Transportation Trust Fund.

     Virginia is involved in numerous leases that are subject to appropriation
of funding by the General Assembly. Virginia also finances the acquisition of
certain personal property and equipment through installment purchase
agreements.

     Bonds issued by the Virginia Housing Development Authority, the Virginia
Resources Authority and the Virginia Public School Authority are designed to be
self-supporting from their individual loan programs. A portion of the Virginia
Housing Development Authority bonds, Virginia Public School Authority bonds and
the Virginia Resources Authority bonds are secured in part by a moral
obligation pledge of Virginia. Should the need arise, Virginia may consider
funding deficiencies in the respective debt service reserves for such moral
obligation debt. To date, none of these authorities has advised Virginia that
any such deficiencies exist.

     As of June 30, 2000, local government in Virginia was comprised of 95
counties, 40 incorporated cities, and 168 incorporated towns. Virginia is
unique among the several states in that cities and counties are independent,
and their land areas do not overlap. The largest expenditures by local
governments in Virginia are for education, but local governments also provide
other services such as water and sewer, police and fire protection and
recreational facilities. The Virginia Constitution imposes numerous
restrictions on local indebtedness, affecting both its incurrence and amount.

     Most recently, Moody's has rated the long-term general obligation bonds of
Virginia Aaa, and Standard & Poor's has rated such bonds AAA. There can be no
assurance that the economic conditions on which these ratings are based will
continue or that particular bond issues may not be adversely affected by
changes in economic or political conditions.


     While the information regarding the Commonwealth is presented as of the
latest dates for which official information was available, the consequences of
the general economic downturn that began in the spring of 2001 and the
acceleration thereof that occurred as a result of the events of September 11,
2001 to employment in and the economy of the Commonwealth are not fully
reflected in the data or discussion presented herein and such consequences are
of indeterminate duration.


     Additionally, many factors, including national, economic, social and
environmental policies and conditions, which are not within the control of such
issuers, could have an adverse impact on the financial conditions of such
issuers. The Trust cannot predict whether or to what extent such factors may
affect the issuers of Virginia municipal securities, the market value or
marketability of such securities or the ability of the respective issuers of
such securities acquired by the Trust to pay interest on principal of such
securities. The creditworthiness of obligations issued by local Virginia
issuers may be unrelated to the creditworthiness of obligations issued by the
Commonwealth of Virginia, and there is no responsibility on the part of the
Commonwealth of Virginia to make payments on such local obligations. There may
be specific factors that are applicable in connection with investment in the
obligations of particular issuers located within Virginia, and it is possible
the Trust will invest in obligations of particular issuers as to which specific
factors are applicable. However, the information set forth above is intended
only as a general summary and not as a discussion of any specific factors that
my affect any particular issuer of Virginia municipal securities.


                                      B-10
<PAGE>

DURATION MANAGEMENT AND OTHER MANAGEMENT TECHNIQUES


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


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


     The Trust may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, and will usually enter into interest rate
swaps on a net basis, i.e., the two payment streams are netted out, with the
Trust receiving or paying, as the case may be, only the net amount of the two
payments on the payment dates. The Trust will accrue the net amount of the
excess, if any, of the Trust's obligations over its entitlements with respect
to each interest rate swap on a daily basis and will designate on its books and
records 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


                                      B-11
<PAGE>

options on the above. The Trust will ordinarily engage in such transactions
only for bona fide hedging, risk management (including duration management) and
other portfolio management purposes. However, the Trust is also permitted to
enter into such transactions for non-hedging purposes to enhance income or
gain, in accordance with the rules and regulations of the CFTC, which currently
provide that no such transaction may be entered into if at such time more than
5% of the Trust's net assets would be posted as initial margin and premiums
with respect to such non-hedging transactions.

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

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

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

     Appendix C contains further information about the characteristics, risks
and possible benefits of Additional Investment Management Techniques and the
Trust's other policies and limitations (which are not fundamental policies)
relating to investment in futures contracts and options. The principal risks
relating to the use of futures contracts and other Additional Investment
Management Techniques


                                      B-12
<PAGE>

are: (a) less than perfect correlation between the prices of the instrument and
the market value of the securities in the Trust's portfolio; (b) possible lack
of a liquid secondary market for closing out a position in such instruments;
(c) losses resulting from interest rate or other market movements not
anticipated by BlackRock; and (d) the obligation to meet additional variation
margin or other payment requirements, all of which could result in the Trust
being in a worse position than if such techniques had not been used.

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


SHORT SALES

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

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


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


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


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



                   OTHER INVESTMENT POLICIES AND TECHNIQUES

RESTRICTED AND ILLIQUID SECURITIES

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


WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

     The Trust may purchase Securities on a "when-issued" basis and may
purchase or sell Securities on a "forward commitment" basis in order to acquire
the security or to hedge against anticipated


                                      B-13
<PAGE>


changes in interest rates and prices. When such transactions are negotiated,
the price, which is generally expressed in yield terms, is fixed at the time
the commitment is made, but delivery and payment for the securities take place
at a later date. When-issued securities and forward commitments may be sold
prior to the settlement date, but the Trust will enter into when-issued and
forward commitments only with the intention of actually receiving or delivering
the securities, as the case may be. If the Trust disposes of the right to
acquire a when-issued Security prior to its acquisition or disposes of its
right to deliver or receive against a forward commitment, it might incur a gain
or loss. At the time the Trust enters into a transaction on a when-issued or
forward commitment basis, it will designate on its books and records cash or
liquid debt securities equal to at least the value of the when-issued or
forward commitment securities. The value of these assets will be monitored
daily to ensure that their marked to market value will at all times equal or
exceed the corresponding obligations of the Trust. There is always a risk that
the securities may not be delivered and that the Trust may incur a loss.
Settlements in the ordinary course, which may take substantially more than five
business days, are not treated by the Trust as when-issued or forward
commitment transactions and accordingly are not subject to the foregoing
restrictions.



BORROWING

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


REVERSE REPURCHASE AGREEMENTS


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


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


REPURCHASE AGREEMENTS

     As temporary investments, the Trust may invest in repurchase agreements. A
repurchase agreement is a contractual agreement whereby the seller of
securities agrees to repurchase the same


                                      B-14
<PAGE>

security at a specified price on a future date agreed upon by the parties. The
agreed-upon repurchase price determines the yield during the Trust's holding
period. Repurchase agreements are considered to be loans collateralized by the
underlying security that is the subject of the repurchase contract. The Trust
will only enter into repurchase agreements with registered securities dealers
or domestic banks that, in the opinion of BlackRock, present minimal credit
risk. The risk to the Trust is limited to the ability of the issuer to pay the
agreed-upon repurchase price on the delivery date; however, although the value
of the underlying collateral at the time the transaction is entered into always
equals or exceeds the agreed-upon repurchase price, if the value of the
collateral declines there is a risk of loss of both principal and interest. In
the event of default, the collateral may be sold but the Trust might incur a
loss if the value of the collateral declines, and might incur disposition costs
or experience delays in connection with liquidating the collateral. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the security, realization upon the collateral by the Trust may be delayed or
limited. BlackRock will monitor the value of the collateral at the time the
transaction is entered into and at all times subsequent during the term of the
repurchase agreement in an effort to determine that such value always equals or
exceeds the agreed-upon repurchase price. In the event the value of the
collateral declines below the repurchase price, BlackRock will demand
additional collateral from the issuer to increase the value of the collateral
to at least that of the repurchase price, including interest.


ZERO COUPON BONDS

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


LENDING OF SECURITIES


     The Trust may lend its portfolio securities to banks or dealers which meet
the creditworthiness standards established by the Board of Trustees of the
Trust ("Qualified Institutions"). By 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 American 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.



                                      B-15
<PAGE>

     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.


HIGH YIELD SECURITIES


     The Trust may invest up to 20% of its Managed Assets in securities rated
below investment grade such as those rated Ba or B by Moody's and BB or B by
S&P or securities comparably rated by other rating agencies or in unrated
securities determined by BlackRock to be of comparable quality. Securities
rated Ba by Moody's are judged to have speculative elements; their future
cannot be considered as well assured and often the protection of interest and
principle payments may be very moderate. Securities rated BB by S&P are
regarded as having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other speculative
grade debt, they face 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 lowest rated
security that the Trust will invest in is one rated B by either Moody's or S&P.



     Lower grade securities, though high yielding, are characterized by high
risk. They may be subject to certain risks with respect to the issuing entity
and to greater market fluctuations than certain lower yielding, higher rated
securities. The retail secondary market for lower grade securities may be less
liquid than that of higher rated securities; adverse conditions could make it
difficult at times for the Trust to sell certain securities or could result in
lower prices than those used in calculating the Trust's net asset value.

     The prices of debt securities generally are inversely related to interest
rate changes; however, the price volatility caused by fluctuating interest
rates of securities also is inversely related to the coupons of such
securities. Accordingly, below investment grade securities may be relatively
less sensitive to interest rate changes than higher quality securities of
comparable maturity because of their higher coupon. This higher coupon is what
the investor receives in return for bearing greater credit risk. The higher
credit risk associated with below investment grade securities potentially can
have a greater effect on the value of such securities than may be the case with
higher quality issues of comparable maturity.

     Lower grade securities may be particularly susceptible to economic
downturns. It is likely that an economic recession could severely disrupt the
market for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principle and pay interest thereon and increase the incidence of default for
such securities.

