BLACKROCK BOND ALLOCATION TARGET SHARES (Form: N-1A/A, Received: 10/15/2004 16:45:34)

PFPC Distributors, Inc.

Chief Compliance Officer

Date Became Access Person:

Employee Name

As filed with the Securities and Exchange Commission on October 15, 2004

Securities Act File No. 333-109980

Investment Company Act File No. 811-21457

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A


		REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933		x

		Pre-Effective Amendment No. 2		x

		Post-Effective Amendment No. and/or

		REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940		x
		Amendment No. 2

BlackRock Bond Allocation Target Shares

(Exact Name of Registrant as Specified in Charter)

100 Bellevue Parkway

Wilmington, Delaware 19809

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code:

Brian Kindelan, Esq.

BlackRock Bond Allocation Target Shares

100 Bellevue Parkway

Wilmington, Delaware 19809

(name and address of agent for service)

Copy to:

Sarah E. Cogan, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

CALCULATION OF REGISTRATION FEE UNDER THE

SECURITIES ACT OF 1933


Title of Securities Being Registered		Amount Being Registered
Common Shares of Beneficial Interest		Indefinite ¹

Registrant elects to register an indefinite number of shares of its Common Shares of Beneficial Interest, par value $.001 per share, under the Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.

BlackRock Bond Allocation Target Shares

PROSPECTUS

October , 2004

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE SHARES DESCRIBED IN THIS PROSPECTUS OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

When you invest in a Portfolio you are not making a bank deposit. Your investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or by any bank or governmental agency and may lose value.

BlackRock Bond Allocation Target Shares

Prospectus

October , 2004

BlackRock Bond Allocation Target Shares (“BATS” or the “Trust”) is a mutual fund family with five investment portfolios, all of which are described in this prospectus. BATS is an open-end management investment company.

Investors may only purchase shares in the five investment portfolios described herein by entering into a wrap-fee program or other managed account. Typically, participants in wrap-fee programs pay a single aggregate fee to the program sponsor for all costs and expenses of the wrap-fee programs, including investment advice and portfolio execution.

Upon entering into a wrap-fee program with the program sponsor, the investor will be asked to choose an investment strategy from among the following options: Core Strategy, Intermediate Duration Strategy, Short Duration Strategy or Core PLUS Strategy. These strategies will be described fully in the wrap-fee brochure provided by the program sponsor. Investors who select the Core Strategy will have some portion of the funds in their account allocated to BATS: Series C and Series M Portfolios. Investors who select the Intermediate Duration Strategy will have some portion of the funds in their account allocated to BATS: Series I Portfolio. Investors who select the Short Duration Strategy will have some portion of the funds in their account allocated to BATS: Series S Portfolio. Investors who select the Core PLUS Strategy will have some portion of the funds in their account allocated to BATS: Series C, Series M and Series P Portfolios. Currently, the Trust intends to initially offer the BATS: Series S, Series C and Series M Portfolios.

Investors will not own shares in all of the Portfolios described herein upon opening a wrap-fee program with the program sponsor.

TABLE OF CONTENTS


		Page

How to Find the Information You Need About BlackRock Bond Allocation Target Shares		1

BATS: Series S Portfolio		4

BATS: Series C Portfolio		9

BATS: Series M Portfolio		14

BATS: Series P Portfolio		18

BATS: Series I Portfolio		24

Summary of Additional Risks		29

About Your Investment		34

How to Find the Information You Need About BlackRock Bond Allocation Target Shares

This is the BlackRock Bond Allocation Target Shares Prospectus. It has been written to provide you with the information you need to make an informed decision about whether to invest in BATS.

This prospectus contains information on five of the BATS funds (each a “Portfolio”). The prospectus has been organized so that each Portfolio has its own short section. Simply turn to the section for any particular Portfolio to read about important Portfolio facts. Also included are sections that tell you about buying and selling shares, certain fees and expenses, shareholder features of the Portfolio, additional risks of investing in the various Portfolios and your rights as a shareholder. These sections apply to each Portfolio.

The following definitions will be inserted in the left margin of the printed prospectus.

IMPORTANT DEFINITIONS

Asset-Backed Securities: Securities that are backed by a pool of assets, usually loans such as installment sale contracts or credit card receivables.

Bank Loans: Fixed and floating rate loans arranged through private negotiations between a company or a non-U.S. government and one or more financial institutions. The Portfolio considers such investments to be debt securities. [BATS: Series P Portfolio]

Collateralized Bond Obligations (CBO): Securities backed by a diversified pool of high yield securities.

Collateralized Mortgage Obligations (CMO): Securities that are backed by cash flows from pools of mortgages. CMOs may have multiple classes with different payment rights.

Commercial Mortgage-Backed Securities (CMBS): Securities that are backed by a mortgage loan or pool of loans secured by commercial property, not single family residential property.

Duration: A mathematical calculation of the average life of a debt obligation that serves as a useful measure of its price risk. Each year of duration represents an expected 1% change in the net asset value of an obligation for every 1% change in interest rates. For example, if a bond fund has an average duration of four years, its net asset value will fall about 4% when interest rates rise by one percentage point. Conversely, the bond fund’s net asset value will rise about 4% when interest rates fall by one percentage point. Duration, which measures price sensitivity to interest rate changes, is not necessarily equal to average maturity.

High Yield Bonds: Sometimes referred to as “junk bonds”, these are debt securities which are rated less than investment grade (below the fourth highest rating of the major rating agencies). These securities generally pay more interest than higher-rated securities. The higher yield is an incentive to investors who otherwise may be hesitant to purchase the debt of such a low rated issuer. [BATS: Series S Portfolio and BATS: Series P Portfolio]

Investment Grade: Securities which are rated in the four highest categories by at least one of the major rating agencies or determined by the fund manager to be of similar quality. Generally, the higher the rating of a bond, the higher the likelihood that interest and principal payments will be made on time.

Lehman Brothers U.S. Aggregate Index : An unmanaged index comprised of more than 5,000 taxable bonds. This is an index of investment grade bonds; all securities included must be rated investment grade by Moody’s, Standard & Poor’s or Fitch. [BATS: Series C Portfolio]

Maturity: The date upon which debt securities are due to be repaid, that is, the date when the issuer generally must pay back the face amount of the security.

Mortgage-Backed Securities: Asset-backed securities based on a particular type of asset, a mortgage. There is a wide variety of mortgage-backed securities involving commercial or residential, fixed rate or adjustable rate mortgages and mortgages issued by banks or government agencies.

Total Return: A way of measuring fund performance. Total return is based on a calculation that takes into account income dividends, capital gain distributions and the increase or decrease in share price.

BATS: Series S Portfolio

Investment Goal

The Portfolio seeks to maximize total return, consistent with income generation and prudent investment management.

The Portfolio is non-diversified and is available solely to wrap-fee clients or other managed accounts of BlackRock, Inc.’s advisory subsidiaries (collectively, “BlackRock”) from whom BlackRock has a short duration fixed income mandate. This Portfolio invests in a manner intended to assist BlackRock in achieving short duration portfolios for those clients. The Portfolio’s assets, taken by themselves, may not necessarily have a short duration.

Primary Investment Strategies

In pursuit of the investment goal, the Portfolio will principally invest in the following securities:

•

mortgage-related securities, which are securities backed by loans secured by residential, multifamily and commercial properties;

•

obligations of non-U.S. governments and supra-national organizations, such as the World Bank, which are chartered to promote economic development;

•

obligations of domestic and non-U.S. corporations;

•

asset-backed securities, which are securities backed by a pool of finite life financial assets, usually representing obligations of a number of different parties, such as installment sale contracts, credit card receivables, royalty payments or securities;

•

municipal securities, both taxable and tax-exempt issues;

•

preferred securities, including non-convertible preferred securities such as trust preferreds;

•

U.S. Treasury and agency securities;

•

cash equivalent investments, considered to be any security that has an effective duration, a weighted average life and spread duration less than one year;

•

repurchase agreements and reverse repurchase agreements; and

•

mortgage dollar rolls.

The management team evaluates sectors of the bond market and individual securities within these sectors.

The Portfolio may also invest in non-investment grade bonds (high yield or junk bonds) or convertible securities with a minimum rating of B at the time of investment by at least one nationally recognized rating agency or determined by the investment advisor to be of comparable credit quality. If a security’s rating or credit quality falls below B, the management team will decide whether to continue to hold the security. A security will be sold if, in the opinion of the management team, the risk of continuing to hold the security is unacceptable when compared to the total return potential. See “Key Risks – Non-investment grade securities.”

The management team may, when consistent with the Portfolio’s investment goal, buy or sell options or futures on a security or an index of securities, or enter into interest rate or foreign currency transactions, including swaps (collectively, commonly known as derivatives). An option is the right to buy or sell a security or an index of securities at a specific price on or before a specific date. A future is an agreement to buy or sell a security or an index of securities at a specific price on a specific date. A swap is an agreement whereby one party exchanges its right to receive or its obligation to pay one type of interest or currency with another party for that other party’s obligation to pay or its right to receive another type of interest or currency in the future or for a period of time. The management team uses derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The management team may also use derivatives for leverage, in which case their use would involve leveraging risk. For a discussion of certain risks associated with the use of derivatives and other strategic transactions, see “Summary of Additional Risks – Strategic transactions.”

The Portfolio may also purchase securities traded only in the institutional market under Rule 144A and in illiquid private placements following the guidelines and limitations under the Investment Company Act of 1940, as amended.

Some transactions may give rise to a form of leverage. These transactions may include, among others, derivatives, reverse repurchase agreements and dollar rolls and may expose the Portfolio to greater risk and increase its costs. A reverse repurchase agreement or dollar roll involves the sale of a security by the Portfolio and its agreement to repurchase the instrument at a specified time and price. The Portfolio will segregate on its books assets determined to be liquid by the investment advisor in accordance with procedures established by the Board of Trustees or otherwise cover its obligations under reverse repurchase agreements, dollar rolls and other leveraging transactions. For a discussion of certain risks associated with the use of leveraging transactions, see “Summary of Additional Risks – Leveraged transactions.”

The Portfolio may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Should the Board of Trustees determine that the investment goal of the Portfolio should be changed, shareholders will be given at least 30 days’ notice before any such change is made. However, such change can be made without shareholder approval.

Key Risks

While the management team chooses securities it believes can provide above average total returns, there is no guarantee that shares of the Portfolio will not lose value. This means you could lose money.

Two of the main risks of investing in the Portfolio are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of securities of the type held by the Portfolio. Market interest rates have in recent years declined significantly below recent historical average rates. This decline may have increased the risk that these rates will rise in the future. Credit risk refers to the possibility that the issuer of the security will not be able to make principal and interest payments.

Non-investment grade securities . The Portfolio may invest in non-investment grade or “high yield” fixed income or convertible securities commonly known to investors as “junk bonds.” All such securities must be rated “B” or higher at the time of investment by at least one nationally recognized rating agency, unless determined by the investment advisor to be of comparable credit quality. A “B” rating generally indicates that while the issuer can currently make its interest and principal payments, it probably will not be able to do so in times of financial difficulty. Non-investment grade debt securities carry greater risks than securities which have higher credit ratings, including a high risk of default.

The credit rating of a high yield security does not necessarily address its market value risk. Ratings and market values may change from time to time, positively or negatively, to reflect new developments regarding the issuer. High yield securities are considered speculative, meaning there is a significant risk that companies issuing these securities may not be able to repay principal and interest or dividends on time. Also, the market for high yield securities is not as liquid as the market for higher-rated securities. This means that it may be harder to buy and sell high yield securities, especially on short notice, at the price at which the Portfolio has valued such securities.

During an economic downturn, a period of rising interest rates or a recession, issuers of high yield securities may experience severe financial problems. They may not have enough cash to make their principal and interest payments and may not have further access to the capital markets to raise additional cash. An economic downturn could also hurt the market for lower-rated securities and the Portfolio.

Securities rated in the fourth highest category by the rating agencies are considered investment grade but they may also have some speculative characteristics, meaning that they carry more risk than higher-rated securities and may have problems making principal and interest payments in difficult economic climates. Credit ratings, including investment grade ratings, do not guarantee that securities will not lose value.

Additional principal risks of investing in the Portfolio are described under the heading “Summary of Additional Risks”.

Risk / Return Information

No risk/return information is provided for the Portfolio because it is newly formed.

Expenses and Fees

The tables on this page and the following page describe fees and expenses that you may pay if you buy and hold shares of the Portfolio. “Other Expenses” are based on estimated amounts for the current fiscal year.

Shareholder Fees ¹


SHAREHOLDER FEES (fees paid directly from your investment):
Maximum Sales Charge (Load) on purchases (as a percentage of offering price)	0.00	%
Maximum Deferred Sales Charge (Load) (as a percentage of redemption price)	0.00	%
ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets):
Management Fees*	0.10	%
Distribution and Service Expenses	0.00	%
Other Expenses	0.20	%
Total Annual Operating Expenses	0.30	%

Fee Waiver/Expense Reimbursement**	0.30	%

Net Expenses	0.00	%

This amount reflects the portion of the wrap fee attributable to the management of the Portfolio, and the amount under “Other Expenses” reflects the approximate amount of operating expenses of the Portfolio which are paid or reimbursed by the investment advisor; see also Note 1 below.

The investment advisor has agreed irrevocably to waive all fees and reimburse all expenses, except extraordinary expenses incurred by the Portfolio.

The table shows the net expenses of the Portfolio as 0.00%, reflecting the fact that the investment advisor is absorbing all expenses of operating the Portfolio, and is waiving or reimbursing any fees to the Portfolio. You should be aware, however, that the Portfolio is an integral part of wrap-fee programs. Typically, participants in these programs pay a single aggregate fee to the program sponsor for all costs and expenses of the wrap-fee programs including investment advice and portfolio execution. You should read carefully the wrap-fee brochure provided to you by your program sponsor or investment advisor. The brochure is required to include information about the fees charged by your program sponsor and the fees paid by your program sponsor to the Trust’s investment advisor. You pay no additional fees or expenses to purchase or redeem shares of the Portfolio.

Example:

This example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. We are assuming that you invest $10,000 in the shares of the Portfolio for the time periods indicated, that your investment has a 5% return every year, that you reinvest dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


1 YEAR		3 YEARS
$-0		$-0

Portfolio Management

The Portfolio is managed by BlackRock Advisors, Inc. The Portfolio is managed by a team of investment professionals including the following individuals who have day-to-day responsibility: Scott Amero, Managing Director of BlackRock since 1990, and Todd Kopstein, Managing Director of BlackRock since 2003. With BlackRock since 1994, Mr. Kopstein spent two years as an analyst in the Account Management Group followed by one and one-half years with a BlackRock subsidiary that provides risk management services. He became a portfolio manager specializing in short duration securities in 1998.

Financial Highlights

Shares of the Portfolio have not previously been offered and therefore do not have a previous financial history.

BATS: Series C Portfolio

Investment Goal

The Portfolio seeks to maximize total return, consistent with income generation and prudent investment management.

The Portfolio is non-diversified and is available solely to wrap-fee clients or other managed accounts of BlackRock, Inc.’s advisory subsidiaries (collectively, “BlackRock”) from whom BlackRock has a core and/or core PLUS fixed income mandate, including corporate securities exposure. This Portfolio invests in a manner intended to assist BlackRock in achieving core or core PLUS fixed income portfolios with corporate securities exposure for those clients. The Portfolio’s assets, taken by themselves, may not necessarily represent a core or core PLUS fixed income portfolio.

Primary Investment Strategies

In pursuit of the investment goal, the Portfolio will principally invest in the following securities:

•

obligations of domestic and non-U.S. corporations;

•

preferred securities, including non-convertible preferred securities such as trust preferreds;

•

mortgage-related securities, which are securities backed by loans secured by residential, multifamily and commercial properties;

•

obligations of non-U.S. governments and supra-national organizations, such as the World Bank, which are chartered to promote economic development;

•

municipal securities, both taxable and tax-exempt issues;

•

U.S. Treasury and agency securities;

•

cash equivalent investments, considered to be any security that has an effective duration, a weighted average life and spread duration less than one year;

•

repurchase agreements and reverse repurchase agreements; and

•

any securities contained in the Lehman Brothers U.S. Aggregate Index.

The management team evaluates sectors of the bond market and individual securities within these sectors.

The Portfolio may invest only in securities that are rated investment grade (at least BBB or Baa) at the time of investment by at least one nationally recognized rating agency or determined by the investment advisor to be of comparable credit quality. If a security’s rating or credit quality falls below investment grade, the management team will decide whether to continue to hold the security. A security will be sold if, in the opinion of the management team, the risk of continuing to hold the security is unacceptable when compared to the total return potential.

The Portfolio may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Key Risks

Additional principal risks of investing in the Portfolio are described under the heading “Summary of Additional Risks”.

Risk / Return Information

No risk/return information is provided for the Portfolio because it is newly formed.

Expenses and Fees

Shareholder Fees ¹


SHAREHOLDER FEES (fees paid directly from your investment):
Maximum Sales Charge (Load) on purchases (as a percentage of offering price)	0.00	%
Maximum Deferred Sales Charge (Load) (as a percentage of redemption price)	0.00	%
ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets):
Management Fees*	0.10	%
Distribution and Service Expenses	0.00	%
Other Expenses	0.20	%
Total Annual Operating Expenses	0.30	%

Fee Waiver/Expense Reimbursement**	0.30	%

Net Expenses	0.00	%

This amount reflects the portion of the wrap fee attributable to the management of the Portfolio, and the amount under “Other Expenses” reflects the approximate amount of operating expenses of the Portfolio which are paid or reimbused by the investment advisor; see also Note 1 below.

The investment advisor has agreed irrevocably to waive all fees and reimburse all expenses, except extraordinary expenses incurred by the Portfolio.

Example:

This example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. We are assuming that you invest $10,000 in the shares of the Portfolio for the time periods indicated, that your investment has a 5% return every year, that you reinvest all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


1 YEAR		3 YEARS
$-0		$-0

Portfolio Management

The Portfolio is managed by BlackRock Advisors, Inc. The Portfolio is managed by a team of investment professionals including the following individuals who have day-to-day responsibility: Scott Amero, Managing Director of BlackRock since 1990 and Matt Marra, Director of BlackRock since 2003. With BlackRock since 1995, Mr. Marra spent two years as an analyst in the Portfolio Analytics Group before becoming a portfolio manager in 1997.

Financial Highlights

Shares of the Portfolio have not previously been offered and therefore do not have a financial history.

BATS: Series M Portfolio

Investment Goal

The Portfolio seeks to maximize total return, consistent with income generation and prudent investment management.

The Portfolio is non-diversified and is available solely to wrap-fee clients or other managed accounts of BlackRock, Inc.’s advisory subsidiaries (collectively “BlackRock”) from whom BlackRock has a core and/or core PLUS fixed income mandate, including mortgage securities exposure. This Portfolio invests in a manner intended to assist BlackRock in achieving core or core PLUS fixed income portfolios with mortgage securities exposure for those clients. The Portfolio’s assets, taken by themselves, may not necessarily represent a core or core PLUS fixed income portfolio.

Primary Investment Strategies

In pursuit of the investment goal, the Portfolio will principally invest in the following securities:

•

mortgage-related securities, which are securities backed by loans secured by residential, multifamily and commercial properties;

•

U.S. Treasury and agency securities;

•

cash equivalent investments, considered to be any security that has an effective duration, a weighted average life and spread duration less than one year; and

•

mortgage dollar rolls.

The management team evaluates sectors of the bond market and individual securities within these sectors.

security or an index of securities at a specific price on a specific date. A swap is an agreement whereby one party exchanges its right to receive or its obligation to pay one type of interest or currency with another party for that other party’s obligation to pay or its right to receive another type of interest or currency in the future or for a period of time. The management team uses derivatives as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The management team may also use derivatives for leverage, in which case their use would involve leveraging risk. For a discussion of certain risks associated with the use of derivatives and other strategic transactions, see “Summary of Additional Risks – Strategic transactions.”

The Portfolio may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Key Risks

Additional principal risks of investing in the Portfolio are described under the heading “Summary of Additional Risks”.

Risk / Return Information

No risk/return information is provided for the Portfolio because it is newly formed.

Expenses and Fees

The tables on this page and on the following page describe fees and expenses that you may pay if you buy and hold shares of the Portfolio. “Other Expenses” are based on estimated amounts for the current fiscal year.

Shareholder Fees ¹


SHAREHOLDER FEES (fees paid directly from your investment):
Maximum Sales Charge (Load) on purchases (as a percentage of offering price)	0.00	%
Maximum Deferred Sales Charge (Load) (as a percentage of redemption price)	0.00	%
ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets):
Management Fees*	0.10	%
Distribution and Service Expenses	0.00	%
Other Expenses	0.20	%
Total Annual Operating Expenses	0.30	%

Fee Waiver/Expense Reimbursement**	0.30	%

Net Expenses	0.00	%

The investment advisor has agreed irrevocably to waive all fees and reimburse all expenses, except extraordinary expenses incurred by the Portfolio.

Example:

This example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. We are assuming that you invest $10,000 in the shares of the Portfolio for the time periods indicated, that your investment has a 5% return every year, that you reinvest all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


1 YEAR		3 YEARS
$-0		$-0

Portfolio Management

The Portfolio is managed by BlackRock Advisors, Inc. The Portfolio is managed by a team of investment professionals including the following individuals who have day-to-day responsibility: Andrew Phillips, Managing Director of BlackRock since 1999 and Eric Pellicciaro, Director of BlackRock since 2003. With BlackRock since 1996, Mr. Pellicciaro spent 3 years with a BlackRock subsidiary that provides risk management services before becoming a portfolio manager in 1999.

Financial Highlights

Shares of the Portfolio have not previously been offered and therefore do not have a financial history.

BATS: Series P Portfolio

Investment Goal

The Portfolio seeks to maximize total return, consistent with income generation and prudent investment management.

The Portfolio is non-diversified and is available solely to wrap-fee clients or other managed accounts of BlackRock, Inc.’s advisory subsidiaries (collectively “BlackRock”) from whom BlackRock has a core PLUS fixed income mandate, including high yield, non-U.S. dollar and emerging market securities exposure. This Portfolio invests in a manner intended to assist BlackRock in achieving core PLUS fixed income portfolios with high yield, non-U.S. dollar and emerging market securities exposure for those clients. The Portfolio’s assets, taken by themselves, may not necessarily represent a core PLUS fixed income portfolio.

Primary Investment Strategies

In pursuit of the investment goal, the Portfolio will principally invest in the following securities:

•

corporate bonds, notes and debentures, including high yield securities;

•

mezzanine securities, which are subordinated debt securities which receive payments of interest and principal after other more senior security holders are paid;

•

collateralized bond obligations, which are securities backed by a diversified pool of high yield securities;

•

obligations, including emerging markets securities, of non-U.S. governments and supra-national organizations, such as the World Bank, which are chartered to promote economic development;

•

preferred securities, including non-convertible preferred securities such as trust preferreds;

•

convertible bonds;

•

mortgage-related securities, which are securities backed by loans secured by residential, multifamily and commercial properties;

•

bank loans;

•

U.S. Treasury and agency securities;

•

obligations of domestic and non-U.S. corporations;

•

municipal securities, both taxable and tax-exempt issues;

•

cash equivalent investments, considered to be any security that has an effective duration, a weighted average life and spread duration less than one year;

•

repurchase agreements and reverse repurchase agreements; and

•

mortgage dollar rolls.

The management team evaluates sectors of the bond market and individual securities within these sectors.

The Portfolio primarily invests its assets in any combination of non-investment grade bonds (high yield or junk bonds), non-dollar denominated bonds and bonds of emerging market issuers. The Portfolio’s investment in non-dollar denominated bonds may be on a currency hedged or unhedged basis.

The non-investment grade bonds or convertible securities in which the Portfolio will invest will have a minimum rating of CCC at the time of investment by at least one nationally recognized rating agency or determined by the investment advisor to be of comparable credit quality. These securities have increased risks and have uncertainties regarding the issuers’ ability to make interest and principal payments. If a security’s rating falls below CCC, the management team will decide whether to continue to hold the security. A security will be sold if, in the opinion of the management team, the risk of continuing to hold the security is unacceptable when compared to the total return potential. See “Key Risks – Non-investment grade securities.”

reverse repurchase agreements, dollar rolls and other leveraging transactions. For a discussion of certain risks associated with the use of leveraging transactions, see “Summary of Additional Risks – Leveraged transactions.”

The Portfolio may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Key Risks

Non-investment grade securities . The Portfolio may invest in non-investment grade or “high yield” fixed income or convertible securities commonly known to investors as “junk bonds.” All such securities must be rated “CCC” or higher at the time of investment by at least one nationally recognized rating agency, unless determined by the investment advisor to be of comparable credit quality. A “CCC” rating generally indicates that the issue is regarded as having highly speculative characteristics regarding the likelihood of timely payment of principal and interest and a currently identifiable vulnerability to default. Non-investment grade debt securities carry greater risks than securities which have higher credit ratings, including a high risk of default.

Additional principal risks of investing in the Portfolio are described under the heading “Summary of Additional Risks”.

Risk / Return Information

No risk/return information is provided for the Portfolio because it is newly formed.

Expenses and Fees

The tables on the next page describe fees and expenses that you may pay if you buy and hold shares of the Portfolio. “Other Expenses” are based on estimated amounts for the current fiscal year.

Shareholder Fees ¹


SHAREHOLDER FEES (fees paid directly from your investment):
Maximum Sales Charge (Load) on purchases (as a percentage of offering price)	0.00	%
Maximum Deferred Sales Charge (Load) (as a percentage of redemption price)	0.00	%
ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets):
Management Fees*	0.10	%
Distribution and Service Expenses	0.00	%
Other Expenses	0.20	%
Total Annual Operating Expenses	0.30	%

Fee Waiver/Expense Reimbursement**	0.30	%

Net Expenses	0.00	%

The investment advisor has agreed irrevocably to waive all fees and reimburse all expenses, except extraordinary expenses incurred by the Portfolio.

Example:

This example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. We are assuming that you invest $10,000 in the shares of the Portfolio for the time periods indicated, that your investment has a 5% return every year, that you reinvest all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


1 YEAR		3 YEARS
$-0		$-0

Portfolio Management

The Portfolio is managed by BlackRock Advisors, Inc. The Portfolio is managed by a team of investment professionals including the following individuals who have day-to-day responsibility: Jeff Gary, Managing Director of BlackRock since 2003, and Andrew Gordon, Managing Director of BlackRock since 1996. Jeff Gary is the head of the High Yield Team. Prior to joining BlackRock, he was a Managing Director and portfolio manager with AIG (American General) Investment Group.

Financial Highlights

Shares of the Portfolio have not previously been offered and therefore do not have a financial history.

BATS: Series I Portfolio

Investment Goal

The Portfolio seeks to maximize total return, consistent with income generation and prudent investment management.

The Portfolio is non-diversified and is available solely to wrap-fee clients or other managed accounts of BlackRock, Inc.’s advisory subsidiaries (collectively, “BlackRock”) from whom BlackRock has an intermediate duration fixed income mandate. This Portfolio invests in a manner intended to assist BlackRock in achieving intermediate duration portfolios for those clients. The Portfolio’s assets, taken by themselves, may not necessarily have an intermediate duration.

Primary Investment Strategies

In pursuit of the investment goal, the Portfolio will principally invest in the following securities:

•

mortgage-related securities, which are securities backed by loans secured by residential, multifamily and commercial properties;

•

obligations of non-U.S. governments and supra-national organizations, such as the World Bank, which are chartered to promote economic development;

•

obligations of domestic and non-U.S. corporations;

•

municipal securities, both taxable and tax-exempt issues;

•

preferred securities, including non-convertible preferred securities such as trust preferreds;

•

U.S. Treasury and agency securities;

•

cash equivalent investments, considered to be any security that has an effective duration, a weighted average life and spread duration less than one year;

•

repurchase agreements and reverse repurchase agreements; and

•

mortgage dollar rolls.

The management team evaluates sectors of the bond market and individual securities within these sectors.

The Portfolio may engage in active and frequent trading of portfolio securities to achieve its primary investment strategies.

Key Risks

years declined significantly below recent historical average rates. This decline may have increased the risk that these rates will rise in the future. Credit risk refers to the possibility that the issuer of the security will not be able to make principal and interest payments.

Additional principal risks of investing in the Portfolio are described under the heading “Summary of Additional Risks”.

Risk / Return Information

No risk/return information is provided for the Portfolio because it is newly formed.

Expenses and Fees

Shareholder Fees ¹


SHAREHOLDER FEES (fees paid directly from your investment):
Maximum Sales Charge (Load) on purchases (as a percentage of offering price)	0.00	%
Maximum Deferred Sales Charge (Load) (as a percentage of redemption price)	0.00	%
ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets):
Management Fees*	0.10	%
Distribution and Service Expenses	0.00	%
Other Expenses	0.20	%
Total Annual Operating Expenses	0.30	%

Fee Waiver/Expense Reimbursement**	0.30	%

Net Expenses	0.00	%

This amount reflects the portion of the wrap fee attributable to the management of the Portfolio, and the amount under “Other Expenses” reflects the approximate amount of operating expenses of the Portfolio which are paid for by the investment advisor; see also Note 1 below.

The investment advisor has agreed irrevocably to waive all fees and reimburse all expenses, except extraordinary expenses incurred by the Portfolio.

Example:

This example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. We are assuming that you invest $10,000 in the shares of the Portfolio for the time periods indicated, that your investment has a 5% return every year, that you reinvest all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


1 YEAR		3 YEARS
$-0		$-0

Portfolio Management

Financial Highlights

Shares of the Portfolio have not previously been offered and therefore do not have a financial history.

Summary of Additional Risks

THE FOLLOWING APPLIES TO EACH PORTFOLIO EXCEPT AS NOTED:

Additional risks of the securities in which the Portfolio may invest include:

U.S. Treasury and agency securities . Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. Government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. Government. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.

Municipal securities . Municipal securities are generally issued by state and local governments and their agencies, authorities and other instrumentalities. Municipal securities are subject to interest rate and credit risk. The ability of an issuer to make payments could be affected by litigation, legislation, other political events, loss of revenues out of which the securities may be paid or the bankruptcy of the issuer.

Preferred stock . Preferred stock has a preference over common stock in liquidation (and generally with respect to dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield and maturity characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Non-U.S. investments . Non-U.S. securities involve risks not typically associated with investing in U.S. securities. These risks include but are not limited to: currency

risks (the risk that the value of interest paid on non-U.S. securities, or the value of the securities themselves, may fall if currency exchange rates change), the risk that a security’s value will be hurt by changes in non-U.S. political or social conditions, including changes in policies restricting non-U.S. investment, the possibility of heavy taxation, nationalization or expropriation of assets and more difficulty obtaining information on non-U.S. securities or companies. In addition, a portfolio of non-U.S. securities may be harder to sell and may be subject to wider price movements than comparable investments in U.S. companies. There is also less government regulation of non-U.S. securities markets.

In addition, political and economic structures in emerging market countries may be undergoing rapid change and these countries may lack the social, political and economic stability of more developed countries. As a result, some of the risks described above, including the risks of nationalization or expropriation of assets and the existence of smaller, more volatile and less regulated markets, may be increased. The value of many investments in emerging market countries has declined significantly in the past, and may do so again in the future, as a result of economic and political turmoil in many of these countries.

Strategic transactions . The Portfolio 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 Portfolio also may purchase derivative instruments that combine features of these instruments. Collectively, all of the above are referred to as “Strategic Transactions.” The Portfolio’s use of Strategic Transactions may reduce the Portfolio’s returns and/or increase volatility. Volatility is defined as the characteristic of a security, an index or a market to fluctuate significantly in price within a short period of time. A risk of the Portfolio’s use of Strategic Transactions is that the fluctuations in their values may not correlate with the changes in value or risks that the Portfolio is using the Strategic Transactions to track or protect against. Strategic Transactions are also subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation. In addition, some Strategic Transactions are more sensitive to interest rate changes and market price fluctuations than others. The possible lack of a liquid secondary market for Strategic Transactions and the resulting inability of the Portfolio to sell or otherwise close a position could expose the Portfolio to losses. The Portfolio could also suffer losses related to its Strategic Transactions as a result of unanticipated market movements, which losses are potentially unlimited. Finally, the Portfolio’s investment advisor may not be able to predict correctly the direction of securities prices, interest rates and other economic factors, which could cause the Portfolio’s Strategic Transactions to lose value.

Leveraged transactions . The Portfolio may use transactions that give rise to a form of leverage. These transactions may include, among others, reverse repurchase

agreements and dollar rolls and may expose the Portfolio to greater risk and increase its costs. The use of leverage by the Portfolio may harm its performance because the return from the securities purchased using leverage may be less than the cost of leverage due to adverse changes in interest rates or reduction in credit quality. The use of leverage may force the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements.

