Edgar Filing: BLACKROCK NEW JERSEY MUNICIPAL BOND TRUST

Filed Pursuant to Rule 497(c)
Registration File No.: 333-84542

PROSPECTUS [BLACKROCK LOGO]

2,000,000 SHARES

BLACKROCK NEW JERSEY MUNICIPAL BOND TRUST
COMMON SHARES
$15.00 PER SHARE

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

Investment Objective. BlackRock New Jersey 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 New Jersey gross income tax.

Portfolio Contents. The Trust will invest primarily in municipal bonds
that pay interest that is exempt from regular Federal income tax and New Jersey
gross 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 "BLJ".

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 20
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.
---------------

PER SHARE TOTAL
--------- -----

Public Offering Price $ 15.000 $30,000,000
Sales Load $ 0.675 $ 1,350,000
Estimated Offering Expenses(1) $ 0.030 $ 60,000
Proceeds, after expenses, to the Trust $ 14.295 $28,590,000

(1) Aggregate offering expenses are expected to be $176,028. BlackRock has
agreed to reimburse offering expenses in excess of $0.030.

The Underwriters expect to deliver the common shares to purchasers on or
about April 30, 2002.

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

SALOMON SMITH BARNEY

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

GRUNTAL & CO., L.L.C. J.J.B. HILLIARD, W.L. LYONS, INC.
A PNC COMPANY

April 25, 2002.

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 41 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 300,000
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.

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

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary ..................................................... 4
Summary of Trust Expenses .............................................. 11
The Trust .............................................................. 13
Use of Proceeds ........................................................ 13
The Trust's Investments ................................................ 13
Preferred Shares and Leverage .......................................... 18
Risks .................................................................. 20
How the Trust Manages Risk ............................................. 23
Management of the Trust ................................................ 25
Net Asset Value ........................................................ 28
Distributions .......................................................... 28
Dividend Reinvestment Plan ............................................. 29
Description of Shares .................................................. 30
Certain Provisions in the Agreement and Declaration of Trust ........... 33
Closed-End Trust Structure ............................................. 34
Repurchase of Common Shares ............................................ 35
Tax Matters ............................................................ 35
Underwriting ........................................................... 37
Custodian and Transfer Agent ........................................... 39
Legal Opinions ......................................................... 40
Table of Contents for the Statement of Additional Information .......... 41

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

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.

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 New Jersey Municipal Bond Trust is a
newly organized, non-diversified, closed-end
management investment company. Throughout the
prospectus, we refer to BlackRock New Jersey
Municipal Bond Trust simply as the "Trust" or as
"we," "us" or "our." See "The Trust."

THE OFFERINg................ The Trust is offering 2,000,000 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, UBS Warburg LLC, Gruntal & Co.,
L.L.C. and J.J.B. Hilliard, W.L. Lyons, Inc. The
common shares of beneficial interest are called
"common shares" in the rest of this prospectus.
You must purchase at least 100 common shares
($1,500) in order to participate in this
offering. The Trust has given the Underwriters an
option to purchase up to 300,000 additional
common shares to cover orders in excess of
2,000,000 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 New Jersey gross income tax.

INVESTMENT POLICIES......... The Trust will invest primarily in municipal
bonds that pay interest that is exempt from
regular Federal income tax and New Jersey gross
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 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."

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 "BLJ".
See "Description of Shares--Common Shares."

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

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

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

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

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

Credit Risk. Credit risk is the risk that one or
more municipal bonds in the Trust's portfolio
will decline in price, or fail to pay interest
or principal when due, because the issuer of the
bond experiences a decline in its financial
status. 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 to 20% (measured at the time of
investment) of its total assets in municipal
bonds that are rated Ba/BB or B or that are
unrated but judged to be of comparable quality
by 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 New Jersey Issuers. The Trust's
policy of investing primarily in municipal
obligations of issuers located in New Jersey
makes the Trust more susceptible to adverse
economic, political or regulatory occurrences
affecting those issuers. New Jersey state and
local governmental obligations may be adversely
affected by political and economical conditions
and developments within the State of New Jersey
and the nation as a whole. For the balance of
Fiscal 2002, New Jersey anticipates a revenue
shortfall of $2.9 billion; the state has
proposed various fiscal measures to close the
shortfall. For a discussion of economic and
other conditions in New Jersey, see "The Trust's
Investments-- Municipal Bonds--Economic and
Other Considerations in New Jersey."