     The ratings of Moody's, S&P and other rating agencies represent their
opinions as to the quality of the obligations which they undertake to rate.
Ratings are relative and subjective and, although ratings may be useful in
evaluating the safety of interest and principle payments, they do not evaluate
the market value risk of such obligations. Although these ratings may be an
initial criterion for selection of portfolio investments, BlackRock also will
independently evaluate these securities and the ability for the issuers of such
securities to pay interest and principal. To the extent that the Trust invests
in lower grade securities that have not been rated by a rating agency, the
Trust's ability to achieve its investment objectives will be more dependent on
BlackRock's credit analysis than would be the case when the Trust invests in
rated securities.


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


                                      B-16
<PAGE>

the other security or index inversely affect the residual interest paid on the
inverse floater, the value of an inverse floater is generally more volatile
than that of a fixed-rate bond. Inverse floaters have interest rate adjustment
formulas which generally reduce or, in the extreme, eliminate the interest paid
to the Trust when short-term interest rates rise, and increase the interest
paid to the Trust when short-term interest rates fall. Inverse floaters have
varying degrees of liquidity, and the market for these securities is relatively
volatile. These securities tend to underperform the market for fixed-rate bonds
in a rising interest rate environment, but tend to outperform the market for
fixed-rate bonds when interest rates decline. Shifts in long-term interest
rates may, however, alter this tendency. Although volatile, inverse floaters
typically offer the potential for yields exceeding the yields available on
fixed-rate bonds with comparable credit quality, coupon, call provisions and
maturity. These securities usually permit the investor to convert the floating
rate to a fixed rate (normally adjusted downward), and this optional conversion
feature may provide a partial hedge against rising rates if exercised at an
opportune time. Investment in inverse floaters may amplify the effects of the
Trust's use of leverage. Should short-term interest rates rise, the combination
of the Trust's investment in inverse floaters and the use of leverage likely
will adversely affect the Trust's income and distributions to common
shareholders. Although the Trust does not intend initially to invest in inverse
floaters, the Trust may do so at some point in the future. The Trust will
provide shareholders 30 days' written notice prior to any change in its policy
of not investing in inverse floaters.


                            MANAGEMENT OF THE TRUST

INVESTMENT MANAGEMENT AGREEMENT

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

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


     The investment management agreement and certain scheduled waivers of
investment advisory fees were approved by the Trust's board of trustees at an
in person meeting of the board of trustees held on April 8, 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 0.65% of the average weekly value of the Trust's Managed
Assets. A related waiver letter from BlackRock Advisors provided for temporary
fee waiver of 0.30% the average weekly value of the Trust's Managed Assets in
each of the first five years of the Trust's operations (through April 30, 2007)
and for a declining amount for an additional five years (through April 30,
2012). In approving this agreement the board of trustees considered, among
other things, the nature and quality of services to be provided by BlackRock
Advisors, the profitability to BlackRock Advisors of its relationship with the
Trust, economies of scale and comparative fees and expense ratios.

     The investment management agreement and the waivers of the management fees
were approved by the sole common shareholder of the Trust as of April 23, 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



                                      B-17
<PAGE>


outstanding and entitled to vote (as such term is defined in the Investment
Company Act) and (2) by the vote of a majority of the trustees who are not
parties to the investment management agreement or interested persons (as such
term is defined in the Investment Company Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
investment management agreement may be terminated as a whole at any time by the
Trust, without the payment of any penalty, upon the vote of a majority of the
Trust's board of trustees or a majority of the outstanding voting securities of
the Trust or by BlackRock Advisors, on 60 days' written notice by either party
to the other (which can be waived by the non-terminating Party). The investment
management agreement will terminate automatically in the event of its
assignment (as such term is defined in the Investment Company Act and the rules
thereunder).



SUB-INVESTMENT ADVISORY AGREEMENT

     BlackRock Financial Management, the Sub-Advisor, is a wholly owned
subsidiary of BlackRock, Inc. Pursuant to the sub-investment advisory
agreement, BlackRock Advisors has appointed BlackRock Financial Management, one
of its affiliates, to perform certain of the day-to-day investment management
of the Trust. BlackRock Financial Management will receive a portion of the
management fee paid by the Trust to BlackRock Advisors. From the management
fees, BlackRock Advisors will pay BlackRock Financial Management, for serving
as Sub-Advisor, a fee equal to: (i) prior to April 30, 2003, 38% of the monthly
management fees received by BlackRock Advisors, (ii) from May 1, 2003 to April
30, 2004, 19% of the monthly management fees received by BlackRock Advisors;
and (iii) after April 30, 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 April 8, 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 April 23, 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 Trust, or BlackRock Financial Management,
on 60 days' written notice by any party to the others (which may be waived by



                                      B-18
<PAGE>


the non-terminating party). The sub-investment advisory agreement will also
terminate automatically in the event of its assignment (as such term is defined
in the Investment Company Act and the rules thereunder).



TRUSTEES AND OFFICERS


     The officers of the Trust manage its day-to-day operations. The officers
are directly responsible to the Trust's board of trustees which sets broad
policies for the Trust and chooses its officers. Following is a list of the
trustees and officers of the Trust and their present positions and principal
occupations during the last five years. Trustees who are interested persons of
the Trust (as defined by 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.



                                      B-19
<PAGE>



<TABLE>
<CAPTION>
                                                                            NUMBER OF
                                                                            PORTFOLIOS
                                                                             IN FUND
                                                                             COMPLEX
                           TERM OF                                         OVERSEEN BY
NAME, ADDRESS             OFFICE AND          PRINCIPAL OCCUPATION          TRUSTEE OR
AGE AND POSITION(S)       LENGTH OF        DURING THE PAST FIVE YEARS      NOMINEE FOR         OTHER DIRECTORSHIPS
HELD WITH REGISTRANT     TIME SERVED         AND OTHER AFFILIATIONS          TRUSTEE             HELD BY TRUSTEE
- ---------------------- --------------- ---------------------------------- ------------- ---------------------------------
<S>                    <C>             <C>                                <C>           <C>
INDEPENDENT
TRUSTEES:

Andrew F. Brimmer      3 years(1)(2)   President of Brimmer &                  37       Director of CarrAmerica Realty
P.O. Box 4546                          Company, Inc., a Washington,                     Corporation and Borg-Warner
New York, NY 10163                     D.C.-based economic and                          Automotive. Formerly member
Age: 75                                financial consulting firm. Lead                  of the Board of Governors of the
Trustee                                Director and Chairman of the                     Federal Reserve System.
                                       Audit Committee of each of the                   Formerly Director of AirBorne
                                       closed-end Trusts in which                       Express, BankAmerica
                                       BlackRock Advisors Inc. acts as                  Corporation (Bank of America),
                                       investment advisor.                              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    3 years(1)(2)   President and Chief Executive           37       Trustee Emeritus, Wesleyan
P.O. Box 4546                          Officer of The Conference                        University, Trustee: Drucker
New York, NY 10163                     Board, Inc., a leading global                    Foundation, Airplanes Group,
Age: 55                                business membership                              Aircraft Finance Trust (AFT)
Trustee                                organization, from 1995-present.                 and Education Testing Service
                                       Former Executive Dean of the                     (ETS). Director, Arch Chemicals,
                                       John F. Kennedy School of                        Fremont Group and The
                                       Government at Harvard                            Guardian Life Insurance
                                       University from 1988-1995.                       Company of America.
                                       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             37       Former Director of ISFA (the
P.O. Box 4546                          President and Chief Executive                    owner of INVEST, a national
New York, NY 10163                     Officer of Empire Federal                        securities brokerage service
Age: 64                                Savings Bank of America and                      designed for banks and thrift
Trustee                                Banc PLUS Savings Association,                   institutions).
                                       former Chairman of the Board,
                                       President and Chief Executive
                                       Officer of Northeast Savings.
</TABLE>


                                      B-20
<PAGE>



<TABLE>
<CAPTION>
                                                                            NUMBER OF
                                                                            PORTFOLIOS
                                                                             IN FUND
                                                                             COMPLEX
                           TERM OF                                         OVERSEEN BY
NAME, ADDRESS             OFFICE AND          PRINCIPAL OCCUPATION          TRUSTEE OR
AGE AND POSITION(S)       LENGTH OF        DURING THE PAST FIVE YEARS      NOMINEE FOR         OTHER DIRECTORSHIPS
HELD WITH REGISTRANT     TIME SERVED         AND OTHER AFFILIATIONS          TRUSTEE             HELD BY TRUSTEE
- ---------------------- --------------- ---------------------------------- ------------- --------------------------------
<S>                    <C>             <C>                                <C>           <C>
Frank J. Fabozzi       3 years(1)(2)   Consultant. Editor of THE               37       Director, Guardian Mutual Funds
P.O. Box 4546                          JOURNAL OF PORTFOLIO                             Group.
New York, NY 10163                     MANAGEMENT and Adjunct
Age: 53                                Professor of Finance at the
Trustee                                School 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.            37       Director, Jacobs Engineering
La Force, Jr.                          Anderson Graduate School of                      Group, Inc., Payden & Rygel
P.O. Box 4546                          Management, University of                        Investment Trust, Provident
New York, NY 10163                     California since July 1, 1993.                   Investment Counsel Funds,
Age: 73                                Acting Dean of The School of                     Timken Company and Trust for
Trustee                                Business, Hong Kong University                   Investment Managers.
                                       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        37       Director, Northwest Airlines
P.O. Box 4546                          firm (December 1996-present,                     Corp., UnitedHealth Group,
New York, NY 10163                     September 1987-August 1993).                     Formerly, Director, RBC Dain
Age: 74                                Formerly U.S. Ambassador to                      Rauscher Inc.
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:

