PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]
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[ ] Preliminary proxy statement
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The BlackRock North American Government Income Trust Inc.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
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(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(4) Proposed maximum aggregate value of transaction:

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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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1 Set forth the amount on which the filing fee is calculated and state how
it was determined.

[LOGO OMITTED] BLACKROCK

THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.

Dear Shareholders,

We are sending you the enclosed proxy materials in order to ask you to
approve a restructuring of The BlackRock North American Government Income Trust
Inc. ("BNA"). Since its inception, shares of BNA generally have traded at a
discount to net asset value. In the enclosed proxy materials, BNA is asking you
to approve changes in its investment objective and certain fundamental
investment restrictions in order to change the focus of BNA to seek to enhance
its total return performance (i.e, its income and capital appreciation).

If you approve the restructuring, BNA would sell all or substantially all
of its Canadian securities and thereby reduce its foreign currency exposure.
The new BNA would invest in a diversified portfolio consisting primarily of
U.S. investment grade bonds, including corporate bonds, U.S. government and
agencies and mortgage related securities.

BNA believes that if the changes to its objectives and policies discussed
in the enclosed proxy materials are approved then, its total return performance
may be improved. BNA believes that any such increase in total return
performance would be beneficial to stockholders because, in addition to
providing a better return, it may reduce BNA's trading discount to net asset
value and, therefore, maximize shareholder value.

The Board of Directors of BNA, including the independent directors,
unanimously recommends that you vote "FOR" the restructuring and each of the
other proposals in the enclosed proxy materials.

Sincerely,

/s/ Laurence D. Fink
Laurence D. Fink
Chairman

/s/ Ralph L. Schlosstein
Ralph L. Schlosstein
President

IMPORTANT NEWS FOR SHAREHOLDERS OF
THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.

While we encourage you to read the full text of the enclosed proxy
statement, here is a brief overview of some matters affecting BNA that you are
being asked to vote on.

Q&A: QUESTIONS AND ANSWERS

Q. Why am I being asked to vote at the special meeting?

A. You are being asked to approve the proposals contained in the enclosed
proxy statement to effect a restructuring of BNA. This restructuring would
change BNA to a fund that is focused on achieving both monthly income and
capital appreciation (i.e., "total return") primarily through investment in
a portfolio of U.S. investment grade bonds. In order to complete this
restructuring, we are asking you to approve proposals in the enclosed proxy
statement to modify BNA's investment objective and to modify certain of
BNA's fundamental investment restrictions.

Q. What is the current focus of BNA?

A. Currently, BNA's investment objective is to "manage a portfolio of
investment grade securities to achieve high monthly income consistent with
preservation of capital." To achieve this objective, BNA invests in a
portfolio of Canadian and U.S. dollar-denominated investment grade
securities.

Q. How will the restructuring affect BNA?

A: If the restructuring is approved, BNA's investment objective would be
changed to "providing current income and capital appreciation." To achieve
this new objective, BNA would sell all or substantially all of its Canadian
securities, thereby eliminating most of its foreign currency exposure, and
invest in a diversified portfolio consisting primarily of U.S. investment
grade bonds, including corporate bonds, U.S. government and agencies and
mortgage related securities. In addition, BNA would invest up to 25% of its
managed assets in below investment grade securities which are higher
yielding, higher risk securities. After the restructuring, BNA would become
a "diversified" fund. This means that BNA would be required to invest its
assets in a broader range of issuers than a non-diversified fund and may be
less susceptible to any single economic, political or regulatory occurrence
than a non-diversified fund.

Q: Why should I vote in favor of restructuring BNA?

A: Since its inception, shares of BNA generally have traded at a discount to
their net asset value. As of April 30, 2002, BNA's shares traded at a
10.80% discount to net asset value. Since its inception and over the
periods set forth below, BNA shares traded at the average discount to net
asset value set forth opposite each respective period:

PERIOD DISCOUNT
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1 year 9.55%
3 year 12.23%
5 year 13.51%
Since inception (12/27/91) 9.14%

Over the years, BNA has tried a share repurchase program to reduce BNA's
discount to net asset value. However, any reductions in the discount
resulting from this program have been temporary. BNA believes that a
restructuring of BNA may offer a more permanent solution to its persistent
discount to net asset value.

Q: What are the potential benefits of the restructuring?

A: BNA believes that the restructuring of BNA may improve BNA's total return
performance and, therefore, may reduce or eliminate BNA's trading discount
to net asset value. BNA believes that by selling all or substantially all
of its portfolio of Canadian securities and thereby reducing its foreign
currency exposure, investing in a broader array of U.S. investment grade
fixed income securities and investing a significant portion of BNA's assets
in below investment grade securities which are higher yielding, higher-risk
securities, BNA may improve its capital appreciation performance (i.e.,
increase BNA's net asset value) as well as its income performance (i.e,
increase its dividend). BNA believes that any such increased total return
performance may be beneficial to stockholders because, in addition to
providing a better return, it may reduce BNA's trading discount to net
asset value. Of course, there is no guarantee that changing BNA's
investment objective and policies will increase total return performance or
reduce BNA's discount to net asset value.

Q: Will BNA's expenses increase?

A: No, the expenses of BNA are expected to remain the same after the
restructuring as before the restructuring.

Q. Will BNA's name change?

A. Yes, to reflect the new investment objective, policies and strategies, BNA
would change its name to "BlackRock Income Opportunity Trust" but would
continue to trade on the New York Stock Exchange under the ticker symbol
"BNA."

Q. When will the restructuring take place?

A. If approved by stockholders, BNA anticipates that the restructuring will
take place within approximately one month after the special meeting.

Q: How does the Board of Directors recommend that I vote?

A: The Board of Directors of BNA, including the independent directors,
unanimously recommends that you vote "FOR" each of the proposals.

Q: Where can I get more information?

A: You may obtain more information by contacting BlackRock at 1-800-227-7BFM
(7236).

Q: How can I vote?

A: You may choose one of the following options to vote your shares:
o By mail, with the enclosed proxy card and return envelope.
o By telephone, with a toll free call to the telephone number that appears
on your proxy card.
o By internet, by following the steps on the enclosed proxy card.
o In person at the stockholder meeting (see details in the enclosed proxy
statement).

Please vote all proposals on the enclosed proxy card. BlackRock and BNA
employ procedures for internet and telephone voting that they consider to be
reasonable to confirm that the instructions received are genuine. If reasonable
procedures are employed, neither BlackRock nor BNA will be liable for following
internet or telephone instructions they believe to be genuine. Thank you for
mailing your proxy card promptly. Do not mark or return your proxy card if you
voted by telephone or internet.

THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 31, 2002

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To the Stockholders of BNA:

The Special Meeting of Stockholders of The BlackRock North American
Government Income Trust Inc. ("BNA" or the "Trust") will be held at the East
Side Marriott Hotel, 525 Lexington Avenue, New York, New York on Wednesday,
July 31, 2002 at 10:00 a.m. (New York City Time) for the following purposes:

1. To approve a change in BNA's investment objective.

2. To modify BNA's fundamental investment restriction concerning investment
in real estate.

3. To modify BNA's fundamental investment restriction concerning short
sales.

THE BOARD OF DIRECTORS OF BNA, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE PROPOSALS.

We encourage you to contact BlackRock at (800) 227-7BFM (7236) if you have
any questions.

The Board of Directors has fixed the close of business on June 24, 2002 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting.

By order of the Board of Directors of
The BlackRock North American
Government Income Trust Inc.

Anne F. Ackerley, Secretary

New York, New York
June 26, 2002

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON OR
BY PROXY. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY
TELEPHONE, INTERNET OR MAIL. (IF VOTING BY MAIL PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.) IF YOU
ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU WILL BE ABLE TO DO SO AND
YOUR VOTE AT THE MEETING WILL REVOKE ANY PROXY YOU MAY HAVE SUBMITTED. YOUR
VOTE IS EXTREMELY IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN,
PLEASE SEND IN YOUR PROXY CARD TODAY.

THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102

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PROXY STATEMENT

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FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JULY 31, 2002

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of The BlackRock North American Government
Income Trust Inc. ("BNA" or the "Trust") of proxies to be voted at the Special
Meeting of Stockholders of BNA to be held on Wednesday, July 31, 2002, and any
adjournment or postponement thereof (the "Special Meeting"). The Meeting will
be held at the East Side Marriott Hotel, 525 Lexington Avenue, New York, New
York, on July 31, 2002 at 10:00 a.m. (New York City Time).

SUMMARY

At the Special Meeting, stockholders will be asked to approve a
restructuring of BNA by modifying BNA's investment objective and to consider a
number of issues relating to BNA's fundamental investment restrictions.

Proposal 1 asks BNA stockholders to approve a change in BNA's investment
objective.

Proposals 2 and 3 ask BNA stockholders to approve changes in certain
fundamental investment policies of BNA. Stockholders are being asked to modify
certain of BNA's investment policies primarily to permit BNA to have increased
investment flexibility.

Any proxy may be revoked at any time prior to the exercise thereof by
submitting another written proxy bearing a later date or by giving written
notice to the Secretary of BNA at the address indicated above or by voting in
person at the Meeting.

The cost of soliciting proxies will be borne by BNA. In addition, certain
officers, directors and employees of Prudential Investments Fund Management LLC
and BlackRock Advisors, Inc. (the "Advisor") may solicit proxies by telephone
or mail. BNA will employ Georgeson Shareholder Communications Inc. pursuant to
its standard contract as proxy solicitor, the cost of which is estimated to be
approximately $15,000. All other expenses of the Special Meeting will also be
borne by BNA.

The affirmative vote of a "majority of the outstanding voting securities"
of BNA, as defined in the Investment Company Act of 1940, as amended (the "1940
Act"), is necessary to approve each Proposal. As defined in the 1940 Act, the
vote of a "majority of the outstanding voting securities" of BNA means the vote
of (i) 67% or more of BNA's outstanding shares present at a meeting, if the
holders of more than 50% of the outstanding shares of BNA are present or
represented by proxy, or (ii) more than 50% of BNA's outstanding shares,
whichever is less.

Broker non-votes are shares held in street name for which instructions on
a particular proposal have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary
voting authority. Abstentions and broker non-votes will be counted as shares
present for purposes of determining whether a quorum is present. Abstentions
and broker non-votes will have the effect of being counted against the outcome
of the vote on the Proposals.

The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated thereon if your proxy is received
properly executed. If you properly execute your proxy card and give no voting
instructions your shares will be voted FOR the Proposals.

The Board of BNA has fixed the close of business on June 24, 2002, as the
record date for the determination of stockholders of BNA entitled to notice of
and to vote at the Meeting. Stockholders of BNA on that date will be entitled
to one vote on each matter to be voted on for each share held and a fractional
vote with respect to fractional shares with no cumulative voting rights.