Portfolio turnover . Higher than normal portfolio turnover (more than 100%) may result in increased transaction costs to the Portfolio, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of Portfolio securities may result in the recognition of capital gain or loss. Given the frequency of sales, such gain or loss will likely be short-term capital gain or loss. Unlike long-term capital gain, short-term capital gain of individuals is taxable at the same rates as ordinary income. These effects of higher than normal portfolio turnover may adversely affect Portfolio performance.

Non-diversification . The Portfolio is part of the wrap-fee program, which utilizes a diversified investment strategy; however, the Portfolio is classified as a non-diversified portfolio under the Investment Company Act of 1940, as amended. Investment returns on a non-diversified portfolio typically are dependent upon the performance of a smaller number of securities relative to the number held in a diversified portfolio. Consequently, the change in value of any one security may affect the overall value of a non-diversified portfolio more than it would a diversified portfolio. Because it can concentrate its investments in the obligations of a smaller number of issuers, the Portfolio may be more at risk than a more widely diversified portfolio to any single economic, political or regulatory event which harms one or more of these issuers.

Mortgage- and asset-backed securities . The characteristics of mortgage-backed and asset-backed securities differ from traditional fixed income securities, thus presenting different risks. A main difference is that the principal on the assets backing such securities may normally be prepaid at any time, which may reduce the yield and market value of these securities. Asset-backed securities and commercial mortgage-backed securities (“CMBS”) are usually structured to experience less prepayment than residential mortgage-backed securities.

Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties.

Non-mortgage asset-backed securities may involve risks that are not presented by mortgage-related securities. Many of these securities do not have the benefit of a security interest in the underlying collateral. Credit card receivables, for example, are generally unsecured, and the debtors are entitled to the protection of a number of state and Federal consumer credit laws which give debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Other asset-based securities may not have the benefit of as much collateral as mortgage-backed securities generally have.

The average life of a mortgage-related instrument, in particular, is likely to be substantially less than the stated original maturity of the mortgage pools underlying the securities as the result of scheduled principal payments and unscheduled prepayments. In general, the collateral supporting non-mortgage asset-backed securities is of shorter maturity than mortgage loans and is less likely to experience substantial prepayments. Like other fixed-income securities, when interest rates rise the value of an asset-backed security generally will decline; however, when interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities. The relationship between prepayments and interest rates may give some high-yielding mortgage-related and asset-backed securities less potential for growth in value than conventional bonds with comparable maturities.

In periods of falling interest rates, the rate of prepayments tends to increase. During such periods, the reinvestment of prepayment proceeds by the Portfolio 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, mortgage-related and other asset-backed securities’ total return, duration and maturity may be difficult to predict precisely. To the extent that the Portfolio purchases mortgage-related and other asset-backed securities at a premium, prepayments (which usually may be made without penalty) may result in loss of the Portfolio’s principal investment to the extent of premium paid.

Certain CMBS are issued in several classes with different levels of yield and credit protection. The Portfolio’s investments in CMBS with several classes may be in the lower classes that have greater risks than the higher classes, including greater interest rate, credit and prepayment risks.

THE FOLLOWING APPLIES ONLY TO THE BATS: SERIES S AND P PORTFOLIOS:

Bank loans . The Portfolio may invest in fixed and floating rate loans arranged through private negotiations between a company or a non-U.S. government and one or more financial institutions. The Portfolio considers such investments to be debt securities. The market for bank loans may not be highly liquid and the Portfolio may have difficulty selling them. These investments expose the Portfolio to the credit risk of both the financial institution and the underlying borrower. To the extent that these loans do not qualify as Rule 144A securities and also satisfy certain liquidity standards, they will be treated as illiquid securities subject to the Portfolio’s 15% illiquid securities limitations.

Collateralized bond obligations . The BATS: Series S Portfolio and BATS: Series P Portfolio may invest in collateralized bond obligations (“CBOs”), which are structured products backed by a diversified pool of high yield public or private fixed income securities. The pool of high yield securities is typically separated into tranches representing different degrees of credit quality. The top tranche of CBOs, which represents the highest credit quality in the pool, has the greatest collateralization and pays

the lowest interest rate. Lower CBO tranches represent lower degrees of credit quality and pay higher interest rates to compensate for the attendant risks. The bottom tranche specifically receives the residual interest payments (i.e., money that is left over after the higher tiers have been paid) rather than a fixed interest rate. The return on the bottom tranche of CBOs is especially sensitive to the rate of defaults in the collateral pool.

Mezzanine securities . The BATS: Series S Portfolio and BATS: Series P Portfolio may invest in certain high yield securities known as mezzanine investments, which are subordinated debt securities that are generally issued in private placements in connection with an equity security (e.g., with attached warrants). Such mezzanine investments may be issued with or without registration rights. Similar to other high yield securities, maturities of mezzanine investments are typically seven to ten years, but the expected average life is significantly shorter at three to five years. Mezzanine investments are usually unsecured and subordinate to other obligations of the issuer.

THE FOLLOWING APPLIES ONLY TO THE BATS: SERIES S, C, P AND I PORTFOLIOS:

Trust preferred securities . The Portfolio may invest in trust preferred securities. Trust preferred securities are a comparatively new asset class. Trust preferred securities are typically issued by corporations, generally in the form of interest bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The trust preferred securities market consists of both fixed and adjustable coupon rate securities that are either perpetual in nature or have stated maturity dates.

Trust preferred securities are typically junior and fully subordinated liabilities of an issuer and benefit from a guarantee that is junior and fully subordinated to the other liabilities of the guarantor. In addition, trust preferred securities typically permit an issuer to defer the payment of income for five years or more without triggering an event of default. Because of their subordinated position in the capital structure of an issuer, the ability to defer payments for extended periods of time without default consequences to the issuer, and certain other features (such as restrictions on common dividend payments by the issuer or ultimate guarantor when full cumulative payments on the trust preferred securities have not been made), these trust preferred securities are often treated as close substitutes for traditional preferred securities, both by issuers and investors. Trust preferred securities have some of the key characteristics of equity and became popular because they could be treated as preferred equity for accounting purposes. However, trust preferred securities are no longer treated as equity and are rarely issued in the current environment.

About Your Investment

What Price Per Share Will You Pay?

The price of each Portfolio’s shares generally changes every business day. A business day is defined as any weekday on which the New York Stock Exchange (NYSE) is open for business. A mutual fund is a pool of investors’ money that is used to purchase a portfolio of securities, which in turn is owned in common by the investors. Investors put money into a mutual fund by buying shares. If a mutual fund has a portfolio with a net asset value (NAV) worth $50 million and has 5 million shares outstanding, the NAV per share is $10. When you buy shares in the Portfolio you pay the NAV per share.

Each Portfolio’s assets are valued primarily on the basis of market quotations. Certain short-term securities are valued on the basis of amortized cost. When a determination is made that market quotations are not readily available, including when a particular security does not trade regularly or has had its trading halted or there has been a significant subsequent event, each Portfolio values the affected securities at fair value as determined by BlackRock under the direction of the Trust’s Board of Trustees. For example, in valuing a security that trades principally on a foreign market, a Portfolio generally uses the most recent closing market price from the market on which the security principally trades. However, if the closing market price, in BlackRock’s judgment, does not represent the current market value of the security due to the occurrence of a significant subsequent event, BlackRock may adjust the closing market price of the security to reflect what it believes to be the fair value of the security as of the time the Portfolio calculates its NAV. Fair value represents a good faith approximation of the value of a security. A security’s valuation may differ depending on the method used for determining value.

Since the NAV changes daily, the price of your shares depends on the time that your order is received by the Portfolio’s transfer agent, whose job it is to keep track of shareholder records.

PFPC Inc., each Portfolio’s transfer agent, will probably receive your order from your registered representative, who takes the order from the BlackRock advisor managing your wrap-fee account. Purchase orders received by the transfer agent before the close of regular trading on the New York Stock Exchange (normally 4:00 p.m. (Eastern time)) on each day the NYSE is open will be priced based on the NAV calculated at the close of trading on that day. NAV is calculated separately for each Portfolio at 4:00 p.m. (Eastern time) each day the NYSE is open. Shares will not be priced on days the NYSE is closed. Purchase orders received after the close of trading will be priced based on the next calculation of NAV per share. Non-U.S. securities and certain other securities, such as most fixed income securities, held by a Portfolio may trade on days when the NYSE is closed. In these cases, the Portfolio’s NAV per share may change when Portfolio shares cannot be bought or sold.

Purchases of a Portfolio’s shares will normally be made only in full shares, but may be made in fractional shares under certain circumstances. Certificates for shares will not be issued. The payment for shares to be purchased shall be wired to the Portfolio’s transfer agent.

How Much Is the Minimum Investment?

There is no minimum or maximum investment for initial or subsequent purchases of shares. Each Portfolio may reject any purchase order; establish, modify or waive any minimum investment requirements; and suspend and resume the sale of shares of any Portfolio at any time.

How Much Is the Sales Charge?

There are no sales charges on purchases or redemptions of shares.

How To Sell Shares

Redemption requests for Portfolio shares are effected at the NAV per share next determined after receipt of a redemption request by the transfer agent. A redemption request received by the transfer agent prior to close of regular trading on the NYSE (currently 4:00 p.m. Eastern time), on a day the Portfolio is open for business, is effected on that day. A redemption request received after that time is effected on the next business day. Redemption proceeds usually will be wired to the investment advisor within one business day after the redemption request is received, but may take up to three business days. Redemption proceeds that are paid in cash will be sent by wire only. Each Portfolio may suspend the right of redemption or postpone the payment date at times when the NYSE is closed, or during certain other periods as permitted under the federal securities laws.

The Trust’s Rights

The Trust may:

•

Suspend the right of redemption if trading is halted or restricted on the NYSE or under other emergency conditions;

•

Postpone the date of payment upon redemption if trading is halted or restricted on the NYSE or under other emergency conditions;

•

Redeem shares involuntarily in certain cases, such as when the value of a shareholder account falls below a specified level; and

•

Redeem shares for property other than cash if conditions exist which make cash payments undesirable. The Trust does not intend to make an election to honor requests to pay in cash to the extent provided in Rule 18f-1 under the Investment Company Act of 1940, as amended. It is unlikely that shares would ever be redeemed for property other than cash. However, in consideration of the best interests of the remaining investors, each Portfolio reserves the right to pay any redemption proceeds in whole or in part by a distribution in kind of securities held by the Portfolio in lieu of cash. When shares are redeemed in kind, the redeeming registered investment advisor should expect to incur transaction costs upon the disposition of the securities received in the distribution.

Management

The investment advisor of each Portfolio is BlackRock Advisors, Inc. (“BlackRock Advisors”). BlackRock Advisors was organized in 1994 to perform advisory services for investment companies and is located at 100 Bellevue Parkway, Wilmington, DE 19809. BlackRock Advisors is a wholly owned subsidiary of BlackRock, Inc., one of the largest publicly traded investment management firms in the United States with approximately $314 billion of assets under management as of July 31, 2004. BlackRock, Inc. is a majority-owned indirect subsidiary of The PNC Financial Services Group, Inc., one of the largest diversified financial services companies in the United States.

Dividends and Distributions

Each Portfolio distributes substantially all of its net investment company income (which includes net short-term capital gain) to shareholders investing in the Portfolio in the form of dividends. An investment in Portfolio shares begins earning dividends on the shares the day after the Portfolio receives the related purchase payment. Dividends are declared daily and paid monthly on the last business day of the month.

In addition, each Portfolio distributes any net capital gains, if any, it earns from the sale of portfolio securities to shareholders investing in the Portfolio no less frequently than annually.

Distributions by a Portfolio of net investment company income and net capital gain will be paid only in cash. Dividends and capital gain distributions will not be reinvested in additional Portfolio shares.

Taxation of Distributions

The discussion below and in the Statement of Additional Information provides general tax information related to an investment by a taxable U.S. investor in the common shares of a Portfolio. No attempt is made to present a detailed explanation of all federal, state, local and foreign tax concerns affecting the Portfolios and their shareholders (including shareholders owning a large position in a Portfolio), and the discussions set forth here and in the Statement of Additional Information do not constitute tax advice.

The discussion reflects applicable tax laws of the United States as of the date of this prospectus, which tax laws may be changed or subject to new interpretations by the courts or the Internal Revenue Service retroactively or prospectively. Because tax laws are complex and often change, you should consult your tax advisor about the tax consequences of an investment in a Portfolio.

Each Portfolio intends to elect to be treated and to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). In order to so qualify, each Portfolio must satisfy income, diversification and distribution requirements. As a regulated investment company, a Portfolio will generally be exempt from federal income taxes on investment company taxable income and net capital gain distributed to shareholders each year, provided it distributes at least 90% of the sum of its investment company taxable income and net tax-exempt income, if any, each year. A Portfolio will, however, be subject to federal income tax at regular corporate income tax rates on any investment company taxable income and net capital gain that it fails to distribute. If for any taxable year a Portfolio does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable to the shareholders as ordinary dividends to the extent of such Portfolio’s current and accumulated earnings and profits. If a Portfolio fails to distribute, by the close of each calendar year, at least an amount equal to the sum of 98% of its ordinary taxable income for such year and 98% of its net capital gain for the one year period ending October 31 in such year, plus certain undistributed amounts from previous years on which the Portfolio paid no federal income tax, it will be liable for a 4% excise tax on the undistributed amount of such income.

Distributions by one of the Portfolios of investment company taxable income will be taxable to you as ordinary dividend income (to the extent of the current or accumulated earnings and profits of the Portfolio). Due to each Portfolio’s expected investments, distributions generally will not be eligible for the dividends received deduction allowed to corporate shareholders and will not qualify for the reduced rate of tax for qualified dividend income allowed to individuals. Distributions of net capital gain realized by a Portfolio and distributed or credited to you will be taxable to you as long-term capital gain regardless of the length of time you have owned shares of the Portfolio. Distributions by a Portfolio in excess of current and accumulated earnings and profits of such Portfolio will first reduce the adjusted tax basis of your shares and, after the adjusted tax basis is reduced to zero, will constitute capital gain to you (assuming the shares are held as capital assets).

When you sell shares of a Portfolio or have shares repurchased by the Portfolio, any gain or loss you realize will generally be treated as a long-term capital gain or loss if you have held your shares for more than one year, or as a short-term capital gain or loss if you have held your shares for one year or less. However, if you sell Portfolio shares on which a long-term capital gain distribution has been received and you have held the shares for six months or less, any loss you realize will be treated as a long-term capital loss to the extent of any long-term capital gain distribution received by you (including amounts credited as an undistributed capital gain dividend) with respect to such shares. Each January, you will be sent information on the tax status of any distribution made during the previous calendar year. Because each shareholder’s situation is unique, you should always consult your tax advisor concerning the effect income taxes may have on your individual investment.

The foregoing is a general and abbreviated summary of the provisions of the Code and the Treasury regulations in effect as they directly govern the taxation of each Portfolio and its shareholders. These provisions are subject to change by legislative or administrative action, and any such change may be retroactive. A more complete discussion of the tax rules applicable to each Portfolios and its shareholders can be found in the Statement of Additional Information that is incorporated by reference into the prospectus. Shareholders are urged to consult their tax advisors regarding specific questions of U.S. federal, state, local and foreign income or other taxes.

Statements

Every shareholder automatically receives regular account statements. In addition, for tax purposes, shareholders also receive a yearly statement describing the characteristics of any dividends or other distributions received.

For more information:

This prospectus contains important information you should know before you invest. Read it carefully and keep it for future reference. More information about the BATS is available from your program sponsor, or upon request, including:

Annual/Semi-Annual Reports

These reports contain additional information about each of the Portfolio’s investments, describe each Portfolio’s performance, list Portfolio holdings and discuss recent market conditions, economic trends and fund strategies for the last fiscal year.

Statement of Additional Information (SAI)

A Statement of Additional Information dated October , 2004 has been filed with the Securities and Exchange Commission (SEC). The SAI, which includes additional information about the BATS, may be obtained free of charge, along with the Trust’s annual and semi-annual reports, by calling (888) 825-2257. The SAI, as supplemented from time to time, is incorporated by reference into this prospectus.

Securities and Exchange Commission (SEC)

You may also view and copy public information about the Trust, including the SAI, by visiting the EDGAR database on the SEC Web site (http://www.sec.gov) or the SEC’s Public Reference Room in Washington, D.C. Information about the operation of the public reference room can be obtained by calling the SEC directly at (202) 942-8090. Copies of this information can be obtained, for a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the Public Reference Section of the SEC, Washington, D.C. 20549-0102.

Portfolio Characteristics and Holdings

For additional information, as well as more current information and portfolio holdings and characteristics, you may call (888) 825-2257.

INVESTMENT COMPANY ACT FILE NO. 811-21457

STATEMENT OF ADDITIONAL INFORMATION

BLACKROCK BOND ALLOCATION TARGET SHARES

This Statement of Additional Information provides supplementary information pertaining to shares representing interests in BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series M Portfolio, BATS: Series P Portfolio and BATS: Series I Portfolio (collectively referred as the “Portfolio” unless otherwise noted) of BlackRock Bond Allocation Target Shares (“BATS” or the “Trust”). This Statement of Additional Information is not a prospectus, and should be read only in conjunction with the prospectus of the Trust relating to the Portfolio, dated October , 2004, as amended from time to time (the “Prospectus”). The Prospectus may be obtained by calling toll-free (888) 825-2257. This Statement of Additional Information is dated October , 2004. Capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Prospectus.

TABLE OF CONTENTS


		Page
THE TRUST		2

INVESTMENT POLICIES		2

ADDITIONAL INVESTMENT LIMITATIONS		30

TRUSTEES AND OFFICERS		32

INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND SERVICING ARRANGEMENTS		38

EXPENSES		42

PORTFOLIO TRANSACTIONS		42

VALUATION OF PORTFOLIO SECURITIES		46

PERFORMANCE INFORMATION		48

TAXES		52

ADDITIONAL INFORMATION CONCERNING SHARES		57

MISCELLANEOUS		59

FINANCIAL STATEMENTS		61

APPENDIX A		1

APPENDIX B		1

APPENDIX C PROXY VOTING PROCEDURES		1

THE TRUST

The Trust was organized as a Delaware statutory trust on March 5, 2003 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Amended and Restated Agreement and Declaration of Trust authorizes the Board of Trustees to classify and reclassify any unissued shares into one or more classes of shares. Pursuant to this authority, the Trustees have authorized the issuance of an unlimited number of shares in five investment portfolios.

INVESTMENT POLICIES

The following supplements information contained in the Prospectus concerning the Portfolio’s investment policies. For a description of the objective and policies of the Portfolio, see “Primary Investment Strategies” in the Prospectus. To the extent that an investment strategy is discussed in this Statement of Additional Information but not in the Prospectus, such strategy is not a principal strategy of the Portfolio.

Additional Information on Portfolio Investments

THE FOLLOWING APPLIES TO EACH PORTFOLIO EXCEPT AS NOTED:

Non-Diversified Status. The Portfolio is classified as a non-diversified portfolio under the 1940 Act. Investment returns on a non-diversified portfolio typically are dependent upon the performance of a smaller number of securities relative to the number held in a diversified portfolio. Consequently, the change in value of any one security may affect the overall value of a non-diversified portfolio more than it would a diversified portfolio. Because it can concentrate its investments in the obligations of a smaller number of issuers, the Portfolio may be more at risk than a more widely diversified fund to any single economic, political or regulatory event which harms one or more of these issuers.

Duration. The Portfolio is non-diversified and is available solely to wrap-fee clients of BlackRock from whom BlackRock has a fixed income mandate that is described in the Prospectus. The Portfolio invests in a manner intended to assist BlackRock in achieving the duration or other goal for those clients and its assets, taken by themselves, may not necessarily have such duration.

Non-U.S. Investments. Investing in non-U.S. securities involves risks not typically associated with investing in securities of companies organized and operated in the United States. Because non-U.S. securities generally are denominated and pay dividends or interest in non-U.S. currencies, the value of a portfolio that invests in non-U.S. securities as measured in U.S. dollars will be affected favorably or unfavorably by changes in exchange rates. The Portfolio’s investments in non-U.S. securities may also be adversely affected by changes in non-U.S. political or social conditions, diplomatic relations, confiscatory taxation, expropriation, limitation on the removal of funds or assets, or imposition of (or change in) exchange control regulations. In addition, changes in government administrations or economic or monetary policies in the U.S. or abroad

could result in appreciation or depreciation of portfolio securities and could favorably or adversely affect the Portfolio’s operations. In general, less information is publicly available with respect to non-U.S. issuers than is available with respect to U.S. companies. Most non-U.S. companies are also not subject to the same accounting and financial reporting requirements applicable to issuers in the United States. While the volume of transactions effected on non-U.S. stock exchanges has increased in recent years, it remains appreciably below that of the New York Stock Exchange. Accordingly, the Portfolio’s non-U.S. investments may be less liquid and their prices may be more volatile than comparable investments in securities in U.S. companies. In addition, there is generally less government supervision and regulation of securities exchanges, brokers and issuers in non-U.S. countries.

The BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series P Portfolio and BATS: Series I Portfolio may invest their assets in countries with emerging economies or securities markets. However, the BATS: Series C Portfolio and BATS: Series I Portfolio may only invest in securities that are rated investment grade. Political and economic structures in many of these countries may be undergoing significant evolution and rapid development, and these countries may lack the social, political and economic stability characteristic of more developed countries. Some of these countries may have in the past failed to recognize private property rights and have at times nationalized or expropriated the assets of private companies. As a result the risks described above, including the risks of nationalization or expropriation of assets, may be heightened. In addition, unanticipated political or social developments may affect the value of investments in these countries and the availability to the Portfolio of additional investments in emerging market countries. The small size and inexperience of the securities markets in certain of these countries and the limited volume of trading in securities in these countries may make investments in the countries illiquid and more volatile than investments in Japan or most Western European countries. There may be little financial or accounting information available with respect to issuers located in certain emerging market countries, and it may be difficult to assess the value or prospects of an investment in such issuers.

Investments in non-dollar denominated securities may be on either a currency hedged or unhedged basis, and may hold from time to time various non-U.S. currencies pending investment or conversion into U.S. dollars. Some of these instruments may have the characteristics of futures contracts. In addition, the Portfolio may engage in non-U.S. currency exchange transactions to seek to protect against changes in the level of future exchange rates which would adversely affect the Portfolio’s performance. These investments and transactions involving non-U.S. securities, currencies, options (including options that relate to non-U.S. currencies), futures, hedging and cross-hedging are described below under “Interest Rate Swaps, Floors, Caps, Currency Swaps and Swaptions” and “Options and Futures Contracts.”

Brady Bonds. The BATS: Series S Portfolio’s, BATS: Series C Portfolio’s, BATS: Series P Portfolio’s and BATS: Series I Portfolio’s emerging market debt securities may include emerging market governmental debt obligations commonly referred to as Brady Bonds, provided that, in the case of the BATS: Series C Portfolio

and BATS: Series I Portfolio, the Brady Bonds must be rated investment grade. Brady Bonds are securities created through the exchange of existing commercial bank loans to sovereign entities for new obligations in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the “Brady Plan”). Brady Plan debt restructurings have been implemented in a number of countries, including: Argentina, Bolivia, Brazil, Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, Panama, Peru, the Philippines, Poland, Uruguay, and Venezuela.

Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively traded in the over-the-counter secondary market. Brady Bonds are not considered to be U.S. Government securities. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds, are generally collateralized in full as to principal by U.S. Treasury zero-coupon bonds having the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are collateralized on a one-year or longer rolling-forward basis by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of interest payments or, in the case of floating rate bonds, initially is equal to at least one year’s interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to “value recovery payments” in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized. Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity (the uncollateralized amounts constitute the “residual risk”).

Most Mexican Brady Bonds issued to date have principal repayments at final maturity fully collateralized by U.S. Treasury zero-coupon bonds (or comparable collateral denominated in other currencies) and interest coupon payments collateralized on an 18-month rolling-forward basis by funds held in escrow by an agent for the bondholders. A significant portion of the Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date have repayments at final maturity collateralized by U.S. Treasury zero-coupon bonds (or comparable collateral denominated in other currencies) and/or interest coupon payments collateralized on a 14-month (for Venezuela) or 12-month (for Argentina) rolling-forward basis by securities held by the Federal Reserve Bank of New York as collateral agent.

Brady Bonds involve various risk factors described above associated with investing in non-U.S. securities, including the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in which the Portfolios may invest will not be subject to restructuring arrangements or to requests for new credit, which may cause the Portfolios to suffer a loss of interest or principal on any of its holdings. A significant amount of the Brady Bonds that the BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series P Portfolio and/or BATS: Series I Portfolio may purchase have no or

limited collateralization, and the BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series P Portfolio and/or BATS: Series I Portfolio will be relying for payment of interest and (except in the case of principal collateralized Brady Bonds) principal primarily on the willingness and ability of the non-U.S. government to make payment in accordance with the terms of the Brady Bonds. A substantial portion of the Brady Bonds and other sovereign debt securities in which the BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series P Portfolio and/or BATS: Series I Portfolio may invest are likely to be acquired at a discount. There can be no assurance that Brady Bonds acquired by the BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series P Portfolio and/or BATS: Series I Portfolio will not be subject to restructuring arrangements or to requests for new credit, which may cause the BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series P Portfolio and/or BATS: Series I Portfolio to suffer a loss of interest or principal on any of its holdings.

ADRs, EDRs and GDRs. The Portfolio may invest in both sponsored and unsponsored American Depository Receipts (“ADRs”), European Depository Receipts (“EDRs”), Global Depository Receipts (“GDRs”) and other similar global instruments. ADRs typically are issued by an American bank or trust company and evidence ownership of underlying securities issued by a non-U.S. corporation. EDRs, which are sometimes referred to as Continental Depository Receipts, are receipts issued in Europe, typically by non-U.S. banks and trust companies, that evidence ownership of either non-U.S. or domestic underlying securities. GDRs are depository receipts structured like global debt issues to facilitate trading on an international basis. Unsponsored ADR, EDR and GDR programs are organized independently and without the cooperation of the issuer of the underlying securities. As a result, available information concerning the issuer may not be as current as for sponsored ADRs, EDRs and GDRs, and the prices of unsponsored ADRs, EDRs and GDRs may be more volatile if such instruments were sponsored by the issuer. Investments in ADRs, EDRs and GDRs present additional investment considerations as described under “Non-U.S. Investments.”

Repurchase Agreements. The Portfolio may agree to purchase securities from financial institutions subject to the seller’s agreement to repurchase them at an agreed upon time and price (“repurchase agreements”). Repurchase agreements are, in substance, loans. Default by or bankruptcy of a seller would expose the Portfolio to possible loss because of adverse market action, expenses and/or delays in connection with the disposition of the underlying obligations. The repurchase price under the repurchase agreements generally equals the price paid by the Portfolio involved plus interest negotiated on the basis of current short-term rates (which may be more or less than the rate on securities underlying the repurchase agreement). The financial institutions with which the Portfolio may enter into repurchase agreements will be banks and non-bank dealers, if such banks and non-bank dealers are deemed creditworthy by the Portfolio’s investment advisor. The Portfolio’s investment advisor will continue to monitor creditworthiness of the seller under a repurchase agreement, and will require the seller to maintain during the term of the agreement the value of the securities subject to the agreement to equal at least the repurchase price (including accrued interest). The accrued premium is the amount specified in the repurchase agreement or the daily amortization of the difference between the purchase price and the repurchase price

\specified in the repurchase agreement. The Portfolio’s investment advisor will mark-to-market daily the value of the securities. Securities subject to repurchase agreements will be held by the Trust’s custodian (or sub-custodian) in the Federal Reserve/Treasury book-entry system or by another authorized securities depository. Repurchase agreements are considered to be loans by the Portfolio under the 1940 Act.

The use of repurchase agreements involves certain risks. For example, if the seller of securities under a repurchase agreement defaults on its obligation to repurchase the underlying securities, as a result of its bankruptcy or otherwise, the Portfolio will seek to dispose of such securities, which action could involve costs or delays. If the seller becomes insolvent and subject to liquidation or reorganization under applicable bankruptcy or other laws, the Portfolio’s ability to dispose of the underlying securities may be restricted. Finally, it is possible that the Portfolio may not be able to substantiate its interest in the underlying securities. To minimize this risk, the securities underlying the repurchase agreement will be held by the custodian at all times in an amount at least equal to the repurchase price, including accrued interest. If the seller fails to repurchase the securities, the Portfolio may suffer a loss to the extent proceeds from the sale of the underlying securities are less than the repurchase price.

Reverse Repurchase Agreements and Other Borrowings . The Portfolio is authorized to borrow money from banks. If the securities held by the Portfolio should decline in value while borrowings are outstanding, the net asset value of the Portfolio’s outstanding shares will decline in value by proportionately more than the decline in value suffered by the Portfolio’s securities. Borrowings may be made by the Portfolio through reverse repurchase agreements under which the Portfolio sells portfolio securities to financial institutions such as banks and broker-dealers and agrees to repurchase them at a particular date and price. Such agreements are considered to be borrowings under the 1940 Act. The Portfolio will use the proceeds of reverse repurchase agreements to purchase additional securities within the Portfolio’s guidelines. This use of reverse repurchase agreements may be regarded as leveraging and, therefore, speculative. Reverse repurchase agreements involve the risks that the interest income earned in the investment of the proceeds will be less than the interest expense, that the market value of the securities sold by the Portfolio may decline below the price of the securities the Portfolio is obligated to repurchase and that the securities may not be returned to the Portfolio. During the time a reverse repurchase agreement is outstanding, the investment advisor will designate liquid assets on its books and records in an amount equal to the amount of the Portfolio’s commitments. The Portfolio will not borrow any money if after giving effect to the borrowing its total borrowings will exceed, in the aggregate, 33 ¹ / 3 % of the value of its total assets.

Variable and Floating Rate Instruments. The Portfolio may purchase rated and unrated variable and floating rate instruments. These instruments may include variable amount master demand notes that permit the indebtedness thereunder to vary in addition to providing for periodic adjustments in the interest rate.

The interest rate of an inverse floater resets in the opposite direction from the market rate of interest on a security or index to which it is related. An inverse floater

may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values.

With respect to purchasable variable and floating rate instruments, the investment advisor will consider the earning power, cash flows and liquidity ratios of the issuers and guarantors of such instruments and, if the instruments are subject to a demand feature, will monitor their financial status to meet payment on demand. Such instruments may include variable amount master demand notes that permit the indebtedness thereunder to vary in addition to providing for periodic adjustments in the interest rate. The absence of an active secondary market with respect to particular variable and floating rate instruments could make it difficult for the Portfolio to dispose of a variable or floating rate note if the issuer defaulted on its payment obligation or during periods that the Portfolio is not entitled to exercise its demand rights, and the Portfolio could, for these or other reasons, suffer a loss with respect to such instruments.

Preferred Securities . The Portfolio may invest in preferred securities. Preferred stock has a preference over common stock in liquidation (and generally dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Trust Preferred Securities. The Portfolio may invest in trust preferred securities. Trust preferred securities are a comparatively new asset class. Trust preferred securities are typically issued by corporations, generally in the form of interest bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The trust preferred securities market consists of both fixed and adjustable coupon rate securities that are either perpetual in nature or have stated maturity dates.

securities have not been made), these trust preferred securities are often treated as close substitutes for traditional preferred securities, both by issuers and investors. Trust preferred securities have some of the key characteristics of equity and became popular because they could be treated as preferred equity for accounting purposes. However, trust preferred securities are no longer treated as equity and are rarely issued in the current environment.

Trust preferred securities include but are not limited to trust originated preferred securities (“TOPRS(r)”); monthly income preferred securities (“MIPS(r)”); quarterly income bond securities (“QUIBS(r)”); quarterly income debt securities (“QUIDS(r)”); quarterly income preferred securities (“QUIPS/sm/”); corporate trust securities (“CORTS(r)”); public income notes (“PINES(r)”); and other trust preferred securities.

Trust preferred securities are typically issued with a final maturity date, although some are perpetual in nature. In certain instances, a final maturity date may be extended and/or the final payment of principal may be deferred at the issuer’s option for a specified time without default. No redemption can typically take place unless all cumulative payment obligations have been met, although issuers may be able to engage in open-market repurchases without regard to whether all payments have been paid.

Many trust preferred securities are issued by trusts or other special purpose entities established by operating companies and are not a direct obligation of an operating company. At the time the trust or special purpose entity sells such preferred securities to investors, it purchases debt of the operating company (with terms comparable to those of the trust or special purpose entity securities), which enables the operating company to deduct for tax purposes the interest paid on the debt held by the trust or special purpose entity. The trust or special purpose entity is generally required to be treated as transparent for Federal income tax purposes such that the holders of the trust preferred securities are treated as owning beneficial interests in the underlying debt of the operating company. Accordingly, payments on the trust preferred securities are treated as interest rather than dividends for Federal income tax purposes. The trust or special purpose entity in turn would be a holder of the operating company’s debt and would have priority with respect to the operating company’s earnings and profits over the operating company’s common shareholders, but would typically be subordinated to other classes of the operating company’s debt. Typically a preferred share has a rating that is slightly below that of its corresponding operating company’s senior debt securities.