Laurence D. Fink*      3 years(1)(2)   Chairman and Chief Executive            37       President, Treasurer and a
Age: 49                                Officer of BlackRock, Inc. since                 Trustee of the BlackRock Funds,
Chairman                               its formation in 1998 and of                     Chairman of the Board and
                                       BlackRock, Inc.'s predecessor                    Director of Anthracite Capital,
                                       entities since 1988. Chairman of                 Inc., a Director of BlackRock's
                                       the Management Committee.                        offshore funds and alternative
                                       Formerly, Managing Director of                   investment vehicles and
                                       the First Boston Corporation,                    Chairman of the Board of
                                       Member of its Management                         Nomura BlackRock Asset
                                       Committee, Co-head of its                        Management Co., Ltd. Currently,
                                       Taxable Fixed Income Division                    Co-Chairman of the Board of
                                       and Head of its Mortgage and                     Trustees of Mount Sinai New
                                       Real Estate Products Group.                      York University Medical Center
                                       Currently, Chairman of the                       and Health System and a
                                       Board of each of the closed-end                  Member of the Board of Phoenix
                                       Trusts in which BlackRock                        House.
                                       Advisors, Inc. acts as investment
                                       advisor.
</TABLE>


                                      B-21
<PAGE>



<TABLE>
<CAPTION>
                                                                            NUMBER OF
                                                                            PORTFOLIOS
                                                                             IN FUND
                                                                             COMPLEX
                           TERM OF                                         OVERSEEN BY
NAME, ADDRESS             OFFICE AND          PRINCIPAL OCCUPATION          TRUSTEE OR
AGE AND POSITION(S)       LENGTH OF        DURING THE PAST FIVE YEARS      NOMINEE FOR         OTHER DIRECTORSHIPS
HELD WITH REGISTRANT     TIME SERVED         AND OTHER AFFILIATIONS          TRUSTEE             HELD BY TRUSTEE
- ----------------------- ------------- ----------------------------------- ------------- ---------------------------------
<S>                     <C>           <C>                                 <C>           <C>
Ralph L. Schlosstein*   3 years(1)(2) Director since 1999 and President        37       Chairman and President of the
Age: 51                               of BlackRock, Inc. since its                      BlackRock Provident
Trustee and                           formation in 1998 and of                          Institutional Funds. Director of
President                             BlackRock, Inc.'s predecessor                     several of BlackRock's
                                      entities since 1988. Member of                    alternative investment vehicles.
                                      the Management Committee and                      Currently, a Member of the
                                      Investment Strategy Group of                      Visiting Board of Overseers of
                                      BlackRock, Inc. Formerly,                         the John F. Kennedy School of
                                      Managing Director of Lehman                       Government at Harvard
                                      Brothers, Inc. and Co-head of its                 University, the Financial
                                      Mortgage and Savings                              Institutions Center Board of the
                                      Institutions Group. Currently,                    Wharton School of the University
                                      President and Director of each of                 of Pennsylvania, a trustee of
                                      the closed-end Trusts in which                    Trinity School in New York City
                                      BlackRock Advisors, Inc. acts as                  and a Trustee of New Visions for
                                      investment advisor.                               Public Education in New York
                                                                                        City. Formerly, a Director of
                                                                                        Pulte Corporation and a Member
                                                                                        of Fannie Mae's Advisory
                                                                                        Council.
</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 Clayburn, as Class I trustees, are expected to
          stand for re-election at the Trust's 2003 annual meeting of
          shareholders

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

     --   Messrs. Fink, 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.








                                      B-22
<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 2000. Formerly
 Age: 40                                    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 its predecessor
 Age: 54                                    entities.

 Robert S. Kapito     Vice President        Vice Chairman of BlackRock, Inc. and its predecessor
 Age: 45                                    entities.

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

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

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



<TABLE>
<CAPTION>
                                                             AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES
                                                               IN ALL REGISTERED INVESTMENT COMPANIES
                                  DOLLAR RANGE OF EQUITY         OVERSEEN BY TRUSTEES IN THE FAMILY
NAME OF TRUSTEE                  SECURITIES IN THE FUND*                INVESTMENT COMPANIES
- -----------------------------   -------------------------   --------------------------------------------
<S>                             <C>                         <C>
Andrew F. Brimmer                           $0                               $1-$10,000
Richard E. Cavanagh                         $0                           $50,001-$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
Laurence D. Fink                            $0                             over $100,000
Walter F. Mondale                           $0                           $50,001-$100,000
Ralph L. Schlosstein                        $0                           $50,000-$100,000
</TABLE>


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


     The fees and expenses of the Independent Trustees of the Trust are paid by
the Trust. The trustees who are members of the BlackRock organization receive
no compensation from the Trust. During the year ended December 31, 2001, the
Independent Trustees/Directors earned the compensation set forth below in their
capacities as trustees/directors of the funds in the BlackRock Family of Funds.
It is estimated that the Independent Trustees will receive from the Trust the
amounts set forth below for the Trust's calendar year ending December 31, 2002,
assuming the Trust had been in existence for the full calendar year.



                                      B-23
<PAGE>



<TABLE>
<CAPTION>
                                                       TOTAL COMPENSATION FROM
                                    ESTIMATED             THE TRUST AND FUND
                                  COMPENSATION             COMPLEX PAID TO
NAME OF BOARD MEMBER               FROM TRUST              BOARD MEMBER(1)
- ------------------------------   --------------   ---------------------------------
<S>                              <C>              <C>
Andrew F. Brimmer                  $  6,000(2)             $195,000(3),(4),(5)
Richard E. Cavanagh                $  6,000(2)             $160,000(4)
Kent Dixon                         $  6,000(2)             $160,000(4)
Frank J. Fabozzi                   $  6,000(2)             $160,000(4)
James Clayburn La Force, Jr.       $  6,000(2)             $160,000(4)
Walter F. Mondale                  $  6,000(2)             $160,000(4)
</TABLE>


- ----------
(1)   Represents the total compensation earned by such person during the
      calendar year ended December 31, 2001 from the thirty closed-end funds
      advised by a the Advisor (the "Fund Complex"). One of these funds, The
      BlackRock 2001 Term Trust, was terminated on June 30, 2001. On February
      28, 2002, one additional fund was 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, $6,000 and
      $3,000, respectively, pursuant to the Fund Complex's deferred
      compensation plan.

(3)   Andrew F. Brimmer serves as "lead director" for each board of
      trustees/directors in the Fund Complex. For his services as lead
      trustee/director, Andrew F. 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's 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 Laurence D. Fink and Ralph L.
Schlosstein 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 Richard E. Cavanagh, Walter F. Mondale,
Dr. Andrew F. Brimmer, Kent Dixon, Frank J. Fabozzi and James Clayburn La
Force, Jr. The Audit Committee acts according to the Audit Committee charter.
Dr. Andrew F. 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.



                                      B-24
<PAGE>


     The Governance Committee consists of Dr. Andrew F. Brimmer, Richard E.
Cavanagh, Kent Dixon, Frank J. Fabozzi, James Clayburn La Force, Jr. and Walter
F. Mondale. The Governance committee acts in accordance with the Governance
Committee charter. Dr. Andrew F. Brimmer has been appointed as Chairman of the
Governance Committee. The Governance Committee consists of the independent
Trustees and performs those functions enumerated in the Governance Committee
Charter including, but not limited to, making nominations for the appointment
or election of independent Trustees, reviewing independent Trustee
compensation, retirement policies and personnel training policies and
administrating the provisions of the Code of Ethics applicable to the
independent Trustees.


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


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



CODES OF ETHICS

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


INVESTMENT ADVISOR AND SUB-ADVISOR


     BlackRock Advisors acts as the Trust's investment advisor. BlackRock
Financial Management acts as the Trust's sub-advisor. BlackRock Advisors,
located at 100 Bellevue Parkway, Wilmington, Delaware 19809, and BlackRock
Financial Management, located at 40 East 52nd Street, New York, New York 10022,
are wholly owned subsidiaries of BlackRock, Inc., which is one of the largest
publicly traded investment management firms in the United States with
approximately $238 billion of assets under management as of March 31, 2002.
BlackRock, Inc. and its affiliates manage assets on behalf of institutional and
individual investors worldwide through a variety of equity, fixed income,
liquidity and alternative investment separate accounts and mutual funds,
including 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 advised a closed-end family of 30 funds, with
approximately $8.6 billion in assets as of March 31, 2002. BlackRock has 21
leveraged municipal closed-end funds and six open-end municipal funds under
management and approximately $17 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


                                      B-25
<PAGE>

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

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

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

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

     It is not the Trust's policy to engage in transactions with the objective
of seeking profits from short-term trading. It is expected that the annual
portfolio turnover rate of the Trust will be approximately 100% excluding
securities having a maturity of one year or less. Because it is difficult to
predict accurately portfolio turnover rates, actual turnover may be higher or
lower. Higher portfolio turnover results in increased Trust costs, including
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of securities and on the reinvestment in other securities.


                             DESCRIPTION OF SHARES

COMMON SHARES

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


                                      B-26
<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 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-27
<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
American 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 American 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

FEDERAL 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, and to satisfy
conditions which will enable dividends on common shares or Preferred Shares
which are attributable to interest on tax-exempt municipal securities to be
exempt from Federal income tax in the hands of its shareholders, subject to the
possible application of the Federal alternative minimum tax.