At the close of business on June 24, 2002, BNA had outstanding 34,449,693
shares of Common Stock, par value $0.01 per share, which is the only authorized
class of stock.

The principal executive offices of BNA are located at Gateway Center
Three, 100 Mulberry Street, Newark, New Jersey 07102. The Advisor is located at
100 Bellevue Parkway, Wilmington, Delaware 19809. This proxy statement and the
enclosed proxy card are first being sent to BNA stockholders on or about June
26, 2002.

BNA will furnish, without charge, a copy of its most recent Annual Report
and the most recent Semi-Annual Report succeeding the Annual Report, if any, to
any stockholder upon request. Requests should be directed to BlackRock
Advisors, Inc., 100 Bellevue Parkway, Wilmington, DE 19809 (telephone number
(800) 227-7BFM(7236)).

The only person known to BNA to own beneficially more than 5% of the
outstanding shares of BNA as of May 13, 2002 is set forth below:

NUMBER OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OWNED
- -------------------------------------- ---------------------- --------------

Wachovia Corporation 9,820,448(1) 28.5%
One Wachovia Center
Charlotte, NC 28288-0137

YOUR VOTE AT THIS SPECIAL MEETING IS ESPECIALLY IMPORTANT, NO MATTER HOW
MANY OR HOW FEW SHARES YOU OWN. PLEASE VOTE BY TELEPHONE, INTERNET OR MAIL. IF
YOU ARE VOTING BY TELEPHONE OR INTERNET PLEASE FOLLOW THE STEPS ON THE ENCLOSED
PROXY CARD. IF YOU CHOOSE TO VOTE BY MAIL, PLEASE SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. IF YOU
CHOOSE TO VOTE BY TELEPHONE OR INTERNET PLEASE DO NOT RETURN YOUR PROXY CARD.

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(1) As reported in Form 13F-HR dated May 13, 2002, filed with the Securities and
Exchange Commission.

PROPOSAL NO.1: TO MODIFY BNA'S INVESTMENT OBJECTIVE

SUMMARY

Stockholders are being asked to approve a modification to BNA's investment
objective as part of a restructuring of BNA. In order to attempt to achieve a
reduction in BNA's trading discount to net asset value, BNA is proposing that
stockholders approve a restructuring in which BNA would adopt a new investment
objective, investment policies and investment strategies (as discussed below).

BNA believes that by selling substantially all of its portfolio of
Canadian securities and thereby reducing its foreign currency exposure,
investing in a broader array of U.S. investment grade fixed income securities
and investing a significant portion of BNA's assets in below investment grade
securities which are higher yielding, higher risk securities pursuant to the
investment objective and policies proposed below, BNA may improve its capital
appreciation performance (i.e, increase its net asset value) as well as its
income performance (i.e., its dividend). BNA believes that any such increased
total return performance may be beneficial to stockholders because, in addition
to providing a better return, it may reduce BNA's trading discount to net asset
value and, therefore, maximize shareholder value. Of course, there is no
guarantee that changing BNA's investment objective and policies will increase
total return performance or reduce BNA's discount to net asset value.

Currently, BNA's investment objective is "to manage a portfolio of
investment grade securities to achieve high monthly income consistent with the
preservation of capital," which BNA attempts to achieve primarily through
investments in Canadian and U.S. dollar-denominated government securities
("Current BNA"). BNA is proposing to change its investment objective to one of
"providing current income and capital appreciation," which BNA would attempt to
achieve by investing primarily in a diversified portfolio of investment grade
bonds ("Proposed BNA"). BNA believes that changing its investment objective and
broadening the types of investments in its portfolio could improve its total
return performance and narrow or eliminate its trading discount from net asset
value.

In order to achieve Proposed BNA's investment objective, the Board has
also approved the modification of certain non-fundamental investment policies
as discussed below. These non-fundamental investment policies will be changed
only if BNA's modified investment objective is approved by stockholders.

REASONS FOR THE PROPOSAL

Stockholders are being asked to approve a modification to BNA's investment
objective as part of a restructuring of BNA. The reason for the restructuring
is to attempt to improve BNA's total return performance. BNA believes that any
such improved total return performance may reduce the discount to net asset
value at which its shares historically have traded. If BNA's discount to net
asset value is reduced, BNA believes that stockholders may be able to receive
more for their shares on the secondary trading market (i.e., the NYSE).

Since its inception, shares of BNA generally have traded at a discount to
their net asset value. As of April 30, 2002, BNA's shares traded at a 10.80%
discount to their net asset value. Since its inception and over the periods set
forth below, BNA traded at the average discount to net asset value set forth
opposite each respective period:

PERIOD DISCOUNT
------------------------------------------------- ---------

1 year ........................................ 9.55%
3 year ........................................ 12.23%
5 year ........................................ 13.51%
Since inception (12/27/91) .................... 9.14%

In fact, for the last five years, BNA has been one of the lower yielding
funds within its peer group on a before tax basis and has generally traded at
discounts wider than its peer group average. In general, lower yielding
closed-end funds have traded at wider discounts than higher yielding funds.
This was BNA's experience, notwithstanding the fact that BNA's use of a
"Qualified Business Unit" (discussed below) permitted it, from time to time, to
treat a portion of the income it paid to stockholders as a return of capital
for U.S. income tax purposes.

The Board of Directors from time to time has considered alternatives to
reduce the discount from net asset value at which shares of BNA trade. At BNA's
2001 annual meeting of stockholders, the stockholders of BNA passed a
nonbinding advisory proposal requesting that the Board of Directors authorize
the conversion of BNA to an open-end investment company. The Board considered
this alternative and considered other alternatives to reducing the discount,
including conducting periodic share repurchases, tender offers, and mergers
with other BlackRock closed-end investment companies. In August 1999, the Board
authorized a share repurchase program. From August 1999 to February 2000 and
again from May 2001 to the date of this proxy statement, BNA repurchased an
aggregate of 1,757,400 shares of its common stock in the open market. Although
these offers resulted in reductions in the discount at the time the shares were
being repurchased, these reductions in the discount were only temporary.

At a meeting of the Governance Committee of the Board of Directors held on
February 20, 2002, the Governance Committee reviewed materials regarding BNA's
discount to net asset value and efforts to reduce the discount. At a meeting of
the Board of Directors on February 21, 2002, the Advisor reviewed with the
Board the history of BNA's discount from net asset value and efforts to reduce
the discount. The Advisor made a preliminary presentation on possible
alternatives it was developing to reduce BNA's discount to net asset value and
informed the Board that it would recommend a proposal to the Board at a later
date.

Between February 21, 2002 and April 26, 2002, the Advisor continued to
develop its proposal for the Board and held telephonic meetings with BNA's lead
independent director and with the legal counsel to the Board's independent
directors to update them on the proposal. In response to these meetings, the
Advisor modified its materials relating to the proposal to include additional
information requested by the lead independent director and by such counsel.

On April 26, 2002, the Board held a telephonic meeting at which the
Advisor proposed that BNA change its investment objective and policies from
those of Current BNA to those of Proposed BNA. During the meeting, the Board
reviewed written materials relating to the Proposal that had been prepared by
the Advisor and previously mailed to the Board, considered a presentation from
the Advisor regarding the proposal and consulted with legal counsel to the
independent directors. At this meeting, the Board took the Advisor's proposal
under advisement with the intention of further considering it at a subsequent
meeting of the Board.

At a telephonic meeting of the Board of Directors held on June 3, 2002,
the Board further considered the Proposal.

In connection with its review of the Proposal, the Board reviewed:

o information derived from an industry trade group analyzing factors that
affect discounts from net asset value for closed-end investment
companies;

o historical information with respect to Current BNA relating to its
trading history (including the discount from net asset value) and yield
and the trading history and yield of its peer group;

o historical information with respect to various types of closed-end
investment companies (as categorized by an independent data service)
relating to the trading history of each type of fund (including their
discounts from net asset value);

o the investment objectives and policies of Current BNA and Proposed BNA;

o Current BNA's portfolio composition and the types of securities in which
Proposed BNA would invest;

o the risks associated with an investment in Current BNA compared to the
risks associated with an investment in Proposed BNA;

o the tax consequences of the proposal;

o the estimated expenses related to the proposal;

o the Advisors experience in managing other mutual funds and accounts
using policies and strategies similar to that of Proposed BNA; and

o BNA's expense ratio.

In particular, the Board considered information indicating that fixed
income closed-end investment companies that have higher yields than other funds
in their peer group tend to trade at smaller discounts to net asset value and
that BNA's use of a Qualified Business Unit did not appear to reduce the
discount at which its shares traded from net asset value. The Board considered
the experience of the Advisor in managing funds and accounts that are similar
to Proposed BNA. The Board also considered certain historical information with
respect to the performance of certain closed-end investment companies that
suggests Proposed BNA's investment objective and policies may result in
increased total return performance for BNA and decrease BNA's trading discount
to net asset value. Of course, no assurance can be provided in this regard and
the past performance and trading history of other funds do not guarantee that
Proposed BNA will produce better returns than Current BNA or trade at less of a
discount to net asset value than Current BNA.

Based upon these and other factors, the Board of Directors determined that
the restructuring was in the best interests of BNA and its stockholders. The
Board of Directors unanimously approved the reorganization by a unanimous
written consent dated June 4, 2002. The final form of this proxy statement was
discussed at a telephonic meeting held on June 20, 2002 and approved by a
unanimous written consent dated June 21, 2002.

FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS, INCLUDING THE
INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS
STOCKHOLDER PROPOSAL ON THE ENCLOSED PROXY CARD.

DESCRIPTION OF THE RESTRUCTURING

Proposed BNA is in some ways similar to Current BNA. The discussion below
discusses the similarities and differences in investment objectives, policies,
strategies and risks between Current BNA and Proposed BNA.

INVESTMENT OBJECTIVE. Stockholders of BNA are being asked to authorize a
change in BNA's investment objective. Current BNA investment objective is "to
manage a portfolio of investment grade securities to achieve high monthly
income consistent with the preservation of capital." Under Current BNA's
investment objective, BNA primarily attempts to earn high monthly income for
stockholders (i.e., dividends) rather than capital appreciation (i.e. increase
in portfolio investments).

Under this Proposal, BNA is proposing to change its investment objective
to "providing current income and capital appreciation." Proposed BNA would seek
to achieve this objective by investing primarily in a diversified portfolio of
U.S. investment grade bonds. Under proposed BNA's investment objective, the
Advisor would manage BNA for both monthly income and appreciation of portfolio
securities (i.e, total return). While BNA does not believe that the proposed
change in investment objective will adversely affect its monthly income (i.e.,
the amount of its dividend), stockholders should be aware that BNA will no
longer be managed with monthly income as its only goal.