Convertible Securities. The Portfolio may invest in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to nonconvertible income securities in that they ordinarily provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers, but lower yields than comparable

nonconvertible securities. The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security’s investment value. Convertible securities rank senior to common stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument.

Dollar Roll Transactions. To take advantage of attractive opportunities and to enhance current income, the Portfolio may enter into dollar roll transactions. A dollar roll transaction involves a sale by the Portfolio of a mortgage-backed or other security concurrently with an agreement by the Portfolio 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 Portfolio 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 Portfolio, and the income from these investments will generate income for the Portfolio. This use of dollar rolls may be regarded as leveraging and, therefore, speculative. If the income earned from the investment of the proceeds of the transaction 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 Portfolio compared with what the performance would have been without the use of dollar rolls. At the time the Portfolio enters into a dollar roll transaction, the investment advisor will designate liquid assets on its books and records in an amount equal to the repurchase price (including accrued interest) and will subsequently monitor the account to ensure that its value is maintained.

Dollar roll transactions involve the risk that the market value of the securities the Portfolio is required to purchase may decline below the agreed upon repurchase price of those securities. If the broker/dealer to whom the Portfolio sells securities becomes insolvent, the Portfolio’s right to purchase or repurchase securities may be restricted. Successful use of mortgage dollar rolls may depend upon the investment advisor’s ability to correctly predict interest rates and prepayments. There is no assurance that dollar rolls can be successfully employed.

Lease Obligations. The Portfolio may hold participation certificates in a lease, an installment purchase contract, or a conditional sales contract (“lease obligations”).

The investment advisor will monitor the credit standing of each municipal borrower and each entity providing credit support and/or a put option relating to lease obligations. In determining whether a lease obligation is liquid, the investment advisor will consider, among other factors, the following: (i) whether the lease can be cancelled; (ii) the degree of assurance that assets represented by the lease could be sold; (iii) the strength of the lessee’s general credit (e.g., its debt, administrative, economic, and

financial characteristics); (iv) in the case of a municipal lease, the likelihood that the municipality would discontinue appropriating funding for the leased property because the property is no longer deemed essential to the operations of the municipality (e.g., the potential for an “event of nonappropriation”); (v) legal recourse in the event of failure to appropriate; (vi) whether the security is backed by a credit enhancement such as insurance; and (vii) any limitations which are imposed on the lease obligor’s ability to utilize substitute property or services other than those covered by the lease obligation. Municipal leases, like other municipal debt obligations, are subject to the risk of non-payment. The ability of issuers of municipal leases to make timely lease payments may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated and reallocated among federal, state and local governmental units. Such non-payment would result in a reduction of income to the Portfolio, and could result in a reduction in the value of the municipal lease experiencing non-payment and a potential decrease in the net asset value of the Portfolio. Issuers of municipal securities might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, the Portfolio could experience delays and limitations with respect to the collection of principal and interest on such municipal leases and the Portfolio may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in lease payments, the Portfolio might take possession of and manage the assets securing the issuer’s obligations on such securities, which may increase the Portfolio’s operating expenses and adversely affect the net asset value of the Portfolio. When the lease contains a non-appropriation clause, however, the failure to pay would not be a default and the Portfolio would not have the right to take possession of the assets. Any income derived from the Portfolio’s ownership or operation of such assets may not be tax-exempt. In addition, the Portfolio’s intention to qualify as a “regulated investment company” under the Internal Revenue Code of 1986, as amended, may limit the extent to which the Portfolio may exercise its rights by taking possession of such assets, because as a regulated investment company the Portfolio is subject to certain limitations on its investments and on the nature of its income.

Commercial Paper. The Portfolio may purchase commercial paper rated (at the time of purchase) “A-1” by S&P or “Prime-1” by Moody’s or, when deemed advisable by the Portfolio’s investment advisor, “high quality” issues rated “A-2” or “Prime-2” by S&P or Moody’s, respectively. These ratings symbols are described in Appendix A.

Commercial paper purchasable by the Portfolio includes “Section 4(2) paper,” a term that includes debt obligations issued in reliance on the “private placement” exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). Section 4(2) paper is restricted as to disposition under the federal securities laws, and is frequently sold (and resold) to institutional investors such as the Portfolio through or with the assistance of investment dealers who make a market in the Section 4(2) paper, thereby providing liquidity. Certain transactions in Section 4(2) paper may qualify for the registration exemption provided in Rule 144A under the 1933 Act.

Investment Grade Debt Obligations. The Portfolio may invest in “investment grade securities,” which are securities rated in the four highest rating categories of a

nationally recognized statistical rating agency (“NRSRO”) or deemed to be of equivalent quality by the Portfolio’s investment advisor. It should be noted that debt obligations rated in the lowest of the top four ratings (i.e., “Baa” by Moody’s or “BBB” by S&P) are considered to have some speculative characteristics and are more sensitive to economic change than higher-rated securities. If an investment grade security of the Portfolio is subsequently downgraded below investment grade, the Portfolio’s investment advisor will consider such an event in determining whether the Portfolio should continue to hold the security. Subject to its other investment strategies, there is no limit on the amount of such downgraded securities the Portfolio may hold, although under normal market conditions the investment advisor does not expect to hold these securities to a material extent. See Appendix A to this Statement of Additional Information for a description of applicable securities ratings.

Pay-in-kind Bonds . The Portfolio may invest in pay-in-kind, or PIK, bonds. PIK bonds are bonds which pay interest through the issuance of additional debt or equity securities. Similar to zero coupon obligations, pay-in-kind bonds also carry additional risk as holders of these types of securities realize no cash until the cash payment date unless a portion of such securities is sold and, if the issuer defaults, the Portfolio may obtain no return at all on its investment. The market price of pay-in-kind bonds is affected by interest rate changes to a greater extent, and therefore tends to be more volatile than that of securities which pay interest in cash. Additionally, current federal tax law requires the holder of certain pay-in-kind bonds to accrue income with respect to these securities prior to the receipt of cash payments. To maintain its qualification as a regulated investment company and avoid liability for federal income and excise taxes, each Portfolio may be required to distribute income accrued with respect to these securities and may have to dispose of portfolio securities under disadvantageous circumstances in order to generate cash to satisfy these distribution requirements.

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

Warrants to Purchase. The Portfolio may purchase warrants, which are privileges issued by corporations enabling the owners to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time. Subscription rights normally have a short life span to expiration. The purchase of warrants involves the risk that the Portfolio could lose the purchase value of a warrant if the right to subscribe to additional shares is not exercised prior to the warrants’ expiration. Also, the purchase of warrants involves the risk that the effective price paid for the warrant added to the subscription price of the related security may exceed the value of the subscribed security’s market price such as when there is no movement in the level of the underlying security.

Options and Futures Contracts. To the extent consistent with its investment goal, the Portfolio may write (i.e., sell) covered call options, buy put options, buy call options and write secured put options for the purpose of hedging or earning additional income, which may be deemed speculative or cross-hedging. For the payment of a premium, the purchaser of an option obtains the right to buy (in the case of a call option) or to sell (in the case of a put option) the item which is the subject of the option at a stated exercise price for a specific period of time. These options may relate to particular securities or securities indices, and may or may not be listed on a securities exchange and may or may not be issued by the Options Clearing Corporation. While the Portfolio will not purchase put and call options when the aggregate premiums on outstanding options exceed 5% of its total assets at the time of purchase, and will not write options on more than 25% of the value of its total assets (measured at the time an option is written), there is no limit on the amount of the Portfolio’s assets that can be put at risk through the use of options. In addition, unlisted options are not subject to the protections afforded purchasers of listed options issued by the Options Clearing Corporation, which performs the obligations of its members if they default.

To the extent consistent with its investment goal, the Portfolio may also invest in futures contracts and options on futures contracts (interest rate futures contracts or index futures contracts, as applicable). These instruments are described in Appendix B to this Statement of Additional Information. The notional value of the Portfolio’s contracts may equal or exceed 100% of its net assets, although the Portfolio will not purchase or sell a futures contract unless immediately afterwards the aggregate amount of margin deposits on its existing futures positions plus the amount of premiums paid for related futures options entered into for other than bona fide hedging purposes is 5% or less of its net assets. There is no limit on the amount of the Portfolio’s assets that can be put at risk through the use of futures contracts. Futures contracts obligate the Portfolio, at maturity, to take or make delivery of securities, the cash value of a securities index or a stated quantity of a non-U.S. currency. The Portfolio may sell a futures contract in order to offset an expected decrease in the value of its portfolio positions that might otherwise result from a market decline or currency exchange fluctuation. The Portfolio may do so either to hedge the value of its securities portfolio as a whole, or to protect against declines occurring prior to sales of securities in the value of the securities to be sold. In addition, the Portfolio may utilize futures contracts in anticipation of changes in the composition of its holdings or in currency exchange rates.

The Portfolio may purchase and sell call and put options on futures contracts traded on an exchange or board of trade. When the Portfolio purchases an option on a futures contract, it has the right to assume a position as a purchaser or a seller of a futures contract at a specified exercise price during the option period. When the Portfolio sells an option on a futures contract, it becomes obligated to sell or buy a futures contract if the option is exercised. In connection with the Portfolio’s position in a futures contract or related option, the investment advisor will designate liquid assets on its books and records in an amount equal to the amount of the Portfolio’s commitments or will otherwise cover its position in accordance with applicable SEC requirements. The primary risks associated with the use of futures contracts and options are (a) the imperfect correlation between the change in market value of the instruments held by the Portfolio and the price of the futures contract or option; (b) possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c) losses caused by unanticipated market movements, which are potentially unlimited; (d) the investment advisor’s inability to predict correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors; and (e) the possibility that the counterparty will default in the performance of its obligations.

While the Trust has filed a notice with the Commodity Futures Trading Commission (the “CFTC”), it is not subject to any CFTC-imposed restrictions on trading in futures contracts or options thereon. The Trust is, however, subject to other CFTC rules such as the general antifraud provisions, prohibitions on manipulation and trade reporting requirements.

Options on particular securities may be more volatile than the underlying securities, and therefore, on a percentage basis, an investment in the underlying securities themselves. The Portfolio will write call options only if they are “covered.” In the case of a call option on a security, the option is “covered” if the Portfolio owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, liquid assets in such amount are designated on the Trust’s books and records in an amount equal to the amount of the Portfolio’s commitments to the extent required by SEC guidelines) upon conversion or exchange of other securities held by it. For a call option on an index, the option is covered if the Portfolio maintains with its custodian liquid assets equal to the contract value. A call option is also covered if the Portfolio holds a call on the same security or index as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written provided the difference is maintained by the Portfolio in liquid assets designated on the Trust’s books and records.

When the Portfolio purchases an option, the premium paid by it is recorded as an asset of the Portfolio. When a Portfolio writes a put option, in return for receipt of the premium, it assumes the obligation to pay the strike price for the instrument underlying the option if the other party to the option chooses to exercise it. When the Portfolio

writes an option, an amount equal to the net premium (the premium less the commission) received by the Portfolio is included in the liability section of the Portfolio’s statement of assets and liabilities as a deferred credit. The amount of this asset or deferred credit will be subsequently marked-to-market to reflect the current value of the option purchased or written. The current value of the traded option is the last sale price or, in the absence of a sale, the mean between the last bid and asked prices. If an option purchased by the Portfolio expires unexercised the Portfolio realizes a loss equal to the premium paid. If the Portfolio enters into a closing sale transaction on an option purchased by it, the Portfolio will realize a gain if the premium received by the Portfolio on the closing transaction is more than the premium paid to purchase the option, or a loss if it is less. If an option written by the Portfolio expires on the stipulated expiration date or if the Portfolio enters into a closing purchase transaction, it will realize a gain (or loss if the cost of a closing purchase transaction exceeds the net premium received when the option is sold) and the deferred credit related to such option will be eliminated. If an option written by the Portfolio is exercised, the proceeds of the sale will be increased by the net premium originally received and the Portfolio will realize a gain or loss. There are several risks associated with transactions in options on securities and indexes. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. In addition, a liquid secondary market for particular options, whether traded over-the-counter or on a national securities exchange may be absent for reasons which include the following: there may be insufficient trading interest in certain options; restrictions may be imposed by an exchange on opening transactions or closing transactions or both; trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities; unusual or unforeseen circumstances may interrupt normal operations on an exchange; the facilities of an exchange or the Options Clearing Corporation may not at all times be adequate to handle current trading volume; or one or more exchange could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options that had been issued by the Options Clearing Corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms.

Securities Lending. The Portfolio may seek additional income by lending securities on a short-term basis. The securities lending agreements will require that the loans be secured by collateral in cash, U.S. Government securities or irrevocable bank letters of credit maintained on a current basis equal in value to at least the market value of the loaned securities. The Portfolio may not make such loans in excess of 33 ¹ / 3 % of the value of its total assets. Securities loans involve risks of delay in receiving additional collateral or in recovering the loaned securities, or possibly loss of rights in the collateral if the borrower of the securities becomes insolvent.

The Portfolio would continue to accrue interest on loaned securities and would also earn income on investment collateral for such loans. Any cash collateral received by the Portfolio in connection with such loans may be invested in a broad range of high

quality, U.S. dollar-denominated money market instruments that meet the restrictions applicable to money market funds. Specifically, cash collateral may be invested in any of the following instruments: (a) securities issued or guaranteed as to principal and interest by the U.S. Government or by its agencies or instrumentalities and related custodial receipts; (b) “first tier” quality commercial paper and other obligations issued or guaranteed by U.S. and non-U.S. corporations and other issuers rated (at the time of purchase) in the highest rating category by at least two NRSROs, or one if only rated by one NRSRO; (c) U.S. dollar-denominated obligations issued or supported by the credit of U.S. or non-U.S. banks or savings institutions with total assets in excess of $1 billion (including obligations of non-U.S. branches of such banks) (i.e., CDs, BA and time deposits); (d) repurchase agreements relating to the above instruments, as well as corporate debt; and (e) unaffiliated and, to the extent permitted by SEC guidelines, affiliated money market funds. Any such investments must be rated “first tier” and must have a maturity of 397 days or less from the date of purchase.

Yields and Ratings. The yields on certain obligations are dependent on a variety of factors, including general market conditions, conditions in the particular market for the obligation, the financial condition of the issuer, the size of the offering, the maturity of the obligation and the ratings of the issue. The ratings of Moody’s, Fitch Investor Services, Inc. (“Fitch”) and S&P represent their respective opinions as to the quality of the obligations they undertake to rate. Ratings, however, are general and are not absolute standards of quality. Consequently, obligations with the same rating, maturity and interest rate may have different market prices. Subsequent to its purchase by the Portfolio, a rated security may cease to be rated. The Portfolio’s investment advisor will consider such an event in determining whether the Portfolio should continue to hold the security. Subject to its other investment strategies, there is no limit on the amount of unrated securities the Portfolio may hold, although under normal market conditions the investment advisor does not expect to hold these securities to a material extent.

Interest Rate Swaps, Floors, Caps, Currency Swaps and Swaptions. The Portfolio may enter into interest rate swaps, may purchase or sell interest rate caps and floors and may enter into options on swap agreements (“swaptions”). The Portfolios may enter into these transactions primarily to preserve a return or spread on a particular investment or portion of their holdings, as a duration management technique or to protect against an increase in the price of securities a Portfolio anticipates purchasing at a later date. They may also be used for speculation to increase returns.

The Portfolio may enter into interest rate swaps, caps, floors and swaptions on either an asset-based or liability-based basis, depending on whether it is hedging its assets or its liabilities. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or in a “basket” of securities representing a particular index. Forms

of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; and interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”.

The Portfolio will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the Portfolio receiving or paying, as the case may be, only the net amount of the two payments. In contrast, currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency.

A swaption is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The Portfolio may write (sell) and purchase put and call swaptions.

Whether the Portfolio’s use of swap agreements or swaptions will be successful in furthering their investment objectives will depend on the advisor’s ability to predict correctly whether certain types of investments are likely to product greater returns than other investments. Because they are two-party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, the Portfolio bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Portfolio will enter into swap agreements only with counterparties that meet certain standards of creditworthiness. If there is a default by the other party to such a transaction, the Portfolio will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid. Caps and floors are less liquid than swaps.

The swaps market is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Portfolio’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

Depending on the terms of the particular option agreement, the Portfolio will generally incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. When the Portfolio purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when the Portfolio writes a swaption, upon exercise of the option the Portfolio will become obligated according to the terms of the underlying agreement.

The Portfolio will accrue the net amount of the excess, if any, of its obligations over its entitlements with respect to each interest rate or currency swap or swaption on a daily basis and its adviser or sub-adviser will designate liquid assets on its books and

records in an amount having an aggregate net asset value at least equal to the accrued excess to the extent required by SEC guidelines. If the other party to an interest rate swap defaults, the Portfolio’s risk of loss consists of the net amount of interest payments that the Portfolio is contractually entitled to receive. Because currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations.

In order to protect against currency rate fluctuations, the Portfolio also may enter into currency swaps. Currency swaps involve the exchange of the rights of the Portfolio and another party to make or receive payments in specified currencies.

Credit derivatives. The Portfolio may engage in credit derivative transactions. There are two broad categories of credit derivatives: default price risk derivatives and market spread derivatives. Default price risk derivatives are linked to the price of reference securities or loans after a default by the issuer or borrower, respectively. Market spread derivatives are based on the risk that changes in market factors, such as credit spreads, can cause a decline in the value of a security, loan or index. There are three basic transactional forms for credit derivatives: swaps, options and structured instruments. The use of credit derivatives is a highly specialized activity which involves strategies and risks different from those associated with ordinary portfolio security transactions. If the investment advisor is incorrect in its forecasts of default risks, market spreads or other applicable factors, the investment performance of the Portfolio would diminish compared with what it would have been if these techniques were not used. Moreover, even if the investment advisor is correct in its forecasts, there is a risk that a credit derivative position may correlate imperfectly with the price of the asset or liability being hedged. There is no limit on the amount of credit derivative transactions that may be entered into by the Portfolio. The Portfolio’s risk of loss in a credit derivative transaction varies with the form of the transaction. For example, if the Portfolio purchases a default option on a security, and if no default occurs with respect to the security, the Portfolio’s loss is limited to the premium it paid for the default option. In contrast, if there is a default by the grantor of a default option, the Portfolio’s loss will include both the premium that it paid for the option and the decline in value of the underlying security that the default option hedged.

Investment Companies. In connection with the management of its daily cash positions, the Portfolio may invest in securities issued by other investment companies which invest in short-term debt securities and which seek to maintain a $1.00 net asset value per share. The Portfolio may also invest in securities issued by other investment companies with investment objectives similar to that of the Portfolio. Securities of other investment companies will be acquired within limits prescribed by the 1940 Act and set forth below. As a shareholder of another investment company, the Portfolio would bear, along with other shareholders, its pro rata portion of the other investment company’s expenses, including advisory fees. The Portfolio currently intends to limit its investments so that, as determined immediately after a securities purchase is made: (i) not more than 5% of the value of its total assets will be invested in the securities of any one investment

company; (ii) not more than 10% of the value of its total assets will be invested in the aggregate in securities of investment companies as a group; and (iii) not more than 3% of the outstanding voting stock of any one investment company will be owned by the Portfolio.

Liquidity Management. As a temporary defensive measure if its investment advisor determines that market conditions warrant, the Portfolio may invest without limitation in high quality money market instruments. During the course of its normal operations, the Portfolio may also invest in high quality money market instruments pending investment or to meet anticipated redemption requests. High quality money market instruments include U.S. government obligations, U.S. government agency obligations, dollar denominated obligations of non-U.S. issuers, bank obligations, including U.S. subsidiaries and branches of non-U.S. banks, corporate obligations, commercial paper, repurchase agreements and obligations of supranational organizations. Generally, such obligations will mature within one year from the date of settlement, but may mature within two years from the date of settlement.

Money Market Obligations of Domestic Banks, Non-U.S. Banks and Non-U.S. Branches of U.S. Banks. The Portfolio may purchase bank obligations, such as certificates of deposit, bankers’ acceptances and time deposits, including instruments issued or supported by the credit of U.S. or non-U.S. banks or savings institutions having total assets at the time of purchase in excess of $1 billion. The assets of a bank or savings institution will be deemed to include the assets of its domestic and non-U.S. branches for purposes of the Portfolio’s investment policies. Investments in short-term bank obligations may include obligations of non-U.S. banks and domestic branches of non-U.S. banks, and also non-U.S. branches of domestic banks.

The Portfolio may have difficulty disposing of Assignments and Participations. In certain cases, the market for such instruments is not highly liquid, and therefore the Portfolio anticipates that in such cases such instruments could be sold only to a limited number of institutional investors. The lack of a highly liquid secondary market may have an adverse impact on the value of such instruments and on the Portfolio’s ability to dispose of particular Assignments or Participations in response to a specific economic event, such as deterioration in the creditworthiness of the borrower. Assignments and Participations will not be considered illiquid so long as it is determined by the Portfolios’ adviser or sub-adviser that an adequate trading market exists for these securities. To the extent that liquid Assignments and Participations that a Portfolio holds become illiquid, due to the lack of sufficient buyers or market or other conditions, the percentage of the Portfolio’s assets invested in illiquid assets would increase.

Corporate and Bank Obligations. The Portfolio may invest in debt obligations of domestic or non-U.S. corporations and banks. Bank obligations may include certificates of deposit, notes, bankers’ acceptances and fixed time deposits. These obligations may be general obligations of the parent bank or may be limited to the issuing branch or subsidiary by the terms of a specific obligation or by government regulation. The Portfolio may also make interest-bearing savings deposits in commercial and savings banks in amounts not in excess of 5% of their respective total assets.

Corporate Debt Securities. Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. When interest rates rise, the value of corporate debt securities can be expected to decline. Debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities.

Mortgage-Related and Asset-Backed Securities . The Portfolio may make investments in residential and commercial mortgage-related and other asset-backed securities (i.e., securities backed by home equity loans, installment sale contracts, credit card receivables or other assets) issued by governmental entities and private issuers.

The yield characteristics of certain mortgage-related and asset-backed securities may differ from traditional debt securities. One such major difference is that all or a

principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to a mortgage-related or asset-backed security subject to such a prepayment feature will have the effect of shortening the maturity of the security. If a Portfolio has purchased such a mortgage-related or asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid. Conversely, an increase in interest rates may result in lengthening the anticipated maturity of such a security because expected prepayments are reduced. A prepayment rate that is faster than expected will reduce the yield to maturity of such a security, while a prepayment rate that is slower than expected may have the opposite effect of increasing yield to maturity.

There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. Mortgage-related securities guaranteed by the Government National Mortgage Association (“GNMA”) include Ginnie Maes, which are guaranteed as to the timely payment of principal and interest by GNMA and such guarantee is backed by the full faith and credit of the United States. GNMA is a wholly owned U.S. Government corporation within the Department of Housing and Urban Development. GNMA certificates also are supported by the authority of GNMA to borrow funds from the U.S. Treasury to make payments under its guarantee. Mortgage-related securities issued by the Federal National Mortgage Association (“FNMA”) include FNMA guaranteed Mortgage Pass-Through Certificates (also known as “Fannie Maes”) which are solely the obligations of the FNMA, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury. FNMA is a government-sponsored organization owned entirely by private stockholders. Fannie Maes are guaranteed as to timely payment of principal and interest by FNMA. Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation (“FHLMC”) include FHLMC Mortgage Participation Certificates (also known as “Freddie Macs” or “PCs”). FHLMC is a corporate instrumentality of the United States, created pursuant to an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs, which are not guaranteed by the United States or by any Federal Home Loan Banks and do not constitute a debt or obligation of the United States or of any Federal Home Loan Bank, are supported by the right of the issuer to borrow from the Treasury. Freddie Macs entitle the holder to timely payment of interest, which is guaranteed by the FHLMC. FHLMC guarantees either ultimate collection or timely payment of all principal payments on the underlying mortgage loans. When FHLMC generally does not guarantee timely payment of principal, FHLMC may remit the amount due on account of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable. FHLMC “Gold” PCs are guaranteed as to timely payment of interest and principal by FHLMC and represent 100% of the current fixed-rate production of the majority of FHLMC fixed-rate securities outstanding.

CMOs and REMICs. In general, collateralized mortgage obligations (“CMOs”) and real estate mortgage investment conduit pass-through or participation certificates (“REMICs”) are debt obligations of a legal entity that are collateralized by, or represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities (the “Mortgage Assets”), the payments on which are used to make payments on the CMOs or multiple pass-through securities. Investors may purchase beneficial interests in CMOs and REMICs, which are known as “regular” interests or “residual” interests. The residual in a CMO or REMIC structure generally represents the interest in any excess cash flow or tax liability remaining after making required payments of principal of and interest on the CMOs or REMICs, as well as the related administrative expenses of the issuer. Residual interests generally are junior to, and may be significantly more volatile than, “regular” CMO and REMIC interests. The markets for CMOs and REMICs may be more illiquid than those of other securities.

Each class of CMOs or REMIC Certificates, often referred to as a “tranche,” is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Principal prepayments on the Mortgage Assets underlying the CMOs or REMIC Certificates may cause some or all of the classes of CMOs or REMIC Certificates to be retired substantially earlier than their final distribution dates. Generally, interest is paid or accrues on all classes of CMOs or REMIC Certificates on a monthly basis.

The principal of and interest on the Mortgage Assets may be allocated among the several classes of CMOs or REMIC Certificates in various ways. In certain structures (known as “sequential pay” CMOs or REMIC Certificates), payments of principal, including any principal prepayments, on the Mortgage Assets generally are applied to the classes of CMOs or REMIC Certificates in the order of their respective final distribution dates. Thus, no payment of principal will be made on any class of sequential pay CMOs or REMIC Certificates until all other classes having an earlier final distribution date have been paid in full. Additional structures of CMOs or REMIC Certificates include, among others, “parallel pay” CMOs and REMIC Certificates. Parallel pay CMOs or REMIC Certificates are those which are structured to apply principal payments and prepayments of the Mortgage Assets to two or more classes concurrently on a proportionate or disproportionate basis. These simultaneous payments are taken into account in calculating the final distribution date of each class. A wide variety of REMIC Certificates may be issued in the parallel pay or sequential pay structures. These securities include accrual certificates (also known as “Z-Bonds”), which only accrue interest at a specified rate until all other certificates having an earlier final distribution date have been retired and are converted thereafter to an interest-paying security, and planned amortization class (“PAC”) certificates, which are parallel pay REMIC Certificates which generally require that specified amounts of principal be applied on each payment date to one or more classes of REMIC Certificates (the “PAC Certificates”), even though all other principal payments and prepayments of the Mortgage Assets are then required to be applied to one or more other classes of the Certificates. The scheduled principal payments for the PAC Certificates generally have the highest priority on each payment date after interest due has been paid to all classes entitled to receive interest currently. Shortfalls, if any, are added to the amount payable on the next

payment date. The PAC Certificate payment schedule is taken into account in calculating the final distribution date of each class of PAC. In order to create PAC tranches, one or more tranches generally must be created that absorb most of the volatility in the underlying Mortgage Assets. These tranches (often called “supports” or “companion” tranches) tend to have market prices and yields that are much more volatile than the PAC classes.

FNMA REMIC Certificates are issued and guaranteed as to timely distribution of principal and interest by FNMA. In addition, FNMA will be obligated to distribute on a timely basis to holders of FNMA REMIC Certificates required installments of principal and interest and to distribute the principal balance of each class of REMIC Certificates in full, whether or not sufficient funds are otherwise available.

For FHLMC REMIC Certificates, FHLMC guarantees the timely payment of interest, and also guarantees the ultimate payment of principal as payments are required to be made on the underlying mortgage participation certificates (“PCs”). PCs represent undivided interests in specified level payment, residential mortgages or participations therein purchased by FHLMC and placed in a PC pool. With respect to principal payments on PCs, FHLMC generally guarantees ultimate collection of all principal of the related mortgage loans without offset or deduction. FHLMC also guarantees timely payment of principal on certain PCs, referred to as “Gold PCs.”

The average life of a mortgage-related instrument, in particular, is likely to be substantially less than the original maturity of the mortgage pools underlying the securities as the result of scheduled principal payments and mortgage prepayments.

CMO Residuals . CMO residuals are mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the prepayment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments on the related underlying mortgage assets, in the same manner as an interest-only (“IO”) class of stripped mortgage-backed securities. In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances an investor may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. Transactions in CMO residuals are generally completed only after careful review of the characteristics of the securities in question. In addition, CMO residuals may, or pursuant to an exception therefrom, may not have been registered under the 1933 Act. CMO residuals, whether or not registered under the 1933 Act, may be subject to certain restrictions on transferability, and may be deemed “illiquid” and subject to the Portfolio’s limitations on investment in illiquid securities. The Portfolio does not currently intend to purchase residual interests.

SBMS. Stripped mortgage-backed securities (“SMBS”) are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

SMBS are usually structures with two classes that receive different portions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and the remainder of the principal. In the most extreme case, one class will receive all the interest (the “IO” class) while the other class will receive all of the principal (the “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments, and a rapid rate of principal payment may have a material adverse effect on a Portfolio’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Portfolio may fail to recoup some or all of its initial investment in these securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several investment banking firms acting as brokers and dealers, these securities were developed fairly recently. As a result, established trading markets have not developed. Accordingly these securities may be deemed “illiquid” and subject to Portfolio’s limitations on investment in illiquid securities.

The Portfolio may from time to time purchase in the secondary market certain mortgage pass-through securities packaged and master serviced by PNC Mortgage Securities Corp. (“PNC Mortgage”) or Midland Loan Services, Inc. (“Midland”) (or Sears Mortgage if PNC Mortgage succeeded to rights and duties of Sears Mortgage) or mortgage-related securities containing loans or mortgages originated by PNC Bank or its affiliates. It is possible that under some circumstances, PNC Mortgage, Midland or their affiliates could have interests that are in conflict with the holders of these mortgage-backed securities, and such holders could have rights against PNC Mortgage, Midland or their affiliates. Such companies are affiliates of BlackRock.

U.S. Government Obligations. Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of certain agencies and instrumentalities of the U.S. Government such as the GNMA are supported by the United States’ full faith and credit; others such as those of the FNMA and the Student Loan Marketing Association are supported by the right of the issuer to borrow from the Treasury; others such as those of the FHLMC are supported only by the credit of the instrumentality. No assurance can be given that the U.S. Government will provide financial support to U.S. Government-sponsored agencies or instrumentalities if it is not obligated to do so by law.

Examples of the types of U.S. Government obligations which the Portfolio may hold include U.S. Treasury bills, Treasury instruments and Treasury bonds and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing Administration, the Farmers Home Administration, the Export-Import Bank of the United States, the Small Business Administration, FNMA, GNMA, the General Services Administration, the Student Loan Marketing Association, the Central Bank for Cooperatives, FHLMC, the Federal Intermediate Credit Banks, the Maritime Administration, the International Bank for Reconstruction and Development (the “World Bank”), the Asian-American Development Bank and the Inter-American Development Bank.

Supranational Organization Obligations. The Portfolio may purchase debt securities of supranational organizations such as the World Bank, which are chartered to promote economic development.

Municipal Obligations. When deemed advisable by the investment advisor, the Portfolio may invest in obligations issued by a state or local government (“Municipal Obligations”). The two principal classifications of Municipal Obligations are “general obligation” securities and “revenue” securities. General obligation securities are secured by the issuer’s pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source such as the user of the facility being financed. Revenue securities include private activity bonds which are not payable from the unrestricted revenues of the issuer.

The credit quality of private activity bonds is usually directly related to the credit standing of the user of the facility involved. Municipal Obligations may also include “moral obligation” bonds, which are normally issued by special purpose public authorities. If the issuer of moral obligation bonds is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund the restoration of which is a moral commitment but not a legal obligation of the state or municipality which created the issuer.

The Portfolio may hold participation certificates in a lease, an installment purchase contract, or a conditional sales contract (“lease obligations”) entered into by a state or political subdivision to finance the acquisition or construction of equipment, land

or facilities. Dividends paid by the Portfolio that are derived from income earned on Municipal Obligations will not be tax-exempt. In determining whether a lease obligation is liquid, the investment advisor will consider, among other factors, the following: (i) whether the lease can be cancelled; (ii) the degree of assurance that assets represented by the lease could be sold; (iii) the strength of the lessee’s general credit (e.g., its debt, administrative, economic, and financial characteristics); (iv) in the case of a municipal lease, the likelihood that the municipality would discontinue appropriating funding for the leased property because the property is no longer deemed essential to the operations of the municipality (e.g., the potential for an “event of nonappropriation”); (v) legal recourse in the event of failure to appropriate; (vi) whether the security is backed by a credit enhancement such as insurance; and (vii) any limitations which are imposed on the lease obligor’s ability to utilize substitute property or services other than those covered by the lease obligation.