     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


                                      B-28
<PAGE>

shareholders. First, the Trust must derive at least 90% of its annual gross
income (including tax-exempt interest) from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities or foreign currencies, or other income (including but not limited
to gains from options, futures and forward contracts) derived with respect to
its business of investing in such stock, securities or currencies (the "90%
gross income test"). Second, the Trust must diversify its holdings so that, at
the close of each quarter of its taxable year, (i) at least 50% of the value of
its total assets is comprised of cash, cash items, United States government
securities, securities of other regulated investment companies and other
securities, limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the Trust's 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 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 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 things 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


                                      B-29
<PAGE>

Trust, defer the Trust's losses, cause adjustments in the holding periods of
the Trust's securities, convert long-term capital gains into short-term capital
gains and convert short-term capital losses into long-term capital losses.
These rules could therefore affect the amount, timing and character of
distributions to holders of common shares.

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

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

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

     The Trust intends to invest in sufficient tax-exempt municipal bonds to
permit payment of 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.

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

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

     Although exempt-interest dividends generally may be treated by holders of
common shares as items of interest excluded from their gross income, each
holder is advised to consult his tax 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.

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


                                      B-30
<PAGE>

     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.

     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 on taxable dividends and certain other
payments paid to non-corporate


- ----------
(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-31
<PAGE>

shareholders who have not furnished to the Trust their correct taxpayer
identification number (in the case of individuals, their Social Security
number) and certain certifications, or who are otherwise subject to backup
withholding. Backup withholding is not an additional tax and any amount
withheld may be refunded or credited against the shareholder's Federal income
tax liability, provided the required information is furnished to the Internal
Revenue Service.

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


                PERFORMANCE RELATED AND COMPARATIVE INFORMATION


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

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

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

     Municipal bonds have had the best after-tax return when compared to any
other major fixed income category.


                       Tax Adjusted Returns vs. Volatility
                              Fixed Income Classes
                          Last 10 Years Ending 4/30/01





                                      B-32
<PAGE>



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



<TABLE>
<CAPTION>
10 YEAR PERIOD
2/28/92 - 2/28/2002             MUNI     AGGREGATE   TREASURY    AGENCY    CORPORATES
- -------------------             ----     ---------   --------    ------    ----------
<S>                         <C>         <C>         <C>        <C>        <C>
Annualized Return .........     11.23%      7.50%       7.39%      7.51%       7.88%
Standard Deviation ........      4.32       3.71        4.19       3.84        4.68

<CAPTION>
10 YEAR PERIOD                             ASSET      HIGH                   GLOBAL       S&P
2/28/92 - 2/28/2002          MORTGAGES    BACKED      YIELD    EURODOLLAR   TREASURY      500        NASDAQ
- -------------------          ---------    ------      -----    ----------   --------      ---        ------
<S>                         <C>         <C>        <C>        <C>          <C>        <C>         <C>
Annualized Return .........     7.34%       7.22%      6.87%       7.39%       5.34%      12.60%      10.57%
Stardard Deviation.........     2.98        2.52       6.07        3.54        5.71       14.01       27.21
</TABLE>



- ----------
     (1) Source: Lehman Brothers. Past performance is no guarantee of future
results. The tax adjusted return for municipal bonds in the above table
reflects an adjustment of 35% of the portion of the Lehman Brothers Municipal
Index attributable to coupon payment (to adjust for an assumed Federal tax
bracket of 35%) and no adjustment to the portion of the Lehman Brothers
Municipal 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 Referenced
Indices: S&P Index and NASDAQ Composite. Other referenced Lehman Indices:
Asset-Backed, Mortgage Backed, Eurodollar, Aggregate Bond, U.S. Agency, Credit
Bond (Corporate), Global Treasury Bond, High Yield and Treasury Bond.



                                      B-33
<PAGE>

Chart B




     Municipal Bonds May Be Attractively Valued Relative To Treasuries.(2)

<TABLE>
<CAPTION>

              YIELD OF MUNIS            BOND BUYER     30-YEAR
         (AS A % OF TREASURIES)(3)      40 INDEX       TREASURY
     ------------------------------     ---------     ----------
     <S>                    <C>            <C>          <C>
       1/4/91 .........     90.90%        7.46          8.207
       1/3/92 .........     89.57%        6.7           7.48
       1/8/93 .........     86.67%        6.47          7.465
       1/7/94 .........     90.09%        5.61          6.227
       1/6/95 .........     91.98%        7.23          7.86
       1/5/96 .........     94.14%        5.69          6.044
       1/3/97 .........     88.09%        5.93          6.732
       1/2/98 .........     90.96%        5.31          5.838
       1/1/99 .........    104.81%        5.34          5.095
       1/8/99 .........    102.60%        5.41          5.273
       1/7/00 .........    100.98%        6.61          6.546
       1/5/01 .........     97.81%        5.28          5.398
       1/4/02 .........    101.12%        5.61          5.548
       3/1/02 .........     97.75%        5.38          5.504
</TABLE>

- ----------

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

      (3) As of 3/1/02 the ten year average of municipal bonds as a percentage
of Treasuries is 93%.





                                      B-34
<PAGE>


                      TAXABLE EQUIVALENT YIELD TABLES FOR
                       BLACKROCK MUNICIPAL BOND TRUSTS




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



<TABLE>
<CAPTION>
                                                        YOUR COMBINED           TAXABLE EQUIVALENT YIELD
                                                        FEDERAL/STATE TAX    --------------------------------
                 SINGLE RETURN      JOINT RETURN ($)      BRACKET IS (%):     5.5 (%)     6.0 (%)     7.0 (%)
               -----------------   ------------------   ------------------   ---------   ---------   --------
<S>            <C>                 <C>                  <C>                  <C>         <C>         <C>
National        27,951-67,700       46,701-112,850      27.0                 7.53         8.22        9.59
(BBK)           67,701-141,250      112,851-171,950     30.0                 7.86         8.57       10.00
               141,251-307,050      171,951-307,050     35.0                 8.46         9.23       10.77
                 Over 307,050        Over 307,050       38.6                 8.96         9.77       11.40
California      37,726-67,700       75,451-112,850      33.8                 8.31         9.05       10.57
(BZA)           67,701-141,250      112,851-171,950     36.5                 8.66         9.45       11.03
               141,251-307,050      171,951-301,050     41.0                 9.33        10.18       11.87
                 Over 307,050        Over 307,050       44.3                 9.88        10.77       12.57
Florida         27,951-67,700       46,701-112,850      27.0                 7.53         8.22        9.59
(BIE)           67,701-141,250      112,851-171,950     30.0                 7.86         8.57       10.00
               141,251-307,050      171,951-307,050     35.0                 8.46         9.23       10.77
                 Over 307,050        Over 307,050       38.6                 8.96         9.77       11.40
Maryland        27,951-67,700       46,701-112,850      30.5                 7.91         8.83       10.07
(BZM)           67,701-141,250      112,851-171,950     33.3                 8.25         9.00       10.50
               141,251-307,050      171,951-307,050     38.1                 8.88         9.69       11.31
                 Over 307,050        Over 307,050       41.5                 9.40        10.26       11.97
New Jersey      67,701-67,700       112,851-150,000     33.9                 8.32         9.07       10.58
(BLJ)           75,001-141,250      150,000-171,950     34.5                 8.39         9.15       10.68
               141,251-307,050      171,951-307,050     39.1                 9.04         9.86       11.50
                 Over 307,050        Over 307,050       42.5                 9.57        10.44       12.18
New York        27,951-67,700       46,701-112,850      32.0                 8.09         8.82       10.29
(BQH)           67,701-141,250      112,851-171,950     34.8                 8.43         9.20       10.74
               141,251-307,050      171,951-307,050     39.5                 9.08         9.91       11.56
                 Over 307,050        Over 307,050       42.8                 9.62        10.49       12.24
Virginia        27,951-67,700       46,701-112,850      31.2                 7.99         8.72       10.17
(BHV)           67,701-141,250      112,851-171,950     34.0                 8.34         9.09       10.81
               141,251-307,050      171,951-307,050     38.7                 8.98         9.79       11.43
                 Over 307,050        Over 307,050       42.1                 9.50        10.37       12.10
</TABLE>


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

          tax-free yield
        -----------------   =   Taxable Equivalent Yield
        1 - Tax Bracket



                                    EXPERTS


     The Statement of Net Assets as of April 25, 2002 the Trust as 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, Massachusetts 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


                                      B-35
<PAGE>

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






















                                      B-36
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Shareholder of
BlackRock Virginia Municipal Bond Trust



     We have audited the accompanying statement of assets and liabilities of
BlackRock Virginia Municipal Bond Trust (the "Trust") as of April 19, 2002 and
the related statements of operations and changes in net assets for the period
from March 14, 2002 (date of inception) to April 19, 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 April 19, 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 & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
April 22, 2002




                                      F-1
<PAGE>

BLACKROCK VIRGINIA MUNICIPAL BOND TRUST
STATEMENT OF ASSETS AND LIABILITIES
APRIL 19, 2002

<TABLE>
<CAPTION>
<S>                                                                    <C>
ASSETS:
Cash ..............................................................    $ 110,002
LIABILITIES:
Payable for organization costs ....................................       10,000
                                                                       ---------
Net Assets ........................................................    $ 100,002
                                                                       =========
NET ASSETS WERE COMPRISED OF:
 Common stock at par (Note 1) .....................................    $       8
 Paid-in capital in excess of par .................................      109,994
                                                                       ---------
                                                                         110,002
 Undistributed net investment loss ................................      (10,000)
                                                                       ---------
Net assets, April 19, 2002 ........................................    $ 100,002
                                                                       =========
NET ASSET VALUE PER SHARE:
Equivalent to 7,679 shares of common stock issued and outstanding,
 par value $0.001, unlimited shares authorized.....................    $   13.02
                                                                       =========
BLACKROCK VIRGINIA MUNICIPAL BOND TRUST
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 14, 2002 (DATE OF INCEPTION) TO APRIL 19, 2002
Investment Income .................................................    $      --
Expenses
 Organization expenses ............................................       10,000
                                                                       ---------
Net investment loss ...............................................    $ (10,000)
                                                                       =========
BLACKROCK VIRGINIA MUNICIPAL BOND TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MARCH 14, 2002 (DATE OF INCEPTION) TO APRIL 19, 2002
INCREASE (DECREASE) IN NET ASSETS
Operations:
   Net investment loss ............................................    $ (10,000)
                                                                       ---------
   Net decrease in net assets resulting from operations ...........      (10,000)
                                                                       ---------
Capital Stock Transactions
   Net proceeds from the issuance of common shares ................      110,002
                                                                       ---------
    Total increase ................................................      100,002
                                                                       ---------
NET ASSETS
Beginning of period ...............................................           --
                                                                       ---------
End of period .....................................................    $ 100,002
                                                                       =========
</TABLE>


                                      F-2
<PAGE>

NOTES TO FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

BlackRock Virginia Municipal Bond Trust (the "Trust") was organized as a
Delaware business trust on March 14, 2002, and is registered as a
non-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 7,679 shares of common stock for $110,002 ($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 0.65% 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
0.30% of the average weekly value of the Trust's managed assets for the first
five years of the Trust's operations (through April 30, 2007), and for a
declining amount for an additional five years (through April 30, 2012).