INVESTMENT POLICIES. In order to better achieve Proposed BNA's investment
objective, the Board has approved changes in certain of BNA's non-fundamental
policies, subject to the approval of stockholders of this Proposal 1.

To achieve its investment objective, Current BNA invests in Canadian and
U.S. dollar-denominated securities. Current BNA invests at least 65% of its
total assets in government securities, and a majority of its assets in U.S. and
Canadian mortgage backed securities. Current BNA invests at least 50% of its
total assets in Canadian dollar-denominated securities. All of Current BNA's
assets are either government securities or securities rated at least Baa or BBB
by Standard and Poor's Rating Services ("S&P"), Moody's Investors Service, Inc.
("Moody's") or Fitch IBCA ("Fitch"), or another nationally-recognized rating
agency or bonds that are unrated but judged to be of comparable quality by the
Advisor at the time of investment. Current BNA may invest 100% of its assets in
Canadian dollar-denominated securities. Current BNA's fundamental investment
restrictions allow it to borrow in an amount equal to 331/3% of its total
assets. Current BNA may invest in other types of securities including corporate
bonds, stripped mortgage-backed securities, CMO residuals and asset-backed
securities. Current BNA may also invest from time to time in various
instruments designed to hedge interest rate risk and its effect on the market
value of BNA's investments. Current BNA, as a matter of fundamental policy, is
non-diversified which means that Current BNA can concentrate its assets in a
small number of issuers. For a more complete description of Current BNA's
investment program, see Annex A to this proxy statement.

To achieve its investment objective, Proposed BNA will invest in a broader
range of bonds than Current BNA and will invest in fewer or no securities
denominated in the Canadian dollar, thereby reducing BNA's foreign currency
exposure. Proposed BNA will invest its assets primarily in a diversified
portfolio of U.S. investment grade bonds. Proposed BNA's investments will
include corporate bonds, U.S. government and agency securities and
mortgage-related securities. Under normal market conditions, Proposed BNA
expects to

be fully invested in bonds. Proposed BNA will invest at least 75% of its
Managed Assets(2) in investment grade quality bonds (i.e., rated Baa or BBB or
better by S&P, Moody's or Fitch or another nationally-recognized rating agency
or bonds that are unrated but judged to be of comparable quality by the
Advisor). Proposed BNA may invest the remainder of its assets in high yield
bonds that at the time of investment are rated Ba/BB or below by S&P, Moody's
or Fitch or bonds that are unrated but judged to be of comparable quality by
the Advisor. Proposed BNA may invest up to only 10% of its Managed Assets in
securities issued in foreign currencies (including the Canadian dollar).
Proposed BNA currently anticipates borrowing in an amount of approximately
331/3% of its total assets. For a more complete description of Proposed BNA's
investment program, see Annex A to this proxy statement.

Annex B to this proxy statement contains a comparative chart illustrating
the differences between the major investment policies of Current BNA and
Proposed BNA. Certain of these differences are discussed in further detail
below:

Credit Quality. Current BNA invests 100% of its total assets in investment
grade quality bonds. Investment grade quality bonds are bonds rated within the
four highest grades (Baa or BBB or better) by Moody's, S&P, Fitch IBCA or
another nationally recognized rating agency, or bonds that are unrated but
judged to be of comparable quality by the Advisor at the time of investment.

Proposed BNA will invest at least 75% of its Managed Assets in bonds that
at the time of investment are investment grade quality. Proposed BNA, however,
will be able to invest its remaining assets in high yield bonds that at the
time of investment are rated Ba/BB or below by Moody's, S&P or Fitch IBCA or
another nationally recognized rating agency or bonds that are unrated but
judged to be of comparable quality by BNA's Advisor. High yield bonds are below
investment grade quality and are regarded as having predominately speculative
characteristics with respect to the issuer's capacity to pay interest and repay
principal. They are commonly referred to as "junk bonds." The lowest rated
bonds in which Proposed BNA may invest are securities rated in the "C" category
or determined by the Advisor to be of comparable quality. Securities rated "C"
are considered highly speculative and may be used to cover a situation where
the issuer has filed a bankruptcy petition but debt service payments are
continued. While such debt will likely have some quality and protective
characteristics, those are outweighed by large uncertainties or major risk
exposure to adverse conditions. These credit quality policies will apply to
Proposed BNA only at the time a security is purchased. Proposed BNA will not be
required to dispose of a security if a rating agency downgrades its assessment
of the credit characteristics of a particular issue. In determining whether to
retain or sell a security that a rating agency has downgraded, the Advisor will
consider such factors as its assessment of the credit quality of the issuer,
the price at which the security could be sold and the rating, if any, assigned
to the security by the rating agency. BNA believes that the addition of high
yield bonds in its investment portfolio, while presenting additional risks, may
improve BNA's total return performance. Annex C to this proxy statement
contains a general description of Moody's, S&P's and Fitch's ratings of debt
securities. For information regarding the increased risks of high yield
securities, see "Risks -- High Yield Risk."

Foreign Securities. Current BNA may invest up to 100% of its total assets
in Canadian dollar-denominated securities and, as a matter of non-fundamental
policy, invests at least 50% of its total assets in

- ----------
(2) "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 any preferred shares is not a liability.

Canadian dollar-denominated securities. If the Proposal is approved, BNA would
sell all or substantially all of its portfolio of Canadian-dollar-denominated
securities thereby reducing its foreign currency exposure and invest primarily
in U.S. dollar-denominated securities. However, Proposed BNA may invest up to
10% of its managed assets in securities denominated in foreign currencies
(including the Canadian dollar and "emerging markets"). As a result, Proposed
BNA may have portfolio investments in foreign countries, including "emerging
markets" which are less developed than Canadian markets. Investments in foreign
and emerging market countries may have more risks than investments in U.S. and
Canadian dollar-denominated securities. Although BNA intends to invest primarily
in securities of governments or established companies based in developed
countries, the value of BNA's investments may be adversely affected by changes
in political or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of funds or assets, or
imposition of (or change in) exchange control or tax regulations in those
foreign countries. For additional information regarding the increased risks of
foreign and emerging market securities, see "Risks -- Foreign Security Risk and
Emerging Market Risk."

Because Current BNA historically invested a substantial portion of its
assets in securities denominated in the Canadian dollar, BNA established a
"Qualified Business Unit" under the U.S. federal income tax laws shortly after
BNA was initially formed. The Qualified Business Unit allowed BNA potentially to
maximize the utilization of foreign currency losses over an extended period of
time and periodically offset a portion of its taxable income. The result of this
offset was that a portion of BNA's distributions constituted a return of capital
not subject to U.S. federal income tax. If the Restructuring is approved,
Proposed BNA will sell all or substantially all of its Canadian
dollar-denominated securities. Because Proposed BNA would have reduced foreign
currency exposure, it currently expects to eliminate such Qualified Business
Unit.

Diversification. Current BNA is classified as a "non-diversified"
investment company. This means that Current BNA may concentrate its portfolio
investments in a small number of issuers. If the Proposal is approved, the
Advisor will manage Proposed BNA as a "diversified" investment company. As a
diversified investment company, Proposed BNA may not, with respect to 75% of its
total assets, invest more than 5% of the value of its total assets in the
securities of any single issuer or purchase more than 10% of the outstanding
voting securities of any one issuer. As a result, Proposed BNA's investment
portfolio will be required to be diversified across a broader range of issuers
than Current BNA's investment portfolio. Broader diversification of portfolio
investments may cause Proposed BNA to be less susceptible to any single
economic, political or regulatory occurrence than Current BNA.

INVESTMENT STRATEGIES. In addition to changes in the types of portfolio
investments owned by BNA, the restructuring will change the manner in which the
Advisor manages BNA.

Current BNA has two distinct portfolios of securities: a Canadian
dollar-denominated portfolio and a U.S. dollar-denominated portfolio. Current
BNA's Canadian and U.S. holdings are managed as two separate portfolios. Current
BNA's Canadian dollar and asset exposure may be adjusted in relation to the
Advisor's views and expectations regarding interest rates and changes in the
currency exchange rates between the U.S. and Canadian dollar. As of the most
recent practicable date, 60% of the portfolio was invested in Canadian
dollar-denominated assets and 40% was invested in U.S. dollar-denominated
assets. Current BNA seeks to provide monthly income that is greater than that
which could be obtained by investing in U.S. Treasury securities with an average
life similar to that of Current BNA's assets. In seeking to achieve Current
BNA's investment objective, the Advisor actively manages Current BNA's assets in
relation to market conditions and changes in general economic conditions in
Canada and the U.S., including its expectations regarding interest

rate changes and changes in currency exchange rates between the U.S. dollar and
the Canadian dollar, to attempt to take advantage of favorable investment
opportunities in each country. As such, the allocation between Canadian and U.S.
securities changes from time to time. In selecting individual bonds for the
Canadian and U.S. portfolios, the Advisor seeks to invest primarily in bonds
that, in the Advisor's opinion, are underrated or undervalued or that have the
potential for above average current income or capital appreciation. Under
current market conditions, the average life of Current BNA's assets is in the
range of seven to ten years. Under other market conditions, Current BNA's
average life could vary and may not be predictable using any formula. While the
Advisor has the opportunity to hedge against currency risks associated with
Canadian securities, Current BNA is intended to provide exposure to the Canadian
marketplace. As a result, historically, currency hedging has not been widely
practiced by Current BNA.

If the Proposal is approved, it is expected that BNA will sell all or
substantially all of its portfolio of Canadian dollar-denominated securities
and, as a result, the Advisor would no longer allocate investments between
Canadian and U.S. securities. Instead, the Advisor would seek to invest
primarily in a diversified portfolio of investment grade bonds of U.S. issuers
that, in the Advisor's opinion, are underrated or undervalued or have the
potential for above average current income and capital appreciation. Following
the effective date of the restructuring, Proposed BNA expects its initial
portfolio to have an average credit quality of "A." Proposed BNA may engage in
active and frequent trading of portfolio securities to achieve its principal
investment strategies. Unlike Current BNA, the Advisor will actively manage the
duration of Proposed BNA. Under current market conditions, the effective
duration of Proposed BNA's portfolio is expected to be within +/- 20% of the
effective duration of the ten year Treasury note. Effective duration measures
the expected sensitivity of market price to changes in interest rates, taking
into account the effects of structural complexities. Each year of effective
duration represents an expected 1% change in the price of a bond for every 1%
change in interest rates. For example, if a bond has an average effective
duration of four years, its price will fall about 4% when interest rates rise by
1%. Conversely, the bond's price will rise about 4% when interest rates fall by
1%. The target duration of BNA's portfolio may change from time to time.