Municipal leases, like other municipal debt obligations, are subject to the risk of non-payment. The ability of issuers of municipal leases to make timely lease payments may be adversely impacted in general economic downturns and as relative governmental cost burdens are allocated and reallocated among federal, state and local governmental units. Such non-payment would result in a reduction of income to the Portfolio, and could result in a reduction in the value of the municipal lease experiencing non-payment and a potential decrease in the net asset value of the Portfolio. Issuers of municipal securities might seek protection under the bankruptcy laws. In the event of bankruptcy of such an issuer, the Portfolio could experience delays and limitations with respect to the collection of principal and interest on such municipal leases and the Portfolio may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in lease payments, the Portfolio may take possession of and manage the assets securing the issuer’s obligations on such securities, which may increase the Portfolio’s operating expenses and adversely affect the net asset value of the Portfolio. When the lease contains a non-appropriation clause, however, the failure to pay would not be a default and the Portfolio would not have the right to take possession of the assets. In addition, the Portfolio’s intention to qualify as a “regulated investment company” under the Internal Revenue Code of 1986, as amended, may limit the extent to which the Portfolio may exercise its rights by taking possession of such assets, because as a regulated investment company the Portfolio is subject to certain limitations on its investments and on the nature of its income.

Illiquid Securities. No Portfolio will invest more than 15% of the value of its net assets in securities that are illiquid. Illiquid securities include most securities the disposition of which is subject to substantial legal or contractual restrictions and are generally viewed as securities that cannot be disposed of within seven days of business at approximately the amount which the Portfolio has valued the securities. Certain illiquid securities may require pricing at fair value as determined in good faith under the supervision of the Board of Trustees. The Portfolio’s investment advisor may experience significant delays in disposing of illiquid securities and may not be able to sell them for the price the Portfolio has valued them. Transactions in illiquid securities may entail registration expenses and other transaction costs that are higher than those for transactions in liquid securities.

Repurchase agreements and time deposits that do not provide for payment within seven days after notice, without taking a reduced price, are considered illiquid. Several other types of instruments the Portfolio may invest in may also be considered to be illiquid. The Portfolio may purchase securities which are not registered under the 1933 Act but which can be sold to “qualified institutional buyers” in accordance with Rule 144A under the 1933 Act. These securities will not be considered illiquid so long as it is determined by the investment advisor that an adequate trading market exists for the securities. This investment practice could have the effect of increasing the level of illiquidity in the Portfolio during any period that qualified institutional buyers become uninterested in purchasing these restricted securities.

Guarantees. The Portfolio may purchase securities which contain guarantees issued by an entity separate from the issuer of the security. Generally, the guarantor of a security (often an affiliate of the issuer) promises to fulfill an issuer’s payment obligations under a security if the issuer is unable to do so.

Portfolio Turnover Rates. The Portfolio’s annual portfolio turnover rate will not be a factor preventing a sale or purchase when the investment advisor believes investment considerations warrant such sale or purchase. Portfolio turnover may vary greatly from year to year as well as within a particular year. Higher than normal portfolio turnover (i.e., 100% or more) may result in increased transaction costs to the Portfolio, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of the securities and on reinvestment in other securities. The sale of the Portfolio’s securities may result in the recognition of capital gain or loss. Given the frequency of sales, such gain or loss will likely be short-term capital gain or loss. Unlike long-term capital gain, short-term capital gain of individuals is taxable at the same rates as ordinary income. These effects of higher than normal portfolio turnover may adversely affect the Portfolio’s performance.

Short Sales. The Portfolio may only make short sales of securities “against-the-box.” A short sale is a transaction in which a Portfolio sells a security it does not own in anticipation that the market price of that security will decline. The Portfolio may make short sales both as a form of hedging to offset potential declines in long positions in similar securities and in order to maintain portfolio flexibility. In a short sale “against-the-box,” at the time of sale, the Portfolio owns or has the immediate and unconditional right to acquire the identical or similar security at no additional cost. When selling short “against-the-box,” a Portfolio forgoes an opportunity for capital appreciation in the security.

THE FOLLOWING APPLIES ONLY TO THE BATS: SERIES S PORTFOLIO AND BATS: SERIES P PORTFOLIO:

Non-Investment Grade Securities. The BATS: Series S Portfolio and BATS: Series P Portfolio may invest in non-investment grade or “high yield” fixed income or convertible securities commonly known to investors as “junk bonds”.

High yield securities are bonds that are issued by a company whose credit rating (based on rating agencies’ evaluation of the likelihood of repayment) necessitates offering a higher coupon and yield on its issues when selling them to investors who may otherwise be hesitant in purchasing the debt of such a company. While generally providing greater income and opportunity for gain, non-investment grade debt securities may be subject to greater risks than securities which have higher credit ratings, including a high risk of default, and their yields will fluctuate over time. High yield securities will generally be in the lower rating categories of nationally recognized rating agencies (rated “Ba” or lower by Moody’s or “BB” or lower by S&P) or will be non-rated. The credit rating of a high yield security does not necessarily address its market value risk, and ratings may from time to time change, positively or negatively, to reflect developments regarding the issuer’s financial condition. High yield securities are considered to be speculative with respect to the capacity of the issuer to timely repay principal and pay interest or dividends in accordance with the terms of the obligation and may have more credit risk than higher-rated securities.

While the market values of high yield securities tend to react less to fluctuations in interest rates than do those of higher-rated securities, the values of high yield 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 high yield securities are often in the growth stage of their development and/or involved in a reorganization or takeover. The issuers are often highly leveraged (have a significant amount of debt relative to shareholders’ 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 high yield securities are subordinated to the prior repayment of senior indebtedness, which will potentially limit a Portfolio’s ability to fully recover principal or to receive interest payments when senior securities are in default. Thus, investors in high yield 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 recession, highly leveraged issuers of high yield 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 value of outstanding securities, the Portfolio’s net asset value and the ability of the issuers to repay principal and interest. If the issuer of a security held by a Portfolio defaulted, the Portfolio may not receive full interest and principal payments due it and could incur additional expenses if it chose to seek recovery of its investment.

The secondary markets for high yield securities are not as liquid as the secondary markets for higher-rated securities. The secondary markets for high yield 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 high yield securities is 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 changes in the condition of a particular issuer. Under certain economic and/or market conditions, a Portfolio may have difficulty disposing of certain high yield 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 high yield security, which may result in increased difficulty selling the particular issue and obtaining accurate market quotations on the issue when valuing a Portfolio’s assets. Market quotations on any particular high yield security may be available only from a single or very 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 high yield securities may be affected by legislative and regulatory developments. These developments could adversely affect a Portfolio’s net asset value and investment practices, the secondary market for high yield securities, the financial condition of issuers of these securities and the value and liquidity of outstanding high yield 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 high yield bonds and limiting the deductibility of interest by certain corporate issuers of high yield bonds adversely affected the market in recent years.

When the secondary market for high yield 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 a Portfolio’s high yield 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 a Portfolio to dispose of such securities at a desirable price. Additionally, if the secondary markets for high yield securities contract due to adverse economic conditions or for other reasons, certain of a Portfolio’s liquid securities may become illiquid and the proportion of the Portfolio’s assets invested in illiquid securities may significantly increase. The rating assigned by a rating agency evaluates the safety of a non-investment grade security’s principal and interest payments, but does not address market value risk. Because such ratings of the ratings agencies may not always reflect current conditions and events, in addition to using nationally recognized rating agencies and other sources, the investment advisor performs its own analysis of the issuers whose non-investment grade securities the Portfolio holds. Because of this, the Portfolio’s performance may depend more on the investment advisor’s own credit analysis than in the case of mutual funds investing in higher-rated securities. For a description of these ratings, see Appendix A.

In selecting non-investment grade securities, the investment advisor considers factors such as the creditworthiness of issuers, the ratings and performance of the securities, the protections afforded the securities and the diversity of the Portfolio. The investment advisor continuously monitors the issuers of non-investment grade securities held by the Portfolio for their ability to make required principal and interest payments, as well as in an effort to control the liquidity of the Portfolio so that it can meet redemption requests. If a security’s rating is reduced below the minimum credit rating that is permitted for a Portfolio, the Portfolio’s investment advisor will consider whether the Portfolio should continue to hold the security.

In the event that a Portfolio investing in high yield securities experiences an unexpected level of net redemptions, the Portfolio could be forced to sell its holdings without regard to the investment merits, thereby decreasing the assets upon which the Portfolio’s rate of return is based.

The costs attributable to investing in the high yield markets are usually higher for several reasons, such as higher investment research costs and higher commission costs.

The BATS: Series S Portfolio may invest in securities rated “B” or above at the time of investment, or determined by the investment advisor to be of comparable quality. The BATS: Series P Portfolio may invest in securities rated in the category “CCC” and above at the time of investment, or determined by the investment advisor to be of comparable quality. Securities rated “B” or “CCC” are considered highly speculative. A “B” rating generally indicates that while the issuer can currently make its interest and principal payments, it probably will not be able to do so in times of financial difficulty. A “CCC” rating generally indicates that the issue is regarded as having highly speculative characteristics regarding the likelihood of timely payment of principal and interest and a currently identifiable vulnerability to default. Non-investment grade debt securities carry greater risks than securities which have higher credit ratings, including a high risk of default.

While such debt will likely have some quality and protective characteristics, those are outweighed by large uncertainties or major risk exposure to adverse conditions.

Collateralized Bond Obligations. The BATS: Series S Portfolio and the BATS: Series P Portfolio may invest in collateralized bond obligations (“CBOs”), which are structured products backed by a diversified pool of high yield public or private fixed income securities. The pool of high yield securities is typically separated into tranches representing different degrees of credit quality. The top tranche of CBOs, which represents the highest credit quality in the pool, has the greatest collateralization and pays the lowest interest rate. Lower CBO tranches represent lower degrees of credit quality and pay higher interest rates to compensate for the attendant risks. The bottom tranche specifically receives the residual interest payments (i.e., money that is left over after the higher tiers have been paid) rather than a fixed interest rate. The return on the bottom tranche of CBOs is especially sensitive to the rate of defaults in the collateral pool.

Mezzanine Investments. The BATS: Series S Portfolio and the BATS: Series P Portfolio may invest in certain high yield securities known as mezzanine investments, which are subordinated debt securities which are generally issued in private placements in connection with an equity security (e.g., with attached warrants). Such mezzanine investments may be issued with or without registration rights. Similar to other high yield securities, maturities of mezzanine investments are typically seven to ten years, but the expected average life is significantly shorter at three to five years. Mezzanine investments are usually unsecured and subordinate to other obligations of the issuer.

Bank Loans. Bank loans are generally non-investment grade floating rate instruments. Usually, they are freely callable at the issuer’s option. The Portfolio may invest in fixed and floating rate loans (“Loans”) arranged through private negotiations between a corporate borrower or a non-U.S. sovereign entity and one or more financial institutions (“Lenders”). The Portfolio may invest in such Loans in the form of participations in Loans (“Participations”) and assignments of all or a portion of Loans from third parties (“Assignments”) as well as forward commitments to enter into Participations. Participations typically will result in the Portfolio having a contractual relationship only with the Lender, not with the borrower. The Portfolio will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Portfolio generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loans, nor any rights of set-off against the borrower, and the Portfolio may not benefit directly from any collateral supporting the Loan in which it has purchased the Participation. As a result, the Portfolio will assume the credit risk of both the borrower and the Lender that is selling the Participation. In the event of the insolvency of the Lender selling the Participation, the Portfolio may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. The Portfolio will acquire Participations only if the Lender interpositioned between the Portfolio and the borrower is determined by the Portfolio’s sub-adviser to be creditworthy. When the Portfolio purchases Assignments from Lenders, the Portfolio will acquire direct rights against the borrower on the Loan, and will not have exposure to a counterparty’s credit risk.

ADDITIONAL INVESTMENT LIMITATIONS

Fundamental Investment Restrictions

The investment restrictions set forth below are fundamental policies of each of the Portfolios and may not be changed with respect to any of the Portfolios without shareholder approval by vote of a majority of the outstanding voting securities of that Portfolio (as defined below). Under these restrictions, none of the Portfolios may:

(1) issue senior securities, borrow money or pledge its assets, except that a Portfolio may borrow from banks or enter into reverse repurchase agreements or dollar rolls in amounts aggregating not more than 33 ¹ / 3 % of the value of its total assets (calculated when the loan is made) to take advantage of investment opportunities and may pledge up to 33 ¹ / 3 % of the value of its total assets to secure such borrowings. Each Portfolio is also authorized to borrow an additional 5% of its total assets without regard to the foregoing limitations for temporary purposes such as clearance of portfolio transactions and share redemptions. For purposes of these restrictions, the purchase or sale of securities on a “when-issued,” delayed delivery or forward commitment basis, the purchase and sale of options and futures contracts and collateral arrangements with respect thereto are not deemed to be the issuance of a senior security, a borrowing or a pledge of assets.

(2) purchase or sell real estate, except that each Portfolio may purchase securities of issuers which deal in real estate and may purchase securities which are secured by interests in real estate.

(3) acquire any other investment company or investment company security except in connection with a merger, consolidation, reorganization or acquisition of assets or where otherwise permitted by the 1940 Act.

(4) act as an underwriter of securities within the meaning of the Securities Act of 1933 except to the extent that the purchase of obligations directly from the issuer thereof, or the disposition of securities, in accordance with the Portfolio’s investment objective, policies and limitations may be deemed to be underwriting.

(5) write or sell put and interest rate options, call options, straddles, spreads, or any combination thereof, except for transactions in options on securities and securities indices, futures contracts and options on futures contracts and currencies.

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

(7) purchase securities on margin, make short sales of securities or maintain a short position, except that (a) this investment limitation shall not apply to a Portfolio’s transactions in futures contracts and related options or a Portfolio’s sale of securities short against the box, and (b) a Portfolio may obtain short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities.

(8) purchase or sell commodity contracts, or invest in oil, gas or mineral exploration or development programs, except that each Portfolio may, to the extent appropriate to its investment policies, purchase securities of companies engaging in whole or in part in such activities and may enter into futures contracts and related options.

(9) make loans, except that each Portfolio may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies and may lend portfolio securities.

(10) purchase or sell commodities except that each Portfolio may, to the extent appropriate to its investment policies, purchase securities of companies engaging in whole or in part in such activities, may engage in currency transactions and may enter into futures contracts and related options.

Non-Fundamental Investment Objective and Restrictions

The investment objective of each Portfolio is not fundamental and may be changed without shareholder approval. Each Portfolio is also subject to the following non-fundamental restrictions (which may be changed without shareholder approval) and, unless otherwise indicated, may not:

(1) invest more than 15% of the net assets of a Portfolio (taken at market value at the time of the investment) in “illiquid securities,” illiquid securities being defined to include repurchase agreements maturing in more than seven days, certain loan participation interests, fixed time deposits which are not subject to prepayment or provide withdrawal penalties upon prepayment (other than overnight deposits), or other securities which legally or in the investment advisor’s opinion may be deemed illiquid (other than securities issued pursuant to Rule 144A under the 1933 Act and certain commercial paper that the investment advisor has determined to be liquid under procedures approved by the Board of Trustees); or

(2) under normal circumstances, invest less than 80% of its total assets in fixed- income instruments.

Unless otherwise indicated, all limitations applicable to a Portfolio’s investments apply only at the time a transaction is entered into. Any subsequent change in a rating assigned by any rating service to a security, or change in the percentage of a Portfolio’s assets invested in certain securities or other instruments resulting from market fluctuations or other changes in a Portfolio’s total assets, will not require the Portfolio to dispose of an investment. In the event that ratings services assign different ratings to the same security, the investment advisor will determine which rating it believes best reflects the security’s quality and risk at that time, which may be the higher of the several assigned ratings.

Derivative instruments with economic characteristics similar to fixed income instruments will be treated as fixed income securities for purposes of the Portfolio’s non-fundamental investment restriction (2) above. A Portfolio may not change non-fundamental

investment restriction (2) above unless the Portfolio provides shareholders with notice required by Rule 35d-1 under the 1940 Act, as it may be amended or interpreted by the SEC from time to time.

The phrases “shareholder approval” and “vote of a majority of the outstanding voting securities” mean the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Portfolio or the Trust, as the case may be, or (2) 67% or more of the shares of the Portfolio or the Trust, as the case may be, present at a meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy.

(3) In addition, to comply with Federal tax requirements for qualification as a “regulated investment company,” the Trust’s investments will be limited in manner such that at the close of each quarter of each tax year, subject to certain exceptions and cure periods, (a) no more than 25% of the value of the Trust’s total assets are invested in the securities (other than U.S. Government securities or securities of other regulated investment companies) of a single issuer or two or more issuers controlled by the Trust and engaged in the same, similar or related trade or businesses and (b) with regard to at least 50% of the Trust’s total assets, no more than 5% of its total assets are invested in the securities (other than U.S. Government securities or securities of other regulated companies) of a single issuer and no investment will consist of 10% or more of the voting stock of such issuer. These tax-related limitations may be changed by the Trustees to the extent appropriate in light of changes to applicable tax requirements.

TRUSTEES AND OFFICERS

The officers of the Trust manage its day-to-day operations. The officers are directly responsible to the Trust’s Board of Trustees which sets broad policies for the Trust and chooses its officers. The following is a list of the trustees and officers of the Trust and their present positions and principal occupations during the past five years. The business address of the Trust, BlackRock Advisors and their board members and officers is 100 Bellevue Parkway, Wilmington, Delaware 19809, unless specified otherwise below. The Trustees listed below are either trustees or directors of other open-end funds in which BlackRock Advisors or an affiliate acts as investment advisor.

Interested Trustees:

Name, Address

and Age

Position(s) Held
with Fund

Term of
Office ¹
and
Length
of Time
Served

Principal Occupation(s)

During Past Five Years

Number of
Portfolios in
Fund
Complex ²
Overseen by
Trustee

Other Directorships Held by Trustee

Laurence D.

Fink ³

BlackRock, Inc.

40 E. 52nd

Street

New York, NY

10022

Age: 50

Trustee and
President

Since
2004

Director, Chairman and Chief Executive Officer of BlackRock, Inc. since its formation in 1998 and of BlackRock, Inc.’s predecessor entities since 1988; Chairman of the Management Committee; formerly, Managing Director of the First Boston Corporation, Member of its Management Committee, Co-head of its Taxable Fixed Income Division and Head of its Mortgage and Real Estate Products Group; formerly Chairman of the Board and Director of each of the closed-end Trusts for which BlackRock Advisors, Inc. acts as investment advisor; Chairman of the Board of Nomura BlackRock Asset Management and several of BlackRock’s alternative investment vehicles; Director of several of BlackRock’s offshore funds; formerly, Director of the New York Stock Exchange; Co-Chairman of the Board of Trustees of Mount Sinai-NYU; Co-Chairman of the Board of Trustees of NYU Hospitals Center; and a member of the Board of Trustees of NYU.

49 (includes
five
Portfolios of
the Trust,
and 44
Portfolios of
BlackRock
Funds)

Director, BlackRock, Inc.

Each Trustee holds office for an indefinite term until the earlier of (1) his or her successor is elected and qualified and (2) such time as such Trustee resigns or his or her term as a Trustee is terminated in accordance with the Fund’s By-Laws and Agreement and Declaration of Trust.

A Fund Complex means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment and investor services, that have a common investment adviser or that have an investment adviser that is an affiliated person of the investment adviser of any of the other registered investment companies.

Mr. Fink is an interested person of the Fund due to his position at BlackRock, Inc.

Disinterested Trustees:


Name, Address and Age	Position(s) Held with Fund	Term of Office ¹ and Length of Time Served	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex ² Overseen by Trustee	Other Directorships Held by Trustee

Honorable Stuart E. Eizenstat Covington & Burling 1201 Pennsylvania Avenue, NW Washington, DC 20004 Age: 60	Trustee and Chairman of the Nominating Committee	Since 2004	Partner, Covington & Burling (law firm) (2001-Present); Deputy Secretary of the Treasury (1999-2001), Under Secretary of State for Economic, Business and Agricultural Affairs (1997-1999), Chairman, International Board of Governors, Weizmann Institute of Science.	49 (includes five Portfolios of the Trust, and 44 Portfolios of BlackRock Funds)	Director, Mirant Corporation; Advisory Board member, The Coca-Cola Company; Advisory Board member, Group Menatep.

Robert M. Hernandez c/o BlackRock Funds, 100 Bellevue Parkway, Wilmington, DE 19809 Age: 59	Trustee, Vice Chairman of the Board and Chairman of the Audit Committee	Since 2004	Retired; Director of USX Corporation (a diversified company principally engaged in energy and steel businesses), 1991-2001; Vice Chairman and Chief Financial Officer 1994-2001, Executive Vice President - Accounting and Finance and Chief Financial Officer from 1991 to 1994.	49 (includes five Portfolios of the Trust, and 44 Portfolios of BlackRock Funds)	Director, ACE Limited (insurance company); Director and Chairman of the Board, RTI International Metals, Inc.; Director, Eastman Chemical Company.

Matina Horner Age: 65	Trustee	Since 2004	Retired; Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund (TIAA-CREF), 1989- 2003.	49 (includes five Portfolios of the Trust, and 44 Portfolios of BlackRock Funds)	Chair of the Board of The Fund for the City of New York; Chair of the Board of the Massachusetts General Hospital Institute of Health Professions; Chair of the Board of the Greenwall Foundation; Trustee, Century Foundation (formerly The Twentieth Century Fund); Greenwall Foundation Director, N STAR (formerly called Boston Edison); Director, The Neiman Marcus Group; Honorary Trustee, Massachusetts General Hospital Corporation.

David R. Wilmerding, Jr. Rosemont Business Campus Building Three, Suite 111 919 Conestoga Road Rosemont, PA 19010 Age: 68	Trustee and Chairman of the Board	Since 2004	Chairman, Wilmerding & Associates, Inc. (investment advisers) since 1989; Director, Beaver Management Corporation (land management corporation); Managing General Partner, Chestnut Street Exchange Fund; Director, Peoples First, The Peoples Bank of Oxford; Director Emeritus, The Mutual Fire, Marine and Inland Insurance Company.	50 (includes five Portfolios of the Trust, 44 Portfolios of BlackRock Funds and 1 portfolio of Chestnut Street Exchange Fund, which is managed by BFM and BIMC.)

Executive Officers


Name, Address and Age	Position(s) Held with Fund	Term of Office ⁴ and Length of Time Served	Principal Occupation(s) During Past Five Years
Paul Audet BlackRock, Inc. 40 E. 52nd Street New York, NY 10022 Age: 50	Treasurer	Since 2004	Managing Director and Chief Financial Officer of BlackRock, Inc. since 1998; Treasurer of BlackRock Provident Institutional Funds since 2001; Senior Vice President of PNC Bank Corp. from 1991 to 1998.

Anne Ackerley BlackRock, Inc. 40 E. 52nd Street New York, NY 10022 Age: 41	Vice President	Since 2004	Managing Director, BlackRock, Inc. since May 2000; First Vice President and Operating Officer, Mergers and Acquisitions Group (1997-2000), First Vice President and Operating Officer, Public Finance Group (1995-1997), and First Vice President, Emerging Markets Fixed Income Research (1994-1995), Merrill Lynch & Co.

Bart Battista BlackRock, Inc. 40 E. 52nd Street New York, NY 10022 Age: 45	Chief Compliance Officer and Anti-Money Laundering Compliance Officer	Since 2004	Chief Compliance Officer of BlackRock, Inc. since 2004, Anti-Money Laundering Compliance Officer of BlackRock, Inc. since 2004; member of legal and compliance department of BlackRock, Inc. since 1998; Chief Compliance Officer at Moore Capital Management from 1995 to 1998.

Ellen L. Corson PFPC Inc. 103 Bellevue Parkway Wilmington, DE 19809 Age: 39	Assistant Treasurer	Since 2004	Senior Director and Vice President of Fund Accounting and Administration, PFPC, Inc., since 2003; Vice President and Director of Mutual Fund Accounting and Administration, PFPC, Inc. since November 1997; Assistant Vice President, PFPC, Inc. from March 1997 to November 1997; Senior Accounting Officer, PFPC, Inc. from March 1993 to March 1997.

Brian P. Kindelan BlackRock Advisors, Inc. 100 Bellevue Parkway Wilmington, DE 19809 Age: 44	Secretary	Since 2004	Director and Senior Counsel (since January 2001), and Vice President and Senior Counsel (1998-2000), BlackRock Advisors, Inc.; Senior Counsel, PNC Bank Corp. from May 1995 to April 1998.

⁴

Each officer holds office for an indefinite term until the earlier of (1) the next meeting of trustees at which his or her successor is appointed and (2) such time as such officer resigns or his or her term as an officer is terminated in accordance with the Fund’s By-Laws and Agreement and Declaration of Trust.

Name, Address and
Age

Position(s) Held
with Fund

Term of
Office ⁴
and
Length

of Time
Served

Principal Occupation(s)

During Past Five Years

Vincent Tritto BlackRock, Inc.

40 E. 52nd

Street

New York, NY

10022 Age: 42

Assistant
Secretary

Since 2004

Director and Assistant Secretary of BlackRock, Inc. since 2002. Formerly, Executive Director (2000-2002) and Vice President (1998-2000), Morgan Stanley & Co. Incorporated and Morgan Stanley Asset Management Inc. and officer of various Morgan Stanley-sponsored investment vehicles; Counsel (1998) and Associate (1988-1997), Rogers & Wells LLP, New York, NY.

The standing committees of the Board are the Audit Committee, the Nominating Committee and the Governance Committee.

The members of the Audit Committee are Ms. Horner and Messrs. Eizenstat, Hernandez and Wilmerding. Mr. Hernandez serves as Chairman. The Audit Committee is responsible for, among other things: (i) considering management’s recommendations of independent accountants for the Fund and evaluating such accountants’ performance, costs and financial stability; (ii) reviewing and coordinating audit plans prepared by the Fund’s independent accountants and management’s internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Fund’s independent accountants and management. The Audit Committee has met 1 time.

The members of the Nominating Committee are Ms. Horner and Messrs. Eizenstat, Hernandez and Wilmerding. Mr. Eizenstat serves as Chairman. The Nominating Committee is responsible for selecting and nominating “disinterested” trustees of the Fund. The Committee will consider nominees recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations which include biographical information and sets forth the qualifications of the proposed nominee to the Fund’s Secretary. The Nominating Committee has not met.

The members of the Governance Committee are Ms. Horner and Messrs. Eizenstat, Hernandez and Wilmerding. The Governance Committee is responsible for, among other things, the scheduling and organization of board meetings, evaluating the structure and composition of the board and determining compensation of the Fund’s disinterested trustees. The Governance Committee has not met.

The following table shows the dollar range of equity securities owned by the Trustees in the Trust and in other investment companies overseen by the Trustees within the same family of investment companies as of December 31, 2003. Investment companies are considered to be in the same family if they share the same investment adviser or principal underwriter and hold themselves out to investors as related companies for purposes of investment and investor services.


Name of Trustee	Dollar Range of Equity Securities in the Trust	Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by the Trustee in the Family of Investment Companies
Interested Trustees
Laurence D. Fink	None	Over $100,000

Disinterested Trustees
Stuart E. Eizenstat	None	None
Robert M. Hernandez	None	Over $100,000
Matina Horner	None	None
David R. Wilmerding, Jr.	None	None

Compensation

Trustees who are not affiliated with BlackRock Advisors, Inc. (“BlackRock”) or BlackRock Distributors, Inc. (“BDI” or the “Distributor”) receive from the BlackRock open-end funds (BlackRock Funds and the Trust) the following: $20,000 annually, $2,500 for each meeting that they attend, whether by phone or in person, and $350 per Portfolio for each full in-person meeting of the Board that they attend; in addition, the Chairman and Vice Chairman of the open-end Boards receive an additional $10,000 and $5,000 per year, respectively, for their service in such capacities and trustees who are not affiliated with BlackRock or BDI receive from the BlackRock open-end funds (BlackRock Funds and the Trust) the following: $1,500 for each committee meeting that they attend, whether by phone or in person, and the Audit Committee Chairman receives an additional $10,000 and each other committee chairperson an additional $5,000 per year, for their service in such capacities. Trustees who are not affiliated with BlackRock or the Distributor are reimbursed for any expenses incurred in attending meetings of the Board of Trustees or any committee thereof. The term of office of each trustee will automatically terminate when such trustee reaches 72 years of age. No officer, director or employee of BlackRock, PFPC Inc. (“PFPC”) (with BlackRock, the “Administrators”), BDI, PNC Bank, National Association (“PNC Bank”) or BlackRock, Inc. currently receives any compensation from the Trust. As of the date of this Statement of Additional Information, the trustees and officers of the Trust, as a group, owned less than 1% of the outstanding shares of each class of the Fund.

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

It is estimated that the Independent Trustees will receive from the Trust the amounts set forth below for the Trust’s fiscal year ending September 30, 2005.


	Estimated Compensation from Registrant ¹		Pension or Retirement Benefits Accrued as Part of Fund Expenses	Estimated Annual Benefits upon Retirement	Total Compensation from Registrant and Fund Complex Paid to Trustees ²
David R. Wilmerding, Jr., Trustee and Chairman of the Board	$	57,700	N/A	N/A	129,300	(3) ³

Robert M. Hernandez, Vice Chairman of the Board and Chairman of the Audit Committee	$	57,700	N/A	N/A	119,300	(2) ³

Honorable Stuart E. Eizenstat, Trustee and Chairman of the Nominating Committee	$	52,700	N/A	N/A	114,300	(2) ³

Matina Horner, Trustee	$	52,700	N/A	N/A	114,300	(2) ³

Includes the $20,000 annual payment for service as Trustee of the BlackRock open-end funds (BlackRock Funds and the Trust) described above.

Estimates the total compensation to be earned by such person during the fiscal year ended September 30, 2005 from the Trust and other open-end funds advised by BlackRock Advisors (the “Fund Complex”).

Total number of investment company boards served on in fund complex.

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

The Board of Trustees has delegated the voting of proxies for Trust securities to the investment advisor pursuant to the investment advisor’s proxy voting guidelines. Under these guidelines, the investment advisor will vote proxies related to Trust securities in the best interests of the Trust and its shareholders. A copy of the investment advisor’s proxy voting procedures are attached as Appendix C to this Statement of Additional Information.

INVESTMENT ADVISORY, ADMINISTRATION,

DISTRIBUTION AND SERVICING ARRANGEMENTS

Advisory Agreement . The advisory services provided by BlackRock Advisors pursuant to the Investment Advisory Agreement (the “Advisory Contract”) is described in the Prospectus.

Under the Advisory Contract, the Trust pays no fee to BlackRock Advisors for its advisory services. Although the Trust does not compensate BlackRock Advisors directly

for its services under the Advisory Contract, BlackRock Advisors may benefit from the Trust being an investment option in a wrap program sponsored by BlackRock. BlackRock Advisors is responsible for paying expenses it incurs in providing advisory services to the Trust and will reimburse the Trust for all of its expenses, except extraordinary expenses.

The Advisory Contract was most recently approved by the Trust’s Board of Trustees at an in-person meeting of the Board held on September 10, 2004, including a majority of the Trustees who are not parties to the agreements or interested persons of any such party (as such term is defined in the 1940 Act). In determining to approve the Advisory Contract, the Trustees met with the relevant investment advisory personnel from BlackRock Advisors and considered information relating to the education, experience and number of investment professionals and other personnel who would provide services under the agreement. The Trustees also took into account the time and attention to be devoted by senior management to the Portfolios. The Trustees evaluated the level of skill required to manage the Portfolios and concluded that the human resources to be available at BlackRock Advisors were appropriate to fulfill effectively the duties of BlackRock Advisors on behalf of the Portfolios under the Advisory Contract. The Trustees also considered the business reputation of BlackRock Advisors, its financial resources and professional liability insurance coverage and concluded that BlackRock Advisors would be able to meet any reasonably foreseeable obligations under the Advisory Contract.

The Trustees received information concerning the investment philosophy and investment process to be applied by BlackRock Advisors in managing the Portfolios. In this connection, the Trustees considered BlackRock Advisors’ in-house research capabilities as well as other resources available to its personnel. The Trustees concluded that the BlackRock Advisor’s investment process, research capabilities and philosophy were well suited to the Portfolios, given the Portfolios’ investment objectives and policies. The Trustees considered the scope of the services provided by BlackRock Advisors to the Portfolios under the Advisory Contracts relative to services provided by third parties to other funds. The Trustees noted that BlackRock Advisor’s standard of care was comparable to that found in most investment company advisory agreements. The Trustees concluded that the scope of BlackRock Advisor’s services to be provided to the Portfolios was consistent with the Portfolios’ operational requirements, including, in addition to its investment objectives, compliance with investment restrictions, tax and reporting requirements and related shareholder services.