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

Leverage Risk. The use of leverage through the
issuance of Preferred Shares creates an
opportunity for increased common share net
investment income dividends, but also creates
risks for the holders of common shares. The
Trust's leveraging strategy may not be
successful. We anticipate that Preferred Shares
will pay adjustable rate dividends based on
shorter-term interest rates that would be
periodically reset. The Trust intends to invest
the proceeds of the Preferred Shares offering in
long-term, typically fixed rate, municipal
bonds. So long as the Trust's municipal bond
portfolio provides a higher rate of return, net
of Trust expenses, than the Preferred Share
dividend rate, as reset periodically, the

leverage may cause the holders of common shares
to receive a higher current rate of return than
if the Trust were not leveraged. If, however,
long- and/or short-term rates rise, the
Preferred Share dividend rate could exceed the
rate of return on long-term bonds held by the
Trust that were acquired during periods of
generally lower interest rates, reducing return
to the holders of common shares. Leverage
creates two major types of risks for the holders
of common shares:

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

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

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

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

Non-Diversification. The Trust has registered as
a "non-diversified" investment company under the
Investment Company Act of 1940, as amended (the
"Investment Company Act"). For Federal income
tax purposes, the Trust, with respect to up to
50% of its total assets, will be able to invest
more than 5% (but not, 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.

SUMMARY OF TRUST EXPENSES

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

SHAREHOLDER TRANSACTION EXPENSES

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

PERCENTAGE OF NET
ASSETS ATTRIBUTABLE
TO COMMON SHARES**
------------------

ANNUAL EXPENSES
Management Fees ........................................ 1.05%
Other Expenses ......................................... 0.56%
-----
Total Annual Expenses .................................. 1.61%***
=====
Fee and Expense Waiver ................................. (0.48)%***
Net Annual Expenses .................................... 1.13%***

----------
* 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.

PERCENTAGE OF NET
ASSETS ATTRIBUTABLE
TO COMMON SHARES
----------------

ANNUAL EXPENSES
Management Fees ....................................... 0.65%
Other Expenses ....................................... 0.35%
----
Total Annual Expenses ................................ 1.00%***
====
Fee and Expense Waiver ............................... (0.30)%***
Net Annual Expenses .................................. 0.70%***

----------

*** 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 Annual Expenses" would be estimated to be 1.61% of average weekly
net assets attributable to common shares and 1.00% of average weekly
Managed Assets.

The purpose of the table above and the example below is to help you
understand all fees and expenses that you, as a holder of common shares, would
bear directly or indirectly. The expenses shown in the table under "Other
Expenses" and "Net Annual Expenses" are based on estimated amounts for the
Trust's first year of operations and assume that the Trust issues 2,000,000
common shares. If the Trust issues fewer common shares, all other things being
equal, these expenses would increase. See "Management of the Trust" and
"Dividend Reinvestment Plan."

The following example illustrates the expenses (including the sales load
of $45) that you would pay on a $1,000 investment in common shares, assuming
(1) total net annual expenses of 1.13% of net assets attributable to common
shares in years 1 through 5, and (2) a 5% annual return:(1)

1 YEAR 3 YEARS 5 YEARS 10 YEARS (2)
------ ------- ------- ------------

Total Expenses Incurred .......... $56 $79 $104 $192

----------
(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."

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 New
Jersey 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
$28,590,000 ($32,878,500 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 New Jersey gross income tax.

The Trust will invest primarily in municipal bonds that pay interest that
is exempt from regular Federal income tax and New Jersey gross 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 New Jersey.
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

exempt from New Jersey gross income tax, the Trust may invest in securities
that pay interest that is not exempt from New Jersey gross income tax when, in
the judgment of BlackRock, the return to the shareholders after payment of
applicable New Jersey gross 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 New Jersey gross 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 New Jersey gross income tax.

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

MUNICIPAL BONDS

General. Municipal bonds are either general obligation or revenue bonds
and typically are issued to finance public projects, such as roads or public
buildings, to pay general operating expenses

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

The municipal bonds in which the Trust will invest pay interest that, in
the opinion of bond counsel to the issuer, or on the basis of another authority
believed by BlackRock to be reliable, is exempt from regular Federal income tax
and New Jersey gross 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 New Jersey gross 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 New Jersey. Except during defensive
periods, the Trust invests primarily in New Jersey municipal obligations which
are municipal securities, the interest on 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 New Jersey gross income taxes. Because the
Trust invests primarily in New Jersey municipal securities, the Trust is more
susceptible to political, economic, regulatory or other factors affecting
issuers of New Jersey municipal securities than a fund which does not limit its
investments to such issuers. These risks include possible legislative, state
constitutional or regulatory amendments that may affect the ability of state
and local governments or regional governmental authorities to raise money to
pay principal and interest on their municipal securities. Economic, fiscal and
budgetary conditions throughout the state may also influence the Trust's
performance.

The following information is a summary of a more detailed description of
certain factors affecting New Jersey municipal securities which is contained in
the Trust's Statement of Additional Information. Investors should obtain a copy
of the Statement of Additional Information for the more detailed discussion of
such factors. Such information is derived from certain official statements of
the State of New Jersey published in connection with the issuance of specific
New Jersey 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 New Jersey municipal securities acquired by the Trust.
The Trust assumes no responsibility for the completeness or accuracy of such
information.