RISKS. Proposed BNA will also have different and in some cases increased
risks compared to Current BNA. A discussion of the risks that apply to Proposed
BNA are summarized below.

Investment Objective. There can be no assurance that Proposed BNA will
achieve its investment objective.

Market Price of Shares. The shares of closed-end investment companies such
as BNA trade on the New York Stock Exchange (NYSE symbol: BNA) and as such are
subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value. There can be no assurance that
Proposed BNA will trade at, above or below its net asset value or that, if it
trades at a discount, the discount will be smaller than the discounts at which
Current BNA historically has traded. If the Proposals are approved, some
shareholders may elect to sell their shares, whereas as other shareholders or
potential shareholders may elect to purchase shares. If passage of the proposals
causes more shares to be sold than purchased, the trading price for BNA's shares
generally would go down and, all other things being equal, the discount would
widen. There can be no assurance that such an imbalance will not occur or, if it
does occur, how long it may last.

Interest Rate Risk. Like Current BNA, Proposed BNA will be subject to
interest rate risk. Interest rate risk is the risk that debt securities, and
Proposed BNA's net assets, will decline in value because of changes in interest
rates. Generally, debt securities 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 debt security holdings. The value of longer-term
debt securities fluctuates more in response to changes in interest rates than
does the value of shorter-term debt securities. Because Proposed BNA will
invest primarily in intermediate and long-term debt securities, 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 Proposed BNA invested
primarily in shorter-term debt securities. BNA's use of leverage, as described
below, will increase interest rate risk.

Credit Risk. Credit risk is the risk that one or more bonds in Proposed
BNA'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, Proposed BNA will invest at least 75% of
its Managed Assets in bonds that are rated Baa/BBB or higher at the time of the
investment. Unlike Current BNA, Proposed BNA may invest up to 25% (measured at
the time of investment) of its Managed Assets in bonds that are rated Ba/BB or
below or that are unrated but judged to be of comparable quality by the Advisor.
As a result, Proposed BNA may be subject to greater credit risk than Current
BNA.

Leverage Risk. We currently intend to use leverage to the same extent as
Current BNA. Leverage risk is the risk associated with the borrowing of funds
and other investment techniques, including the issuance of preferred shares by
Proposed BNA, to leverage the common shares. Leverage is a speculative technique
which will expose Proposed BNA to greater risk and increase its costs. Increases
and decreases in the value of Proposed BNA's portfolio will be magnified when
Proposed BNA uses leverage. For example, leverage may cause greater swings in
BNA's net asset value or cause Proposed BNA to lose more than it invested.
Proposed BNA will also have to pay interest on its borrowings reducing Proposed
BNA's return. This interest expense may be greater than Proposed BNA's return on
the underlying investment. There is no assurance that Proposed BNA's leveraging
strategy will be successful.

High Yield Risk. Unlike Current BNA, Proposed BNA may invest up to 25% of
its Managed Assets in below investment grade securities commonly known as "junk
bonds." As a result, Proposed BNA will be subject to the increased risks
associated with lower grade securities. Lower grade securities are subject to
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 prices of higher grade securities.
Lower grade securities tend to be less liquid than investment grade securities.
The market value of lower grade securities tend to be more volatile than
investment grade securities.

Foreign Risks. Proposed BNA may invest up to 10% of its Managed Assets in
foreign securities, including Canadian issuers. Although fewer of Proposed BNA's
investment would be invested in foreign securities than is the case with Current
BNA's investment objective, Proposed BNA may be subject to risks of investing in
foreign countries that are not usually associated with investments in U.S. or
Canadian issuers. These risks can include foreign currency exchange controls,
political and economic instability, differences in financial reporting,
differences in securities regulation and trading, and foreign taxation issues.
These risks will be greater for investments in emerging market countries.

Emerging Market Risk. Unlike Current BNA, Proposed BNA may invest in
issuers located in emerging markets which will subject Proposed BNA to increased
risks associated with emerging markets investing. Investing in securities of
issuers based in emerging markets entails all of the risks of investment in
securities of foreign issuers to a heightened degree. These heightened risks
include: (i) greater risks of expropriation,

confiscatory taxation, nationalization, and less social, political and economic
stability; (ii) the smaller size of the market for such securities and a lower
volume of trading, resulting in lack of liquidity and in price volatility; and
(iii) certain national policies which may restrict Proposed BNA's investment
opportunities including restrictions on investing in issuers or industries
deemed sensitive to relevant national interests.

Mortgage-Related Investment Risk. Like Current BNA, Proposed BNA will
invest a portion of its assets in mortgage-related securities. The yield and
maturity characteristics of mortgage-related securities differ from traditional
debt securities. A major difference is that the principal amount of the
obligations may normally be prepaid at any time because the underlying assts
(i.e. loans) generally may be prepaid at any time. The relationship between
prepayments and interest rates may give some mortgage-related securities less
potential for growth in value than conventional fixed-income securities with
comparable maturities. In addition, in periods of falling interest rates, the
rate of prepayments tends to increase. During such periods, the reinvestment of
prepayment proceeds by Proposed BNA will generally be at lower rates than the
rates that were carried by the obligations that have been prepaid. Because of
these and other reasons, a mortgage-related security's total return and maturity
may be difficult to predict precisely.

Currency Risk. Proposed BNA may invest a smaller portion of its portfolio
in securities denominated in currencies other than the U.S. dollar than Current
BNA. Because Proposed BNA will invest a smaller percentage of its assets in
foreign securities, it will be subject to foreign currency risk to a lesser
extent than Current BNA. Proposed BNA, however, may be exposed to currency risk
with respect to more currencies than the Canadian dollar. As a result, Proposed
BNA will continue to be affected by changes in foreign currency exchange rates
(and exchange control regulations) which would affect the value of investments
in Proposed BNA and the accrued income and unrealized appreciation or
depreciation of the investments. Changes in foreign currency exchange ratios
relative to the U.S. dollar will affect the U.S. dollar value of Proposed BNA's
assets denominated in that currency and Proposed BNA's yield on such assets. In
addition, Proposed BNA will incur costs in connection with conversions between
various currencies. Because Proposed BNA will invest a smaller percentage of its
assets in foreign securities, it will be subject to foreign currency risk to a
lesser extent than Current BNA. If the Restructuring is approved, BNA will sell
all or substantially all of its Canadian securities. The value of these Canadian
securities will be effected by the value of the Canadian dollar in relation to
the U.S. dollar at the time of their sale.

Counterparty Risk. Like Current BNA, Proposed BNA will be subject to credit
risk with respect to the counterparties to the derivative contracts, if any,
purchased by Proposed BNA. If a counterparty becomes bankrupt or otherwise fails
to perform its obligations under a forward contract due to financial
difficulties, Proposed BNA may experience significant delays in obtaining any
recovery under the forward contract in bankruptcy or other reorganization
proceeding. Proposed BNA may obtain only a limited recovery or may obtain no
recovery in such circumstances.

Inflation Risk. Like Current BNA, Proposed BNA will be subject to 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 may decline. In addition, during any periods of
rising inflation, leverage costs would likely increase, which would tend to
further reduce returns to the holders of common shares.

Risks of Using Derivative Instruments. Like Current BNA, Proposed BNA will
be subject to risks of using derivative instruments. In general terms, a
derivative instrument is one whose value depends on (or is derived

from) the value of an underlying asset, interest rate or index. Options,
futures, options on futures, credit swaps, interest rate swaps or other interest
rate-related transactions are examples of derivative instruments. Derivative
instruments involve risks different from direct investments in underlying
securities. These risks include imperfect correlation between the value of the
instruments and the underlying assets; risks of default by the other party to
certain transactions; risks that the transactions may result in losses that
partially or completely offset gains in portfolio positions; and risks that the
instruments may not be liquid.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES. The modification to BNA's
investment objective and policies will not be a taxable event to BNA or BNA
stockholders. Shifting BNA's portfolio from one that invests primarily in U.S.
and Canadian government securities to one that invests primarily in U.S.
dollar-denominated corporate bonds and mortgage backed securities will, however,
cause BNA to sell some investments that it otherwise might continue to hold and
thus to recognize income, gains and losses from such sales. Any foreign currency
exchange losses in excess of taxable income otherwise recognized in the current
tax year would not be available for use in future tax years by Proposed BNA.
Like Current BNA, Proposed BNA intends to continue to qualify to be treated as a
regulated investment company for U.S. federal income tax purposes. BNA
STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE U.S. FEDERAL
INCOME AND OTHER TAX CONSEQUENCES OF THE MODIFICATION OF BNA'S INVESTMENT
OBJECTIVE AND POLICIES TO THEM, INCLUDING THE EFFECTS OF STATE, LOCAL, AND
NON-U.S. TAX LAWS.

THE RESTRUCTURING. If the Proposal is approved by stockholders, the Advisor
anticipates that BNA will sell all or substantially all of its portfolio of
Canadian dollar-denominated securities in approximately one month after the
stockholder approval. The Advisor would then invest the proceeds from the sale
of Canadian securities in accordance with Proposed BNA's investment objective,
policies and strategies. On the effective date of the restructuring, BNA's name
will be changed to "BlackRock Income Opportunity Trust" and will continue to
trade on the New York Stock Exchange under the symbol "BNA." If the Proposal is
approved, the restructuring will commence whether or not stockholders approve
Proposals 2 and 3 discussed below.

FEES AND EXPENSES. BNA does not anticipate that the proposed change in its
investment objective and policies will change its fees. The following table
shows the actual fees and expenses of Current BNA and anticipated fees and
expenses for Proposed BNA:

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS):

CURRENT PROPOSED(3)
--------- ----------

Management Fee ................................ 0.60% 0.60%
Administration Fee ............................ 0.10% 0.10%
Other Expenses ................................ 0.18% 0.18%
Total Annual Fund Operating Expenses .......... 0.88% 0.88%

- ----------
(3) BNA currently anticipates there will be a slight decrease in its Total
Annual Fund Operating Expenses resulting from a reduction in custodial
expenses relating to foreign currency.

PROPOSAL NO.2: TO MODIFY BNA'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING THE PURCHASE OF REAL ESTATE

At the Special Meeting, the stockholders of BNA will vote regarding the
modification of BNA's fundamental investment restriction with respect to the
purchase of real estate.

Currently, BNA is subject to the following fundamental investment
restriction:

[The Trust may not] purchase real estate or interests therein other than
Canadian and U.S. Mortgage-Backed Securities and similar instruments.