NOTE 3. ORGANIZATION EXPENSES AND OFFERING COSTS

Organization expenses of $10,000 have been expensed. Offering costs, estimated
to be approximately $130,000 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


                                      A-1
<PAGE>

      economic conditions which could lead to inadequate capacity to meet
      timely interest and principal payments. The "BB" rating category is also
      used for debt subordinated to senior debt that is assigned an actual or
      implied "BBB" rating.

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

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

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

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

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

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

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

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

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

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

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

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


     Municipal Notes

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


                                      A-2
<PAGE>

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

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

      Note rating symbols are as follows:

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

SP-2  Satisfactory capacity to pay principal and interest.

SP-3  Speculative capacity to pay principal and interest.

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


     Commercial Paper

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

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

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

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

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

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

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

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

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

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


                                      A-3
<PAGE>

     Municipal Bonds

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

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

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

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

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

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

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

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

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

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

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


     Short-Term Loans

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


                                      A-4
<PAGE>

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

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

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

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


     Commercial Paper

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

     --Leading market positions in well-established industries.

     --High rates of return on funds employed.

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

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

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

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

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

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

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


     Long-Term Credit Ratings

     Investment Grade

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

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


                                      A-5
<PAGE>

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
CC, C  financial commitments is solely reliant upon sustained, favorable
       business or economic developments. A "CC" rating indicates that default
       of some kind appears probable. "C" ratings signal imminent default.

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

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


     Short-Term Credit Ratings

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

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

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

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

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

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


                                      A-6
<PAGE>

D     Default. Denotes actual or imminent payment default.

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

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

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

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

                                      A-7
<PAGE>

                                   APPENDIX B

                        TAXABLE EQUIVALENT YIELD TABLES

     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 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>
                                        FEDERAL
       SINGLE               JOINT       TAX                          TAXABLE EQUIVALENT ESTIMATE CURRENT RETURN
       RETURN          RETURN BRACKET   RATE           4.00%      4.50%      5.00%      5.50%      6.00%      6.50%      7.00%
- -------------------- ------------------ ----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S>                  <C>                <C>         <C>        <C>        <C>        <C>        <C>        <C>        <C>
      $0-6,000           $0-12,000         10.00%      4.44%      5.00%      5.56%      6.11%      6.67%      7.22%      7.78%
   $6,001-27,950      $12,001-46,700       15.00%      4.71%      5.29%      5.88%      6.47%      7.06%      7.65%      8.24%
  $27,951-67,700     $46,701-112,850       27.00%      5.48%      6.16%      6.85%      7.53%      8.22%      8.90%      9.59%
  $67,701-141,250    $112,851-171,950      30.00%      5.71%      6.43%      7.14%      7.86%      8.57%      9.29%     10.00%
 $141,251-307,050    $171,951-307,050      35.00%      6.15%      6.92%      7.69%      8.46%      9.23%     10.00%     10.77%
   Over $307,050       Over $307,050       38.60%      6.51%      7.33%      8.14%      8.96%      9.77%     10.59%     11.40%
</TABLE>


                                   2002-2003

                                   VIRGINIA


     The following table shows the approximate taxable yields for individuals
that are equivalent to tax-free yields under combined Federal and Virginia
state tax rates, using published 2001 marginal Federal tax rates and marginal
Virginia tax rates currently available and scheduled to be in effect.



<TABLE>
<CAPTION>
                                             FEDERAL      STATE      COMBINED
        SINGLE                JOINT            TAX         TAX         TAX
    RETURN BRACKET       RETURN BRACKET        RATE        RATE       RATE*       3.50%
- --------------------- -------------------- ----------- ----------- ----------- ----------
<S>                   <C>                  <C>         <C>         <C>         <C>
      $0 - 3,000          $0 - 3,000           10.00%      2.000%      11.80%      3.97%
    $3,001 - 5,000      $3,001 - 5,000         10.00%      3.000%      12.70%      4.01%
    $5,001 - 6,000      $5,001 - 12,000        10.00%      5.000%      14.50%      4.09%
   $6,001 - 17,000     $12,001 - 17,000        15.00%      5.000%      19.25%      4.33%
   $17,001 - 27,950    $17,001 - 46,700        15.00%      5.750%      19.89%      4.37%
   $27,951 - 67,700    $46,701 - 112,850       27.00%      5.750%      31.20%      5.09%
  $67,701 - 141,250   $112,851 - 171,950       30.00%      5.750%      34.03%      5.31%
 $141,251 - 307,050   $171,951 - 307,050       35.00%      5.750%      38.74%      5.71%
    Over $307,050        Over $307,050         38.60%      5.750%      42.13%      6.05%


<CAPTION>
        SINGLE
    RETURN BRACKET       4.00%      4.50%      5.00%      5.50%      6.00%      6.50%      7.00%
- --------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>
      $0 - 3,000          4.54%      5.10%      5.67%      6.24%      6.80%      7.37%      7.94%
    $3,001 - 5,000        4.58%      5.15%      5.73%      6.30%      6.87%      7.43%      8.02%
    $5,001 - 6,000        4.68%      5.26%      5.85%      6.43%      7.02%      7.60%      8.19%
   $6,001 - 17,000        4.95%      5.57%      6.19%      6.81%      7.43%      8.05%      8.67%
   $17,001 - 27,950       4.99%      5.62%      6.24%      6.87%      7.49%      8.11%      8.74%
   $27,951 - 67,700       5.81%      6.54%      7.27%      7.99%      8.72%      9.45%     10.17%
  $67,701 - 141,250       6.06%      6.82%      7.58%      8.34%      9.09%      9.85%     10.61%
 $141,251 - 307,050       6.53%      7.35%      8.16%      8.98%      9.79%     10.61%     11.43%
    Over $307,050         6.91%      7.78%      8.64%      9.50%     10.37%     11.23%     12.10%
</TABLE>


- ----------

*     The combined tax rates shown reflect the fact that state tax payments are
      currently deductible for Federal tax purposes. Please note that the table
      does not reflect (i) any Federal or state limitations on the amounts of
      allowable itemized deductions, phase-outs of personal or dependents
      exemption credits or other allowable credits, (ii) any local taxes
      imposed, or (iii) any alternative minimum taxes or any taxes other than
      personal income taxes. The table assumes that federal taxable income is
      equal to state income subject to tax. The numbers in the Combined Tax
      Rate column are rounded to the nearest one-tenth of one percent.



                                      B-1
<PAGE>

                                   APPENDIX C

                       GENERAL CHARACTERISTICS AND RISKS
                            OF HEDGING TRANSACTIONS

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


PUT AND CALL OPTIONS ON SECURITIES AND INDICES

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

     The Trust's ability to close out its position as a purchaser or seller of
an exchange-listed put or call option is dependent upon the existence of a
liquid secondary market on option exchanges. Among the possible reasons for the
absence of a liquid secondary market on an exchange are: (i) insufficient
trading interest in certain options; (ii) restrictions on transactions imposed
by an exchange; (iii) trading halts, suspensions or other restrictions imposed
with respect to particular classes or series of options or underlying
securities; (iv) interruption of the normal operations on an exchange; (v)
inadequacy of the facilities of an exchange or OCC to handle current trading
volume; or (vi) a decision by one or more exchanges to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in that class or series of options) would
cease to exist, although outstanding options on that exchange that had been
listed by the OCC as a result of trades on that exchange would generally
continue to be exercisable in accordance with their terms. OTC Options are
purchased from or sold to dealers, financial institutions


                                      C-1
<PAGE>

or other counterparties which have entered into direct agreements with the
Trust. With OTC Options, such variables as expiration date, exercise price and
premium will be agreed upon between the Trust and the counterparty, without the
intermediation of a third party such as the OCC. If the counterparty fails to
make or take delivery of the securities underlying an option it has written, or
otherwise settle the transaction in accordance with the terms of that option as
written, the Trust would lose the premium paid for the option as well as any
anticipated benefit of the transaction. As the Trust must rely on the credit
quality of the counterparty rather than the guarantee of the OCC, it will only
enter into OTC Options with counterparties with the highest long-term credit
ratings, and with primary United States government securities dealers
recognized by the Federal Reserve Bank of New York.