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 condition of such
issuers. The Trust cannot predict whether or to what extent such factors or
other factors may affect the issuers of New Jersey municipal obligations, the
market value or marketability of such obligations or the ability of the
respective issuers of such obligations acquired by

the Trust to pay interest on or principal of such obligations. The
creditworthiness of obligations issued by local New Jersey issuers may be
unrelated to the creditworthiness of obligations issued by the State of New
Jersey, and there is no responsibility on the part of the State of New Jersey
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 New Jersey and it is possible the Trust will invest in
obligations of particular issuers as to which such specific factors are
applicable. However, the information set forth below is intended only as a
general summary and not as a discussion of any specific factors that may affect
any particular issuer of New Jersey municipal obligations.

The State of New Jersey benefits from a diverse economic base which
includes such factors as the State's proximity to New York and Pennsylvania,
extensive highway system, large white-collar labor force, growing
pharmaceutical industry, and various commercial and industrial firms having
headquarters and regional offices located within its borders.

The State's economic indicators at the end of 2000 showed an employment
decrease of 1.4%, personal income growth of 3.8%, construction growth of 7.5%,
sales growth of existing homes decreasing by 4%, and unemployment rate
decreasing to 3.8%. New Jersey's per capita income of $36,983 in 2000
represented the third highest ranking for all states in the nation. Although
preliminary 2001 economic data indicated that the State's average unemployment
rate rose to 4.3%, the rate represented the lowest annual average for the State
since 1989, excluding 2000. Also, December of 2001 marked the twenty-fifth
consecutive month that the State's unemployment rate remained at or below the
national average. Third quarter personal income for 2001 increased 4.5% from
the State's 2000 personal income.

The State ended Fiscal Year 2001 with a balance of $3.21 billion in its
General Fund. For Fiscal 2002, New Jersey anticipates a revenue shortfall of
$2.9 billion. Cost savings and revenue generating measures are being
effectuated to close the gap, including enacting a State tax amnesty program
expected to generate an estimated $150 million, reducing governmental agencies'
operating costs by 5%, and freezing new appropriations.

At the end of Fiscal 2000, New Jersey had approximately $14.5 billion in
outstanding indebtedness, consisting of approximately $3.8 billion of general
obligation bonds and $10.7 billion of appropriation-backed debt obligations.
Projects supported by general obligation bonds are of economic, social and
environmental importance, including the construction of correctional and human
services facilities, transportation projects, and higher education
improvements. The appropriation backed debt obligations of the State included
the 1997 New Jersey Economic Development Authority's issuance of $2.75 billion
of State Pension Funding Bonds, the proceeds of which were used to fully fund
the State's unfunded accrued pension liability. As of the end of Fiscal 2000,
the State's debt ratio remained moderate at $1,755 per capita or 4.9% of
personal income and 4.5% of operating fund appropriations.

New Jersey state and local government obligations may be adversely
affected by political and economic conditions and developments within the State
of New Jersey and the nation as a whole. (For more information, see "Investment
Policies and Techniques--Factors Pertaining to New Jersey" 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 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, 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

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
87% 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 58% in
Aaa/AAA; 9% in Aa/AA; 16% in A; and 4% in Baa/BBB). BlackRock generally expects
to select obligations that may not be redeemed at the option of the issuer for
approximately ten years from the date of purchase by the Trust. See
"--Investment Objective and Policies" in the Statement of Additional
Information.

PREFERRED SHARES AND LEVERAGE

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

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

For tax purposes, the Trust is currently required to allocate tax-exempt
interest income, net capital gain and other taxable income, if any, between the
common shares and Preferred Shares in proportion to total dividends paid to
each class for the year in which or with respect to which the net capital gain
or other taxable income is paid. If net capital gain or other taxable income is
allocated to Preferred Shares, instead of solely tax-exempt income, the Trust
will likely have to pay higher total dividends to Preferred Shareholders or
make special payments to Preferred Shareholders to compensate them for the
increased tax liability. This would reduce the total amount of dividends paid

to the holders of common shares, but would increase the portion of the dividend
that is tax-exempt. If the increase in dividend payments or the special
payments to Preferred Shareholders are not entirely offset by a reduction in
the tax liability of, and an increase in the tax-exempt dividends received by,
the holders of common shares, the advantage of the Trust's leveraged structure
to holders of common shares will be reduced.

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

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

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

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 3.89% yield on the Trust's
investment portfolio, net of expenses, and the Trust's currently projected
annual Preferred Share dividend rate of 2.00%.

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%

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 investment management companies
frequently trade at a discount from their net asset value. The Trust's shares
may trade at a price that is less than the initial offering price. This risk
may be greater for investors who sell their shares in a relatively short period
of time after completion of the initial offering.

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

Credit Risk. Credit risk is the risk that an issuer of a municipal bond
will become unable to meet its obligation to make interest and principal
payments. In general, lower rated municipal bonds carry a greater degree of
risk that the issuer will lose its ability to make interest and principal
payments, which could have a negative impact on the Trust's net asset value or
dividends. 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 State of New Jersey 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 New Jersey municipal bonds. There can be no assurance that New
Jersey will not experience a decline in economic conditions or that the New
Jersey municipal bonds purchased by the Trust will not be affected by such a
decline.