The Board of Directors has recommended that the restriction on real estate
be modified as follows:

[The Trust may not] purchase or sell real estate or interests therein other
than 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.

This Proposal would modify BNA's fundamental investment restriction
concerning the purchase of real estate by making clear that BNA may invest in
bonds secured by real estate or interests therein. The 1940 Act requires that
BNA have a fundamental policy regarding real estate. BNA's current investment
policy limits BNA's investment in real estate or interests therein to Canadian
and U.S. Mortgage-Backed Securities "and similar instruments." The primary
purpose of the Proposal is to make clear that BNA may invest in a wide range of
mortgage-related and other bonds secured by real estate or interests therein
without having to determine whether such bonds are "similar to" Canadian and
U.S. Mortgage Backed Securities. In addition, the change makes clear that BNA
may trade in real estate that it may receive in connection with working out
defaulted securities. If this Proposal 2 is approved, BNA could invest in
preferred shares of real estate investment trusts and other mortgage and real
estate-related bonds that might arguably be prohibited by BNA's current policy.
Because BNA currently may invest in mortgage-backed securities and similar
instruments, BNA does not believe that changing this fundamental investment
restriction would have any material effect on the management of BNA. However,
the Board is requesting approval of this Proposal in order to provide BNA with
increased investment flexibility. If stockholders approve this Proposal, it will
take effect whether or not stockholders approve the restructuring discussed in
Proposal 1.

Based on these and other factors, the Board of Directors determined that
the proposal was in the best interests of BNA and its stockholders. The Board of
Directors unanimously approved this modification by a unanimous written consent
dated June 4, 2002. The final form of this proxy statement was discussed at a
telephonic meeting held on June 20, 2002 and approved by a unanimous written
consent dated June 21, 2002. This investment limitation is fundamental and
therefore cannot be changed without stockholder approval.

FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS, INCLUDING THE
INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS
STOCKHOLDER PROPOSAL ON THE ENCLOSED PROXY CARD.

PROPOSAL NO.3: TO MODIFY BNA'S FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
SHORT SALES

At the Special Meeting, the stockholders of BNA will vote regarding the
modification of BNA's fundamental investment restriction with respect to short
sales.

Currently, BNA is subject to the following fundamental investment
restriction:

[The Trust may not] 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 total assets and the Trust's aggregate
short sales of a particular class of securities do not exceed 25% of then
outstanding securities of that class.

The Board of Directors has recommended that the restriction on investments
with respect to short sales be modified as follows:

The primary purpose of this Proposal is to modify BNA's fundamental
investment restriction regarding short sales. This investment restriction was
initially adopted primarily to comply with state regulatory requirements, which
have subsequently been eliminated as a result of federal legislation. If this
Proposal is approved, BNA could enter into short sales in excess of 25% of its
total assets solely for hedging purposes. In a short sale, an investor sells a
borrowed security and has a corresponding obligation to the lender to return
the identical security. If BNA makes short sales, its custodian will earmark
cash or liquid securities to cover its obligations to the lender to the extent
it does not own the security it is required to deliver to the lender. Approval
of this Proposal 3 is not expected to significantly affect the way BNA is
managed because, although it would provide BNA with a greater ability to hedge
its investments, BNA does not currently anticipate needing to engage in short
sales in excess of the existing limits. However, the Board is requesting
approval of this Proposal in order to provide BNA with increased investment
flexibility. If stockholders approve the Proposal, it will take effect whether
or not stockholders approve the restructuring discussed in Proposal 1.

Based on these and other factors, the Board of Directors determined that
the proposal was in the best interests of BNA and its stockholders. The Board
of Directors discussed this proposal at a meeting held on June 20, 2002 and
unanimously approved this modification by a written consent dated June 21,
2002. This investment limitation is fundamental and therefore cannot be changed
without stockholder approval.

For the reasons stated above, the Board of Directors, including the
independent directors, unanimously recommends that stockholders vote "FOR" this
stockholder proposal on the enclosed proxy card.

ADDITIONAL INFORMATION

INVESTMENT ADVISOR

The Advisor is a wholly-owned subsidiary of BlackRock Inc., ("BlackRock")
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. The Advisor and its affiliates manage assets on behalf of
institutions and individual investors worldwide through a variety of equity,
fixed income, liquidity and alternative investment separate accounts and mutual
funds, including the BlackRock Funds and BlackRock Provident Institutional
Funds. In addition, the Advisor provides risk management and technology services
to a growing number of institutional investors under the BlackRock Solutions
name. Clients are served from BlackRock's headquarters in New York City, as well
as offices in Wilmington, San Francisco, Boston, Edinburgh, Tokyo and Hong Kong.
BlackRock 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.

The executive officers of the Advisor are:

NAME POSITION
- ---------------------- ------------------------------

Laurence D. Fink Chief Executive Officer
Ralph L. Schlosstein President
Robert S. Kapito Vice Chairman
Robert P. Connolly General Counsel and Secretary

Messrs. Fink and Schlosstein are officers and Directors, and Mr. Kapito is
an officer of BNA.

If the Restructuring is approved, the portfolio managers of Proposed BNA
will be:

Keith Anderson, Managing Director and Chief Investment Officer, Fixed
Income of BlackRock, Inc. and its predecessor entities, is co-head of the Fixed
Income Operating Committee, and Chairman of the Investment Strategy Group since
1988.

Mr. Anderson is responsible for global fixed income strategy, asset
allocation and the overall management of client portfolios. In this capacity he
coordinates a team of thirty-one portfolio managers and more than twenty-five
credit and quantitative analysts who specialize in the government, agency,
corporate and mortgage sectors and sub-sectors, worldwide.

Mr. Anderson is a member of the Treasury Borrowing Advisory Committee,
which meets quarterly in Washington, D.C. with the Secretary and Staff of the
U.S. Treasury to advise them on the financings and management of the Federal
debt. Prior to founding BlackRock in 1988, Mr. Anderson was a Vice President in
Fixed Income Research at The First Boston Corporation. Mr. Anderson joined
First Boston in 1987 as a mortgage securities and derivative products
strategist working with institutional money managers. From 1983 to 1987, Mr.
Anderson was a Vice President and portfolio manager at Criterion Investment
Management Company where he had primary responsibility for a $2.8 billion fixed
income portfolio.

Mr. Anderson has authored numerous articles on fixed income strategies,
including two articles in The Handbook of Fixed Income Options: Scenario
Analysis and the Use of Options in Total Return Portfolio Management and
Measuring, Interpreting, and Applying Volatility within the Fixed Income
Market.

Robert S. Kapito, Vice Chairman of BlackRock, Inc., and its predecessor
entities since 1988, Mr. Kapito is also Head of the Portfolio Management Group,
and is a member of the Investment Strategy Group. Mr. Kapito is responsible for
the portfolio management of the Fixed Income, Domestic Equity and International
Equity, Liquidity, and Alternative Investment Groups of BlackRock.

In addition, Mr. Kapito plays a key role in coordinating the efforts of
the analytical and administrative groups with the Portfolio Management Group.
He is also involved in marketing and managing several of BlackRock's funds. Mr.
Kapito serves as a Vice President for BlackRock's family of closed-end mutual
funds and for the Smith Barney Adjustable Rate Government Income Fund.

Prior to founding BlackRock in 1988, Mr. Kapito was a Vice President in
the Mortgage Products Group at The First Boston Corporation. Mr. Kapito joined
First Boston in 1979 in the Public Finance Department. Mr. Kapito left First
Boston to complete his MBA degree and returned to the firm in 1983 in the
Mortgage Products Group. While with this Group, Mr. Kapito initially traded
mortgage securities and then became the head trader of collateralized mortgage
obligations (CMOs). Ultimately, Mr. Kapito became head of Mortgage Capital
Markets with responsibility for marketing and pricing all of the
mortgage-backed and asset-backed securities underwritten by First Boston. In
1982, Mr. Kapito worked as a strategic consultant with Bain & Co. and with two
other private companies in Europe.

Michael P. Lustig, Managing Director and portfolio manager, is a member of
the Investment Strategy Group. Mr. Lustig is responsible for managing the
firm's taxable closed-end funds and derivative products effort. Previously, Mr.
Lustig developed analytical models for security and portfolio analysis,
assisted in the structuring of BlackRock's mutual funds and analyzed the
asset/liability structure of client portfolios.

Prior to joining BlackRock in 1989, Mr. Lustig was an associate in the
Financial Strategies and Investment Analysis Division of Security Pacific
Merchant Bank. Mr. Lustig joined Security Pacific in 1986 and was responsible
for developing models to trade derivative products including caps, floors,
swaps, callable/putable bonds, futures and options.

Mr. Lustig earned a BA degree in computer science and art history from
Columbia University in 1986.

Dennis M. Schaney, Managing Director, is a portfolio manager and member of
the Investment Strategy Group. Mr. Schaney has primary responsibility for
BlackRock's high yield business and is co-head of taxable credit research.

Prior to joining BlackRock in 1998, Mr. Schaney spent nine years with
Merrill Lynch where he was a Managing Director in the firm's Global Fixed
Income Research and Economics Department. During the time that Mr. Schaney
managed Merrill's Corporate and Municipal Bond Research Departments, the group
became the top-ranked Fixed Income Research Department according to industry
polls. Mr. Schaney's specific sector specialties included the media,
entertainment, and cable sectors for both the high yield and investment grade
markets for which he was named to Institutional Investor's All American Fixed
Income Team for five of the last six years. In addition, throughout his career,
Mr. Schaney has covered the auto, transportation, technology and aerospace
industries. Mr. Schaney began his investment career with Standard and Poor's,
followed by four years with The First Boston Corporation; two years as an
analyst in the firm's Fixed Income and Research Department and two years as a
Vice President in the firm's Investment Banking Department.

Mr. Schaney earned a BS degree in finance from the University of
Bridgeport and an MS degree in financial management from Fairfield University.
He is a member of the Fixed Income Analyst Society.

Bruce W. Repasy, Director since 2001, and has been a portfolio manager,
and a member of BlackRock's Investment Strategy Group since joining in 1999 as
a Vice President. Mr. Repasy is primarily responsible for managing BlackRock
Specialized Asset Management portfolios.

Immediately prior to joining BlackRock in 1999, Mr. Repasy spent seven
years as an Assistant Vice President and portfolio manager for institutional
assets at PNC. He assumed his role at PNC in 1994 and was involved in the
management of fixed rate securities including corporate bond, government bond,
asset backed, and mortgage backed securities. Previously, he was a compliance
Examiner for the United States Securities and Exchange Commission specializing
in mutual fund and investment advisor oversight. Mr. Repasy began his
investment career in 1985 as an operations assistant at Prudential Insurance
Company.