The Trustees considered the quality of the services to be provided by BlackRock Advisors to the Portfolios. The Trustees also evaluated the procedures of BlackRock Advisors designed to fulfill its fiduciary duty to the Portfolios with respect to possible conflicts of interest, including their code of ethics (regulating the personal trading of its officers and employees) (see “—Code of Ethics” below), the procedures by which BlackRock Advisors allocates trades among its various investment advisory clients, the integrity of the systems in place to ensure compliance with the foregoing and the record of BlackRock Advisors in these matters. The Trustees also received information concerning standards of BlackRock Advisors with respect to the execution of portfolio transactions. See “Portfolio Transactions” below.

The Board of Trustees gave substantial consideration to the fact that BlackRock Advisors will not be compensated by the Trust under the Advisory Contract. In this regard, the Board of Trustees considered both BlackRock Advisors’ role as investment advisor to the Trust and the fee agreement with the sponsor to the wrap fee program for which the Trust is an investment option. Based on these considerations and the overall high quality of the personnel, operations, financial condition, investment advisory capabilities and methodologies of BlackRock Advisors, the Board of Trustees, including a majority of the non-interested Trustees concluded that, while no advisory fee is to be paid under the Advisory Contract, the scope and quality of the services to be provided to the Trust by BlackRock Advisors were consistent with the Trust’s operational requirements and sufficient to approve the Advisory Contract between the Trust and BlackRock Advisors. The non-interested Trustees were represented by independent counsel who assisted them in their deliberations.

The Advisory Contract was approved by the sole common shareholder of each Portfolio as of October 1, 2004. The Advisory Contract will continue in effect for a period of two years from its effective date, and if not sooner terminated, will continue in effect for successive periods of 12 months thereafter, provided that each continuance is specifically approved at least annually by both (1) the vote of a majority of the Trust’s Board of Trustees or the vote of a majority of the outstanding voting securities of the relevant Portfolio (as defined in the 1940 Act) and (2) by the vote of a majority of the trustees who are not parties to such agreement or interested persons (as such term is defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. The Advisory Contract is terminable as to the Portfolio by vote of the Trust’s Board of Trustees or by the holders of a majority of the outstanding voting securities of the relevant Portfolio, at any time without penalty, on 60 days’ written notice to BlackRock Advisors. BlackRock Advisors may also terminate its advisory relationship with respect to any Portfolio on 60 days’ written notice to the Trust. The Advisory Contract will also terminate automatically in the event of its assignment (as such term is defined in the 1940 Act and the rules thereunder).

Under the Advisory Contract, BlackRock Advisors is not liable for any error of judgment or mistake of law or for any loss suffered by the Trust or the Portfolio in connection with the performance of the Advisory Contract. Under the Advisory Contract, BlackRock Advisors is liable for a loss resulting from willful misfeasance, bad faith or gross negligence in the performance of its duties or from reckless disregard of its duties and obligations thereunder.

Administration Agreement. Pursuant to the Administration Agreement, PFPC, Inc. (“PFPC”) provides general accounting services. Among other things, PFPC participates, to the extent requested by the Trust and its counsel, in the periodic updating of the Trust’s Registration Statement; compiles data and accumulates information for and coordinates with the Trust’s Treasurer or Assistant Treasurer in connection with the preparation of reports to shareholders of record and the Securities and Exchange

Commission (the “SEC”) (e.g., Annual and Semi-Annual Reports on Form N-CSR); and files with the SEC and other federal and state agencies, subject to the approval of the Trust’s Treasurer or Assistant Treasurer, reports and documents. PFPC maintains all financial accounts, records, journals, ledgers and schedules for each Portfolio (other than those maintained by the Trust’s transfer agent and custodian), and computes each portfolio’s net asset value, net income and net capital gains and losses.

Under the Administration Agreement, the Trust would pay to PFPC the following annual fees: (a) for accounting services, (i) $12,000 for each Portfolio’s first $250 million in average net assets, $12,000 for each Portfolio’s next $500 million in average net assets and .0025% of each Portfolio’s average net assets in excess of $750 million, and (ii) $200 per Portfolio per month, plus $0.65 per CUSIP per day; (b) for administration services, .005% of each Portfolio’s average net assets; and (c) out-of-pocket expenses. As mentioned above, BlackRock Advisors will reimburse the Trust for all such expenses.

Custodian Agreement. Pursuant to the terms of a custodian agreement (the “Custodian Agreement”) between the Trust and PFPC Trust Company (“PTC”), PTC, as the Trust’s custodian, (i) maintains a separate account or accounts in the name of each Portfolio, (ii) holds and transfers portfolio securities on account of each Portfolio, (iii) accepts receipts and makes disbursements of money on behalf of each Portfolio, (iv) collects and receives all income and other payments and distributions on account of each Portfolio’s securities, and (v) makes periodic reports to the Board of Trustees concerning each Portfolio’s operations. PTC is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Trust, provided that, with respect to sub-custodians other than sub-custodians for non-U.S. securities, PTC remains responsible for the performance of all its duties under the Custodian Agreement and holds the Trust harmless from the acts and omissions of any sub-custodian. For its services, PTC receives .01% of each Portfolio’s first $10 billion of total net assets and .0075% of each Portfolio’s total net assets over $10 billion, as well as out-of-pocket expenses and certain transaction charges. BlackRock Advisors will reimburse the Trust for all such expenses.

Transfer Agency Agreement. PFPC, which has its principal offices at 301 Bellevue Parkway, Wilmington, DE 19809, serves as the transfer and dividend disbursing agent pursuant to a Transfer Agency Agreement (the “Transfer Agency Agreement”), under which PFPC (i) issues and redeems shares in each Portfolio, (ii) addresses and mails all communications by each Portfolio to record owners of its shares, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders, (iii) maintains shareholder accounts and, if requested, sub-accounts, and (iv) makes periodic reports to the Board of Trustees concerning the operations of each Portfolio. The Trust would pay PFPC an annual fee of $15,000 per Portfolio, plus transaction fees, per account fees and disbursements. BlackRock Advisors will reimburse the Trust for all such expenses.

Distributor and Distribution and Service Plan. The Trust has entered into a distribution agreement (the “Distributor Agreement”) with BlackRock Distributors, Inc.

(“BDI” or the “Distributor”), an affiliate of PFPC Distributors, Inc. Under the Distributor Agreement, the Distributor, as agent, offers shares of the Portfolio on a continuous basis. The Distributor has agreed to use appropriate efforts to effect sales of the shares, but it is not obligated to sell any particular amount of shares. The Distributor’s principal business address is 760 Moore Road, King of Prussia, PA 19406.

Code of Ethics. The Trust, BlackRock Advisors and the Distributor have adopted codes of ethics under Rule 17j-1 of the 1940 Act. These codes of ethics permit personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Trust. These codes can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-202-942-8090. The codes of ethics are available on the EDGAR Database on the Securities and Exchange Commission’s website (http://www.sec.gov), and copies of these codes may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Securities and Exchange Commission’s Public Reference Section, Washington, D.C. 20549-0102.

EXPENSES

Expenses are deducted from the total income of each Portfolio before dividends and distributions are paid. These expenses include, but are not limited to, fees paid to BlackRock Advisors, PFPC, transfer agency fees, fees and expenses of officers and trustees who are not affiliated with BlackRock Advisors, the Distributor or any of their affiliates, taxes, interest, legal fees, custodian fees, auditing fees, fees and expenses in registering and qualifying the Portfolios and their shares for distribution under federal and state securities laws, expenses of preparing prospectuses and statements of additional information and of printing and distributing prospectuses and statements of additional information to existing shareholders, expenses relating to shareholder reports, shareholder meetings and proxy solicitations, fidelity bond and trustees and officers liability insurance premiums, the expense of independent pricing services and other expenses which are not expressly assumed by BlackRock Advisors or the Trust’s service providers under their agreements with the Trust. Any general expenses of the Trust that do not belong to a particular investment portfolio will be allocated among all investment portfolios by or under the direction of the Board of Trustees in a manner the Board determines to be fair and equitable. BlackRock Advisors has agreed to reimburse the Trust for all of its expenses except extraordinary expenses.

PORTFOLIO TRANSACTIONS

In executing portfolio transactions, the investment advisor seeks to obtain the best price and most favorable execution for each Portfolio, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. While the investment advisor generally seeks reasonably competitive commission rates, payment of the lowest commission or spread is not necessarily consistent with obtaining the best

price and execution in particular transactions. Payments of commissions to brokers who are affiliated persons of the Trust (or affiliated persons of such persons) will be made in accordance with Rule 17e-1 under the 1940 Act.

None of the Portfolios has any obligation to deal with any broker or group of brokers in the execution of portfolio transactions. The investment advisor may, consistent with the interests of each Portfolio, select brokers on the basis of the research, statistical and pricing services they provide to the Portfolio and the investment advisor’s other clients. Such research, statistical and/or pricing services must provide lawful and appropriate assistance to the investment advisor’s investment decision-making process in order for such research, statistical and/or pricing services to be considered by the investment advisor in selecting a broker. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by the investment advisor under their contracts. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that the investment advisor determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of the investment advisor to that Portfolio and its other clients and that the total commissions paid by a Portfolio will be reasonable in relation to the benefits to the Portfolio over the long-term. To the extent a Portfolio’s portfolio transactions are used to obtain such services, the brokerage commissions paid by the Portfolio will exceed those that might otherwise be paid by an amount which cannot be presently determined. Such services generally would be useful and of value to the investment advisor in serving one or more of their other clients and, conversely, such services obtained by the placement of brokerage business of other clients generally would be useful to the investment advisor in carrying out their obligations to the Portfolio. While such services are not expected to reduce the expenses of the investment advisor, the investment advisor would, through use of the services, avoid the additional expenses which would be incurred if it should attempt to develop comparable information through its own staff.

Commission rates for brokerage transactions on non-U.S. stock exchanges may be fixed.

Over-the-counter issues, including corporate debt and U.S. Government securities, are normally traded on a “net” basis without a stated commission, through dealers acting for their own account and not as brokers. The Portfolio will primarily engage in transactions with these dealers or deal directly with the issuer unless a better price or execution could be obtained by using a broker. Prices paid to a dealer with respect to both non-U.S. and domestic securities will generally include a “spread,” which is the difference between the prices at which the dealer is willing to purchase and sell the specific security at the time, and includes the dealer’s normal profit. Purchases of money market instruments by the Portfolio are made from dealers, underwriters and issuers. The Portfolio does not currently expect to incur any brokerage commission expense on such transactions because money market instruments are generally traded on a “net” basis with dealers acting as principal for their own accounts without a stated commission. The price of the security, however, usually includes a profit to the dealer.

Securities purchased in underwritten offerings include a fixed amount of compensation to the underwriter, generally referred to as the underwriter’s concession or discount. When securities are purchased or sold directly from or to an issuer, no commissions or discounts are paid.

The investment advisor may seek to obtain an undertaking from issuers of commercial paper or dealers selling commercial paper to consider the repurchase of such securities from a Portfolio prior to maturity at their original cost plus interest (sometimes adjusted to reflect the actual maturity of the securities), if the investment advisor believes that the Portfolio’s anticipated need for liquidity makes such action desirable. Any such repurchase prior to maturity reduces the possibility that a Portfolio would incur a capital loss in liquidating commercial paper, especially if interest rates have risen since acquisition of such commercial paper.

Investment decisions for the Portfolios and for other investment accounts managed by BlackRock Advisors are made independently of each other in light of differing conditions. BlackRock Advisors allocates investments among client accounts in a fair and equitable manner. A variety of factors will be considered in making such allocations. These factors include: (i) investment objectives or strategies for particular accounts, (ii) tax considerations of an account, (iii) risk or investment concentration parameters for an account, (iv) supply or demand for a security at a given price level, (v) size of available investment, (vi) cash availability and liquidity requirements for accounts, (vii) regulatory restrictions, (viii) minimum investment size of an account, (ix) relative size of account, and (x) such other factors as may be approved by BlackRock Advisors’ general counsel. Moreover, investments may not be allocated to one client account over another based on any of the following considerations: (i) to favor one client account at the expense of another, (ii) to generate higher fees paid by one client account over another or to produce greater performance compensation to BlackRock Advisors, (iii) to develop or enhance a relationship with a client or prospective client, (iv) to compensate a client for past services or benefits rendered to BlackRock Advisors or to induce future services or benefits to be rendered to BlackRock Advisors, or (v) to manage or equalize investment performance among different client accounts.

Because different accounts may have differing investment objectives and policies, BlackRock Advisors may buy and sell the same securities at the same time for different clients based on the particular investment objective, guidelines and strategies of those accounts.

In certain instances, BlackRock Advisors may find it efficient for purposes of achieving best execution, to aggregate certain contemporaneous purchases or sale orders of its advisory accounts (a/k/a “bunching”). In general, all contemporaneous trades for client accounts under management by the same portfolio manager or investment team will be bunched in a single order if the trader believes the bunched trade would provide each client with an opportunity to achieve a more favorable execution at a potentially lower execution cost. The costs associated with a bunched order will be shared pro rata among the clients in the bunched order. Generally, if an order for a particular portfolio manager or management team is filled at several different prices through multiple trades,

all accounts participating in the order will receive the average price except in the case of certain international markets where average pricing is not permitted. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as the Portfolio is concerned, in other cases it could be beneficial to the Portfolio. The trader will give the bunched order to the broker dealer that the trader has identified as being able to provide the best execution of the order. Orders for purchase or sale of securities will be placed within a reasonable amount of time of the order receipt and bunched orders will be kept bunched only long enough to execute the order.

The Portfolios will not purchase securities during the existence of any underwriting or selling group relating to such securities of which BlackRock Advisors, the Administrator, the Distributor or any affiliated person (as defined in the 1940 Act) thereof is a member except pursuant to procedures adopted by the Board of Trustees in accordance with Rule 10f-3 under the 1940 Act. In no instance will portfolio securities be purchased from or sold to BlackRock Advisors, the Distributor or any affiliated person of any of the foregoing entities except as permitted by SEC exemptive order or by applicable law.

The portfolio turnover rate of each Portfolio is calculated by dividing the lesser of the Portfolio’s annual sales or purchases of portfolio securities (exclusive of purchases or sales of securities whose maturities at the time of acquisition were one year or less) by the monthly average value of the securities held by the Portfolio during the year.

VALUATION OF PORTFOLIO SECURITIES

In determining the market value of portfolio investments, the Trust may employ outside organizations, which may use, without limitation, a matrix or formula method that takes into consideration market indexes, matrices, yield curves and other specific adjustments. This may result in the securities being valued at a price different from the price that would have been determined had the matrix or formula method not been used. All cash, receivables and current payables are carried on the Trust’s books at their face value. Other assets, if any, are valued at fair value as determined in good faith under the supervision of the Board of Trustees.

Net asset value is calculated separately for each Portfolio as of the close of regular trading hours on the NYSE (currently 4:00 p.m. Eastern time) on each Business Day by dividing the value of all securities, cash and other assets owned by the Portfolio that are allocated to that Portfolio, less the liabilities charged to that Portfolio, by the total number of outstanding shares of the Portfolio.

Valuation of securities held by a Portfolio is as follows: fixed income securities are valued by using market quotations or prices provided by market makers; a portion of the fixed income securities are valued utilizing one or more pricing services approved by the Board of Trustees; an option or futures contract is valued at the last sales price prior to 4:00 p.m. (Eastern time), as quoted on the principal exchange or board of trade on which such option or futures contract is traded, or in the absence of a sale, the mean between the last bid and asked prices prior to 4:00 p.m. (Eastern time); the amortized cost method of valuation will be used with respect to debt obligations with sixty days or less remaining to maturity unless the investment advisor under the supervision of the Board of Trustees determines that such method does not represent fair value. In the event that application of these methods of valuation results in a price for a security which is deemed not to be representative of the market value of such security, the security will be valued under the direction of or in accordance with a method specified by the Board of Trustees as reflecting fair value. All other assets and securities (including securities for which market quotations are not readily available) held by the Portfolios (including restricted securities) are valued at fair value as determined in good faith by the Board of Trustees or by someone under its direction. Any securities that are denominated in a non-U.S. currency are translated into U.S. dollars at the prevailing market rates. Certain of the securities acquired by the Portfolios may be traded on non-U.S. exchanges or over-the-counter markets on days on which the Portfolio’s net asset value is not calculated. In such cases, the net asset value of the Portfolio’s shares may be significantly affected on days when investors can neither purchase nor redeem shares of the Portfolio.

Fair Value. When the exchange or market on which a security or other asset is traded does not open for trading for an entire trading day, and no other market prices are available, market quotations are not readily available. Market quotations may not be reliable when there is a substantial time differential between the close of trading for the asset and the time as of which the Fund values its assets and when significant events have occurred in the markets or in related instruments such as ADRs. When market quotations are not readily available or are believed by BlackRock Advisors to be unreliable, the Fund’s investments are valued at fair value (“Fair Value Assets”).

Fair Value Assets generally are valued by BlackRock Advisors in accordance with procedures approved by the Board of Trustees. BlackRock Advisors may conclude that a market quotation is not readily available or is unreliable if a security or other asset does not have a price source due to its lack of liquidity, if BlackRock Advisors believes a market quotation from a broker-dealer is unreliable (e.g., where it varies significantly from a recent trade), where the security or other asset is thinly traded or where there is a significant event subsequent to the most recent market quotation. For these purpose, a “significant event” is deemed to occur if the BlackRock Advisors Portfolio Management Group and/or the Pricing Group determines, in its business judgment prior to or at the time of pricing the Fund’s assets, that it is highly likely that the event will cause a material change to the last closing market price of one or more assets held by the Fund.

BlackRock Advisors’ Pricing Group will submit its recommendations regarding the valuation and/or valuation methodologies for Fair Value Assets to BlackRock Advisors’ Valuation Committee. The Valuation Committee may accept, modify or reject any recommendations. The pricing of all Fair Value Assets shall be subsequently reported to and ratified by the Board.

When determining the price for a Fair Value Asset, the Valuation Committee (or the Pricing Group) shall seek to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. The price generally may not be determined based on what the Fund might reasonably expect to receive for selling an asset at a later time or if it holds the asset to maturity. Fair value determinations shall be based upon all available factors that the Valuation Committee (or Pricing Group) deems relevant.

Fair value represents a good faith approximation of the value of a security. The fair value of one or more securities may not, in retrospect, be the prices at which those assets could have been sold during the period in which the particular fair values were used in determining a Portfolio’s net asset value. As a result, a Portfolio’s sale or redemption of its shares at net asset value, at a time when a holding or holdings are valued at fair value, may have the effect of diluting or increasing the economic interest of existing shareholders.

PERFORMANCE INFORMATION

Each Portfolio may quote performance in various ways. All performance information supplied by the Portfolio in advertising is historical and is not intended to indicate future returns.

Total Return. For purposes of quoting and comparing the performance of shares of each Portfolio to the performance of other mutual funds and to stock or other relevant indexes in advertisements, sales literature, communications to shareholders and other materials, performance may be stated in terms of total return.

In addition to average annual total returns, each Portfolio may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns may be quoted on a before-tax or after-tax basis and may be quoted with or without taking sales charges into account. Total returns, yields, and other performance information may be quoted numerically or in a table, graph or similar illustration.

Performance information for each Portfolio may be quoted in advertisements and communications to shareholders. Total return will be calculated on an average annual total return basis for various periods. Average annual total return reflects the average annual percentage change in value of an investment in shares of a Portfolio over the measuring period. Total return may also be calculated on an aggregate total return basis. Aggregate total return reflects the total percentage change in value over the measuring period. Both methods of calculating total return assume that dividend and capital gain distributions made by a Portfolio are reinvested in shares of the same Portfolio.

The performance of a Portfolio’s shares may be compared to the performance of other mutual funds with similar investment objectives and to relevant indices, as well as to ratings or rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. The performance of a Portfolio’s shares may be compared to data prepared by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc. and Weisenberger Investment Company Service, and to the performance of the Dow Jones Industrial Average, the “stocks bonds and inflation Index” published annually by Ibbotson Associates, the Lipper International Fund Index, the Lipper Small Cap International Fund Index, the Lehman Brothers U.S. Aggregate Index, the Lehman Brothers Corporate Bond Index and the Financial Times World Stock Index. Performance information may also include evaluations of a Portfolio published by nationally recognized ranking services, and information as reported in financial publications such as Business Week, Fortune, Institutional Investor, Money Magazine, Forbes, Barron’s, The Wall Street Journal and The New York Times, or in publications of a local or regional nature. In addition to providing performance information that demonstrates the actual return of a class of shares, a Portfolio may provide other information demonstrating hypothetical investment returns. This information may include, but is not limited to, illustrating the compounding effects of dividends in a dividend investment plan or the impact on tax-deferring investing. Performance quotations for shares of a Portfolio represent past performance and should not be considered representative of future results. The investment return and principal value of an investment in a Portfolio will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Since performance will fluctuate, performance data for shares of a Portfolio cannot necessarily be used to compare an investment in such shares with bank deposits, savings accounts and similar investment alternatives which often provide an agreed or guaranteed fixed yield for a stated period of time. Performance is generally a function of the kind and quality of the instruments held in a Portfolio, portfolio maturity, operating expenses and market conditions. Any fees charged by brokers or other institutions directly to their customer accounts in connection with investments in shares will not be included in the Portfolio’s performance calculations.

Each Portfolio may also advertise the yields of its Shares.

Other Information Regarding Investment Returns. In addition to providing performance information that demonstrates the total return or yield of shares of a Portfolio over a specified period of time, the Trust may provide certain other information demonstrating hypothetical investment returns. Such information may include, but is not limited to, illustrating the compounding effects of dividends in a dividend reinvestment plan or the impact of “tax deferring” investing.

Miscellaneous. When comparing a Portfolio’s performance to stock, bond, and money market mutual fund performance indices prepared by Lipper or other organizations, it is important to remember the risk and return characteristics of each type of investment. For example, while stock mutual funds may offer higher potential returns, they also may carry higher share price volatility.

From time to time, a Portfolio’s performance may also be compared to other mutual funds tracked by financial or business publications and periodicals. For example, a Portfolio may quote Morningstar, Inc. in its advertising materials. Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the basis of risk-adjusted performance. Rankings that compare the performance of the Portfolio to another fund in appropriate categories over specific periods of time may also be quoted in advertising. Ibbotson Associates of Chicago, Illinois (“Ibbotson”) provides historical returns of the capital markets in the United States, including common stocks, small capitalization stocks, long-term corporate bonds, intermediate-term government bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation (based on the Consumer Price Index), and combinations of various capital markets. The performance of these capital markets is based on the returns of different indices. A Portfolio may use the performance of these capital markets in order to demonstrate general risk-versus-reward investment scenarios. Performance comparisons may also include the value of a hypothetical investment in any of these capital markets. The risks associated with the security types in any capital market may or may not correspond directly to those of the Portfolio. A Portfolio may also compare performance to that of other compilations or indices that may be developed and made available in the future. The Trust may also from time to time include discussions or illustrations of the effects of compounding in advertisements. “Compounding” refers to the fact that, if dividends or other distributions on a Portfolio’s investment are reinvested by being paid in additional Portfolio shares, any future income or capital appreciation of the Portfolio would increase the value, not only of the original investment in a Portfolio, but also of the additional shares received through reinvestment. The Trust may also include discussions or illustrations of the potential investment goals of a prospective investor, (including materials that describe general principles of investing, such as asset allocation, diversification, risk tolerance, and goal setting, questionnaires designed to help create a personal financial profile, worksheets used to project savings needs based on assumed rates of inflation and hypothetical rates of return and action plans offering investment alternatives) investment management techniques, policies or investment suitability of a Portfolio (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer, automatic account rebalancing, the advantages and disadvantages of investing in tax-deferred and taxable investments), economic and political conditions and the relationship between sectors of the economy and the economy as a whole, the effects of inflation and historical performance of various asset classes, including but not limited to, stocks, bonds and Treasury bills. From time to time advertisements, sales literature, communications to shareholders or other materials may summarize the substance of information contained in shareholder reports (including the investment composition of a Portfolio), as well as the

views of a Portfolio’s investment advisor as to current market, economy, trade and interest rate trends, legislative, regulatory and monetary developments, investment strategies and related matters believed to be of relevance to the Portfolio. In addition, selected indices may be used to illustrate historic performance of select asset classes. The Trust may also include in advertisements, sales literature, communications to shareholders or other materials, charts, graphs or drawings which illustrate the potential risks and rewards of investment in various investment vehicles, including but not limited to, stocks, bonds, Treasury bills and shares of a Portfolio. In addition, advertisements, sales literature, shareholder communications or other materials may include a discussion of certain attributes or benefits to be derived by an investment in a Portfolio and/or other mutual funds, benefits, characteristics or services associated with a Portfolio, shareholder profiles and hypothetical investor scenarios, timely information on financial management, tax and retirement planning and investment alternative to certificates of deposit and other financial instruments. Such advertisements or communicators may include symbols, headlines or other material which highlight or summarize the information discussed in more detail therein. Materials may include lists of representative clients of a Portfolio’s investment advisor. Materials may refer to the CUSIP number of a Portfolio and may illustrate how to find the listings of the Portfolio in newspapers and periodicals. Materials may also include discussions of other funds, products, and services.

Charts and graphs using net asset values, adjusted net asset values, and benchmark indices may be used to exhibit performance. An adjusted NAV includes any distributions paid and reflects all elements of return. Unless otherwise indicated, the adjusted NAVs are not adjusted for sales charges, if any. A Portfolio may illustrate performance using moving averages. A long-term moving average is the average of each week’s adjusted closing NAV for a specified period. A short-term moving average is the average of each day’s adjusted closing NAV for a specified period. Moving Average Activity Indicators combine adjusted closing NAVs from the last business day of each week with moving averages for a specified period to produce indicators showing when an NAV has crossed, stayed above, or stayed below its moving average. A Portfolio may quote various measures of volatility and benchmark correlation in advertising. In addition, a Portfolio may compare these measures to those of other funds. Measures of volatility seek to compare the historical share price fluctuations or total returns to those of a benchmark. Measures of benchmark correlation indicate how valid a comparative benchmark may be. All measures of volatility and correlation are calculated using averages of historical data.

Momentum indicators indicate a Portfolio’s price movements over specific periods of time. Each point on the momentum indicator represents the Portfolio’s percentage change in price movements over that period.

A Portfolio may advertise examples of the effects of periodic investment plans, including the principle of dollar cost averaging. In such a program, an investor invests a fixed dollar amount in a fund at periodic intervals, thereby purchasing fewer shares when prices are high and more shares when prices are low. While such a strategy does not assure a profit or guard against loss in a declining market, the investor’s average cost per

share can be lower than if fixed numbers of shares are purchased at the same intervals. In evaluating such a plan, investors should consider their ability to continue purchasing shares during periods of low price levels. A Portfolio may advertise its current interest rate sensitivity, duration, weighted average maturity or similar maturity characteristics. Advertisements and sales materials relating to a Portfolio may include information regarding the background, experience and expertise of the investment advisor and/or portfolio manager for the Portfolio.

TAXES

The following is a description of certain federal income tax issues concerning the Portfolios and the consequences to a shareholder of acquiring, holding and disposing of common shares of one of the Portfolios. No attempt is made to present a detailed explanation of all federal, state, local and foreign tax concerns affecting the Portfolios and their shareholders (including shareholders owning a large position in a Portfolio), and the discussions set forth here and in the Statement of Additional Information do not constitute tax advice. The discussion reflects applicable tax laws of the United States as of the date of this Statement of Additional Information, which tax laws may be changed or subject to new interpretations by the courts or the Internal Revenue Service retroactively or prospectively.

Taxation of the Portfolios

Each Portfolio intends to elect to be treated and to qualify to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). In order to qualify as a regulated investment company, each Portfolio must satisfy certain requirements relating to the source of its income, diversification of its assets, and distributions of its income to its shareholders. First, each Portfolio must derive at least 90% of its annual gross income (including tax-exempt interest) from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies, or other income (including but not limited to gains from options, futures and forward contracts) derived with respect to its business of investing in such stock, securities or currencies. Second, each Portfolio must diversify its holdings so that, at the close of each quarter of its taxable year, (i) at least 50% of the value of its total assets is comprised of cash, cash items, U.S. Government securities, securities of other regulated investment companies and other securities, limited in respect of any one issuer to an amount not greater in value than 5% of the value of the Portfolio’s total assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the total assets is invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies) or two or more issuers controlled by such Portfolio and engaged in the same, similar or related trades or businesses.

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

“investment company taxable income” (which includes, among other items, dividends, taxable interest, taxable original issue discount and market discount income, income from securities lending, net short-term capital gain in excess of net long-term capital loss, and any other taxable income other than “net capital gain” (as defined below) and is reduced by deductible expenses) determined without regard to the deduction for dividends paid and (ii) its net tax-exempt interest (the excess of its gross tax-exempt interest income over certain disallowed deductions). Each Portfolio may retain for investment its net capital gain (which consists of the excess of its net long-term capital gain over its net short-term capital loss). However, if a Portfolio retains any net capital gain or any investment company taxable income, it will be subject to tax at regular corporate rates on the amount retained. If a Portfolio retains any net capital gain, it may designate the retained amount as an undistributed capital gain dividend in a notice to its shareholders who, if subject to federal income tax on long-term capital gain, (i) will be required to include in income for federal income tax purposes, as long-term capital gain, their share of such undistributed amount and (ii) will be entitled to credit their proportionate shares of the tax paid by the Portfolio against their federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds such liabilities. For federal income tax purposes, the tax basis of shares owned by a shareholder of a Portfolio will be increased by the amount of undistributed capital gain included in the gross income of the shareholder less the tax deemed paid by the shareholder under clause (ii) of the preceding sentence. Each Portfolio intends to distribute at least annually to its shareholders all or substantially all of its investment company taxable income and net capital gain.

Treasury Regulations permit a regulated investment company, in determining its investment company taxable income and net capital gain, to elect (unless it has made a taxable year election for excise tax purposes) to treat all or part of any net capital loss, any net long-term capital loss or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year.

In order to avoid a 4% federal excise tax, each Portfolio must distribute or be deemed to have distributed by December 31 of each calendar year the sum of at least 98% of its taxable ordinary income for such year, at least 98% of its net capital gain (generally computed on the basis of the one-year period ending on October 31 of such year) and 100% of any taxable ordinary income and capital gain net income for the prior year that was not distributed during such year and on which the Portfolio paid no federal income tax. Each Portfolio intends to make timely distributions in compliance with these requirements and consequently it is anticipated that it generally will not be required to pay the excise tax.

If in any tax year one of the Portfolios should fail to qualify under Subchapter M for tax treatment as a regulated investment company, such Portfolio would incur a regular corporate federal income tax upon its taxable income for that year, and distributions to its shareholders would be taxable to shareholders as ordinary dividend income for federal income tax purposes to the extent of the Portfolio’s current and accumulated earnings and profits.

Portfolio Investments

Certain of the Portfolios’ investment practices are subject to special and complex U.S. federal income tax provisions that may, among other things, (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (ii) convert lower taxed long-term capital gain into higher taxed short-term capital gain or ordinary income, (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited), (iv) cause the Fund to recognize income or gain without a corresponding receipt of cash, (v) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur, (vi) adversely alter the characterization of certain complex financial transactions, and (vii) produce income that will not qualify as good income under the 90% annual gross income test described above. Each Portfolio will monitor its transactions and may make certain tax elections in order to mitigate the effect of these provisions.

Certain of the Portfolios may invest in preferred securities or other securities the U.S. federal income tax treatment of which may not be clear or may be subject to recharacterization by the Internal Revenue Service. To the extent the tax treatment of such securities or the income from such securities differs from the tax treatment expected by a Portfolio, it could affect the timing or character of income recognized by a Portfolio, requiring a Portfolio to purchase or sell securities, or otherwise change its portfolio, in order to comply with the tax rules applicable to regulated investment companies under the Code.

Income received by each Portfolio with respect to foreign securities may be subject to withholding and other taxes imposed by foreign countries. Tax conventions may reduce or eliminate such taxes. Due to the makeup of each Portfolio’s investment portfolio, shareholders will not be entitled to claim a credit or deduction with respect to such foreign taxes. Similarly, due to the makeup of each Portfolio’s investment portfolio, the Portfolio’s will not be able to pass through to its shareholders tax-exempt dividends despite the fact that the Portfolio may receive some tax-exempt interest.