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

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.

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

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

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

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

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

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

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

MANAGEMENT OF INVESTMENT PORTFOLIO AND CAPITAL STRUCTURE TO LIMIT LEVERAGE RISK

The Trust may take certain actions if short-term interest rates increase
or market conditions otherwise change (or the Trust anticipates such an
increase or change) and the Trust's leverage begins (or is expected) to
adversely affect common shareholders. In order to attempt to offset such a

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

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

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

HEDGING STRATEGIES

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

MANAGEMENT OF THE TRUST

TRUSTEES AND OFFICERS

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

INVESTMENT ADVISOR AND SUB-ADVISOR

BlackRock Advisors acts as the Trust's investment advisor. BlackRock
Financial Management acts as the Trust's sub-advisor. BlackRock Advisors,
located at 100 Bellevue Parkway, Wilmington, Delaware 19809, and BlackRock
Financial Management, located at 40 East 52nd Street, New York, New York 10022,
are wholly owned subsidiaries of BlackRock, Inc., which is one of the largest
publicly traded investment management firms in the United States with
approximately $238 billion of assets under management as of March 31, 2002.
BlackRock manages 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 New Jersey gross
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 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 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.

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

PERCENTAGE WAIVED
TWELVE MONTH (AS A PERCENTAGE
PERIOD ENDING OF AVERAGE WEEKLY
APRIL 30 MANAGED ASSETS*)
-------- ----------------

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%

----------
* 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.

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 date;
otherwise such termination or resumption will be effective with respect to any
subsequently declared dividend or other distribution. Some brokers may
automatically elect to receive cash on your behalf and may re-invest that cash
in additional common shares of the Trust for you. If you wish for all dividends
declared on your common shares of the Trust to be automatically reinvested
pursuant to the Plan, please contact your broker.

The Plan Administrator will open an account for each common shareholder
under the Plan in the same name in which such common shareholder's common
shares are registered. Whenever the Trust declares a dividend or other
distribution (together, a "Dividend") payable in cash, non-participants in the
Plan will receive cash and participants in the Plan will receive the equivalent
in common shares. The common shares will be acquired by the Plan Administrator
for the participants' accounts, depending upon the circumstances described
below, either (i) through receipt of additional unissued but authorized common
shares from the Trust ("Newly Issued Common Shares") or (ii) by purchase of
outstanding common shares on the open market ("Open-Market Purchases") on the
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
Dividend will be divided by 95% of the closing market price per common share on
the payment date. If, on the payment date for any Dividend, the net asset value
per common share is greater than the closing market value plus estimated
brokerage commissions, the Plan Administrator will invest the Dividend amount
in common shares acquired on behalf of the participants in Open-Market
Purchases. In the event of a market discount on the payment date for any
Dividend, the Plan Administrator will have until the last business day before
the next date on which the common shares trade on an "ex-dividend" basis or 30
days after the payment date for such Dividend, whichever is sooner (the "Last
Purchase Date"), to invest the Dividend amount in common shares acquired in
Open-Market

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

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

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

There will be no brokerage charges with respect to common shares issued
directly by the Trust. However, each participant will pay a pro rata share of
brokerage commissions incurred in connection with Open-Market Purchases. The
automatic reinvestment of Dividends will not relieve participants of any
Federal, state or local income tax that may be payable (or required to be
withheld) on such dividends. See "Tax Matters." Participants that request a
sale of shares through the Plan Administrator are subject to a $2.50 sales fee
and a $0.15 per share sold brokerage commission.

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

All correspondence or questions concerning the Plan should be directed to
the Plan Administrator, EquiServe Trust Company, N.A., P.O. Box 43011
Providence, RI 02940-3011 or EquiServe Trust Company, N.A., 150 Royall Street,
Canton, 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 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 "BLJ".

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.

The Trust's board of trustees has indicated its intention to authorize an
offering of Preferred Shares, representing approximately 38% of the Trust's
capital immediately after the Preferred Shares are issued, within approximately
one to three months after completion of this offering of common shares, subject
to market conditions and to the board of trustees' continuing belief that
leveraging the Trust's capital structure through the issuance of Preferred
Shares is likely to achieve the potential benefits to the holders of common
shares described in this prospectus. The Trust may conduct other offerings of
Preferred Shares in the future subject to the same percentage restriction,
after giving

effect to previously issued Preferred Shares. The board of trustees also
reserves the right to change the foregoing percentage limitation and may issue
Preferred Shares to the extent permitted by the Investment Company Act, which
currently limits the aggregate liquidation preference of all outstanding
Preferred Shares to 50% of the value of the Trust's capital. We cannot assure
you, however, that any Preferred Shares will be issued. Although the terms of
any Preferred Shares, including dividend rate, liquidation preference and
redemption provisions, will be determined by the board of trustees, subject to
applicable law and the Agreement and Declaration of Trust, it is likely that
the Preferred Shares will be structured to carry a relatively short-term
dividend rate reflecting interest rates on short-term tax-exempt debt
securities, by providing for the periodic redetermination of the dividend rate
at relatively short intervals through an auction, remarketing or other
procedure. The Trust also believes that it is likely that the liquidation
preference, voting rights and redemption provisions of the Preferred Shares
will be similar to those stated below.