ADMINISTRATOR

The administrator of BNA is Prudential Investments Fund Management LLC
located at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102.
Pursuant to an administration agreement, Prudential performs certain
administrative functions for BNA.

FINANCIAL STATEMENTS AND OTHER INFORMATION

BNA will furnish, without charge, a copy of BNA's most recent Annual
Report and the most recent Semi-Annual Report succeeding the Annual Report, if
any, to any stockholder upon request. Requests should be directed to BlackRock
Advisors, Inc., 100 Bellevue Parkway, Wilmington, DE 19809 (telephone number
(800) 227-7BFM (7236)).

Quarterly performance and other information regarding BNA may be found on
BlackRock's website, which can be accessed at
http://www.blackrock.com/Trusts/ceTrusts.html. This reference to BlackRock's
website is intended to allow investors to access information regarding BNA and
is not intended to incorporate BlackRock's website into this proxy statement.

DEADLINE FOR STOCKHOLDER PROPOSALS

BNA's proxy statement dated April 1, 2002 for its annual meeting held on
May 23, 2002, stated that stockholder proposals intended for inclusion in BNA's
proxy statement in connection with BNA's 2003 annual meeting of stockholders
pursuant to Rule 14a-8 under the 1934 Act, must be received by BNA at BNA's
principal executive offices by December 2, 2002. In order for proposals made
outside of Rule 14a-8 under the 1934 Act to be considered "timely" within the
meaning of Rule 14a-4(c) under the 1934 Act, such proposals must be received by
BNA at BNA's principal executive offices not later than February 15, 2003.

OTHER MATTERS

The management knows of no other matters which are to be brought before
the Special Meeting. However, if any other matters not now known properly come
before the Special Meeting, it is the intention of the persons named in the
enclosed form of proxy to vote such proxy in accordance with their judgment on
such matters.

Very truly yours,

/s/ Laurence D. Fink
LAURENCE D. FINK
Chairman

/s/ Ralph L. Schlosstein
RALPH L. SCHLOSSTEIN
President

June 26, 2002

ANNEX A

INVESTMENT OBJECTIVES AND POLICIES

1) CURRENT BNA'S INVESTMENT OBJECTIVE AND POLICIES

The Trust's investment objective is to manage a portfolio of investment
grade securities to achieve high monthly income consistent with the preservation
of capital. The Trust will seek to achieve its objective by investing in
Canadian and U.S. dollar-dominated securities. Such are expected to consist
primarily of Government Securities. All of the Trust assets will be (i)
Government Securities or (ii) securities rated BBB at the time of investment by
S&P or Baa by Moody's or determined by the Adviser to be of comparable credit
quality at the time of investment. No assurance can be given that the Trust will
achieve its investment objective.

The Trust will invest at least 65% of its assets in Government Securities
and anticipates that a majority of its assets will be invested in Canadian and
U.S. Mortgage-Backed Securities, many of which are expected to be Government
Securities. Under current market conditions, the Adviser expects that the Trust
will invest approximately 50% of its assets in Canadian dollar-denominated
securities. The Adviser will actively manage the Trust's assets in relation to
market conditions and changes in general economic conditions in Canada and the
United States, including its expectations regarding interest rate changes and
changes in currency exchange rates between the U.S. dollar and the Canadian
dollar, to attempt to take advantage of favorable investment opportunities in
each country and expects that it will change the allocation between Canadian and
U.S. securities from time to time in accordance with the foregoing
considerations. Under current market conditions, the initial dollar-weighted
average maturity of the Trust assets is expected to be 7 to 10 years.

The Trust may also invest in various derivative Mortgage-Backed Securities,
such as CMO Residuals and stripped Mortgage-Backed Securities. Under current
conditions, however, the Trust expects that it will not invest in CMO Residuals
or, should they be issued, stripped Mortgage-Backed Securities and will not
invest more than 20% of its total asset in such securities.

In addition, the Trust expects to utilize certain options, futures,
interest rate swaps, foreign exchange transactions, risk management techniques
and related transactions for hedging purposes. For purposes of enhancing
liquidity and/or preserving capital, on a temporary defensive basis, the Trust
may invest without limit in securities issued by the U.S. government or its
agencies or instrumentalities, repurchase agreements collateralized by such
securities, or certificates of deposit, time deposits or bankers' acceptance.

The Trust may also invest in Canadian municipal securities, debt
obligations of Canadian and U.S. corporate issuers, such as interest-paying
corporate bonds and commercial paper, and in certificates of deposit, bankers'
acceptances and interest-bearing savings accounts of banks having assets greater
than $1 billion and whose deposits are insured by the Federal Deposit Insurance
Corporation of the Canada Deposit Insurance Corporation. All Canadian Government
Securities will be rated at least investment grade by S&P or Moody's on a stand
alone basis at the time of investment.

For more information concerning Current BNA's investment policies and
strategies, see "Investment Policies Applicable to Both Current and Proposed
BNA" below.

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2) PROPOSED BNA'S INVESTMENT OBJECTIVE AND POLICIES

The Trust's investment objective is to provide current income and capital
appreciation. No assurance can be given that the Trust will achieve its
investment objective.

The Trust will invest primarily in U.S. investment grade bonds. Bonds held
by the Trust may take the form of bonds, notes, bills, debentures, convertible
securities, warrants attached to debt securities, bank debt obligations, loan
participations and assignments, trust preferred securities and securities issued
by entities organized and operated for the purpose of restructuring the
investment characteristics of securities. Under current market conditions, the
Trust intends to invest primarily in corporate bonds, mortgage-related
securities and U.S. government and agency debt securities.

Under normal market conditions, the Trust will invest at least 75% of its
Managed Assets in investment grade quality 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, Fitch or another nationally
recognized rating agency) by one nationally recognized rating agency or are
unrated but judged to be of comparable quality by BlackRock. Bonds that are
rated by two or more nationally recognized rating agencies will be considered to
have the higher credit rating. Changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity for bonds that are
rated BBB or Baa (or that have equivalent ratings) to make principal and
interest payments than is the case for higher rated bonds. The Trust may invest
up to 25% of its Managed Assets in bonds that are rated, at the time of
investment, Ba/BB or below by Moody's, S&P, Fitch or another nationally
recognized rating agency or that are unrated but judged to be of comparable
quality by BlackRock. Bonds of below investment grade quality 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. The lowest rated bonds in
which the Trust may invest are securities rated in the category "C" or
determined by BlackRock to be of comparable quality. Securities rated "C" are
considered highly speculative and may be used to cover a situation where the
issuer has filed a bankruptcy petition but debt service payments are continued.
While such debt will likely have some quality and protective characteristics,
those are outweighed by large uncertainties or major risk exposure to adverse
conditions. 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 C to this proxy statement contains a description of
Moody's, S&P's and Fitch's ratings of debt securities.

The Trust may invest up to 10% of its Managed Assets in bonds denominated
in currencies other than the U.S. dollar. The Trust may also invest up to 10% of
its assets in securities of other open or closed-end investment companies that
invest primarily in bonds of the types in which the Trust may invest directly.

The Trust can borrow money to buy additional securities. This practice is
known as "leverage." The Trust may borrow from banks or other financial
institutions or through reverse repurchase agreements, dollar rolls and other
investment techniques. The Trust currently anticipates borrowing funds and/or
issuing preferred shares in an aggregate amount of approximately 331/3% of its
total assets.

A-2

The Trust may lend some of its securities in order to earn income. The
Trust will receive collateral in cash or high quality securities equal to the
current value of the loaned securities. The Trust earns interest on the
securities it lends and income when it invests the collateral for the loaned
securities. These loans will be limited to 331/3% of the value of the Trust's
total assets.

BlackRock may, but is not required to, when consistent with the Trust's
investment objective, use various strategic investment transactions described
below to earn income, facilitate portfolio management and mitigate risks,
including currency risk. See "--Strategic Transactions."

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
fully invested, the Trust may invest up to 100% of its Managed Assets in
short-term investments. The Trust may not achieve its investment objective under
these circumstances.

For more information concerning Proposed BNA's investment policies and
strategies, see "Investment Policies Applicable to Both Current and Proposed
BNA" below.

LOWER GRADE SECURITIES

The Trust may invest up to 25% of its Managed Assets in bonds rated below
investment grade such as those rated Ba or lower by Moody's and BB or lower by
S&P or securities comparably rated by other rating agencies or in unrated
securities determined by BlackRock to be of comparable quality. These lower
grade securities are commonly known as "junk bonds." Securities rated below
investment grade are judged to have speculative characteristics with respect to
the interest and principal payments.

The values of lower grade securities often reflect individual corporate
developments and have a high sensitivity to economic changes to a greater extent
than do higher rated securities. Issuers of lower grade securities are often in
the growth stage of their development and/or involved in a reorganization or
takeover. The companies are often highly leveraged (have a significant amount of
debt relative to stockholders' equity) and may not have available to them more
traditional financing methods, thereby increasing the risk associated with
acquiring these types of securities. In some cases, obligations with respect to
lower grade securities are subordinated to the prior repayment of senior
indebtedness, which will potentially limit the Trust's ability to fully recover
principal or to receive interest payments when senior securities are in default.
Thus, investors in lower grade securities have a lower degree of protection with
respect to principal and interest payments than do investors in higher rated
securities.

During an economic downturn, a substantial period of rising interest rates
or a recession, issuers of lower grade securities may experience financial
distress possibly resulting in insufficient revenues to meet their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing. An economic downturn could also disrupt the market for
lower-rated securities and adversely affect the ability of the issuers to repay
principal and interest. If the issuer of a security held generally by the Trust
defaults, the Trust may not receive full interest and principal payments due to
it and could incur additional expenses if it chose to seek recovery of its
investment.

The secondary markets for lower grade securities are not as liquid as the
secondary markets for higher rated securities. The secondary markets for lower
grade securities are concentrated in relatively few market makers and
participants in the markets are mostly institutional investors, including
insurance companies, banks, other financial institutions and mutual funds. In
addition, the trading volume for lower grade securities is

A-3

generally lower than that for higher rated securities and the secondary markets
could contract under adverse market or economic conditions independent of any
specific adverse change in the condition of a particular issuer. Under certain
economic and/or market conditions, the Trust may have difficulty disposing of
certain lower grade securities due to the limited number of investors in that
sector of the market. An illiquid secondary market may adversely affect the
market price of the lower grade securities, which may result in increased
difficulty selling the particular issue and obtaining accurate market quotations
on the issue when valuing the Trust's assets. Market quotations on lower grade
securities are available only from a limited number of dealers, and such
quotations may not be the actual prices available for a purchase or sale.