Taxation of Shareholders

Distributions by each Portfolio of investment company taxable income will be taxable to shareholders as ordinary dividend income (to the extent of the current or accumulated earning and profits of such Portfolio) and (if designated by the Portfolio) will qualify (provided holding period and other requirements are met) for (i) the dividends received deduction in the case of corporate shareholders to the extent such Portfolio’s income consists of dividends from U.S. corporations and, (ii) under the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003 (effective for taxable years after December 31, 2002 through December 31, 2008) (“2003 Tax Act”), as qualified dividend income eligible for the reduced maximum rate to individuals of generally 15% (5% for individuals in lower tax brackets) to the extent that the Fund receives qualified dividend income. Qualified dividend income is, in general, dividend income from taxable domestic corporations and certain foreign corporations (e.g., generally, foreign corporations incorporated in a possession of the United States or in

certain countries with a comprehensive tax treaty with the United States, or, the stock of which is readily tradable on an established securities market in the United States). Due to each Portfolio’s expected investments, distributions generally will not be eligible for the dividends received deduction allowed to corporate shareholders and will not qualify for the reduced rate of tax for qualified dividend income allowed to individuals. Distributions of net long-term capital gain, if any, realized by each Portfolio and distributed to shareholders will be taxable to shareholders as long-term capital gains regardless of the length of time investors have owned shares of such Portfolio. Under the 2003 Tax Act, the maximum tax rate on net long-term capital gain of individuals is reduced generally from 20% to 15% (5% for individuals in lower brackets) for such gain realized before January 1, 2009. Distributions by each Portfolio in excess of such Portfolio’s current and accumulated earnings will first reduce the adjusted tax basis of your shares and, after the adjusted tax basis is reduced to zero, will constitute capital gain to you (assuming the shares are held as capital assets).

The sale or exchange or other disposition of common shares normally will result in capital gain or loss to the holders of common shares who hold their shares as capital assets. Generally, a shareholder’s gain or loss will be long-term capital gain or loss if the shares have been held for more than one year. Under the 2003 Tax Act for non-corporate taxpayers, long-term capital gains will be taxed at a maximum rate of 15% while short-term capital gains and other ordinary income will currently be taxed at a maximum rate of 35%. Because of the limitations on itemized deductions and the deduction for personal exemptions applicable to higher income taxpayers, the effective tax rate may be higher in certain circumstances. Present law taxes both long- and short-term capital gains of corporations at the rates applicable to ordinary income.

No loss will be allowed on the redemption, sale or exchange of common shares if the shareholder purchases other common shares of a Portfolio or the shareholder acquires or enters into a contract or option to acquire shares that are substantially identical to common shares of that Portfolio within a period of 61 days beginning 30 days before and ending 30 days after such redemption, sale or exchange. If disallowed, the loss will be reflected in an adjustment to the basis of the shares acquired. Further, any losses realized on the redemption, sale or exchange of common shares held for six months or less will be treated as long-term capital losses to the extent of any capital gain dividends received (or amounts credited as undistributed capital gain) with respect to such common shares.

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

U.S. taxation of a shareholder who, as to the United States, is a nonresident alien individual, a foreign trust or estate, a foreign corporation or foreign partnership (a “foreign shareholder”) depends on whether the income of a Portfolio is “effectively connected” with a U.S. trade or business carried on by the shareholder. If the income from a Portfolio is not “effectively connected” with a U.S. trade or business carried on by

the foreign shareholder, distributions of investment company taxable income will be subject to a U.S. tax of 30% (or lower treaty rate), which tax is generally withheld from such distributions. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale of shares of a Portfolio, capital gain dividends and amounts retained by a Portfolio that are designated as undistributed capital gains. However, a foreign shareholder who is a non-resident alien individual and is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements will nevertheless be subject to U.S. tax of 30% on such capital gain dividends, undistributed capital gains and sale or exchange gains.

If the income from a Portfolio is “effectively connected” with a U.S. trade or business carried on by a foreign shareholder, then distributions of investment company taxable income and capital gain dividends, any amounts retained by a Portfolio which are designated as undistributed capital gains and any gains realized upon the sale or exchange of shares of a Portfolio will be subject to U.S. income tax at the graduated rates applicable to U.S. citizens, residents and domestic corporations. Foreign corporate shareholders may also be subject to the branch profits tax imposed by the Code.

In the case of a non-corporate foreign shareholder, a Portfolio may be required to withhold U.S. federal income tax from distributions that are otherwise exempt from withholding tax (or taxable at a reduced rate) unless the foreign shareholder certifies his or her foreign status under penalties of perjury or otherwise establishes an exemption.

The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may differ from those described herein. Foreign shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Portfolio.

Each Portfolio is required to withhold tax at a rate of 28% on taxable dividends and certain other payments paid to non-corporate shareholders who have not furnished to the Portfolio their correct taxpayer identification number (in the case of individuals, their Social Security number) and certain certifications, or who are otherwise subject to backup withholding. Backup withholding is not an additional tax and any amount withheld may be refunded or credited against the shareholder’s federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

Under recently promulgated Treasury regulations, if a shareholder recognizes a loss with respect to shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder in any single taxable year (or a greater loss over a combination of years), the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a regulated investment company are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all regulated investment companies. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.

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

ADDITIONAL INFORMATION CONCERNING SHARES

Each share of each Portfolio has a par value of $.001, represents an interest only in the assets of that Portfolio and is entitled solely to the dividends and distributions earned on that Portfolio’s assets that are declared in the discretion of the Board of Trustees. The Trust’s shareholders are entitled to one vote for each full share held and proportionate fractional votes for fractional shares held, and will vote in the aggregate and not by Portfolio, except where otherwise required by law or as determined by the Board of Trustees.

Shares of the Trust have noncumulative voting rights and, accordingly, the holders of more than 50% of the Trust’s outstanding shares may elect all of the Trustees. Shares have no preemptive rights and only such conversion and exchange rights as the Board may grant in its discretion. When issued for payment, shares will be fully paid and non-assessable by the Trust.

There will normally be no meetings of shareholders for the purpose of electing Trustees or for any other purpose unless and until such time as required by law or called by the Board. At that time, the Trustees then in office will call a shareholders’ meeting to elect Trustees. Except as set forth above, the Trustees shall continue to hold office and may appoint successor Trustees. The Trust’s Declaration of Trust provides that meetings of the shareholders of the Trust shall be called by the Trustees upon the written request of shareholders owning at least 51% of the outstanding shares entitled to vote.

Rule 18f-2 under the 1940 Act provides that any matter required by the provisions of the 1940 Act or applicable state law, or otherwise, to be submitted to the holders of the outstanding voting securities of an investment company such as the Trust’s shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each investment portfolio affected by such matter. Rule 18f-2 further provides that an investment portfolio shall be deemed to be affected by a matter unless the interests of each investment portfolio in the matter are substantially identical or the matter does not affect any interest of the investment portfolio. Under the Rule, the approval of an investment advisory agreement, a distribution plan subject to Rule 12b-1 under the 1940 Act or any change in a fundamental investment policy would be

effectively acted upon with respect to an investment portfolio only if approved by a majority of the outstanding shares of such investment portfolio. However, the Rule also provides that the ratification of the appointment of independent accountants, the approval of principal underwriting contracts and the election of Trustees may be effectively acted upon by shareholders of the Trust voting together in the aggregate without regard to a particular investment portfolio.

Shareholder Approvals. As used in this Statement of Additional Information and in the Prospectus, a “majority of the outstanding shares” of a Portfolio means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in a fundamental investment policy, the lesser of (1) 67% of the shares of the particular Portfolio represented at a meeting at which the holders of more than 50% of the outstanding Portfolio are present in person or by proxy, or (2) more than 50% of the outstanding shares of such Portfolio.

The proceeds received by a Portfolio for each issue or sale of its shares, and all net investment income, realized and unrealized gain and proceeds thereof will be specifically allocated to and constitute the underlying assets solely of that Portfolio. The underlying assets of the Portfolio will be segregated on the books of account, and will be charged with the liabilities in respect to that Portfolio and with its allocable share of any general liabilities.

Shareholders have no power to vote on any matter except matters on which a shareholder vote is required by applicable law, the Trust’s Declaration of Trust or resolution of the Trustees. In particular, no amendment of the Trust’s Declaration of Trust, merger, consolidation, share exchange or sale of assets of the Trust or any series thereof, conversion of the Trust to any other form of organization or any other action of the Trust or series thereof requires any vote or other approval of any of the shareholders except as provided by the foregoing sentence. Except to the extent required by the 1940 Act, a separate class vote on the election or removal of Trustees or the selection of auditors for the Trust and its series is not required. The Trust may be dissolved by the affirmative vote of a majority of the Trustees without any vote of the shareholders except as may be required by the 1940 Act. In connection with such a dissolution, after paying or adequately providing for the payment of all liabilities, the Trustees may distribute the remaining property owned or held by or for account of a particular series to the shareholders of that series according to their respective rights. The Trust or any series may merge or consolidate with any other corporation, association, trust or other organization or any series, sub-trust or other designated portion thereof, or may sell, lease, or exchange all or substantially all of the property of the Trust or any property of any series thereof, including its goodwill, or may acquire all or substantially all of the property of any other corporation, association, trust or other organization or any series, sub-trust or other designated portion thereof, when and as authorized by two-thirds of the Trustees and without any vote by shareholders of the Trust or any series or class except as may be required by the 1940 Act. The Declaration of Trust may be amended when and as authorized by two-thirds of the Trustees and without any vote by shareholders of the Trust or any series or class except as may be required by the 1940 Act.

MISCELLANEOUS

The Trust. The Trust was organized as a Delaware statutory trust on March 5, 2003 and is registered under the 1940 Act as an open end, non-diversified management investment company.

Counsel. The law firm of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, NY 10017, serves as the Trust’s counsel.

Independent Registered Public Accountants. Deloitte & Touche LLP, with offices located at 1700 Market Street, 24 ^th Floor, Philadelphia, PA 19103, serves as the Trust’s independent registered public accounting firm.

On October 1, 2004, BlackRock Funding, Inc., a Delaware corporation, which has its principal offices at 100 Bellevue Parkway, Wilmington, Delaware 19809, held of record approximately 100% of the Trust’s outstanding shares, and may be deemed a controlling person of the Trust under the 1940 Act.

Privacy Principles of BlackRock Bond Allocation Target Shares. BlackRock Bond Allocation Target Shares is committed to maintaining the privacy of shareholders and to safeguarding their nonpublic personal information. The following information is provided to help you understand what personal information BlackRock Bond Allocation Target Shares collects, how we protect that information, and why in certain cases we may share such information with select other parties.

BlackRock Bond Allocation Target Shares does not receive any nonpublic information relating to its shareholders who purchase shares through their broker-dealers. In the case of shareholders who are record holders of BlackRock Bond Allocation Target Shares, BlackRock Bond Allocation Target Shares receives nonpublic information on account applications or other forms. With respect to these shareholders, BlackRock Bond Allocation Target Shares also has access to specific information regarding their transactions in BlackRock Bond Allocation Target Shares.

BlackRock Bond Allocation Target Shares does not disclose any nonpublic information about its shareholders or former shareholders to anyone, except as permitted by law or as is necessary in order to service our shareholders’ accounts (for example, to a transfer agent).

BlackRock Bond Allocation Target Shares restricts access to nonpublic personal information about its shareholders to BlackRock employees with a legitimate business need for the information. BlackRock Bond Allocation Target Shares maintains physical, electronic and procedural safeguards designed to protect the nonpublic personal information of our shareholders.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder and Board of Trustees of

BlackRock Bond Allocation Target Shares

We have audited the accompanying statement of assets and liabilities of BlackRock Bond Allocation Target Shares (the “Portfolios”) as of October 1, 2004. This financial statement is the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of assets and liabilities is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of assets and liabilities. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement of assets and liabilities. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the statement of assets and liabilities referred to above presents fairly, in all material respects, the financial position of the Portfolios as of October 1, 2004, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania

October 8, 2004

FINANCIAL STATEMENTS

BLACKROCK BOND ALLOCATION TARGET SHARES

STATEMENTS OF ASSETS AND LIABILITIES

October 1, 2004


	Series C		Series M		Series S
ASSETS:

Cash	$	100,000	$	100,000	$	100,000

LIABILITIES:		—		—		—

Net Assets	$	100,000	$	100,000	$	100,000

Net assets were comprised of:
Common shares at par (Note 1)	$	10	$	10	$	10
Paid-in capital in excess of par		99,990		99,990		99,990

Net assets, October 1, 2004	$	100,000	$	100,000	$	100,000

Net asset value per common share issued and outstanding (par value $0.001, unlimited shares authorized)	$	10.00	$	10.00	$	10.00

Common shares outstanding:		10,000		10,000		10,000

See Notes to Statements of Assets and Liabilities.

NOTES TO STATEMENTS OF ASSETS AND LIABILITIES

Note1. BlackRock Bond Allocation Target Shares (the “Trust”) was organized as a Delaware statutory trust on March 5, 2003, and is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. The Trust currently has 5 registered portfolios, 3 of which are included in this statement of assets and liabilities (the “Portfolios”). Each Portfolio is authorized to issue an unlimited number of shares with a par value of $0.001. The Trust had no operations prior to October 1, 2004, other than the sale to BlackRock Funding, Inc. of 10,000 common shares for $100,000 ($10.00 per share) of Series C, 10,000 common shares for $100,000 ($10.00 per share) of Series M, and 10,000 common shares for $100,000 ($10.00 per share) of Series S.

Note 2. BlackRock Advisors, Inc. (the investment advisor) has agreed irrevocably to waive all fees and reimburse all expenses, except extraordinary expenses incurred by the Portfolios.

Note 3. Each Portfolio’s statement of assets and liabilities is prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from estimates.

APPENDIX A

Commercial Paper Ratings

A Standard & Poor’s commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. The following summarizes the rating categories used by Standard and Poor’s for commercial paper:

“A-1”—Issue’s degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted “A-1+.”

“A-2”—Issue’s capacity for timely payment is satisfactory. However, the relative degree of safety is not as high as for issues designated “A-1.” “A-3”—Issue has an adequate capacity for timely payment. It is, however, somewhat more vulnerable to the adverse effects of changes in circumstances than an obligation carrying a higher designation.

“B”—Issue has only a speculative capacity for timely payment. “C”—Issue has a doubtful capacity for payment.

“D”—Issue is in payment default.

Moody’s commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of 9 months. The following summarizes the rating categories used by Moody’s for commercial paper:

“Prime-1”—Issuer or related supporting institutions are considered to 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 earning coverage of fixed financial charges and high internal cash generation; and well established access to a range of financial markets and assured sources of alternate liquidity. “Prime-2”—Issuer or related supporting institutions are considered to 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 alternative liquidity is maintained. “Prime-3”—Issuer or related supporting institutions have an acceptable capacity for repayment of short-term promissory obligations. The effects 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.

“Not Prime”—Issuer does not fall within any of the Prime rating categories.

A-1

The following summarizes the rating categories used by Fitch for short-term obligations:

“F-1+”—Securities possess exceptionally strong credit quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.

“F-1”—Securities possess very strong credit quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated “F-1+.”

“F-2”—Securities possess good credit quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as the “F-1+” and “F-1” categories.

“F-3”—Securities possess fair credit quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate; however, near-term adverse changes could cause these securities to be rated below investment grade.

“F-S”—Securities possess weak credit quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.

“D”—Securities are in actual or imminent payment default.

Fitch may also use the symbol “LOC” with its short-term ratings to indicate that the rating is based upon a letter of credit issued by a commercial bank.

Thomson BankWatch short-term ratings assess the likelihood of an untimely or incomplete payment of principal or interest of unsubordinated instruments having a maturity of one year or less which are issued by United States commercial banks, thrifts and non-bank banks, non-United States banks, and broker-dealers. The following summarizes the ratings used by Thomson BankWatch:

“TBW-1”—This designation represents Thomson BankWatch’s highest rating category and indicates a very high degree of likelihood that principal and interest will be paid on a timely basis.

“TBW-2”—This designation indicates that while the degree of safety regarding timely payment of principal and interest is strong, the relative degree of safety is not as high as for issues rated “TBW-1.”

“TBW-3”—This designation represents the lowest investment grade category and indicates that while the debt is more susceptible to adverse developments (both internal and external) than obligations with higher ratings, capacity to service principal and interest in a timely fashion is considered adequate. “TBW-4”—This designation indicates that the debt is regarded as non-investment grade and therefore speculative.

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IBCA assesses the investment quality of unsecured debt with an original maturity of less than one year which is issued by bank holding companies and their principal bank subsidiaries. The following summarizes the rating categories used by IBCA for short-term debt ratings:

“A1+”—Obligations which possess a particularly strong credit feature are supported by the highest capacity for timely repayment.

“A1”—Obligations are supported by the highest capacity for timely repayment.

“A2”—Obligations are supported by a satisfactory capacity for timely repayment.

“A3”—Obligations are supported by a satisfactory capacity for timely repayment.

“B”—Obligations for which there is an uncertainty as to the capacity to ensure timely repayment.

“C”—Obligations for which there is a high risk of default or which are currently in default.

Corporate and Municipal Long-Term Debt Ratings

The following summarizes the ratings used by Standard & Poor’s for corporate and municipal debt:

“AAA”—This designation represents the highest rating assigned by Standard & Poor’s to a debt obligation and indicates an extremely strong capacity to pay interest and repay principal.

“AA”—Debt is considered to have a very strong capacity to pay interest and repay principal and differs from AAA issues only in small degree. “A”—Debt is considered to have a strong capacity to pay interest and repay principal although such issues are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories.

“BBB”—Debt is regarded as having an adequate capacity to pay interest and repay principal. Whereas such issues normally exhibit 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.

“BB,” “B,” “CCC,” “CC” and “C”—Debt is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. “BB” indicates the lowest degree of speculation and “C” the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. “BB”—Debt has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or

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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 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 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”—This rating is typically applied to debt subordinated to senior debt that is assigned an actual or implied “CCC” rating.

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

“CI”—This rating is reserved for income bonds on which no interest is being paid.

“D”—Debt is in payment default. This rating 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.

“D” rating is also used upon the filing of a bankruptcy petition if debt service payments are jeopardized. PLUS (+) OR MINUS (-)—The ratings from “AA” through “CCC” may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

“r”—This rating is attached to highlight derivative, hybrid, and certain other obligations that S & P believes may experience high volatility or high variability in expected returns due to non-credit risks. Examples of such obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities. The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

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The following summarizes the ratings used by Moody’s for corporate and municipal long-term debt:

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

“A”—Bonds 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 considered 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,” “B,” “Caa,” “Ca,” and “C”—Bonds that possess one of these ratings provide questionable protection of interest and principal (“Ba” indicates some speculative elements; “B” indicates a general lack of characteristics of desirable investment; “Caa” represents a poor standing; “Ca” represents obligations which are speculative in a high degree; and “C” represents the lowest rated class of bonds). “Caa,” “Ca” and “C” bonds may be in default.

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

(P)—When applied to forward delivery bonds, indicates that the rating is provisional pending delivery of the bonds. The rating may be revised prior to delivery if changes occur in the legal documents or the underlying credit quality of the bonds.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody’s believes possess the strongest investment attributes are designated by the symbols, Aa1, A1, Ba1 and B1.

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The following summarizes the highest four ratings used by Fitch for corporate and municipal bonds:

“AAA”—Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.

“AA”—Bonds considered to be investment grade and of very high credit quality. The obligor’s ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated “AAA.” Because bonds rated in the “AAA” and “AA” categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated “F-1+.”

“A”—Bonds considered to be investment grade and of high credit quality. The obligor’s ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.

“BBB”—Bonds considered to be investment grade and of satisfactory credit quality. The obligor’s ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have an adverse impact on these bonds, and therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.

“BB,” “B,” “CCC,” “CC,” “C,” “DDD,” “DD,” and “D”—Bonds that possess one of these ratings are considered by Fitch to be speculative investments. The ratings “BB” to “C” represent Fitch’s assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating “DDD” to “D” is an assessment of the ultimate recovery value through reorganization or liquidation. To provide more detailed indications of credit quality, the Fitch ratings from and including “AA” to “BBB” may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within these major rating categories.

IBCA assesses the investment quality of unsecured debt with an original maturity of more than one year which is issued by bank holding companies and their principal bank subsidiaries. The following summarizes the rating categories used by IBCA for long-term debt ratings:

“AAA”—Obligations for which there is the lowest expectation of investment risk. Capacity for timely repayment of principal and interest is substantial such that adverse changes in business, economic or financial conditions are unlikely to increase investment risk substantially.

“AA”—Obligations for which there is a very low expectation of investment risk. Capacity for timely repayment of principal and interest is substantial, such that adverse changes in business, economic or financial conditions may increase investment risk, albeit not very significantly.

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“A”—Obligations for which there is a low expectation of investment risk. Capacity for timely repayment of principal and interest is strong, although adverse changes in business, economic or financial conditions may lead to increased investment risk.

“BBB”—Obligations for which there is currently a low expectation of investment risk. Capacity for timely repayment of principal and interest is adequate, although adverse changes in business, economic or financial conditions are more likely to lead to increased investment risk than for obligations in other categories.

“BB,” “B,” “CCC,” “CC,” and “C”—Obligations are assigned one of these ratings where it is considered that speculative characteristics are present. “BB” represents the lowest degree of speculation and indicates a possibility of investment risk developing. “C” represents the highest degree of speculation and indicates that the obligations are currently in default.

IBCA may append a rating of plus (+) or minus (-) to a rating to denote relative status within major rating categories.

Thomson BankWatch assesses the likelihood of an untimely repayment of principal or interest over the term to maturity of long term debt and preferred stock which are issued by United States commercial banks, thrifts and non-bank banks, non-United States banks, and broker-dealers. The following summarizes the rating categories used by Thomson BankWatch for long-term debt ratings:

“AAA”—This designation represents the highest category assigned by Thomson BankWatch to long-term debt and indicates that the ability to repay principal and interest on a timely basis is extremely high.

“AA”—This designation indicates a very strong ability to repay principal and interest on a timely basis with limited incremental risk compared to issues rated in the highest category.

“A”—This designation indicates that the ability to repay principal and interest is strong. Issues rated “A” could be more vulnerable to adverse developments (both internal and external) than obligations with higher ratings.

“BBB”—This designation represents Thomson BankWatch’s lowest investment grade category and indicates an acceptable capacity to repay principal and interest. Issues rated “BBB” are, however, more vulnerable to adverse developments (both internal and external) than obligations with higher ratings.

“BB,” “B,” “CCC,” and “CC,”—These designations are assigned by Thomson BankWatch to non-investment grade long-term debt. Such issues are regarded as having speculative characteristics regarding the likelihood of timely payment of principal and interest. “BB” indicates the lowest degree of speculation and “CC” the highest degree of speculation.

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“D”—This designation indicates that the long-term debt is in default. PLUS (+) OR MINUS (-)—The ratings from “AAA” through “CC” may include a plus or minus sign designation which indicates where within the respective category the issue is placed.

Municipal Note Ratings

A Standard and Poor’s rating reflects the liquidity concerns and market access risks unique to notes due in three years or less. The following summarizes the ratings used by Standard & Poor’s Ratings Group for municipal notes:

“SP-1”—The issuers of these municipal notes exhibit very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics are given a plus (+) designation.

“SP-2”—The issuers of these municipal notes exhibit satisfactory capacity to pay principal and interest.

“SP-3”—The issuers of these municipal notes exhibit speculative capacity to pay principal and interest.

Moody’s ratings for state and municipal notes and other short-term loans are designated Moody’s Investment Grade (“MIG”) and variable rate demand obligations are designated Variable Moody’s Investment Grade (“VMIG”). Such ratings recognize the differences between short-term credit risk and long-term risk. The following summarizes the ratings by Moody’s Investors Service, Inc. for short-term notes:

“MIG-1”/“VMIG-1”—Loans bearing this designation are of the best quality, enjoying strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.

“MIG-2”/“VMIG-2”—Loans bearing this designation are of high quality, with margins of protection ample although not so large as in the preceding group.

“MIG-3”/“VMIG-3”—Loans bearing this designation are of favorable quality, with all security elements accounted for but lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.

“MIG-4”/“VMIG-4”—Loans bearing this designation are of adequate quality, carrying specific risk but having protection commonly regarded as required of an investment security and not distinctly or predominantly speculative. “SG”—Loans bearing this designation are of speculative quality and lack margins of protection.

Fitch uses the short-term ratings described under Commercial Paper Ratings for municipal notes.

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APPENDIX B

A Portfolio may enter into certain futures transactions. Such transactions are described in this Appendix.

I. Interest Rate Futures Contracts

Use of Interest Rate Futures Contracts. Bond prices are established in both the cash market and the futures market. In the cash market, bonds are purchased and sold with payment for the full purchase price of the bond being made in cash, generally within five business days after the trade. In the futures market, only a contract is made to purchase or sell a bond in the future for a set price on a certain date. Historically, the prices for bonds established in the futures markets have tended to move generally in the aggregate in concert with the cash market prices and have maintained fairly predictable relationships. Accordingly, a Portfolio may use interest rate futures contracts as a defense, or hedge, against anticipated interest rate changes and not for speculation. As described below, this would include the use of futures contract sales to protect against expected increases in interest rates and futures contract purchases to offset the impact of interest rate declines.

A Portfolio could accomplish a similar result to that which it hopes to achieve through the use of futures contracts by selling bonds with long maturities and investing in bonds with short maturities when interest rates are expected to increase, or conversely, selling short-term bonds and investing in long-term bonds when interest rates are expected to decline. However, because of the liquidity that is often available in the futures market, the protection is more likely to be achieved, perhaps at a lower cost and without changing the rate of interest being earned by the Portfolio, by using futures contracts.

Description of Interest Rate Futures Contracts. An interest rate futures contract sale would create an obligation by a Portfolio, as seller, to deliver the specific type of financial instrument called for in the contract at a specific future time for a specified price. A futures contract purchase would create an obligation by a Portfolio, as purchaser, to take delivery of the specific type of financial instrument at a specific future time at a specific price. The specific securities delivered or taken, respectively, at settlement date, would not be determined until at or near that date. The determination would be in accordance with the rules of the exchange on which the futures contract sale or purchase was made.

Although interest rate futures contracts by their terms call for actual delivery or acceptance of securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery of securities. Closing out a futures contract sale is effected by a Portfolio entering into a futures contract purchase for the same aggregate amount of the specific type of financial instrument and the same delivery date. If the price of the sale exceeds the price of the offsetting purchase, the Portfolio is immediately paid the difference and thus realizes a gain. If the offsetting purchase price exceeds the sale price, the Portfolio pays the difference and realizes a loss. Similarly, the

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closing out of a futures contract purchase is effected by a Portfolio entering into a futures contract sale. If the offsetting sale price exceeds the purchase price, the Portfolio realizes a gain, and if the purchase price exceeds the offsetting sale price, the Portfolio realizes a loss. Interest rate futures contracts are traded in an auction environment on the floors of several exchanges — principally, the Chicago Board of Trade, the Chicago Mercantile Exchange and the New York Futures Exchange. Each exchange guarantees performance under contract provisions through a clearing corporation, a nonprofit organization managed by the exchange membership. A public market now exists in futures contracts covering various financial instruments including long-term U.S. Treasury Bonds and Notes; Government National Mortgage Association (GNMA) modified pass-through mortgage-backed securities; three-month U.S. Treasury Bills; and ninety-day commercial paper. A Portfolio may trade in any interest rate futures contracts for which there exists a public market, including, without limitation, the foregoing instruments.

With regard to the Portfolio, the investment advisor also anticipates engaging in transactions, from time to time, in foreign stock index futures such as the ALL-ORDS (Australia), CAC-40 (France), TOPIX (Japan) and the FTSE-100 (United Kingdom).

II. Index Futures Contracts

General. A stock or bond index assigns relative values to the stocks or bonds included in the index, which fluctuates with changes in the market values of the stocks or bonds included. Some stock index futures contracts are based on broad market indexes, such as Standard & Poor’s 500 or the New York Stock Exchange Composite Index. In contrast, certain exchanges offer futures contracts on narrower market indexes, such as the Standard & Poor’s 100 or indexes based on an industry or market indexes, such as oil and gas stocks. Futures contracts are traded on organized exchanges regulated by the Commodity Futures Trading Commission. Transactions on such exchanges are cleared through a clearing corporation, which guarantees the performance of the parties to each contract. With regard to the Portfolio, to the extent consistent with its investment goal, the investment advisor anticipates engaging in transactions, from time to time, in foreign stock index futures such as the ALL-ORDS (Australia), CAC-40 (France), TOPIX (Japan) and the FTSE-100 (United Kingdom).

A Portfolio may sell index futures contracts in order to offset a decrease in market value of its portfolio securities that might otherwise result from a market decline. A Portfolio may do so either to hedge the value of its portfolio as a whole, or to protect against declines, occurring prior to sales of securities, in the value of the securities to be sold. Conversely, a Portfolio may purchase index futures contracts in anticipation of purchases of securities. A long futures position may be terminated without a corresponding purchase of securities.

In addition, a Portfolio may utilize index futures contracts in anticipation of changes in the composition of its portfolio holdings. For example, in the event that a Portfolio expects to narrow the range of industry groups represented in its holdings it may, prior to making purchases of the actual securities, establish a long futures position based on a more restricted index, such as an index comprised of securities of a particular

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industry group. A Portfolio may also sell futures contracts in connection with this strategy, in order to protect against the possibility that the value of the securities to be sold as part of the restructuring of a Portfolio will decline prior to the time of sale.

III. Margin Payments

Unlike purchase or sales of portfolio securities, no price is paid or received by a Portfolio upon the purchase or sale of a futures contract. Initially, a Portfolio will be required to deposit with the broker or in a segregated account with a custodian an amount of liquid assets known as initial margin, based on the value of the contract. The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds by the customer to finance the transactions. Rather, the initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to the Portfolio upon termination of the futures contract assuming all contractual obligations have been satisfied. Subsequent payments, called variation margin, to and from the broker, will be made on a daily basis as the price of the underlying instruments fluctuates making the long and short positions in the futures contract more or less valuable, a process known as marking-to-the-market. For example, when a Portfolio has purchased a futures contract and the price of the contract has risen in response to a rise in the underlying instruments, that position will have increased in value and the Portfolio will be entitled to receive from the broker a variation margin payment equal to that increase in value. Conversely, where a Portfolio has purchased a futures contract and the price of the future contract has declined in response to a decrease in the underlying instruments, the position would be less valuable and the Portfolio would be required to make a variation margin payment to the broker. Prior to expiration of the futures contract, the investment advisor may elect to close the position by taking an opposite position, subject to the availability of a secondary market, which will operate to terminate a Portfolio’s position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to a Portfolio, and the Portfolio realizes a loss or gain.

IV. Risks of Transactions in Futures Contracts

There are several risks in connection with the use of futures by the Portfolio as a hedging device. One risk arises because of the imperfect correlation between movements in the price of the futures and movements in the price of the instruments which are the subject of a hedge. The price of the future may move more than or less than the price of the instruments being hedged. If the price of the futures moves less than the price of the instruments which are the subject of the hedge, the hedge will not be fully effective but, if the price of the instruments being hedged has moved in an unfavorable direction, the Portfolio would be in a better position than if it had not hedged at all. If the price of the instruments being hedged has moved in a favorable direction, this advantage will be partially offset by the loss on the futures. If the price of the futures moves more than the price of the hedged instruments, the Portfolio involved will experience either a loss or gain on the futures which will not be completely offset by movements in the price of the instruments which are the subject of the hedge. To compensate for the imperfect correlation of movements in the price of instruments being hedged and movements in the

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price of futures contracts, a Portfolio may buy or sell futures contracts in a greater dollar amount than the dollar amount of instruments being hedged if the volatility over a particular time period of the prices of such instruments has been greater than the volatility over such time period of the futures, or if otherwise deemed to be appropriate by the investment advisor. Conversely, a Portfolio may buy or sell fewer futures contracts if the volatility over a particular time period of the prices of the instruments being hedged is less than the volatility over such time period of the futures contract being used, or if otherwise deemed to be appropriate by the investment advisor. It is also possible that, where a Portfolio has sold futures to hedge its portfolio against a decline in the market, the market may advance and the value of instruments held in the Portfolio may decline. If this occurred, a Portfolio would lose money on the futures and also experience a decline in value in its portfolio securities. When futures are purchased to hedge against a possible increase in the price of securities or a currency before a Portfolio is able to invest its cash (or cash equivalents) in an orderly fashion, it is possible that the market may decline instead; if a Portfolio then concludes not to invest its cash at that time because of concern as to possible further market decline or for other reasons, a Portfolio will realize a loss on the futures contract that is not offset by a reduction in the price of the instruments that were to be purchased. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the futures and the instruments being hedged, the price of futures may not correlate perfectly with movement in the cash market due to certain market distortions. Rather than meeting additional margin deposit requirements, investors may close futures contracts through off-setting transactions which could distort the normal relationship between the cash and futures markets. Second, with respect to financial futures contracts, the liquidity of the futures market depends on participants entering into off-setting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced thus producing distortions. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may also cause temporary price distortions. Due to the possibility of price distortion in the futures market, and because of the imperfect correlation between the movements in the cash market and movements in the price of futures, a correct forecast of general market trends or interest rate movements by the investment advisor may still not result in a successful hedging transaction over a short time frame.