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

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

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

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

The discussion above describes the possible offering of Preferred Shares
by the Trust. If the board of trustees determines to proceed with such an
offering, the terms of the Preferred Shares may

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

CERTAIN PROVISIONS IN THE AGREEMENT AND DECLARATION OF TRUST

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

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

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

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

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

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

The Trust may be required to withhold taxes on certain of your dividends
if you have not provided the Trust with your correct taxpayer identification
number (if you are an individual, normally your Social Security number), or if
you are otherwise subject to back-up withholding. If you receive Social
Security benefits, you should be aware that tax-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.

NEW JERSEY TAX MATTERS

Individual shareholders of the Trust, including trusts and estates, who
are subject to the New Jersey gross income tax will not be required to include
in their New Jersey gross income distributions from the Trust which the Trust
clearly identifies as directly attributable to interest or gains from New
Jersey municipal securities, obligations of the United States or any other
obligations the interest and gain on which are exempt from New Jersey gross
income tax under New Jersey or Federal law, provided that the Trust qualifies
as a regulated investment company under the Code and provided that the Trust
satisfies New Jersey's statutory requirements for treatment as a qualified
investment fund under the provisions of the New Jersey Gross Income Tax Act
(N.J. Stat. Ann. (S).54A:5-1 et seq.), as amended and supplemented, and any
regulations promulgated thereunder.

Under existing New Jersey law, gross income distributions to individual
shareholders from the Trust will not be subject to the New Jersey gross income
tax for any calendar year if, at the close of each quarter of such calendar
year, the Trust's portfolio consisted solely of (1) notes, bonds and other
obligations issued by the State of New Jersey or its municipalities, counties
and other taxing districts, or by the United States government and its
agencies, or by the governments of Puerto Rico or Guam or (2) any other
obligations which are exempt from inclusion in gross income under the New
Jersey Gross Income Tax Act.

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code, Treasury Regulations and New Jersey tax laws presently
in effect. For the complete provisions, reference should be made to the
pertinent Code sections and the Treasury Regulations promulgated thereunder.
The Code and the Treasury Regulations, as well as the New Jersey tax laws, are
subject to change by legislative, judicial or administrative action either
prospectively or retroactively.

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, UBS Warburg LLC, Gruntal & Co., L.L.C. and J.J.B.
Hilliard, W.L. Lyons, Inc. are acting as representatives of the Underwriters
named below. Subject to the terms and conditions stated in the underwriting
agreement dated April 25, 2002, each Underwriter named below has agreed to
purchase, and the Trust has agreed to sell to such Underwriter, the number of
common shares set forth opposite the name of such Underwriter.

NUMBER OF
UNDERWRITERS COMMON SHARES
------------ -------------

Salomon Smith Barney Inc. .................................... 260,000
A.G. Edwards & Sons, Inc. .................................... 260,000
Prudential Securities Incorporated ........................... 260,000
UBS Warburg LLC .............................................. 260,000
Gruntal & Co., L.L.C. ........................................ 260,000
J.J.B. Hilliard, W.L. Lyons, Inc. ............................ 260,000
Deutsche Bank Securities Inc. ................................ 42,500
First Union Securities, Inc. ................................. 42,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ................................................ 42,500
U.S. Bancorp Piper Jaffray Inc. .............................. 42,500
Advest, Inc. ................................................. 22,500
BB&T Capital Markets, a division of Scott & Stringfellow ..... 22,500
H&R Block Financial Advisors, Inc. ........................... 22,500
Crowell, Weedon & Co. ........................................ 22,500
Fahnestock & Co. Inc. ........................................ 22,500
Ferris, Baker Watts, Inc. .................................... 22,500
Howe Barnes Investments, Inc. ................................ 22,500
Janney Montgomery Scott LLC .................................. 22,500
Legg Mason Wood Walker, Incorporated ......................... 22,500
Quick & Reilly, Inc. ......................................... 22,500
RBC Dain Rauscher Inc. ....................................... 22,500
TD Waterhouse Investor Services, Inc. ........................ 22,500
---------
Total ..................................................... 2,000,000
=========

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
April 30, 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 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 300,000 additional
common shares at the public offering price less the sales load. The
Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent such
option is exercised, each Underwriter will be obligated, subject to certain
conditions, to purchase a number of additional common shares approximately
proportionate to such Underwriter's initial purchase commitment.

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

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

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 400 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
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.

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

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 New Jersey law on the opinion of Wilentz, Goldman & Spitzer, P.A.,
Woodbridge, New Jersey.