The high yield markets may react strongly to adverse news about an issuer
or the economy, or to the perception or expectation of adverse news, whether or
not it is based on fundamental analysis. Additionally, prices for lower grade
securities may be affected by legislative and regulatory developments. These
developments could adversely affect the Trust's net asset value and investment
practices, the secondary market for lower grade securities, the financial
condition of issuers of these securities and the value and liquidity of
outstanding lower grade securities, especially in a thinly traded market. For
example, federal legislation requiring the divestiture by federally insured
savings and loan associations of their investments in lower grade securities and
limiting the deductibility of interest by certain corporate issuers of lower
grade securities adversely affected the lower grade securities market in the
past.

When the secondary market for lower grade securities becomes more illiquid,
or in the absence of readily available market quotations for such securities,
the relative lack of reliable objective data makes it more difficult to value
the Trust's securities, and judgment plays a more important role in determining
such valuations. Increased illiquidity in the junk bond market, in combination
with the relative youth and growth of the market for such securities, also may
affect the ability of the Trust to dispose of such securities at a desirable
price. Additionally, if the secondary markets for lower grade securities
contract due to adverse economic conditions or for other reasons, certain of the
Trust's liquid securities may become illiquid and the proportion of the Trust's
assets invested in illiquid securities may significantly increase.

FOREIGN SECURITIES

The Trust may invest up to 10% of its Managed Assets in bonds issued in
foreign currencies (including the Canadian dollar). Although the Trust intends
to invest primarily in securities of governments or established companies based
in developed countries, the value of the Trust's investments may be adversely
affected by changes in political or social conditions, diplomatic relations,
confiscatory taxation, expropriation, nationalization, limitation on the removal
of funds or assets, or imposition of (or change in) exchange control or tax
regulations in those foreign countries. In addition, changes in government
administrations or economic or monetary policies in the United States or abroad
could result in appreciation or depreciation of Trust securities and could
favorably or unfavorably affect the Trust's operations. Furthermore, the
economies of individual foreign nations may differ from the U.S. economy,
whether favorably or unfavorably, in areas such as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. It may also be more difficult to obtain and
enforce a judgment against a foreign issuer. In general, less information is
publicly available with respect to foreign issuers than is available with
respect to U.S. companies. Most foreign companies are also not subject to the
uniform accounting and financial reporting requirements applicable to issuers in
the United States. Any foreign investments made by the Trust must be made in
compliance with U.S. and foreign currency restrictions and tax laws restricting
the amounts and types of foreign investments.

A-4

Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the Trust may hold various foreign
currencies from time to time, the value of the net assets of the Trust as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. Generally, the Trust's currency exchange transactions will be
conducted on a spot (i.e., cash) basis at the spot rate prevailing in the
currency exchange market. The cost of the Trust's currency exchange transactions
will generally be the difference between the bid and offer spot rate of the
currency being purchased or sold. In order to protect against uncertainty in the
level of future foreign currency exchange, the Trust is authorized to enter into
certain foreign currency exchange transactions.

The Trust may also invest in issuers located in emerging market countries.
Investment in securities of issuers based in underdeveloped emerging markets
entails all of the risks of investing in securities of foreign issuers outlined
in the above section to a heightened degree. In addition to brokerage
commissions, custodial services and other costs relating to investments in
emerging markets are generally more expensive than in the United States. Such
markets have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. The inability of
the Trust to make intended securities purchases due to settlement problems could
cause the Trust to miss attractive investment opportunities. An inability to
dispose of a security due to settlement problems could result in losses to the
Trust due to subsequent declines in the value of the security

3) INVESTMENT POLICIES APPLICABLE TO BOTH CURRENT AND PROPOSED BNA

The following are applicable to both Current BNA and Proposed BNA:

CORPORATE BONDS

The Trust will invest in corporate bonds. The investment return of
corporate bonds reflects income on the security and changes in the market value
of the security. The market value of a corporate bond generally may be expected
to rise and fall inversely with interest rates. The market value of a corporate
bond also may be affected by the credit rating of the corporation, the
corporation's performance and perceptions of the corporation in the market
place. There is a risk that the issuers of the securities may not be able to
meet their obligations on interest or principal payments at the time called for
by an instrument.

U.S. GOVERNMENT SECURITIES

The Trust may invest in debt securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities including: (1) U.S. Treasury
obligations, which differ in their interest rates, maturities and times of
issuance, such as U.S. Treasury bills (maturity of one year or less), U.S.
Treasury notes (maturity of one to ten years), and U.S. Treasury bonds
(generally maturities of greater than ten years), including the principal
components or the interest components issued by the U.S. government under the
Separate Trading of Registered Interest and Principal Securities program (i.e.,
"STRIPS"), all of which are backed by the full faith and credit of the United
States; and (2) obligations issued or guaranteed by U.S. government agencies or
instrumentalities, including government guaranteed mortgage-related securities,
some of which are backed by the full faith and credit of the U.S. Treasury, some
of which are supported by the right of the issuer to borrow from the U.S.
government and some of which are backed only by the credit of the issuer itself.

A-5

MORTGAGE-RELATED SECURITIES

The Trust will invest in mortgage-related securities. Mortgage-related
securities are a form of security collateralized by pools of commercial or
residential mortgages. Pools of mortgage loans are assembled as securities for
sale to investors by various governmental, government-related and private
issuers. These securities may include complex instruments such as collateralized
mortgage obligations, stripped mortgage-backed securities, mortgage pass-through
securities, interests in real estate mortgage investment conduits, adjustable
rate mortgages, real estate investment trusts ("REITs"), including debt and
preferred stock issued by REITs, as well as other real estate-related
securities. The mortgage-related securities in which the Trust may invest
include those with fixed interest rates, those with interest rates that change
based on multiples of changes in a specified index of interest rates and those
with interest rates that change inversely to changes in interest rates, as well
as those that do not bear interest.

Interests in pools of mortgage-related securities differ from other forms
of bonds, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their residential or
commercial mortgage loans, net of any fees paid to the issuer or guarantor of
such securities. Additional payments are caused by repayments of principal
resulting from the sale of the underlying property, refinancing or foreclosure,
net of fees or costs which may be incurred. Some mortgage-related securities
(such as securities issued by the "Government National Mortgage Association," or
"GNMA") are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.

The rate of prepayments on underlying mortgages will affect the price and
volatility of a mortgage-related security, and may have the effect of shortening
or extending the effective maturity of the security beyond what was anticipated
at the time of purchase. To the extent that unanticipated rates of prepayment on
underlying mortgages increase in the effective maturity of a mortgage-related
security, the volatility of such security can be expected to increase.

The yield and maturity characteristics of mortgage-related securities
differ from traditional debt securities. A major difference is that the
principal amount of the obligations may normally be prepaid at any time because
the underlying assets (i.e., loans) generally may be prepaid at any time. The
relationship between prepayments and interest rates may give some
mortgage-related securities less potential for growth in value than conventional
fixed-income securities with comparable maturities. In addition, in periods of
falling interest rates, the rate of prepayments tends to increase. During such
periods, the reinvestment of prepayment proceeds by the Trust will generally be
at lower rates than the rates that were carried by the obligations that have
been prepaid. Because of these and other reasons, a mortgage-related security's
total return and maturity may be difficult to predict precisely. To the extent
that the Trust purchases mortgage-related securities at a premium, prepayments
(which may be made without penalty) may result in loss of the Trust's principal
investment to the extent of premium paid.

Mortgage-related securities come in different classes that have different
risks. The Trust may invest in lower, or junior, classes of mortgage-related
securities which may have a rating below investment grade and therefore are
riskier investments than higher rated securities. Junior classes of
mortgage-related securities

A-6

protect the senior class investors against losses on the underlying mortgage
loans by taking the first loss if there are liquidations among the underlying
loans. Junior classes generally receive principal and interest payments only
after all required payments have been made to more senior classes. Because the
Trust may invest in junior classes of mortgage-related securities, it may not be
able to recover all of its investment in the securities it purchases. In
addition, if the underlying mortgage portfolio has been overvalued, or if
mortgage values subsequently decline, the Trust may suffer significant losses.

Investments in mortgage-related securities, especially lower rated
securities, involve the risks of interruptions in the payment of interest and
principal (delinquency) and the potential for loss of principal if the property
underlying the security is sold as a result of foreclosure on the mortgage
(default). These risks include the risks associated with direct ownership of
real estate, such as the effects of general and local economic conditions on
real estate values, the conditions of specific industry segments, the ability of
tenants to make lease payments and the ability of a property to attract and
retain tenants, which in turn may be affected by local market conditions such as
oversupply of space or a reduction of available space, the ability of the owner
to provide adequate maintenance and insurance, energy costs, government
regulations with respect to environmental, zoning, rent control and other
matters, and real estate and other taxes. The risks associated with the real
estate industry will be more significant for the Trust to the extent that it
invests in mortgage-related securities. These risks are heightened in the case
of mortgage-related securities related to a relatively small pool of mortgage
loans. If the underlying borrowers cannot pay their mortgage loans, they may
default and the lenders may foreclose on the property. Finally, the ability of
borrowers to repay mortgage loans underlying mortgage-related securities will
typically depend upon the future availability of financing and the stability of
real estate values.

For mortgage loans not guaranteed by a government agency or other party,
the only remedy of the lender in the event of a default is to foreclose upon the
property. If borrowers are not able or willing to pay the principal balance on
the loans, there is a good chance that payments on the related mortgage-related
securities will not be made. Certain borrowers on underlying mortgages may
become subject to bankruptcy proceedings, in which case the value of the
mortgage-related securities may be hurt.

Stripped Mortgage-Backed Securities. The Trust also may invest in Stripped
Mortgage-Backed Securities. Stripped Mortgage-Backed Securities are created by
segregating the cash flows from underlying mortgage loans or mortgage securities
to create two or more new securities, each with a specified percentage of the
underlying security's principal or interest payments. Mortgage securities may be
partially stripped so that each investor class receives some interest and some
principal. When securities are completely stripped, however, all of the interest
is distributed to holders of one type of security, known as an interest-only
security, or IO, and all of the principal is distributed to holders of another
type of security known as a principal-only security, or PO. Strips can be
created in a pass-through structure or as tranches of a CMO. The yields to
maturity on IOs and POs are very sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Trust may not fully recoup its initial investment in IOs even if
the security has received the highest rating from one or more nationally
recognized statistical ratings organizations. Conversely, if the underlying
mortgage assets experience less than anticipated prepayments of principal, the
yield on POs could be materially and adversely affected.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

The Trust may buy and sell bonds on a when-issued basis and may purchase or
sell bonds on a "forward commitment" basis. When such transactions are
negotiated, the price, which is generally expressed in yield

A-7

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 assets in securities of other open-
or closed-end investment companies that invest primarily in 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 during periods when there is a
shortage of attractive opportunities in the fixed-income market. As a
shareholder in an investment company, the Trust would bear its ratable share of
that investment company's expenses, and would remain subject to payment of the
Trust's advisory and other fees and expenses with respect to assets so invested.