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


FUTURES CONTRACTS AND RELATED OPTIONS

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

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


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

     Segregation and Cover Requirements. Futures contracts, interest rate
swaps, caps, floors and collars, short sales, reverse repurchase agreements and
dollar rolls, and listed or OTC options on securities, indices and futures
contracts sold by the Trust are generally subject to being designated on the
books and records and coverage requirements of either the CFTC or the SEC, with
the result that,



                                      C-2
<PAGE>


if the Trust does not hold the security or futures contract underlying the
instrument, the Trust will be required to designate on its books and records on
an ongoing basis, cash, U.S. government securities, or other liquid high grade
debt obligations in an amount at least equal to the Trust's obligations with
respect to such instruments. Such amounts fluctuate as the obligations increase
or decrease. The earmarking requirement can result in the Trust maintaining
securities positions it would otherwise liquidate, segregating assets at a time
when it might be disadvantageous to do so or otherwise restrict portfolio
management.


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














                                      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)     Agreement and Declaration of Trust.(1)

        (b)     By-Laws.(1)

        (c)     Inapplicable.

        (d)     Form of Specimen Certificate.(2)

        (e)     Dividend Reinvestment Plan.(2)

        (f)     Inapplicable.

      (g)(1)    Investment Management Agreement.(2)

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

      (g)(3)    Waiver Reliance Letter.(2)

        (h)     Form of Underwriting Agreement.(2)

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

        (j)     Custodian Agreement.(2)

        (k)     Transfer Agency Agreement.(2)

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

        (m)     Inapplicable.

        (n)     Consent of Independent Public Accountants.(2)

        (o)     Inapplicable.

        (p)     Initial Subscription Agreement.(2)

        (q)     Inapplicable.

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

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

        (s)     Powers of Attorney.(1)
</TABLE>



- ----------
(1)  Previously filed.

(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 fees .....................................   $  5,520
         American Stock Exchange listing fee ...................     35,000
         Printing (other than certificates) ....................     43,230
         Engraving and printing certificates ...................     18,571
         Accounting fees and expenses ..........................      5,000
         Legal fees and expenses ...............................     11,294
         NASD fee ..............................................      6,500
         Miscellaneous .........................................     18,824
         Total .................................................   $143,939
</TABLE>


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

     None.


ITEM 28. NUMBER OF HOLDERS OF SHARES


<TABLE>
<CAPTION>
                                                       NUMBER OF
       TITLE OF CLASS                               RECORD HOLDERS
       --------------                               --------------
<S>                                                 <C>
       Shares of Beneficial Interest .........             0
</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,


                                      C-2
<PAGE>

however, that no indemnitee shall be indemnified hereunder against any
liability to any person or any expense of such indemnitee arising by reason of
(i) willful misfeasance, (ii) bad faith, (iii) gross negligence, or (iv)
reckless disregard of the duties involved in the conduct of his position (the
conduct referred to in such clauses (i) through (iv) being sometimes referred
to herein as "disabling conduct"). Notwithstanding the foregoing, with respect
to any action, suit or other proceeding voluntarily prosecuted by any
indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such indemnitee (1)
was authorized by a majority of the Trustees or (2) was instituted by the
indemnitee to enforce his or her rights to indemnification hereunder in a case
in which the indemnitee is found to be entitled to such indemnification. The
rights to indemnification set forth in this Declaration shall continue as to a
person who has ceased to be a Trustee or officer of the Trust and shall inure
to the benefit of his or her heirs, executors and personal and legal
representatives. No amendment or restatement of this Declaration or repeal of
any of its provisions shall limit or eliminate any of the benefits provided to
any person who at any time is or was a Trustee or officer of the Trust or
otherwise entitled to indemnification hereunder in respect of any act or
omission that occurred prior to such amendment, restatement or repeal.

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

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

     (d) The rights accruing to any indemnitee under these provisions shall not
exclude any other right which any person may have or hereafter acquire under
this Declaration, the By-Laws of the Trust, any statute, agreement, vote of
stockholders or Trustees who are "disinterested persons" (as defined in Section
2(a)(19) of the 1940 Act) or any other right to which he or she may be lawfully
entitled.

     (e) Subject to any limitations provided by the 1940 Act and this
Declaration, the Trust shall have the power and authority to indemnify and
provide for the advance payment of expenses to employees, agents and other
Persons providing services to the Trust or serving in any capacity at the
request of the Trust to the full extent corporations organized under the
Delaware General Corporation Law may indemnify or provide for the advance
payment of expenses for such Persons, provided that such indemnification has
been approved by a majority of the Trustees.

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



                                      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 25th
day of April, 2002.





                                        /s/ Ralph L. Schlosstein
                                      -----------------------------------------
                                            Ralph L. Schlosstein
                                            Trustee, President, Chief Executive
                                            Officer and Chief Financial Officer


     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities set forth below on the 25th of April, 2002.



<TABLE>
<CAPTION>
                 NAME                                       TITLE
                 ----                                       -----
<S>                                     <C>
          /s/ Ralph L. Schlosstein      Trustee, President, Chief Executive Officer
 ----------------------------------      and Chief Financial Officer
         Ralph L. Schlosstein

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

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

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

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

                   *                    Trustee
 ----------------------------------
           Laurence D. Fink

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

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

                   *                    Treasurer
 ----------------------------------
             Henry Gabbay

By: /s/ Ralph L. Schlosstein
   --------------------------------
        Ralph L. Schlosstein
        Attorney-in-fact

</TABLE>

<PAGE>



INDEX TO EXHIBITS


(d)        Form of specimen certificate

(e)        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





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

<TABLE>
<CAPTION>
<S>               <C>                                                                     <C>
                  COMMON SHARES                                                            Shares
                  OF BENEFICIAL INTEREST

Number            PAR VALUE $.001

                  ORGANIZED UNDER THE LAWS
                  OF THE STATE OF DELAWARE

                  The Shares represented by this certificate may not be                    THIS CERTIFICATE
                  owned or transferred, directly or indirectly, by or to (I) the           IS TRANSFERABLE IN
                  United States, or any state or political subdivision thereof,            BOSTON OR IN NEW YORK CITY
                  any foreign government, any international organiz or any
                  agency or instrumentality of any of the foregoing, (II)                  CUSIP
                  any organization (other than a farmer's cooperative                      SEE REVERSE FOR CERTAIN DEFINITIONS
                  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.
</TABLE>

                     BLACKROCK VIRGINIA MUNICIPAL BOND TRUST


<TABLE>
<CAPTION>
<S>      <C>                                                 <C>                      <C>
         THIS CERTIFIES THAT




         IS THE OWNER OF

                  FULLY PAID AND NONASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST OF


         BlackRock Virginia Municipal Bond 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


                                                              /s/ Anne Ackerley         /s/ Ralph L. Schlosstein
                       AUTHORIZED SIGNATURE                   SECRETARY                 PRESIDENT

</TABLE>


<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>
<CAPTION>
<S>      <C>              <C>                                 <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                             Act........................................
                          tenants in common                                                         (State)


                          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.

</TABLE>


                                        2



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


                     BLACKROCK VIRGINIA MUNICIPAL BOND TRUST

                      AUTOMATIC DIVIDEND REINVESTMENT PLAN

                              TERMS AND CONDITIONS

     Pursuant to this Automatic Dividend Reinvestment Plan (the "Plan") of
BlackRock Virginia Municipal Bond 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 equal to or 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 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 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 April 19, 2002, the Trust has
caused this Plan to be executed in the name and on behalf of the Trust by a duly
authorized officer.




                                       4
<PAGE>


                                            BLACKROCK VIRGINIA
                                            MUNICIPAL BOND TRUST,
                                            a Delaware business trust

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




                                       5


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

                         INVESTMENT MANAGEMENT AGREEMENT


     AGREEMENT, dated April 19, 2002, between BlackRock Virginia Municipal Bond
Trust (the "Trust"), a Delaware business trust, and BlackRock Advisors, Inc.
(the "Advisor"), a Delaware corporation.

     WHEREAS, Advisor has agreed to furnish investment advisory services to
BlackRock Virginia Municipal Bond 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 providers) for the Trust. To the extent
requested by the Trust, the Advisor agrees to provide the following
administrative services:



<PAGE>




     (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;

     (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;

                                       2

<PAGE>


     (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.

     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.

                                       3

<PAGE>


     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 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


                                       4
<PAGE>

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
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

                                       5
<PAGE>

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 0.65 % 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, 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

                                       6

<PAGE>

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 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.

                                       7

<PAGE>



     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' 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. 1.

     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

                                       8

<PAGE>

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.

     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.

                                       9

<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 VIRGINIA MUNICIPAL BOND TRUST



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


                              BLACKROCK ADVISORS, INC.



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




                                       10



</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 April 19, 2002, between BlackRock Virginia Municipal
Bond Trust, a Delaware business 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
April 19, 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 April 30, 2003, 38% of the monthly advisory fees received by the
Advisor, (ii) from May 1, 2003 to April 30, 2004, 19% of the monthly advisory
fee received by the Advisor; and (iii) after April 30, 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.

          (b) For purposes of this Agreement, the Managed Assets of the Trust
shall be calculated pursuant to the procedures adopted by resolutions of


                                        5

<PAGE>



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 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.



                                        6

<PAGE>



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



                                        7

<PAGE>



          (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.

     13.   Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an


                                        8

<PAGE>



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: /s/ Anne Ackerley
                                        ------------------------------------
                                        Name:  Anne F. Ackerley
                                        Title: Managing Director


                                    BLACKROCK FINANCIAL MANAGEMENT, INC.