TABLE OF CONTENTS FOR THE
STATEMENT OF ADDITIONAL INFORMATION

PAGE
----

Use of Proceeds ........................................................... B-2
Investment Objective and Policies ......................................... B-2
Investment Policies and Techniques ........................................ B-4
Other Investment Policies and Techniques .................................. B-11
Management of the Trust ................................................... B-15
Portfolio Transactions and Brokerage ...................................... B-23
Description of Shares ..................................................... B-24
Repurchase of Common Shares ............................................... B-24
Tax Matters ............................................................... B-25
Performance Related and Comparative Information ........................... B-30
Experts ................................................................... B-33
Additional Information .................................................... B-33
Independent Auditors Report ............................................... F-1
Financial Statements ...................................................... F-2
APPENDIX A Ratings of Investments ......................................... A-1
APPENDIX B Taxable Equivalent Yield Table ................................. B-1
APPENDIX C General Characteristics and Risks of Hedging Transactions ...... C-1

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

2,000,000 SHARES

BLACKROCK NEW JERSEY
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

GRUNTAL & CO., L.L.C.

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

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

BLACKROCK NEW JERSEY MUNICIPAL BOND TRUST

STATEMENT OF ADDITIONAL INFORMATION

BlackRock New Jersey 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

PAGE
----

Use of Proceeds ........................................................... B-2
Investment Objective and Policies ......................................... B-2
Investment Policies and Techniques ........................................ B-4
Other Investment Policies and Techniques .................................. B-11
Management of the Trust ................................................... B-15
Portfolio Transactions and Brokerage ...................................... B-23
Description of Shares ..................................................... B-24
Repurchase of Common Shares ............................................... B-24
Tax Matters ............................................................... B-25
Performance Related and Comparative Information ........................... B-30
Experts ................................................................... B-33
Additional Information .................................................... B-33
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

This Statement of Additional Information is dated April 25, 2002.

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 New Jersey gross 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.

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.

B-2

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;

(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.

B-3

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 New Jersey gross 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 New Jersey
gross 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

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

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

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

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 NEW JERSEY

Under existing New Jersey law, gross income distributions to individual
shareholders from the Trust will not be subject to the New Jersey gross income
tax for any calendar year if, at the close of each quarter of such calendar
year, the Trust's portfolio consisted solely of (1) notes, bonds and other
obligations issued by the State of New Jersey or its municipalities, counties
and other taxing districts, or by the United States government and its
agencies, or by the governments of Puerto Rico, Guam or the U.S. Virgin
Islands, or (2) any other obligations which are exempt from inclusion in gross
income under the New Jersey Gross Income Tax Act.

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.

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

B-8

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
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

B-9

security, futures contract or index at a fixed price. Calls on futures on
municipal bonds must also be covered by deliverable securities or the futures
contract or by liquid high grade debt securities segregated to satisfy the
Trust's obligations pursuant to such instruments.

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

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

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

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

SHORT SALES

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

When the Trust makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the

B-10

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
earmark similar collateral with its custodian to the extent, if any, necessary
so that the aggregate collateral value is at all times at least equal to the
current market value of the security sold short. Depending on arrangements made
with the broker-dealer from which it borrowed the security regarding payment
over of any payments received by the Trust on such security, the Trust may not
receive any payments (including interest) on its collateral deposited with such
broker-dealer.

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

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

OTHER INVESTMENT POLICIES AND TECHNIQUES

RESTRICTED AND ILLIQUID SECURITIES

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

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

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

BORROWING

Although it has no present intention of doing so, the Trust reserves the
right to borrow funds to the extent permitted as described under the caption
"Investment Objective and Policies--Investment

B-11

Restrictions." The proceeds of borrowings may be used for any valid purpose
including, without limitation, liquidity, investments and repurchases of shares
of the Trust. Borrowing is a form of leverage and, in that respect, entails
risks comparable to those associated with the issuance of Preferred Shares.

REVERSE REPURCHASE AGREEMENTS

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

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

REPURCHASE AGREEMENTS

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

B-12

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 331/3% of the value of the Trust's
total assets (including such loans). Loan arrangements made by the Trust will
comply with all other applicable regulatory requirements, including the rules
of the 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.

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.

B-13

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 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.

B-14

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 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:

B-15

(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 March 20, 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
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-16

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

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.

B-17

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.

B-18

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

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 President formation in 1998 and of Institutional Funds. Director of
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.

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

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

-- Messrs. Schlosstein, 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-19

PRINCIPAL OCCUPATION DURING THE
NAME AND AGE TITLE PAST FIVE YEARS AND OTHER AFFILIATIONS
--------------------- --------------------- ------------------------------------------------------------

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.

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

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 $50,001-$100,000

----------
* 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-20

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

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)

----------
(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 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-21

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

B-22

PORTFOLIO TRANSACTIONS AND BROKERAGE

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

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

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

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

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

B-23

DESCRIPTION OF SHARES

COMMON SHARES

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

PREFERRED SHARES

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

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

OTHER SHARES

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

REPURCHASE OF COMMON SHARES

The Trust is a closed-end 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

B-24

accumulation of cash by the Trust in anticipation of share repurchases or
tenders will reduce the Trust's net income. Any share repurchase, tender offer
or borrowing that might be approved by the Trust's board of trustees would have
to comply with the Securities Exchange Act of 1934, as amended, the Investment
Company Act and the rules and regulations thereunder.