Positions in futures may be closed out only on an exchange or board of trade which provides a secondary market for such futures. Although the Portfolio intends to purchase or sell futures only on exchanges or boards of trade where there appear to be active secondary markets, there is no assurance that a liquid secondary market on any exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures investment position, and in the event of adverse price movements, the Portfolio would continue to be required to make daily cash payments of variation margin. However, in the event futures contracts have been used to hedge Portfolio securities, such securities will not be sold until the futures contract can be terminated. In such circumstances, an increase in the price of the securities, if any, may partially or completely offset losses on the futures contract.

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However, as described above, there is no guarantee that the price of the securities will in fact correlate with the price movements in the futures contract and thus provide an offset on a futures contract. Further, it should be noted that the liquidity of a secondary market in a futures contract may be adversely affected by “daily price fluctuation limits” established by commodity exchanges which limit the amount of fluctuation in a futures contract price during a single trading day. Once the daily limit has been reached in the contract, no trades may be entered into at a price beyond the limit, thus preventing the liquidation of open futures positions. The trading of futures contracts is also subject to the risk of trading halts, suspensions, exchange or clearing house equipment failures, government intervention, insolvency of a brokerage firm or clearing house or other disruptions of normal activity, which could at times make it difficult or impossible to liquidate existing positions or to recover excess variation margin payments.

Successful use of futures by a Portfolio is also subject to the investment advisor’s ability to predict correctly movements in the direction of the market. For example, if a Portfolio has hedged against the possibility of a decline in the market adversely affecting securities held by it and securities prices increase instead, a Portfolio will lose part or all of the benefit to the increased value of its securities which it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if a Portfolio has insufficient cash, it may have to sell securities to meet daily variation margin requirements. Such sales of securities may be, but will not necessarily be, at increased prices which reflect the rising market. A Portfolio may have to sell securities at a time when it may be disadvantageous to do so.

The risk of loss in trading futures contracts in some strategies can be substantial, due both to the low margin deposits required, and the extremely high degree of leverage involved in futures pricing. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss (as well as gain) to the investor. For example, if at the time of purchase, 10% of the value of the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, before any deduction for the transaction costs, if the contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount invested in the contract.

V. Options on Futures Contracts

A Portfolio may purchase and write options on the futures contracts described above. A futures option gives the holder, in return for the premium paid, the right to buy (call) from or sell (put) to the writer of the option a futures contract at a specified price at any time during the period of the option. Upon exercise, the writer of the option is obligated to pay the difference between the cash value of the futures contract and the exercise price. Like the buyer or seller of a futures contract, the holder, or writer, of an option has the right to terminate its position prior to the scheduled expiration of the option by selling, or purchasing an option of the same series, at which time the person entering into the closing transaction will realize a gain or loss. A Portfolio will be

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required to deposit initial margin and variation margin with respect to put and call options on futures contracts written by it pursuant to brokers’ requirements similar to those described above. Net option premiums received will be included as initial margin deposits. As an example, in anticipation of a decline in interest rates, a Portfolio may purchase call options on futures contracts as a substitute for the purchase of futures contracts to hedge against a possible increase in the price of securities which the Portfolio intends to purchase. Similarly, if the value of the securities held by a Portfolio is expected to decline as a result of an increase in interest rates, the Portfolio might purchase put options or sell call options on futures contracts rather than sell futures contracts.

Investments in futures options involve some of the same considerations that are involved in connection with investments in futures contracts (for example, the existence of a liquid secondary market). In addition, the purchase or sale of an option also entails the risk that changes in the value of the underlying futures contract will not correspond to changes in the value of the option purchased. Depending on the pricing of the option compared to either the futures contract upon which it is based, or upon the price of the securities or currencies being hedged, an option may or may not be less risky than ownership of the futures contract or such securities or currencies. In general, the market prices of options can be expected to be more volatile than the market prices on the underlying futures contract. Compared to the purchase or sale of futures contracts, however, the purchase of call or put options on futures contracts may frequently involve less potential risk to the Portfolio because the maximum amount at risk is the premium paid for the options (plus transaction costs). The writing of an option on a futures contract involves risks similar to those risks relating to the sale of futures contracts.

VI. Other Matters

Accounting for futures contracts will be in accordance with generally accepted accounting principles.

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APPENDIX C

PROXY VOTING PROCEDURES

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PROXY VOTING POLICY

For

BlackRock Advisors, Inc.

and Its Affiliated Registered Investment Advisers

Introduction

This Proxy Voting Policy (“Policy”) for BlackRock Advisors, Inc. and its affiliated registered investment advisers (“BlackRock”) reflects our duty as a fiduciary under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) to vote proxies in the best interests of our clients. In addition, the Department of Labor views the fiduciary act of managing ERISA plan assets to include the voting of proxies. Proxy voting decisions must be made solely in the best interests of the pension plan’s participants and beneficiaries. The Department of Labor has interpreted this requirement as prohibiting a fiduciary from subordinating the retirement income interests of participants and beneficiaries to unrelated objectives. The guidelines in this Policy have been formulated to ensure decision-making consistent with these fiduciary responsibilities.

Any general or specific proxy voting guidelines provided by an advisory client or its designated agent in writing will supercede the specific guidelines in this Policy. BlackRock will disclose to our advisory clients information about this Policy as well as disclose to our clients how they may obtain information on how we voted their proxies. Additionally, BlackRock will maintain proxy voting records for our advisory clients consistent with the Advisers Act. For those of our clients that are registered investment companies, BlackRock will disclose this Policy to the shareholders of such funds and make filings with the Securities and Exchange Commission and make available to fund shareholders the specific proxy votes that we cast in shareholder meetings of issuers of portfolio securities in accordance with the rules and regulations under the Investment Company Act of 1940.

Registered investment companies that are advised by BlackRock as well as certain of our advisory clients may participate in securities lending programs, which may reduce or eliminate the amount of shares eligible for voting by BlackRock in accordance with this Policy if such shares are out on loan and cannot be recalled in time for the vote.

Implicit in the initial decision to retain or invest in the security of a corporation is approval of its existing corporate ownership structure, its management, and its operations. Accordingly, proxy proposals that would change the existing status of a corporation will be reviewed carefully and supported only when it seems clear that the proposed changes are likely to benefit the corporation and its shareholders. Notwithstanding this favorable predisposition, management will be assessed on an ongoing basis both in terms of its business capability and its dedication to the shareholders to ensure that our continued confidence remains warranted. If it is determined that management is acting on its own behalf instead of for the well being of the corporation, we will vote to support shareholder proposals, unless other mitigating circumstances are present.

C-2

Additionally, situations may arise that involve an actual or perceived conflict of interest. For example, we may manage assets of a pension plan of a company whose management is soliciting proxies, or a BlackRock employee involved with managing an account may have a close relative who serves as a director or executive of a company that is soliciting proxies regarding securities held in such account. In all cases, the manner in which we vote proxies must be based on our clients’ best interests and not the product of a conflict.

This Policy and its attendant recommendations attempt to generalize a complex subject. It should be clearly understood that specific fact situations, including differing voting practices in jurisdictions outside the United States, might warrant departure from these guidelines. In such instances, the relevant facts will be considered, and if a vote contrary to these guidelines is indicated it will be cast and the reasons therefor recorded in writing.

Section I of the Policy describes proxy proposals that may be characterized as routine and lists examples of the types of proposals we would typically support. Section II of the Policy describes various types of non-routine proposals and provides general voting guidelines. These non-routine proposals are categorized as those involving:

Social Issues,

Financial/Corporate Issues, and

Shareholder Rights.

Finally, Section III of the Policy describes the procedures to be followed in casting a vote pursuant to these guidelines.

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SECTION I

ROUTINE MATTERS

Routine proxy proposals, amendments, or resolutions are typically proposed by management and meet the following criteria:

They do not measurably change the structure, management control, or operation of the corporation.

They are consistent with industry standards as well as the corporate laws of the state of incorporation.

Voting Recommendation

BlackRock will normally support the following routine proposals:

To increase authorized common shares.

To increase authorized preferred shares as long as there are not disproportionate voting rights per preferred share.

To elect or re-elect directors.

To appoint or elect auditors.

To approve indemnification of directors and limitation of directors’ liability.

To establish compensation levels.

To establish employee stock purchase or ownership plans.

To set time and location of annual meeting.

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SECTION II

NON-ROUTINE PROPOSALS

A. Social Issues

Proposals in this category involve issues of social conscience. They are typically proposed by shareholders who believe that the corporation’s internally adopted policies are ill-advised or misguided.

Voting Recommendation

If we have determined that management is generally socially responsible, we will generally vote against the following shareholder proposals:

To enforce restrictive energy policies.

To place arbitrary restrictions on military contracting.

To bar or place arbitrary restrictions on trade with other countries.

To restrict the marketing of controversial products.

To limit corporate political activities.

To bar or restrict charitable contributions.

To enforce a general policy regarding human rights based on arbitrary parameters.

To enforce a general policy regarding employment practices based on arbitrary parameters.

To enforce a general policy regarding animal rights based on arbitrary parameters.

10.

To place arbitrary restrictions on environmental practices.

B. Financial/Corporate Issues

Proposals in this category are usually offered by management and seek to change a corporation’s legal, business or financial structure.

Voting Recommendation

We will generally vote in favor of the following management proposals provided the position of current shareholders is preserved or enhanced:

To change the state of incorporation.

C-5

To approve mergers, acquisitions or dissolution.

To institute indenture changes.

To change capitalization.

C. Shareholder Rights

Proposals in this category are made regularly both by management and shareholders. They can be generalized as involving issues that transfer or realign board or shareholder voting power.

We typically would oppose any proposal aimed solely at thwarting potential takeover offers by requiring, for example, super-majority approval. At the same time, we believe stability and continuity promote profitability. The guidelines in this area seek to find a middle road, and they are no more than guidelines. Individual proposals may have to be carefully assessed in the context of their particular circumstances.

Voting Recommendation

We will generally vote for the following management proposals:

To require majority approval of shareholders in acquisitions of a controlling share in the corporation.

To institute staggered board of directors.

To require shareholder approval of not more than 66.23% for a proposed amendment to the corporation’s by-laws.

To eliminate cumulative voting.

To adopt anti-greenmail charter or by-law amendments or to otherwise restrict a company’s ability to make greenmail payments.

To create a dividend reinvestment program.

To eliminate preemptive rights.

To eliminate any other plan or procedure designed primarily to discourage a takeover or other similar action (commonly known as a “poison pill”).

We will generally vote against the following management proposals:

To require greater than 66.23% shareholder approval for a proposed amendment to the corporation’s by-laws (“super-majority provisions”).

To require that an arbitrary fair price be offered to all shareholders that is derived from a fixed formula (“fair price amendments”).

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To authorize a new class of common stock or preferred stock which may have more votes per share than the existing common stock.

To prohibit replacement of existing members of the board of directors.

To eliminate shareholder action by written consent without a shareholder meeting.

To allow only the board of directors to call a shareholder meeting or to propose amendments to the articles of incorporation.

To implement any other action or procedure designed primarily to discourage a takeover or other similar action (commonly known as a “poison pill”).

To limit the ability of shareholders to nominate directors.

We will generally vote for the following shareholder proposals:

To rescind share purchases rights or require that they be submitted for shareholder approval, but only if the vote required for approval is not more than 66 ² / 3 %.

To opt out of state anti-takeover laws deemed to be detrimental to the shareholder.

To change the state of incorporation for companies operating under the umbrella of anti-shareholder state corporation laws if another state is chosen with favorable laws in this and other areas.

To eliminate any other plan or procedure designed primarily to discourage a takeover or other similar action.

To permit shareholders to participate in formulating management’s proxy and the opportunity to discuss and evaluate management’s director nominees, and/or to nominate shareholder nominees to the board.

To require that the board’s audit, compensation, and/or nominating committees be comprised exclusively of independent directors.

To adopt anti-greenmail charter or by-law amendments or otherwise restrict a company’s ability to make greenmail payments.

To create a dividend reinvestment program.

To recommend that votes to “abstain” not be considered votes “cast” at an annual meeting or special meeting, unless required by state law.

10.

To require that “golden parachutes” be submitted for shareholder ratification.

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We will generally vote against the following shareholder proposals:

To restore preemptive rights.

To restore cumulative voting.

To require annual election of directors or to specify tenure.

To eliminate a staggered board of directors.

To require confidential voting.

To require directors to own a minimum amount of company stock in order to qualify as a director or to remain on the board.

To dock director pay for failing to attend board meetings.

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SECTION III

VOTING PROCESS

BlackRock has engaged a third-party service provider to assist us in the voting of proxies. These guidelines have been provided to this service provider, who then analyzes all proxy solicitations we receive for our clients and makes recommendations to us as to how, based upon our guidelines, the relevant votes should be cast. These recommendations are set out in a report that is provided to the relevant Portfolio Management Group team, who must approve the proxy vote in writing and return such written approval to the Operations Group. If any authorized member of a Portfolio Management Group team desires to vote in a manner that differs from the recommendations, the reason for such differing vote shall be noted in the written approval form. A copy of the written approval form is attached as an exhibit. The head of each relevant Portfolio Management Group team is responsible for making sure that proxies are voted in a timely manner. The Brokerage Allocation Committee shall receive regular reports of all proxy votes cast to review how proxies have been voted, including reviewing Override Votes, and votes that may have involved a potential conflict of interest. The Committee shall also review these guidelines from time to time to determine their continued appropriateness and whether any changes to the guidelines or the proxy voting process should be made.

IF THERE IS ANY POSSIBILITY THAT THE VOTE MAY INVOLVE A MATERIAL CONFLICT OF INTEREST BECAUSE, FOR EXAMPLE, THE ISSUER SOLICITING THE VOTE IS A BLACKROCK CLIENT OR THE MATTER BEING VOTED ON INVOLVES BLACKROCK, PNC OR ANY AFFILIATE (INCLUDING A PORTFOLIO MANAGEMENT GROUP EMPLOYEE) OF EITHER OF THEM, PRIOR TO APPROVING SUCH VOTE, THE BROKERAGE ALLOCATION COMMITTEE MUST BE CONSULTED AND THE MATTER DISCUSSED. The Committee, in consultation with the Legal and Compliance Department, shall determine whether the potential conflict is material and if so, the appropriate method to resolve such conflict, based on the particular facts and circumstances, the importance of the proxy issue, whether the Portfolio Management Group team is proposing a vote that differs from recommendations made by our third-party service provider with respect to the issue and the nature of the conflict, so as to ensure that the voting of the proxy is not affected by the potential conflict. If the conflict is determined not to be material with respect to votes in connection with securities held on a particular record date but sold from a client account prior to the holding of the related meeting, BlackRock may take no action on proposals to be voted on in such meeting. With respect to voting proxies of non-U.S. companies, a number of logistical problems may arise that may have a detrimental effect on BlackRock’s ability to vote such proxies in the best interests of our clients. These problems include, but are not limited to, (i) untimely and/or inadequate notice of shareholder meetings, (ii) restrictions on the ability of holders outside the issuer’s jurisdiction of organization to exercise votes, (iii) requirements to vote proxies in person, if not practicable, (iv) the imposition of restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting, and (v) impracticable or inappropriate requirements to provide local agents with power of attorney to facilitate the voting instructions. Accordingly, BlackRock may determine not to vote proxies if it

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believes that the restrictions or other detriments associated with such vote outweigh the benefits that will be derived by voting on the company’s proposal.

* * * * *

Any questions regarding this Policy may be directed to the General Counsel of BlackRock.

Approved: October 21, 1998

Revised: May 27, 2003

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PART C: OTHER INFORMATION

Item 22. EXHIBITS

(a)

Declaration of Trust of the Registrant. (2)

(b)

Registrant’s By-laws. (1)

(c)

Reference is made to Article VI of Exhibit (a).

(d)

Form of Investment Management Agreement. (2)

(e)

Form of Distribution Agreement. (2)

(f)

Not Applicable.

(g)

Form of Custodian Agreement. (2)

(h)(1)

Form of Transfer Agency Agreement. (2)

(h)(2)

Form of Administration Agreement. (2)

(i)

Opinion of Counsel. (2)

(j)

Consent of Independent Registered Public Accounting Firm.

(k)

Not Applicable.

(l)

Form of Agreement with Initial Shareholder. (2)

(m)

Not Applicable.

(n)

Not Applicable.

(o)

Not Applicable.

(p)(1)

Code of Ethics for the Registrant. (2)

(p)(2)

Code of Ethics for the Investment Advisor. (2)

(p)(3)

Code of Ethics for the Distributor. (2)

(x)

Powers of Attorney. (2)

(1)

Previously filed as Exhibit (A) in Registrant’s Registration Statement on Form N-1A on October 24, 2003.

(2)

Filed herewith.

PART C-1

Item 23. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None.

Item 24. INDEMNIFICATION

Article V of the Registrant’s Amended and Restated Agreement and Declaration of Trust provides as follows:

5.1 NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No Shareholder of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. Shareholders shall have the same limitation of personal liability as is extended to stockholders of a private corporation for profit incorporated under the Delaware General Corporation Law. No Trustee or officer of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person, save only liability to the Trust or its Shareholders arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his duty to such Person; and, subject to the foregoing exception, all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee or officer, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, subject to the foregoing exception, he shall not, on account thereof, be held to any personal liability. Any repeal or modification of this Section 5.1 shall not adversely affect any right or protection of a Trustee or officer of the Trust existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

5.2 MANDATORY INDEMNIFICATION. (a) The Trust hereby agrees to indemnify each person who at any time serves as a Trustee or officer of the Trust (each such person being an “indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and reasonable counsel fees reasonably incurred by such indemnitee in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body in which he may be or may have been involved as a party or otherwise or with which he may be or may have been threatened, while acting in any capacity set forth in this Article V by reason of his having acted in any such capacity, except with respect to any matter as to which he shall not have acted in good faith in the reasonable belief that his action was in the best interest of the Trust or, in the case of any criminal proceeding, as to which he shall have had reasonable cause to believe that the conduct was unlawful, provided, however, that no indemnitee shall be indemnified hereunder against any liability to any person or any expense of such indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence, or (iv) reckless disregard of the duties involved in the conduct of his position (the conduct referred to in such clauses (i) through (iv) being sometimes referred to herein as “disabling conduct”). Notwithstanding the foregoing, with respect to any action, suit or other proceeding voluntarily prosecuted by any indemnitee as plaintiff,

PART C-2

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

(b) Notwithstanding the foregoing, no indemnification shall be made hereunder unless there has been a determination (i) by a final decision on the merits by a court or other body of competent jurisdiction before whom the issue of entitlement to indemnification hereunder was brought that such indemnitee is entitled to indemnification hereunder or, (ii) in the absence of such a decision, by (1) a majority vote of a quorum of those Trustees who are neither “interested persons” of the Trust (as defined in Section 2(a)(19) of the 1940 Act) nor parties to the proceeding (“Disinterested Non-Party Trustees”), that the indemnitee is entitled to indemnification hereunder, or (2) if such quorum is not obtainable or even if obtainable, if such majority so directs, independent legal counsel in a written opinion concludes that the indemnitee should be entitled to indemnification hereunder. All determinations to make advance payments in connection with the expense of defending any proceeding shall be authorized and made in accordance with the immediately succeeding paragraph (c) below.

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

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

PART C-3

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

5.3 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No purchaser, lender, transfer agent or other person dealing with the Trustees or with any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, undertaking, instrument, certificate, Share, other security of the Trust, and every other act or thing whatsoever executed in connection with the Trust shall be conclusively taken to have been executed or done by the executors thereof only in their capacity as Trustees under this Declaration or in their capacity as officers, employees or agents of the Trust. The Trustees may maintain insurance for the protection of the Trust Property, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable or is required by the 1940 Act.

5.4 RELIANCE ON EXPERTS, ETC. Each Trustee and officer or employee of the Trust shall, in the performance of its duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of the Trust’s officers or employees or by any advisor, administrator, manager, distributor, selected dealer, accountant, appraiser or other expert or consultant selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee.

Insofar as indemnification for liabilities arising under the Act, may be terminated to Trustees, officers and controlling persons of the Trust, pursuant to the foregoing provisions or otherwise, the Trust has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

PART C-4

Item 25. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISOR

BlackRock Advisors, Inc. (the “Advisor”) is a registered investment advisor providing investment management and administrative services to the Registrant. The Advisor also provide similar services to other mutual funds.

The information required by this Item 25 with respect to any other business, profession, vocation or employment of a substantial nature engaged in by directors and officers of the Advisor during the past two fiscal years is incorporated by reference to Form ADV filed by the Advisor pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-47710).

Item 26. PRINCIPAL UNDERWRITER

(a) BlackRock Distributors, Inc. currently acts as distributor for BlackRock Bond Allocation Target Shares and BlackRock Funds.

(b) The principal business address of each director, officer or partner of BlackRock Distributors, Inc. (formerly Compass Distributors, Inc.) is 760 Moore Road, King of Prussia, PA 19406. No individual listed in the chart below is an officer or employee of the Trust.


Name		Position With Distributor
Brian Burns		Director, Chairman, Chief Executive Officer and President
Michael DeNofrio		Director
Nicholas Marsini		Director
Christine Ritch		Chief Legal Officer, Assistant Secretary and Assistant Clerk
Rita Adler		Chief Compliance Officer
Douglas Castagna		Controller and Assistant Treasurer
Craig Stokarski		Treasurer and Financial Operations Principal
Bruno Distefano		Vice President
Susan Moscaritolo		Vice President
Jason Greim		Assistant Vice President
Salvatore Faia		Secretary and Clerk
John Wilson		Assistant Secretary and Assistant Clerk
Linda Toepel		Assistant Secretary and Assistant Clerk
Bradley Stearns		Assistant Secretary and Assistant Clerk

Item 27. LOCATION OF ACCOUNTS AND RECORDS

The Registrant’s accounts, books and other documents are currently located at the offices of the Registrant, c/o BlackRock Advisors, Inc., 100 Bellevue Parkway,

PART C-5

Wilmington, Delaware 19809 and at the offices of PFPC Trust Company, (8800 Tinicum Boulevard, Philadelphia, PA 19153) and PFPC, Inc., (301 Bellevue Parkway, Wilmington, DE 19809), the Registrant’s Custodian and Transfer Agent, respectively.

Item 28. MANAGEMENT SERVICES

Not Applicable.

Item 29. UNDERTAKINGS

Not Applicable.

PART C-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and State of New York, on the 15th day of October 2004.

/s/ Laurence D. Fink

Laurence D. Fink

President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities set forth below on the 15th day of October 2004.


NAME		TITLE
/s/ Laurence D. Fink Laurence D. Fink		Trustee, President and Chief Executive Officer

/s/ Paul Audet Paul Audet		Treasurer and Principal Financial Officer

* Stuart E. Eizenstat		Trustee

* Robert M. Hernandez		Trustee

* Matina Horner		Trustee

* David R. Wilmerding, Jr.		Trustee

/s/ Anne Ackerley

*By: Anne Ackerley

Attorney-in-fact

Exhibit Index


Exhibit No.		Description

(a)		Declaration of Trust

(d)		Form of Investment Management Agreement

(e)		Form of Distribution Agreement

(g)		Form of Custodian Agreement

(h)(1)		Form of Transfer Agency Agreement

(h)(2)		Form of Administration Agreement

(i)		Opinion of Counsel

(j)		Consent of Independent Registered Public Accounting Firm

(l)		Form of Agreement with Initial Shareholder

(p)(1)		Code of Ethics for Registrant

(p)(2)		Code of Ethics for the Investment Advisor

(p)(3)		Code of Ethics for the Distributor

(x)		Powers of Attorney

Exhibit (a)

BLACKROCK BOND ALLOCATION TARGET SHARES

AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

Dated as of November 17, 2003

TABLE OF CONTENTS


		Page
ARTICLE I

The Trust

1.1	Name	1

1.2	Definitions	1

1.3	Purpose and Powers of Trust	3

ARTICLE II

Trustees

2.1	Number and Qualification	3

2.2	Term and Election	4

2.3	Resignation and Removal	4

2.4	Vacancies	4

2.5	Meetings	4

2.6	Trustee Action by Written Consent	5

2.7	Officers	5

ARTICLE III

Powers and Duties of Trustees

3.1	General	5

3.2	Investments	6

3.3	Legal Title	6

3.4	Issuance and Repurchase of Shares	6

3.5	Borrow Money or Utilize Leverage	7

3.6	Delegation: Committees	7

3.7	Collection and Payment	7


3.8	Expenses	7

3.9	By-Laws	8

3.10	Miscellaneous Powers	8

3.11	Further Powers	8

ARTICLE IV

Advisory, Management and Distribution Arrangements

4.1	Advisory and Management Arrangements	9

4.2	Distribution Arrangements	9

4.3	Parties to Contract	9

ARTICLE V

Limitations of Liability and Indemnification

5.1	No Personal Liability of Shareholders, Trustees, etc.	10

5.2	Mandatory Indemnification	10

5.3	No Duty of Investigation: Notice in Trust Instruments, etc.	12

5.4	Reliance on Experts, etc.	12

ARTICLE VI

Shares of Beneficial Interest

6.1	Beneficial Interest	12

6.2	Series Designation	12

6.3	Class Designation	13

6.4	Description of Shares	13

6.5	Rights of Shareholders	15

6.6	Trust Only	15

6.7	Issuance of Shares	15

6.8	Register of Shares	15


6.9	Transfer Agent and Registrar	16

6.10	Transfer of Shares	16

6.11	Notices	16

ARTICLE VII

Custodians

7.1	Appointment and Duties	16

7.2	Central Certificate System	17

ARTICLE VIII

Redemption

8.1	Redemptions	17

8.2	Disclosure of Holding	18

8.3	Redemptions of Small Accounts	18

ARTICLE IX

Determination of Net Asset Value Net Income and Distributions

9.1	Net Asset Value	18

9.2	Distributions to Shareholders	18

9.3	Power to Modify Foregoing Procedures	19

ARTICLE X

Shareholders

10.1	Meetings of Shareholders	19

10.2	Voting	19

10.3	Notice of Meeting and Record Date	20

10.4	Quorum and Required Vote	20

10.5	Proxies, etc.	20

10.6	Reports	21


10.7	Inspection of Records	21

10.8	Shareholder Action by Written Consent	21

ARTICLE XI

Duration; Termination of Trust; Amendment; Mergers, Etc.

11.1	Duration	21

11.2	Termination	22

11.3	Amendment Procedure	22

11.4	Merger, Consolidation and Sale of Assets	23

11.5	Subsidiaries	23

ARTICLE XII

Miscellaneous

12.1	Filing	24

12.2	Resident Agent	24

12.3	Governing Law	24

12.4	Counterparts	24

12.5	Reliance by Third Parties	24

12.6	Provisions in Conflict with Law or Regulation	25

BLACKROCK BOND ALLOCATION TARGET SHARES

AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made as of the 17th day of November, 2003, by the Trustees hereunder, and by the holders of shares of beneficial interest issued hereunder as hereinafter provided.

WHEREAS, this Trust has been formed to carry on business as set forth more particularly hereinafter,

WHEREAS, this Trust is authorized to issue an unlimited number of its shares of beneficial interest in separate series and classes of each such series, each separate series to be a sub-trust hereunder, all in accordance with the provisions hereinafter set forth;

WHEREAS, the Trustees have agreed to manage all property coming, into their hands as Trustees of a Delaware statutory trust in accordance with the provisions hereinafter set forth; and

WHEREAS, the parties hereto intend that the Trust created by this Declaration and the Certificate of Trust filed with the Secretary of State of the State of Delaware on March 5, 2003 shall constitute a statutory trust under the Delaware Statutory Trust Act and that this Declaration shall constitute the governing instrument of such statutory trust.

NOW, THEREFORE, the Trustees hereby declare that they will hold all cash, securities, and other assets which they may from time to time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the following terms and conditions for the benefit of the holders from time to time of shares of beneficial interest in this Trust or sub-trusts created hereunder as hereinafter set forth.

ARTICLE I

The Trust

1.1 Name . This Trust shall be known as the “BlackRock Bond Allocation Target Shares” and the Trustees shall conduct the business of the Trust under that name or any other name or names as they may from time to time deter-mine.

1.2 Definitions . As used in this Declaration, the following terms shall have the following meanings:

“ By-Laws ” shall mean the By-Laws of the Trust as amended from time to time by the Trustees.

“ Class ” shall mean a portion of Shares of a Series of the Trust established in accordance with Section 6.3 hereof.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

“ Commission ” shall mean the Securities and Exchange Commission.

“ Declaration ” shall mean this Agreement and Declaration of Trust, as amended or amended and restated from time to time, including by way of any classifying or reclassifying Shares of any Series or any Class of any such Series or determining any designations, powers, preferences, voting, conversion and other rights, limitations, qualifications and terms and conditions thereof.

“ Delaware Statutory Trust Statute ” shall mean the provisions of the Delaware Statutory Trust Act, 12 Del . C. §3801, et , seq ., as such Act maybe amended from time to time.

“ Delaware General Corporation Law ” means the Delaware General Corporation Law, 8 Del. C. § 100, et . seq ., as amended from time to time.

“ Fundamental Policies ” shall mean the investment policies and restrictions set forth from time to time in any current Prospectus or contained in any current Registration Statement of the Trust or any Series filed with the Commission or as otherwise adopted by the Trustees and the Shareholders in accordance with the requirements of the 1940 Act that are expressly designated as fundamental policies of such Series as they may be amended from time to time in accordance with the 1940 Act.

“ Interested Person ” shall have the meaning ascribed thereto in the 1940 Act.

“ Majority Shareholder Vote ” shall mean a vote of a “majority of the outstanding voting securities” (as such term is defined in the 1940 Act) of the Trust, any Series of the Trust or any Class thereof, as applicable.

The “ 1940 Act ” refers to the Investment Company Act of 1940 and the rules and regulations promulgated thereunder and applicable exemptions there-from, as amended from time to time.

The “ 1933 Act ” refers to the Securities Act of 1933, and the rules and regulations promulgated thereunder and applicable exemptions therefrom, as amended from time to time.

“ Person ” shall mean and include natural persons, corporations, partnerships, trusts, limited liability companies, associations, joint ventures and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof.

“ Prospectus ” shall mean the current prospectus or offering memorandum of securities of the Trust or of any Series thereof or of any Class of any such Series, as applicable.

“ Series ” shall mean the separate sub-trusts that may be established and designated as series pursuant to Section 6.2 hereof or any one of such sub-trusts, as applicable.

“ Series Liabilities ” shall mean as of any particular time any and all debts, obligations or other liabilities, contingent or otherwise, of or relating to a particular Series of the Trust.

“ Series Property ” shall mean as of any particular time any and all property, real or personal, tangible or intangible, which at such time is owned or held by or for the account of a particular Series.

“ Shareholders ” shall mean as of any particular time the holders of record of outstanding Shares of the Trust, any Series of the Trust or any Class of any Series, as applicable, at such time.

“ Shares ” shall mean the transferable units of beneficial interest in the Trust or in a Series of the Trust and includes fractions of Shares as well as whole Shares, which Shares may be classified as relating to particular Series and Classes within a Series. All references to Shares shall be deemed to be Shares of any or all Series or Classes as the context may require.

“ Trust ” shall mean the trust established by this Declaration, as amended from time to time, inclusive of each such amendment and every sub-trust established as a Series hereunder.

“ Trustees ” shall mean the signatory to this Declaration, so long as such signatory shall continue in office in accordance with the terms hereof, and all other Persons who at the time in question have been duly elected or appointed and have qualified as trustees in accordance with the provisions hereof and are then in office.

1.3 Purpose and Powers of Trust . The Trust is established for the purpose of engaging in any activity not prohibited by Delaware law and shall have the power to engage in any such activity and in any activity incidental or related to any such activity.

ARTICLE II

Trustees

2.1 Number and Qualification . Prior to any offering of Shares, there may be a sole Trustee and thereafter, the number of Trustees shall be such number, not less than two or more than nine, as shall be set forth in a written instrument signed by a majority of the Trustees then in office. No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term. An individual nominated as a Trustee shall be at least 21 years of age and not older than 80 years of age at the time of nomination and not under legal disability. Trustees need not own, Shares and may succeed themselves in office. The Trustees may elect from their number a Chairman who shall serve at the pleasure of the Trustees.

2.2 Term and Election . Each Trustee elected shall hold office until his or her successor shall have been elected and shall have qualified. The term of office of a Trustee shall terminate and a vacancy shall occur in the event of the death, resignation, removal, bankruptcy, adjudicated incompetence or other incapacity to perform the duties of the office, or removal, of a Trustee.