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


                                    BLACKROCK VIRGINIA MUNICIPAL BOND TRUST


                                    By: /s/ Anne 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
                             ----------------------


                                                     April 19, 2002

BlackRock Virginia Municipal Bond Trust
100 Bellevue Parkway
Wilmington, Delaware  19809


Ladies and Gentlemen:

     BlackRock Advisors, Inc. (the "Advisor") and BlackRock Virginia Municipal
Bond 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 April 19, 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 .65% 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
April 30, 2003, and for the twelve month periods ending April 30 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
of 1940,




<PAGE>



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:


Period Ending                              Period Ending
April 30               Waiver              April 30                   Waiver
- -------------------    ------              --------                   ------
2003                   .30%                2008                       .25%
2004                   .30%                2009                       .20%
2005                   .30%                2010                       .15%
2006                   .30%                2011                       .10%
2007                   .30%                2012                       .05%

     The Advisor intends to cease to so waive receipt of payments upon the
earlier of (a) April 30, 2012 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: /s/ Anne Ackerley
                                             --------------------------
                                             Name:  Anne F. Ackerley
                                             Title: Managing Director




                                        2


<PAGE>

CONFIRMED AND ACCEPTED:

BLACKROCK VIRGINIA MUNICIPAL BOND TRUST


By: /s/ Anne 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 VIRGINIA MUNICIPAL BOND TRUST

                                 [       ] Shares

                      Common Shares of Beneficial Interest


                                                             [          ], 2002


SALOMON SMITH BARNEY 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 Virginia Municipal Bond 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 $.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. and [       ] (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."

<PAGE>

                                                                               2

                  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-[      ]
and 811-[      ]), [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 in the registration statement at the time of filing of [Pre-Effective
Amendment No. 1] to the registration statement with the Commission on
[       ], 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

<PAGE>

                                                                               3

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 [$      ] 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, 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


<PAGE>

                                                                               4

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
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


<PAGE>

                                                                               5

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 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.



<PAGE>

                                                                               6

                  (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 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


<PAGE>


                                                                              7
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 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.


<PAGE>

                                                                               8

                  (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.

                  (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


<PAGE>

                                                                               9

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 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


<PAGE>

                                                                              10

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 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).


<PAGE>

                                                                              11

                  (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 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,


<PAGE>

                                                                              12

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.

                  (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


<PAGE>

                                                                              13

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 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


<PAGE>

                                                                              14

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.

                  (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


<PAGE>

                                                                              15

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 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


<PAGE>

                                                                              16

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 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


<PAGE>

                                                                              17

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
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


<PAGE>

                                                                              18

(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 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


<PAGE>

                                                                              19

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
[Daniel Waltcher], 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:

                       (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


<PAGE>

                                                                              20

                  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
                  Virginia, 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 Virginia 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;


<PAGE>

                                                                              21

                       (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
Skadden, Arps, Slater, Meagher & Flom LLP, special New York counsel for the
Trust, 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:

                       (i) The statements in the Prospectus under the captions
                  "Prospectus Summary - Special Risk Considerations -
                  Concentration in Virginia Issuers", "The Trust's Investments -
                  Municipal Bonds - Economic and Other Conditions in Virginia"
                  and "Tax Matters - Virginia Tax Matters" (in the prospectus)
                  and "Investment Policies and Techniques - Factors Pertaining
                  to Virginia" (in the statement of additional information),
                  insofar as they refer to statements of law or legal
                  conclusions, are accurate and present fairly the information
                  shown; and

                       (ii) Such counsel shall also state that they have
                  participated in the preparation of, and have reviewed and
                  discussed the contents of, the Registration Statement and
                  Prospectus with certain officers and employees of the Trust
                  and BAI and with counsel for the Trust concerning the
                  statements set forth in the Registration Statement and
                  Prospectus under the captions "Prospectus Summary - Special
                  Risk Considerations - Concentration in Virginia Issuers", "The
                  Trust's Investments - Municipal Bonds - Economic and Other
                  Conditions in Virginia" and "Tax Matters - Virginia Tax
                  Matters" (in the prospectus) and "Investment Policies and
                  Techniques - Factors Pertaining to Virginia" (in the statement
                  of additional information), and that based upon the foregoing,
                  no facts have come to their attention which cause them to
                  believe that the statements contained in the Registration
                  Statement or any amendment or supplement thereto under such
                  captions (except as to any financial statements or other
                  financial data included in the Registration Statement or any
                  such amendment or supplement, as to which they express no
                  belief), as of its effective date, contained an untrue
                  statement of a material fact or omitted to state a material
                  fact required to be stated therein or


<PAGE>

                                                                              22


                  necessary to make the statements contained therein not
                  misleading or that the statements contained in the
                  Prospectus or any amendment or supplement thereto under such
                  captions (except as to any financial statements or other
                  financial data included in the Prospectus or any such
                  amendment or supplement, as to which they express no
                  belief), as of its issue date and as of the Closing Date or
                  the Option Closing Date, as the case may be, contained an
                  untrue statement of a material fact or omitted 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.

                  (f) 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.

                  (g) 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.

                  (h) (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 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


<PAGE>

                                                                              23

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(h) and in Section 9(i)
hereof.

                  (i) 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.

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

                  (k) 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.

                  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


<PAGE>

                                                                              24

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 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 any
Underwriter to the Trust or the Advisers, by notice to the Trust or the
Advisers, if prior to the Closing Date or any Option


<PAGE>

                                                                              25

Closing Date (if different from the Closing Date and then only as to the Option
Shares), as the case may be, (i) trading in the Shares or securities generally
on the New York Stock Exchange, the American Stock Exchange, the Nasdaq National
Market or the Nasdaq Stock Market shall have been suspended or materially
limited, (ii) additional material governmental restrictions not in force on the
date of this Agreement have been imposed upon trading in securities generally or
a general moratorium on commercial banking activities in Virginia shall have
been declared by either federal or state authorities, or (iii) there shall have
occurred any outbreak or material escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions, the effect of which is to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Trust or either
Adviser 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 last 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.

                  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 Virginia.

                  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.


<PAGE>

                                                                              26

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


                                      Very truly yours,

                                      BLACKROCK VIRGINIA MUNICIPAL BOND TRUST


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



                                      BLACKROCK ADVISORS, INC.


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



                                      BLACKROCK FINANCIAL MANAGEMENT, INC.


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



<PAGE>

                                                                              27

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.
[             ]
As Representatives of the Several Underwriters


By:  SALOMON SMITH BARNEY INC.



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


<PAGE>



                                   SCHEDULE I

                     BLACKROCK VIRGINIA MUNICIPAL BOND TRUST

                                                         Number
                        Underwriter                    of Shares
                        -----------                    ---------



















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






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

                                                                ANNEX A

                                                         ATTORNEY WORK PRODUCT
                                                     PRIVILEGED AND CONFIDENTIAL


                                 BLACKROCK FUNDS
                           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"), hereby establishes this BlackRock
Funds Deferred Compensation Plan, effective as of February 24, 2000 (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 "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 Account" shall mean a book entry account maintained to
reflect an Eligible Trustee's compensation deferred as provided in Section 2.4
of the Plan.

     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 Deferral
Account 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.


<PAGE>



     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 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 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


                                       2
<PAGE>

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.

     (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 cancel or 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. Such change will be effective as of the
first day of the calendar year following the date such revision is submitted.

     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


                                       3
<PAGE>


               (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;

              (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:

                                       4
<PAGE>



               (i)  As to any Eligible Trustee in office on the effective date
                    of the Plan 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 the effective date of the Plan, if later;

               (ii) As to any individual who becomes an Eligible Trustee after
                    the 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; and

               (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.

     (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.




                                       5
<PAGE>


     2.4 Valuation of Deferral Account.

     (a) Each Participating Fund shall establish a Deferral Account to which
will be credited in an amount equal to the Participant's Deferred Compensation
under the Plan. Any compensation earned by the Participant which the Participant
has elected to defer will be credited to the Deferral Account on the date such
amounts otherwise would have been payable to such Participant. On each Valuation
Date, each Deferral Account will be credited or debited (as described in
subsection (b) below) with the amount that would have been realized had the
Deferral Account been invested in the Eligible Investments designated by the
Participant. The Deferral Account shall be debited to reflect any distributions
as of the date such distributions are made in accordance with Section 3 of the
Plan.

     (b) Each Participating Fund shall adjust the Participant's Deferral Account
to reflect a value which would have been earned as if the amount of Deferred
Compensation represented by such Deferral Account had been invested and
reinvested in shares of the Eligible Investments designated by the Participant
as follows:

          The value of each account will be determined by reference to the
          number of the shares of the Eligible Investment that the Deferred
          Compensation would have purchased (or sold) at the then Fair Market
          Value per share on the date such amounts are credited to (or debited
          from) the Deferral Account (less any brokerage fees payable upon the
          acquisition of shares of such in the open market) as well as the Fair
          Market Value of shares that would have been acquired through
          reinvestment of dividends and capital gains distributed.

     (c) As of each Valuation Date, income, gain and loss equivalents
(determined as if the Deferral Accounts are invested in the manner set forth in
Section 2.2(a) hereof) attributable to the period following the next preceding
Valuation Date shall be credited to and/or debited from the Participant's
Deferral Account.


                                       6
<PAGE>


     2.5  Investment of Deferral Account Balance.

     (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 Account shall be
deemed to be invested.