Although the decision to take action in response to a discount from net
asset value will be made by the board of trustees at the time it considers such
issue, it is the board's present policy, which may be changed by the board of
trustees, not to authorize repurchases of common shares or a tender offer for
such shares if: (1) such transactions, if consummated, would (a) result in the
delisting of the common shares from the 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

B-25

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
shareholders. First, the Trust must derive at least 90% of its annual gross
income (including tax-exempt interest) from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities or foreign currencies, or other income (including but not limited
to gains from options, futures and forward contracts) derived with respect to
its business of investing in such stock, securities or currencies (the "90%
gross income test"). Second, the Trust must diversify its holdings so that, at
the close of each quarter of its taxable year, (i) at least 50% of the value of
its total assets is comprised of cash, cash items, United States government
securities, securities of other regulated investment companies and other
securities, limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the Trust's total assets and to not more than 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of the total assets is invested in the securities of any one
issuer (other than United States government securities and securities of other
regulated investment companies) or two or more issuers controlled by the Trust
and engaged in the same, similar or related trades or businesses.

As a regulated investment company, the Trust will not be subject to
Federal income tax on income and gains that it distributes each taxable year to
its shareholders, provided that in such taxable year it distributes at least
90% of the sum of (i) its "investment company taxable income" (which includes,
among other 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

B-26

or exempt-interest dividends (as defined below) will be treated as a return of
capital to the extent of (and in reduction of) the shareholder's tax basis in
his or her shares. Any excess will be treated as gain from the sale of his or
her shares, as discussed below.

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

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

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

B-27

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.

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.

----------
(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-28

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 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.

NEW JERSEY TAX MATTERS

Under existing New Jersey law, gross income distributions to individual
shareholders from the Trust will not be subject to the New Jersey gross income
tax for any calendar year if, at the close of each quarter of such calendar
year, the Trust's portfolio consisted solely of (1) notes, bonds and other
obligations issued by the State of New Jersey or its municipalities, counties
and other taxing districts, or by the United States government and its
agencies, or by the governments of Puerto Rico, Guam or the U.S. Virgin
Islands, or (2) any other obligations which are exempt from inclusion in gross
income under the New Jersey Gross Income Tax Act.

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.

B-29

PERFORMANCE RELATED AND COMPARATIVE INFORMATION

New Jersey municipal bonds can provide double tax-free income (exempt from
both regular Federal and state income taxes) for investors who are residents of
New Jersey 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 an annualized total return for the 10 years ended
February 28, 2002 of 6.91%. This figure, when adjusted for taxes, assuming a
39.6% tax bracket and the highest average national state tax bracket, increases
to 11.23% which is better than the after tax return of other major fixed income
categories.

Tax Adjusted Municipals vs. Other
Fixed Income Category Returns
Last 10 Years Ending 4/30/01

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

10 YEAR PERIOD TAX ADJ.
2/28/92 - 2/28/2002 MUNIS AGGREGATE TREASURY AGENCY CORPORATES
------------------- ----- --------- -------- ------ ----------

Annualized Return ....... 11.23% 7.50% 7.39% 7.51% 7.88%
Standard Deviation ...... 4.32 3.71 4.19 3.84 4.68

10 YEAR PERIOD ASSET HIGH GLOBAL S&P
2/28/92 - 2/28/2002 MORTGAGES BACKED YIELD EURODOLLAR TREASURY 500 NASDAQ
------------------- --------- ------ ----- ---------- -------- --- ------

Annualized Return ....... 7.34% 7.22% 6.87% 7.39% 5.34% 12.60% 10.57%
Standard Deviation ...... 2.98 2.52 6.07 3.54 5.71 14.01 27.21

----------
(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 39.6% and the highest average national state tax
bracket 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-30

Chart B

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

YIELD OF MUNIS BOND BUYER 30-YEAR
(AS A % OF TREASURIES)(3) 40 INDEX TREASURY
------------------------- -------- --------

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

----------
(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-31

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:

YOUR COMBINED TAXABLE EQUIVALENT YIELD
FEDERAL/STATE TAX -----------------------------------------
SINGLE RETURN JOINT RETURN ($) BRACKET IS (%): 5.5 (%)(1) 6.0 (%)(1) 7.0 (%)(1)
----------------- ----------------- ------------------ ------------ ------------ -----------

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

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

B-32

EXPERTS

The Statement of Net Assets of the Trust as of April 25, 2002 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 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-33

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Shareholder of
BlackRock New Jersey Municipal Bond Trust

We have audited the accompanying statement of assets and liabilities of
BlackRock New Jersey 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

BLACKROCK NEW JERSEY MUNICIPAL BOND TRUST

STATEMENT OF ASSETS AND LIABILITIES

APRIL 19, 2002

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 NEW JERSEY 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 NEW JERSEY 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
=========

F-2

NOTES TO FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

BlackRock New Jersey 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

APPENDIX A

RATINGS OF INVESTMENTS

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

Long-Term Debt

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

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

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

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

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

2. Nature of and provisions of the obligation; and

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

Investment Grade

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

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

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

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

Speculative Grade Rating

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

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

A-1

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

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

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

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

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

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

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

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

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

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

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

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

Municipal Notes

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

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

A-2

--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:

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.