Holders of common shares would therefore be subject to duplicative expenses
to the extent the Trust invests in other investment companies. BlackRock will
take expenses into account when evaluating the investment merits of an
investment in an investment company relative to available bond investments. 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 "Borrowings
and Preferred Shares," the net asset value and market value of leveraged shares
will be more volatile and the yield to stockholders 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 bonds.

BORROWINGS

The Trust currently anticipates borrowing funds in an aggregate amount of
approximately 331/3% of its total assets to purchase additional securities. This
practice is known as "leverage." The Trust may borrow from banks and other
financial institutions and may also borrow additional funds using such
investment techniques and in such amounts as BlackRock may from time to time
determine. Of these investment techniques, the Trust expects primarily to use
reverse repurchase agreements and dollar roll transactions. Changes in the value
of the Trust's bond portfolio, including bonds bought with the proceeds of the
leverage, 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 leverage. Leverage involves greater risks. The
Trust's leveraging strategy may not be successful.

REVERSE REPURCHASE AGREEMENTS

Borrowings may be made by the Trust through reverse repurchase agreements
under which the Trust sells portfolio securities to financial institutions such
as banks and broker-dealers and agrees to repurchase them at

A-8

a particular date and price. Such agreements are considered to be borrowings
under the Investment Company Act. The Trust may utilize reverse repurchase
agreements when it is anticipated that the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction.

DOLLAR ROLL TRANSACTIONS

Borrowings may be made by the Trust through dollar roll transactions. A
dollar roll transaction involves a sale by the Trust of a mortgage-backed or
other security concurrently with an agreement by the Trust to repurchase a
similar security at a later date at an agreed-upon price. The securities that
are repurchased will bear the same interest rate and stated maturity as those
sold, but pools of mortgages collateralizing those securities may have different
prepayment histories than those sold. During the period between the sale and
repurchase, the Trust will not be entitled to receive interest and principal
payments on the securities sold. Proceeds of the sale will be invested in
additional instruments for the Trust, and the income from these investments will
generate income for the Trust. If such income does not exceed the income,
capital appreciation and gain or loss that would have been realized on the
securities sold as part of the dollar roll, the use of this technique will
diminish the investment performance of the Trust compared with what the
performance would have been without the use of dollar rolls.

STRATEGIC TRANSACTIONS

The Trust may, but is not required to, use various strategic transactions
described below to earn income, facilitate portfolio management and mitigate
risks. Such strategic transactions are generally accepted under modern portfolio
management and are regularly used by many mutual funds and other institutional
investors. Although BlackRock seeks to use the practices to further the Trust's
investment objective, no assurance can be given that these practices will
achieve this result.

The Trust may purchase and sell derivative instruments such as
exchange-listed and over-the-counter put and call options on securities,
financial futures, equity, fixed-income and interest rate indices, and other
financial instruments, purchase and sell financial futures contracts and options
thereon, enter into various interest rate transactions such as swaps, caps,
floors or collars and enter into various currency transactions such as currency
forward contracts, currency futures contracts, currency swaps or options on
currency or currency futures or credit transactions and credit default swaps.
The Trust also may purchase derivative instruments that combine features of
these instruments. Collectively, all of the above are referred to as "Strategic
Transactions." The Trust generally seeks to use Strategic Transactions as a
portfolio management or hedging technique to seek to protect against possible
adverse changes in the market value of securities held in or to be purchased for
the Trust's portfolio, protect the value of the Trust's portfolio, facilitate
the sale of certain securities for investment purposes, manage the effective
interest rate exposure of the Trust, protect against changes in currency
exchange rates, manage the effective maturity or duration of the Trust's
portfolio, or establish positions in the derivatives markets as a temporary
substitute for purchasing or selling particular securities. The Trust may use
Strategic Transactions to enhance potential gain, although no more than 5% of
the Trust's Managed Assets will be committed to variation margin for Strategic
Transactions for non-hedging purposes.

Strategic Transactions have risks, including the imperfect correlation
between the value of such instruments and the underlying assets, the possible
default of the other party to the transaction or illiquidity of the derivative
instruments. Furthermore, the ability to successfully use Strategic Transactions
depends on

A-9

BlackRock's ability to predict pertinent market movements, which cannot be
assured. Thus, the use of Strategic Transactions may result in losses greater
than if they had not been used, may require the Trust to sell or purchase
portfolio securities at inopportune times or for prices other than current
market values, may limit the amount of appreciation the Trust can realize on an
investment, or may cause the Trust to hold a security that it might otherwise
sell. The use of currency transactions can result in the Trust incurring losses
as a result of the imposition of exchange controls, suspension of settlements or
the inability of the Trust to deliver or receive a specified currency.
Additionally, amounts paid by the Trust as premiums and cash or other assets
held in margin accounts with respect to Strategic Transactions are not otherwise
available to the Trust for investment purposes.

A-10

ANNEX B

The following chart provides a summary comparison of the investment
policies of Current BNA and Proposed BNA. This chart is qualified by reference
to the discussion under Description of the Restructuring" in Proposal 1:

CURRENT BNA PROPOSED BNA
----------- ------------

INVESTMENT OBJECTIVE o To manage a portfolio of investment o Providing current income and
grade securities to achieve high capital appreciation
monthly income consistent with the
preservation of capital.

INVESTMENT POLICIES o Invests in Canadian and U.S. o Will invest primarily in a
dollar-denominated securities. diversified portfolio of
investment grade bonds,
o Invests at least 50% and may invest including corporate bonds, U.S.
100% of its assets in Canadian government and agency securities
dollar-denominated securities. and mortgage-related securities
and fewer or no securities
o Invests at least 65% of its assets in denominated in the Canadian
government securities, and a majority dollar
of its assets in U.S. and Canadian
mortgage backed securities.

CREDIT QUALITY o All assets are either government o Will invest at least 75% of its
securities or investment grade bonds. Managed Assets in investment
grade bonds. May invest
remaining 25% of its Managed
Assets in high yield bonds.

FOREIGN SECURITIES o May invest up to 100% of its total o May invest up to 10% of its
assets in Canadian dollar- managed assets in securities
denominated securities and as a denominated in foreign
matter of non-fundamental policy, currencies, including Canada and
invests at least 50% of its total "emerging markets."
assets in Canadian dollar-denominated
securities.

DIVERSIFICATION o Is non-diversified which means it can o Will be diversified which means
concentrate its assets in a small it may not, with respect to 75%
number of issuers. of its total assets, invest more
than 5% of the value of its
total assets in the securities
of any single issuer or purchase
more than 10% of the outstanding
voting securities of any one
issuer. As a result, it will be
less susceptible to any single
economic, political or
regulatory occurrence.

B-1

ANNEX C
RATINGS OF INVESTMENTS

Standard & Poor's Corporation -- A brief description of the applicable Standard
& Poor's Ratings Group ("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.

C-1

Speculative Grade Rating

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

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

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

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

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

CC Debt rated "CC" has a currently identifiable high
vulnerability to default. It typically is applied to debt
subordinated to senior debt that is assigned an actual or
implied "CCC" debt rating.

C Debt rated "C" is currently vulnerable to nonpayment and is
dependent upon business, financial and economic conditions
for the obligor to meet its financial commitment or
obligation. It 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.

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

C-2

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.

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.

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

Municipal Notes

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

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

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

Note rating symbols are as follows:

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

SP-2 Satisfactory capacity to pay principal and interest.

SP-3 Speculative capacity to pay principal and interest.

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

C-3

COMMERCIAL PAPER

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

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

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

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

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

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

C This rating is assigned to short-term debt obligations with
a currently high vulnerability to nonpayment.

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

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

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

Municipal Bonds

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

Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds.

C-4

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.

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

Short-Term Loans

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

C-5

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

MIG 3/VMIG 3 This designation denotes acceptable credit quality.
Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less
well-established.

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

Commercial Paper

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

-- Leading market positions in well-established industries.

-- High rates of return on funds employed.

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

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

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

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

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

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

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

Long-Term Credit Ratings

INVESTMENT GRADE

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

C-6

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

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

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

Speculative Grade

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

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

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

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

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

Short-Term Credit Ratings

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

C-7

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

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

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

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

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

D Default. Denotes actual or imminent payment default.

Notes:

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

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

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

Rating Watch: Ratings are placed on Rating Watch 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 Watch is typically resolved over a
relatively short period.

C-8

THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940

VOTE BY TELEPHONE VOTE BY INTERNET

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FOLLOW THESE FOUR EASY STEPS:
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2. GO TO THE WEBSITE
2. CALL THE TOLL-FREE NUMBER http://www.eproxyvote.com/bna
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3. ENTER YOUR VOTER CONTROL NUMBER
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[BKTNG - BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.] [FILE NAME:
ZBKTN1.ELX] [VERSION - (6)] [06/20/02] [orig. 05/14/02]

DETACH HERE ZBKTN1

[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

------------------------------------------------------------------
THE BLACKROCK
NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
------------------------------------------------------------------
COMMON STOCK
FOR AGAINST ABSTAIN

1. Approval of Proposal 1, to change BNA's [ ] [ ] [ ]
investment objective.

2. Approval of Proposal 2, to modify BNA's [ ] [ ] [ ]
fundamental investment restriction
concerning investment in real estate.

3. Approval of Proposal 3, to modify BNA's [ ] [ ] [ ]
fundamental investment restriction
concerning short sales.

Mark box at right if an address change or comment has been [ ]
noted on the reverse side of this card.

Please be sure to sign and date this Proxy.

Signature: Date: Signature: Date:
-------------- ---------- --------------- ----------

[BKTNG - BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.] [FILE NAME:
ZBKTN2.ELX] [VERSION - (3)] [06/12/02] [orig. 05/14/02]
ZBKTN2

DETACH HERE

PROXY

THE BLACKROCK
NORTH AMERICAN GOVERNMENT INCOME TRUST INC.

COMMON STOCK

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Anne F. Ackerley, Robert S. Kapito and Henry
Gabbay, and each of them, as proxies, each with the power to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as designated
on the reverse side hereof, all of the shares of common stock of The BlackRock
North American Government Income Trust Inc. (the "Trust") held of record by the
undersigned on June 24, 2002 at the Special Meeting of Stockholders of the
Trust to be held on July 31, 2002 or at any adjournments thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL.

PLEASE MARK BOXES IN BLUE OR BLACK INK.
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE PAID
ENVELOPE.

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

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