     (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 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 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, 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-


                                       7
<PAGE>

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 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 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 ACCOUNT

     3.1  Distribution Election.

     The aggregate value of a Participant's Deferral 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 Account shall continue to accrue earnings and dividend
equivalents, computed in accordance with the provisions of Section 2.4(b), and
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 Account, the numerator of which is one, and the denominator of which is
the total number of installments. The amount of each subsequent payment shall be
a fraction of the then Fair Market Value of the Participant's Deferral Account
remaining after the prior payment, the numerator of


                                       8
<PAGE>

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 Account. 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 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
Account, notwithstanding any Election made by the Participant and
notwithstanding any other provision set forth herein, the value of such Deferral
Account 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 Account as of the Valuation Date next following, 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


                                       9
<PAGE>

Participating Fund shall distribute the amounts in the Participant's Deferral
Account 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 Account 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 Account 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 Account as of the end of
each calendar year and all credits and debits of such Deferral Account during
such year. Such statements will be furnished no later than sixty (60) days after
the end of each calendar year.



                                       10
<PAGE>


     4.2  Rights in Deferral Account.

     Credits to the Deferral Accounts 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 from such Deferral Accounts. 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.

     (a) 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 Account 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.



                                       11
<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.



                                       12
<PAGE>


     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 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.



                                       13
<PAGE>


     4.13 Non-liability of Participating Funds.

     Interpretations of, and determinations (including factual determinations)
related to, the Plan made by the Participating Funds in good faith, including
any determinations of the amounts of the Deferral Accounts, shall be conclusive
and binding upon all parties; and 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 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.



                                       14
<PAGE>


     IN WITNESS WHEREOF, each Participating Fund has caused this Plan to be
executed by one of its duly authorized officers, this 24th day of February,
2000.






By:________________________________
Name:
Title:




Witness:__________________________
Name:
Title:



                                       15
<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 Bond Trust
BlackRock California Municipal Income 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 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 Bond Trust
BlackRock Municipal Income Trust
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 Bond Trust
BlackRock New York Municipal Income Trust
BlackRock North American Government Income Trust
BlackRock Pennsylvania Strategic Municipal 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 High Yield Trust
BlackRock Income Trust
BlackRock Investment Quality Term Trust
BlackRock North American Government Income 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 death, to

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

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

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


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 April 19, 2002 between BlackRock Virginia
Municipal Bond 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 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
party in the

                                       13

<PAGE>


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 Tax-Free 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 VIRGINIA MUNICIPAL BOND
                                        TRUST



      /s/ Henry Gabbay                  By:   /s/ Anne Ackerley
- ------------------------------------       -------------------------------
Name: Henry Gabbay                            Name:  Anne Ackerley
                                              Title: 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

                                                             [STATE STREET LOGO]

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

                                                             [STATE STREET LOGO]


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

                                                             [STATE STREET LOGO]

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

                                                             [STATE STREET LOGO]

[  ]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

                                                             [STATE STREET LOGO]

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

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

FUND: BLACKROCK VIRGINIA MUNICIPAL BOND 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:

<TABLE>
<CAPTION>

NAME                                TITLE (Specify whether position            SPECIMEN SIGNATURE
                                    is with Fund or Investment
                                    Adviser)
<S>                                <C>                                          <C>

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


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


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


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


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


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:

<TABLE>
<CAPTION>

NAME                                 CALLBACK PHONE NUMBER                    DOLLAR LIMITATION (IF ANY)
<S>                                  <C>                                      <C>


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


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


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


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


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


<PAGE>


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


         ADDENDUM to that certain Custodian Contract dated as of March __, 2002
(the "Custodian Agreement") between BlackRock Virginia Municipal Bond 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~SightSM 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.

                                       ii


<PAGE>


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

EQUISERVE




                                   REGISTRAR,

                      TRANSFER AGENCY AND SERVICE AGREEMENT

                                     between

                     BLACKROCK VIRGINIA MUNICIPAL BOND TRUST

                                       and

                          EQUISERVE TRUST COMPANY, N.A.









Innovative Leadership in Shareholder Services.


150 Royall Street
Canton, MA 02021


<PAGE>



                                TABLE OF CONTENTS
                                -----------------

Article 1   Terms of Appointment; Duties of the Bank....................  1

Article 2   Fees and Expenses...........................................  3

Article 3   Representations and Warranties of the Bank..................  4

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

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

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

Article 7   Standard of Care............................................  8

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

Article 9   Termination of Agreement.................................... 10

Article 10  Assignment.................................................. 10

Article 11  Amendment................................................... 11

Article 12  Massachusetts Law to Apply.................................. 11

Article 13  Force Majeure............................................... 11

Article 14  Consequential Damages....................................... 11

Article 15  Merger of Agreement......................................... 11




<PAGE>

                REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT

     AGREEMENT made as of the 19th day of April 2002, by and between BlackRock
Virginia Municipal Bond 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:

                                        1
<PAGE>



          (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 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

                                       2
<PAGE>

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 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.

                                       3
<PAGE>

     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 By-Laws
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
          -------------------------------------------

     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
<PAGE>

     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:

                                       5
<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

                                       6
<PAGE>

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 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.

                                       7
<PAGE>

     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 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
co-transfer 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

                                       8
<PAGE>

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 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

                                       9
<PAGE>

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 such

                                       10
<PAGE>


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 l7A(c)(2) of the Securities Exchange Act of
1934 ("Section l7A(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 may be 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.

                                       11
<PAGE>

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 MAJEURE
           -------------

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

     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.




                                       12
<PAGE>


     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 VIRGINIA MUNICIPAL BOND TRUST


                                         BY: /s/ Anne Ackerley
                                            ---------------------
                                         Name:   Anne Ackerley
                                         Title:    Secretary



                                         EQUISERVE TRUST COMPANY, N.A.


                                         BY: /s/ Tyler Haynes
                                            ---------------------
                                         Name:   Tyler Haynes
                                         Title:    Managing Director




                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(L)
<SEQUENCE>12
<FILENAME>file011.txt
<DESCRIPTION>OPINION AND CONSENT OF COUNSEL
<TEXT>
<PAGE>

                                             April 25, 2002

BlackRock Virginia Municipal Bond Trust
100 Bellevue Parkway
Wilmington, Delaware 19809

                    Re:  BlackRock Virginia Municipal Bond Trust
                         Registration Statement on Form N-2
                         --------------------------------------------

Ladies and Gentlemen:

     We have acted as special counsel to BlackRock Virginia Municipal Bond
Trust, a business trust formed under the Delaware Business Trust Act (the
"Trust"), in connection with the initial public offering by the Trust of up to [
] 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 March 19, 2002 as filed with the Securities and Exchange
Commission (the "Commission") on March 19, 2002, (ii) the Registration Statement
of the Trust on Form N-2 (File Nos. 333-84538 and 811-21053), as filed with the
Commission on March 19, 2002, and as amended by Pre-Effective Amendment No. 1 on
March 22,

<PAGE>

BlackRock Virginia Municipal Bond Trust
April 25, 2002
Page 2


2002 and Pre-Effective Amendment No. 2 on April 25, 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, and Salomon Smith Barney Inc., as
representative of the several underwriters named therein (the "Underwriters"),
filed as an exhibit to the Registration Statement; (iv) a specimen certificate
representing the Common Shares; (v) the Certificate of Trust and Agreement and
Declaration of Trust of the Trust, as dated and currently in effect; (vi) the
By-Laws of the Trust, as currently in effect and (vii) certain resolutions of
the Board of Trustees of the Trust relating to the issuance and sale of the
Shares and related matters. 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 latter documents. In making our
examination of documents, we have assumed that the parties thereto, other than
the Trust, its directors and officers, 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.

<PAGE>


BlackRock Virginia Municipal Bond Trust
April 25, 2002
Page 3


     Members of our firm are admitted to the bar in the State of New York and we
do not express any opinion as to the laws of any jurisdiction other than the
Delaware Business Trust Act.

     Based upon and subject to the foregoing, we are of the opinion that 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 value of the Common Shares as
contemplated by the Underwriting Agreement, the issuance and sale of the Shares
will have been duly authorized, and 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. 2 to the Registration
Statement of BlackRock Virginia Municipal Bond Trust (Securities Act
Registration No. 333-84538) of our report dated April 22, 2002, relating to the
financial statements of BlackRock Virginia Municipal Bond Trust as of April 19,
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
April 25, 2002





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(P)
<SEQUENCE>14
<FILENAME>file013.txt
<DESCRIPTION>INITIAL SUBSCRIPTION
<TEXT>
<PAGE>

                             SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT is entered into as of the 19th day of April,
2002, between BlackRock Florida Municipal Bond 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 7,679 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
$110,002.

     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 Pur chaser'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
registra tion 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 evaluat ing the
merits and risks of the investment in the Shares. The Purchaser is an "accred
ited 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 securi ties
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 circum stances. 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 Pur chaser 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 in the


                                       2

<PAGE>



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 Florida 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 FLORIDA
                                            MUNICIPAL BOND TRUST



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




                                            BLACKROCK ADVISORS, Inc.



                                            By: /s/ Anne Ackerley
                                                --------------------------------
                                                Name:  Anne 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-99.2(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

Laurence D. Fink                            Chairman/Director
Andrew F. Brimmer                           Director
Richard E. Cavanagh                         Director
Kent Dixon                                  Director
Frank J. Fabozzi                            Director
James Clayburn La Force, Jr.                Director
Walter F. Mondale                           Director
Ralph L. Schlosstein                        Director


OFFICERS

Ralph L. Schlosstein                        President
Robert S. Kapito                            Vice President
Kevin Klingert                              Vice President (Municipals Only)
Dennis Schaney                              Vice President (BHY Only)
Richard M. Shea                             Vice President/Tax
Henry Gabbay                                Treasurer
James 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
<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.

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<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


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<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>
</SEC-DOCUMENT>
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