A-3

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.

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.

A-4

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

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

Commercial Paper

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

--Leading market positions in well-established industries.

--High rates of return on funds employed.

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

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

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

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

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

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

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

Long-Term Credit Ratings

Investment Grade

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

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

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

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

A-5

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

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

Short-Term Credit Ratings

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

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

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

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

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

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

D Default. Denotes actual or imminent payment default.

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

'NR' indicates that Fitch 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.

A-6

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

APPENDIX B

TAXABLE EQUIVALENT YIELD TABLE

The taxable equivalent yield is the current yield you would need to earn
on a taxable investment in order to equal a stated tax-free yield on a
municipal investment. To assist you to more easily compare municipal
investments like the Trust with taxable alternative investments, the table
below presents the taxable equivalent yields for a range of hypothetical
tax-free yields assuming the stated marginal Federal tax rates for 2002 listed
below:

2002-2003 FEDERAL TAXABLE VS. TAX-FREE YIELDS

FEDERAL
SINGLE JOINT TAX TAXABLE EQUIVALENT ESTIMATE CURRENT RETURN
RETURN RETURN BRACKET RATE 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
--------------------------------------------------------------------------------------------------------------------------------

$ 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%

The following tables show the approximate taxable yields for individuals
that are equivalent to tax-free yields under combined Federal and New Jersey
state taxes, using published 2002 marginal Federal tax rates and marginal New
Jersey tax rates currently available and scheduled to be in effect.

2002-2003

NEW JERSEY

FEDERAL STATE COMBINED
SINGLE JOINT TAX TAX TAX TAXABLE EQUIVALENT ESTIMATED CURRENT RETURN
RETURN RETURN BRACKET BRACKET* BRACKET* 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0%
------------------------------------------------------------------------------------------------------------------------------------

$ 0-6,000 $ 0-12,000 10.00% 1.400% 11.26% 4.51% 5.07% 5.63% 6.20% 6.76% 7.32% 7.89%
$ 6,001-20,000 $ 12,001-20,000 15.00% 1.400% 16.19% 4.77% 5.37% 5.97% 6.56% 7.16% 7.76% 8.35%
$ 20,001-27,950 $ 20,001-46,700 15.00% 1.750% 16.49% 4.79% 5.39% 5.99% 6.59% 7.18% 7.78% 8.38%
$ 46,701-50,000 27.00% 1.750% 28.28% 5.58% 6.27% 6.97% 7.67% 8.37% 9.06% 9.76%
$ 27,951-35,000 $ 50,001-70,000 27.00% 1.750% 28.79% 5.62% 6.32% 7.02% 7.72% 8.43% 9.13% 9.83%
$ 35,001-40,000 $ 70,001-80,000 27.00% 3.500% 29.56% 5.68% 6.39% 7.10% 7.81% 8.52% 9.23% 9.94%
$ 40,001-67,700 $ 80,001-112,850 27.00% 5.525% 31.03% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.15%
$ 67,701-75,000 $112,851-150,000 30.00% 5.525% 33.87% 6.05% 6.80% 7.56% 8.32% 9.07% 9.83% 10.58%
$ 75,001-141,250 $150,001-171,950 30.00% 6.370% 34.46% 6.10% 6.87% 7.63% 8.39% 9.15% 9.92% 10.68%
$141,251-307,050 $171,951-307,050 35.00% 6.370% 39.14% 6.57% 7.39% 8.22% 9.04% 9.86% 10.68% 11.50%
Over $307,050 Over $307,050 38.60% 6.370% 42.51% 6.96% 7.83% 8.70% 9.57% 10.44% 11.31% 12.18%

---------
* 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 dependent 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, and in cases where more than one state rate
falls within a Federal bracket, the highest state rate corresponding to
the highest income within that Federal bracket is used. In particular,
the table does not reflect county income taxes. The numbers in the
Combined Tax Rate column are rounded to the nearest one-tenth of one
percent.

B-1

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

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

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

FUTURES CONTRACTS AND RELATED OPTIONS

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

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

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

Segregation and Cover Requirements. Futures contracts, interest rate
swaps, caps, floors and collars, short sales, reverse repurchase agreements and
dollar rolls, and listed or OTC options on securities, indices and futures
contracts sold by the Trust are generally subject to earmarking and coverage
requirements of either the CFTC or the SEC, with the result that, if the Trust
does not hold

C-2

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