2.3 Resignation and Removal . Any of the Trustees may resign their trust (without need for prior or subsequent accounting) by an instrument in writing signed by such Trustee and delivered or mailed to the Trustees or the Chairman, if any, the President or the Secretary and such resignation shall be effective upon such delivery, or at a later date according to the terms of the instrument. Any of the Trustees may be removed (provided the aggregate number of Trustees after such removal shall not be less than the minimum number required by Section 2.1 hereof) with or without cause by written instrument signed by two-thirds of the remaining Trustees specifying the date such removal shall become effective or by action taken by the holders of at least seventy-five percent (75%) of the Shares then entitled to vote in an election of such Trustee. Upon the resignation or removal of a Trustee, each such resigning or removed Trustee shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Series Property held in the name of such resigning or removed Trustee. Upon the incapacity or death of any Trustee, such Trustee’s legal representative shall execute and deliver on such Trustee’s behalf such documents as the remaining Trustees shall require as provided in the preceding sentence.

2.4 Vacancies . Whenever a vacancy in the Board of Trustees shall occur, the remaining Trustees may, subject to the requirements of the 1940 Act, fill such vacancy by appointing an individual having the qualifications described in this Article by a written instrument signed by a majority of the Trustees then in office or by election by the Shareholders, or may leave such vacancy unfilled or may reduce the number of Trustees (provided the aggregate number of Trustees after such reduction shall not be less than the minimum number required by Section 2.1 hereof). Any vacancy created by an increase in Trustees may be filled by the appointment of an individual having the qualifications described in this Article made by a written instrument or resolution signed or approved by a majority of the Trustees then in office or by election by the Shareholders. No vacancy shall operate to annul this Declaration or to revoke any existing authority or power existing pursuant to the terms of this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled as provided herein, the Trustees in office, regard-less of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration.

2.5 Meetings . Meetings of the Trustees shall be held from time to time upon the call of the Chairman, if any, or the President or any two Trustees. Regular meetings of the Trustees may be held without call or notice at a time and place fixed by the By-Laws or by resolution of the Trustees. Notice of any other meeting shall be given by the Secretary and shall be delivered to the Trustees orally not less than 24 hours, or in writing not less than 72 hours, before the meeting, but may be waived in writing by any Trustee either before or after such meeting. The attendance of a Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Trustee attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been properly called or

convened. A quorum for all meetings of the Trustees shall be one-third, but no less than two, of the Trustees. Unless provided otherwise in this Declaration and except as required under the 1940 Act, any action of the Trustees maybe taken at a meeting by vote of a majority of the Trustees present (a quorum being present) or without a meeting by written consent of a majority of the Trustees.

Any committee of the Trustees, including an executive committee, if any, may act with or without a meeting. A quorum for all meetings of any such committee shall be one-third, but not less than two, of the members thereof. Unless provided otherwise in this Declaration, any action of any such committee may be taken at a meeting by vote of a majority of the members present (a quorum being present) or without a meeting by written consent of all of the members.

With respect to actions of the Trustees and any committee of the Trustees, Trustees who are Interested Persons in any action to be taken may be counted for quorum purposes under this Section and shall be entitled to vote to the extent not prohibited by the 1940 Act.

All or any one or more Trustees may participate in a meeting of the Trustees or any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other; participation in a meeting pursuant to any such communications system shall constitute presence in person at such meeting.

2.6 Trustee Action by Written Consent . Any action which may be taken by Trustees by vote may be taken without a meeting if that number of the Trustees, or members of a committee, as the case may be, required for approval of such action at a meeting of the Trustees or of such committee consent to the action in writing and the written consents are filed with the records of the meetings of Trustees. Such consent shall be treated for all purposes as a vote taken at a meeting of Trustees.

2.7 Officers . The Trustees shall elect a President, a Secretary and a Treasurer and may elect a Chairman who shall serve at the pleasure of the Trustees or until their successors are elected. The Trustees may elect or appoint or may authorize the Chairman, if any, or President to appoint such other officers or agents with such powers as the Trustees may deem to be advisable. The Chairman shall, and the President, Secretary and Treasurer may, but need not, be a Trustee.

ARTICLE III

Powers and Duties of Trustees

3.1 General . The Trustees shall owe to the Trust and its Shareholders the same fiduciary duties as owed by directors of corporations to such corporations and their stockholders under the general corporation law of the State of Delaware. The Trustees shall have exclusive and absolute control over the Series Property of each Series and over the business of the Trust and any Series thereof to the same extent as if the Trustees were the sole owners of all such Series Property and business in their own right, but with such powers of delegation as may be

permitted by this Declaration. The Trustees may perform such acts as in their sole discretion are proper for conducting the business of the Trust. The enumeration of any specific power herein shall not be construed as limiting the aforesaid power. The powers of the Trustees may be exercised without order of or resort to any court. No Trustee shall be obligated to give any bond or other security for the performance of any of his duties or powers hereunder.

3.2 Investments . The Trustees shall have power, subject to the Fundamental Policies in effect from time to time with respect to the Trust, to:

(a) manage, conduct, operate and carry on the business of an investment company,

(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal in or dispose of any and all sorts of property, tangible or intangible, including but not limited to securities of any type whatsoever, whether equity or non-equity, of any issuer, evidences of indebtedness of any Person and any other rights, interests, instruments or property of any sort and to exercise any and all rights, powers and privileges of ownership or interest in respect of any and all such investments of every kind and description, including, without limitation, the right to consent and otherwise act with respect thereto, with power to designate one or more Persons to exercise any of said rights, powers and privileges in respect of any of said investments. The Trustees shall not be limited by any law limiting the investments which may be made by fiduciaries.

3.3 Legal Title . Legal title to all the Series Property shall be vested in the Trustees as joint tenants except that the Trustees shall have power to cause legal title to any Series Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or any Series thereof, or in the name of any other Person as nominee, custodian or pledgee, on such terms as the Trustees may determine, provided that the interest of the Trust or any Series thereof therein is appropriately protected.

The right, title and interest of the Trustees in the Series Property shall vest automatically in each Person who may hereafter become a Trustee upon his due election and qualification. Upon the ceasing of any Person to be a Trustee for any reason, such Person shall automatically cease to have any right, title or interest in any of the Series Property, and the right, title and interest of such Trustee in the Series Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered.

3.4 Issuance and Repurchase of Shares . The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares, including Shares in fractional denominations, shall have the power to establish from time to time in accordance with the provisions of Section 6.2 and 6.3 hereof Series and Classes representing interests in the Trust or a Series thereof and, subject to the more detailed provisions set forth in Article VII, shall have the power to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the applicable Series of the Trust whether capital or surplus or otherwise, to the full extent now or hereafter permitted by the laws of the State of Delaware governing business corporations.

3.5 Borrow Money or Utilize Leverage . Subject to the Fundamental Policies in effect from time to time, the Trustees shall have the power to borrow money or otherwise obtain credit or utilize leverage in connection with the activities of any Series to the maximum extent permitted by law, regulation or order and the Fundamental Policies of any Series and to secure the same by mortgaging, pledging or otherwise subjecting as security the assets of such Series, including the lending of portfolio securities, and to endorse, guarantee, or undertake the performance of any obligation, contract or engagement of any other Person; provided, however, that the assets of any particular Series shall not be used as security for any credit extended solely or partially to one or more other Series and that no assets of any other Series shall be charged with any liability for such indebtedness.

3.6 Delegation: Committees . The Trustees shall have the power, consistent with their continuing exclusive authority over the management of the Trust and the Series Property, to delegate from time to time to such of their number or to officers, employees or agents of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the applicable Series or the names of the Trustees or otherwise as the Trustees may deem expedient, to at least the same extent as such delegation is permitted to directors of a Delaware business corporation and is permitted by the 1940 Act, as well as any further delegations the Trustees may determine to be desirable, expedient or necessary in order to effect the purpose hereof. The Trustees may designate one or more committees which shall have all or such lesser portion of the authority of the entire Board of Trustees as the Trustees shall determine from time to time except to the extent action by the entire Board of Trustees or particular Trustees is required by the 1940 Act.

3.7 Collection and Payment . The Trustees shall have power to collect all property due to any Series of the Trust; to pay all claims, including taxes, against any Series Property, the Trust or any Series of the Trust, the Trustees or any officer, employee or agent of the Trust; to prosecute, defend, compromise or abandon any claims relating to any Series Property, the Trust or any Series of the Trust, the Trustees or any officer, employee or agent of the Trust; to foreclose any security interest securing any obligations, by virtue of which any property is owed to any Series of the Trust; and to enter into releases, agreements and other instruments. Except to the extent required for a Delaware business corporation, the Shareholders shall have no power to vote as to whether or not a court action, legal proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust, any Series or the Shareholders thereof.

3.8 Expenses . The Trustees shall have power to incur and pay out of the assets or income of any Series of the Trust, any expenses which in the opinion of the Trustees are necessary or appropriate to carry out any of the purposes of this Declaration, and the business of any Series of the Trust, and to pay reasonable compensation from the funds of each Series to themselves as Trustees. The Trustees shall fix the compensation of all officers, employees and Trustees. Subject to the 1940 Act, the Trustees may pay themselves such compensation for special services, including legal, underwriting, syndicating and brokerage services, as they in good faith may deem reasonable and reimbursement for expenses reasonably incurred by themselves on behalf of any Series. The Trustees shall have the power, as frequently as they may determine, to cause each Shareholder, or each Shareholder of any particular Series, to pay directly, in advance or arrears, for charges of distribution, of the custodian or transfer,

shareholder servicing or similar agent of such Series or Class, a pro rata amount as defined from time to time by the Trustees, by setting off such charges due from such Shareholder from declared but unpaid dividends or distributions owed such Shareholder and/or by reducing the number of shares in the account of such Shareholder by that number of full and/or fractional Shares which represents, at the net asset value thereof, the outstanding amount of such charges due from such Shareholder.

3.9 By-Laws . The Trustees shall have the exclusive authority to adopt and from time to time amend or repeal By-Laws for the conduct of the business of the Trust.

3.10 Miscellaneous Powers . The Trustees shall have the power to: (a) employ or contract with such Persons as the Trustees may deem desirable for the transaction of the business of any Series; (b) enter into joint ventures, partnerships and any other combinations or associations; (c) purchase, and pay for out of Series Property, insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisors, distributors, selected dealers or independent contractors of any Series against all claims arising by reason of holding any such position or by reason of any action taken or omitted by any such Person in such capacity, whether or not constituting negligence, or whether or not the Trust would have the power to indemnify such Person against such liability; (d) establish pension, profit-sharing, share purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees and agents of the Trust; (e) make donations, irrespective of benefit to the Trust, for charitable, religious, educational, scientific, civic or similar purposes; (f) to the extent permitted by applicable law, indemnify any Person with . whom any Series has dealings, including without limitation any investment advisor, administrator, manager, transfer agent, custodian, distributor or selected dealer, or any other Person as the Trustees may see fit to such extent as the Trustees shall determine; (g) guarantee indebtedness or contractual obligations of others; (h) determine and change the fiscal year of the Trust and the method in which its accounts shall be kept; and (i) adopt a seal for the Trust but the absence of such seal shall not impair the validity of any instrument executed on behalf of the Trust.

3.11 Further Powers . The Trustees shall have the power to conduct the business of the Trust or any Series of the Trust or any Class thereof and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, dependencies, colonies, possessions, agencies or instrumentalities of the United States of America and of foreign governments, and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust or any Series of the Trust or any Class thereof although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust or any Series of the Trust or any Class thereof made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration, the presumption shall be in favor of a grant of power to the Trustees. The Trustees will not be required to obtain any court order to deal with any Series Property.

ARTICLE IV

Advisory, Management and Distribution Arrangements

4.1 Advisory and Management Arrangements . Subject to the requirements of applicable law as in effect from time to time, the Trustees may in their discretion from time to time enter into advisory, administration or management contracts (including, in each case, one or more sub-advisory, sub-administration or sub-management contracts) whereby the other party to any such contract shall undertake to furnish the Trustees such advisory, administrative and management services, with respect to the Trust as the Trustees shall from time to time consider desirable and all upon such terms and conditions as the Trustees may in their discretion determine. Notwithstanding any provisions of this Declaration, the Trustees may authorize any advisor, administrator or manager (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect investment transactions with respect to the assets on behalf of the Trustees to the full extent of the power of the Trustees to effect such transactions or may authorize any officer, employee or Trustee to effect such transactions pursuant to recommendations of any such advisor, administrator or manager (and all without further action by the Trustees). Any such investment transaction shall be deemed to have been authorized by all of the Trustees.

4.2 Distribution Arrangements . Subject to compliance with the 1940 Act, the Trustees may retain a distributor to sell Shares of the Trust or any Series. The Trustees may in their discretion from time to time enter into one or more contracts, providing for the sale of the Shares of the Trust or any Series, whereby the Trust may either agree to sell such Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article IV or the By-Laws; and such contract may also provide for the repurchase or sale of Shares of the Trust or Series by such other party as principal or as agent of the Trust.

4.3 Parties to Contract . Any contract of the character described in Sections 4.1 and 4.2 of this Article IV or in Article VII hereof may be entered into with any Person, although one or more of the Trustees, officers or employees of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any Person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, provided that the contract when entered into was reasonable and fair and not inconsistent with the provisions of this Article IV or the By-Laws. The same Person may be the other party to contracts entered into pursuant to Sections 4.1 and 4.2 above or Article VII, and any individual may be financially interested or otherwise affiliated with Persons who are parties to any or all of the contracts mentioned in this Section 4.3.

ARTICLE V

Limitations of Liability

and Indemnification

5.1 No Personal Liability of Shareholders, Trustees, etc . No Share-holder of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person in connection with Series Property or the acts, obligations or affairs of the Trust. Shareholders shall have the same limitation of personal liability as is extended to stockholders of a private corporation for profit incorporated under the general corporation law of the State of Delaware. No Trustee, officer, employee or agent of the Trust or any Series of the Trust shall be subject in such capacity to any personal liability whatsoever to any Person, other than the Trust or the respective Series or the Shareholders, in connection with Series Property or the affairs of the Trust or the respective Series, save only liability to the Trust or its Shareholders arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his duty to such Person; and, subject to the foregoing exception, all such Persons shall look solely to the Series Property of the affected Series for satisfaction of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee or officer, as such, of the Trust, is made a party to any suit or proceeding to enforce any such liability, subject to the foregoing exception regarding Trustees and officers, he shall not, on account thereof, be held to any personal liability. Any repeal or modification of this Section 5.1 shall not adversely affect any right or protection of a Trustee or officer of the Trust existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

5.2 Mandatory Indemnification . (a) The Trust hereby agrees, solely out of the assets of the affected Series, to indemnify each Person who at any time serves as Trustee or officer of the Trust (each such Person being an “indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and reasonable counsel fees reasonably incurred by such indemnitee in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative body in which he may be or may have been involved as a party or otherwise or with which he may be or may have been threatened, while acting in any capacity set forth above in this Article V by reason of his having acted in any such capacity, except with respect to any matter as to which he shall not have acted in good faith in the reasonable belief that his action was in the best interest of the Trust or the respective Series of the Trust and further-more, in the case of any criminal proceeding, as to which he shall have had reason-able cause to believe that the conduct was unlawful, provided, however, that no indemnitee shall be indemnified hereunder against any liability to any Person or any expense of such indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence, or (iv) reckless disregard of the duties involved in the conduct of his position. Notwithstanding the foregoing, with respect to any action, suit or other proceeding voluntarily prosecuted by any indemnitee as plaintiff, indemnification shall be mandatory only if the prosecution of such action, suit or other proceeding by such indemnitee was (1) authorized by a majority of the Trustees or (2) was instituted by the indemnitee to enforce his or her rights to indemnification hereunder in a case in which the indemnitee is found to be entitled to such indemnification. The rights to indemnification set forth in this Declaration shall continue as to a Person who has ceased to be a Trustee or officer of the Trust and shall inure to the benefit of his or her heirs,

executors and personal and legal representatives. No amendment or restatement of this Declaration or repeal of any of its provisions shall limit or eliminate any of the benefits provided to any Person who at any time is or was a Trustee or officer of the Trust or otherwise entitled to indemnification hereunder in respect of any act or omission that occurred prior to such amendment, restatement or repeal.

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

(c) The Trust shall make advance payments in connection with the expenses of defending any action with respect to which indemnification might be sought hereunder if the Trust receives a written affirmation by the indemnitee of the indemnitee’s good faith belief that the standards of conduct necessary for indemnification have been met and a written undertaking to reimburse the Trust unless it is subsequently determined that indemnitee is entitled to such indemnification and if a majority of the Trustees determine that the applicable standards of conduct necessary for indemnification appear to have been met. In addition, at least one of the following conditions must be met: (1) the indemnitee shall provide adequate security for his undertaking, (2) the Trust shall be insured against losses arising by reason of any lawful advances, or (3) a majority of a quorum of the Disinterested Non-Party Trustees, or if a majority vote of such quorum so directs, independent legal counsel in a written opinion, shall conclude, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is substantial reason to believe that the indemnitee ultimately will be found entitled to indemnification.

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

5.3 No Duty of Investigation: Notice in Trust Instruments, etc . No purchaser, lender, transfer agent or other Person dealing with the Trustees or with any officer, employee or agent of the Trust or any Series of the Trust or Class thereof shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, undertaking, instrument, certificate, Share, other security of the Trust or any Series of the Trust, and every other act or thing whatsoever executed in connection with the Trust or any Series of the Trust shall be conclusively taken to have been executed or done by the executors thereof only in their capacity as Trustees under this Declaration or in their capacity as officers, employees or agents of the Trust. The Trustees may maintain insurance for the protection of the Series Property, the Shareholders of each Series, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible liability, and such other insurance as the Trustees in their sole judgment shall deem advisable or is required by the 1940 Act.

5.4 Reliance on Experts, etc . Each Trustee and officer or employee of the Trust or any Series of the Trust shall, in the performance of his duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust or any Series of the Trust or Class thereof, upon an opinion of counsel, or upon reports made to the Trust or any Series thereof by any of the Trust’s officers or employees or by any advisor, administrator, manager, distributor, selected dealer, accountant, appraiser or other expert or consultant selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or other expert may also be a Trustee.

ARTICLE VI

Shares of Beneficial Interest

6.1 Beneficial Interest . The interest of the beneficiaries hereunder shall be represented by an unlimited number of transferable shares of beneficial interest, par value $.001 per share. All Shares issued in accordance with the terms hereof, including, without limitation, Shares issued in connection with a dividend in Shares or a split of Shares, shall be fully paid when the consideration determined by the Trustees (if any) therefor shall have been received by the Trust. The power to make certain changes against Shareholders and their Shares shall not be considered assessments for the foregoing purpose.

6.2 Series Designation . The Trustees, in their discretion from time to time, may authorize the reclassification of Shares into one or more Series, each Series relating to a separate portfolio of investments and each of which Series shall be a separate and distinct sub-trust of the Trust. Each Series so established hereunder shall be deemed to be a separate trust under the provisions of Delaware law. The Trustees shall have exclusive power without the requirement of Shareholder approval to establish and designate such separate and distinct Series and to fix and determine the relative rights and preferences as between the different Series. The establishment and designation of any Series shall be effective upon the execution or approval by a majority of the Trustees of an instrument or resolution setting forth the establishment and

designation of such Series (or when authorized to do so, by any officer of the Trust pursuant to the vote of a majority of the Trustees of the Trust). Such instrument shall also set forth any rights and preferences of such Series which are in addition to the rights and preferences of Shares set forth in this Declaration. At any time that there are no Shares outstanding of any particular Series previously established and designated, the Trustees may by an instrument or resolution executed or approved by a majority of their number abolish or alter that Series and the establishment and designation thereof. Each instrument referred to in this paragraph shall have the status of an amendment to this Declaration.

6.3 Class Designation . The Trustees, in their discretion from time to time, may authorize the reclassification of Shares of any Series into one or more Classes of Shares all the assets of which Series shall remain commingled and not allocated among the different Classes thereof. The Trustees shall have exclusive power without the requirement of Shareholder approval to establish and designate such separate and distinct Classes and to fix and determine the relative rights, terms, conditions and expenses applicable to each Class of Shares to the maximum extent permitted by the 1940 Act. The establishment and designation of any Class of Shares shall be effective upon the execution or approval by a majority of the Trustees of an instrument or resolution setting forth the establishment and designation of such Class (or when authorized to do so, by an officer of the Trust pursuant to the vote of a majority of the Trustees of the Trust). At any time that there are no Shares outstanding of any particular Class previously established and designated, the Trustees may, by an instrument or resolution executed or approved by a majority of the Trustees, abolish or alter that Class and the establishment and designation thereof.

6.4 Description of Shares . If the Trustees shall create sub-trusts and reclassify the Shares into one or more Series or create Classes of Shares, the following provisions shall be applicable:

(a) Number of Shares . The number of Shares of each Series or Class that may be issued shall be unlimited. The Trustees may, but shall not be required to, classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series or Class into one or more Series or Classes that may be established and designated from time to time. The Trustees may, but shall not be required to, hold as treasury Shares (of the same or some other Series or Class), reissue for such consideration and on such terms as they may determine, or cancel any Shares of any Series or Class reacquired by the Trust at their discretion from time to time.

(b) Investment of Property . The power of the Trustees to invest and reinvest the Series Property of each Series that may be established shall be governed by Section 3.2 of this Declaration.

(c) Allocation of Assets . All consideration received by the Trust for the issue or sale of Shares of a particular Series or Class of such Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payment derived from any reinvestment of such proceeds in whatever form the same may be, together with such Series’ or Class’s share of any other assets of the Trust, shall be

held by the Trustees and Trust for the benefit of the Shareholders of such Series and, subject to the rights of creditors of such Series only, shall irrevocably belong to that Series for all purposes, and shall be so recorded upon the books of account of the Trust. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds or payments which are not readily identifiable as belonging to any particular Series, such assets shall be allocated among the Series in proportion to their net assets as a proportion of the total net assets of the Trust unless the Trustees shall have affirmatively allocated them among any one or more of the Series established and designated from time to time in any other manner or basis as they, in their sole discretion, deem fair and equitable, and anything so allocated to a Series shall subject to the rights of creditors of such Series only, belong to such Series for all purposes. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes.

(d) Allocation of Liabilities . The assets belonging to each particular Series or attributable to each particular Class of such Series shall be charged with the liabilities of the Trust in respect of that Series or Class and with all expenses, costs, charges and reserves attributable to that Series or Class, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as being attributable to any particular Series or Class shall be allocated and charged against assets of the Series and Classes of each Series in proportion to their net assets as a proportion of the total net assets of the Trust unless the Trustees shall have affirmatively allocated them among any one or more of the Series or Classes established and designated from time to time in any other manner or basis as the Trustees in their sole discretion deem fair and equitable; provided that any incremental expenses allocated to one or more Classes of Shares on a basis other than the relative net asset values of the respective Classes shall be allocated in a manner consistent with the 1940 Act. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the Shareholders and creditors of all Series and Classes for all purposes. The Trustees shall have full discretion, to the extent not inconsistent with the 1940 Act, to determine which items shall be treated as income and which items as capital, and each such determination and allocation shall be conclusive and binding upon the Share-holders and creditors of all Series and Classes for all purposes. Under no circumstances shall the assets allocated or belonging to a particular Series or attributable to a particular Class be charged with any liabilities attributable to another Series or Class. Any creditor may look only to the assets of the particular Series with respect to which such Person is a creditor for satisfaction of such creditor’s debt.

(e) Dividends . The power of the Trust to pay dividends and make distributions with respect to any one or more Series shall be governed by Section 9.2 of this Trust. Dividends and distributions on Shares of a particular Series may be paid with such frequency as the Trust may determine, which may be daily or otherwise, pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trust may determine, to the holders of Shares of that Series, from such of the income and capital gains, accrued or realized, from the assets belonging to that Series, as the Trust may determine, after providing for actual and accrued liabilities belonging to that Series. All dividends and distributions on each Class of a Series shall be distributed pro rata to the holders of Shares of that Class in proportion to the number of Shares of that Class held by such holders at the date and time of record established for the payment of such dividends or distributions, and such dividends and distributions need not be pro rata with respect to dividends and distributions paid to Shares of

any other Class of such Series. Dividends and distributions shall be paid with respect to Shares of a given Class only out of lawfully available assets attributable to such Class.

6.5 Rights of Shareholders . The Shares shall be personal property giving only the rights in this Declaration specifically set forth. The ownership of the Series Property of every description and the right to conduct any business herein before described are vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares, with respect to a particular Series or Class and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to share or assume any losses of the Trust or, subject to the right of the Trustees to charge certain expenses directly to Shareholders, as provided in the last sentence of Section 3.8, suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights (except as specified in Section 11.4 or as specified by the Trustees in the designation or redesignation of any Series or Class thereof).

6.6 Trust Only . It is the intention of the Trustees to create only the relationship of Trustee and beneficiary between the Trustees and each Shareholder from time to time. It is not the intention of the Trustees to create a general partner-ship, limited partnership, joint stock association, corporation, bailment or any form of legal relationship other than a trust. Nothing in this Declaration shall be construed to make the Shareholders, either by themselves or with the Trustees, partners, members or shareholders of any such entity.

6.7 Issuance of Shares . The Trustees, in their discretion, may from time to time without the vote of the Shareholders issue Shares with respect to any Series that may have been established pursuant to Section 6.2, in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consideration, including cash or property, at such time or times, and on such terms as the Trustees may determine, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with the assumption of, liabilities) and businesses. The Trustees may from time to time divide or combine the Shares of any Series into a greater or lesser number without thereby changing the proportionate beneficial interest in such Series of the Trust. Issuances and redemptions of Shares may be made in whole Shares and/or 1/1,000th of a Share or multiples thereof as the Trustees may determine.

6.8 Register of Shares . One or more registers shall be kept at the offices of the Trust or any transfer agent duly appointed by the Trustees under the direction of the Trustees which shall contain the names and addresses of the Share-holders and the number of Shares of each Series and Class thereof held by them respectively and a record of all transfers thereof. Such registers shall be conclusive as to who are the holders of the Shares of the applicable Series and Classes thereof and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive payment of any dividend or distribution, nor to have notice given to him as herein provided, until he or she has given his or her address to a transfer agent or such other officer or agent of the Trustees as shall keep the register for entry thereon. It is not contemplated that certificates will be issued for the Shares; however, the Trustees, in their discretion, may authorize the issuance of share certificates and promulgate appropriate fees therefore and rules and regulations as to their use.

6.9 Transfer Agent and Registrar . The Trustees shall have power to employ a transfer agent or transfer agents, and a registrar or registrars, with respect to the Shares. The transfer agent or transfer agents may keep the applicable register and record therein, the original issues and transfers, if any, of the said Shares. Any such transfer agents and/or registrars shall perform the duties usually performed by transfer agents and registrars of certificates of stock in a corporation, as modified by the Trustees.

6.10 Transfer of Shares . Shares shall be transferable on the records of the Trust only by the record holder thereof or by its agent thereto duly authorized in writing, upon delivery to the Trustees or a transfer agent of the Trust of a duly executed instrument of transfer, together with such evidence of the genuineness of each such execution and authorization and of other matters as may reasonably be required. Upon such delivery the transfer shall be recorded on the applicable register of the Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereof and neither the Trustees nor any transfer agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer. Except as otherwise determined by the Trustees, no holders of any Shares or any Series or Class may sell or otherwise transfer for value any Shares to any Person other than the Trust upon redemption thereof.

Any Person becoming entitled to any Shares in consequence of the death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the applicable register of Shares as the holder of such Shares upon production of the proper evidence thereof to the Trustees or a transfer agent of the Trust, but until such record is made, the Shareholder of record shall be deemed to be the holder of such for all purposes hereof, and neither the Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bankruptcy or incompetence, or other operation of law.

6.11 Notices . Any and all notices to which any Shareholder hereunder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the applicable register of the Trust.

ARTICLE VII

Custodians

7.1 Appointment and Duties . The Trustees shall at all times employ a custodian or custodians, meeting the qualifications for custodians for portfolio securities of investment companies contained in the 1940 Act, as custodian with respect to the assets of the Trustor any Series. Any custodian shall have authority as agent of the Trust or Series with respect to which it is acting as determined by the custodian agreement or agreements, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the By-Laws of the Trust and the 1940 Act:

(1) to hold the securities owned by the Trust or Series and deliver the same upon written order,

(2) to receive any receipt for any moneys due to the Trust or Series and deposit the same in its own banking department (if a bank) or elsewhere as the Trustees may direct;

(3) to disburse such funds upon orders or vouchers;

(4) if authorized by the Trustees, to keep the books and accounts of the Trust and furnish clerical and accounting services; and

(5) if authorized to do so by the Trustees, to compute the net income or net asset value of the Trust or Series;

all upon such basis of compensation as may be agreed upon between the Trustees and the custodian.

The Trustees may also authorize each custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian and upon such terms and conditions, as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall meet the qualifications for custodians contained in the 1940 Act.

7.2 Central Certificate System . Subject to such rules, regulations and orders as the Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the securities owned by the Trust or Series in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, or such other Person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act, pursuant to which system all securities of any particular class of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust.

ARTICLE VIII

Redemption

8.1 Redemptions . All outstanding Shares of any Series of the Trust or any Class thereof may be redeemed at the option of the holders thereof, upon and subject to the terms and conditions provided in this Article VIII. The Trust shall, upon application by any Shareholder or pursuant to authorization from any Share-holder of a particular Series or Class, redeem or repurchase from such Shareholder outstanding Shares of such Series or Class for an amount per share determined by the application of a formula adopted for such purpose by the Trustees with respect to such Series or Class (which formula shall be consistent with the 1940 Act); provided that (a) such amount per share shall not exceed any limitations imposed under applicable law and (b) if so authorized by the Trustees, the Trust may, at any time and from time to time, charge fees for effecting such redemption, at such rates as the Trustees may establish, as and to the extent permitted under the 1940 Act, and may, at any time and from time to time, pursuant to such Act, suspend such right of redemption. The procedures for effecting redemption

shall be as set forth in the Prospectus with respect to the applicable Series or Class from time to time. The proceeds of the redemption of Shares shall be paid in cash or property (tangible or intangible) or any combination thereof in the sole discretion of the Trustees or, if not determined by them, the Trust’s investment advisor.

8.2 Disclosure of Holding . The holders of Shares or other securities of the Trust shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of Shares or other securities of the Trust as the Trustees deem necessary to comply with the provisions of the Code or any other applicable laws.

8.3 Redemptions of Small Accounts . The Trustees shall have the power to redeem shares of any Series or Class in any or all accounts at a redemption price determined in accordance with Section 8.1 above, (a) if at any time the total . investment in such account does not have a value of at least such minimum amount as may be specified in the Prospectus for such Series or Class from time to time, (b) as provided by Section 3.8, or (c) to the extent a Shareholder or other Person beneficially owns Shares equal to or in excess of a percentage of Shares of the Trust or any Series or Class determined from time to time by the Trustees and specified in the applicable Prospectus. In the event the Trustees determine to exercise their power to redeem Shares provided in subsection (a) of this Section 8.3, the Shareholder shall be. notified that the value of his account is less than the applicable minimum amount and shall be allowed 30 days to make an appropriate investment before redemption is processed.

ARTICLE IX

Determination of Net Asset Value

Net Income and Distributions

9.1 Net Asset Value . The value of the assets of the Trust or any Series of the Trust or any Class of such Series, the amount of liabilities of the Trust or any Series of the Trust or any Class of such Series and the net asset value of each outstanding Share of any Series or Class shall be determined at such time or times and on such days as the Trustees may determine in accordance with the 1940 Act. The method of determination of net asset value shall be determined by the Trustees. The power and duty to value the assets and liabilities of the Trust and make net asset value determinations and calculations may be delegated by the Trustees.

9.2 Distributions to Shareholders .

(a) The Trust shall from time to time distribute among the Shares such proportion of the net profits, surplus (including paid-in surplus), capital, or assets held by the Trustees as they or any Persons to whom they delegate such determination may deem proper or as may otherwise be determined in the instrument setting forth the terms of such Series or Class of Shares, which need not be ratable with respect to distributions in respect of Shares of any other Class. Such distributions may be made in cash or property (including without limitation any type of obligations of the Trust or any assets thereof) or any combination thereof.

(b) Distributions may be made to the Shareholders of record entitled to such distribution at the time such distribution is declared or at such later date as shall be determined by the Trust prior to the date of payment.

(c) The Trust may always retain from any source such amount as the Trustees or their delegee may deem necessary to pay the debts or expenses of the Trust or to meet obligations of the Trust, or as the Trustees or their delegee otherwise may deem desirable to use in the conduct of its affairs or to retain for future requirements or extensions of the business of the Trust.

9.3 Power to Modify Foregoing Procedures . Notwithstanding any of the foregoing provisions of this Article IX, the Trustees may prescribe, in their absolute discretion except as may be required by the 1940 Act, such other bases and times for determining the per share asset value of the Trust’s Shares or net income, or the declaration and payment of dividends and distributions as they may deem necessary or desirable for any reason, including to enable the Trust to comply with any provision of the 1940 Act, or any securities exchange or association registered under the Securities Exchange Act of 1934, or any order of exemption issued by the Commission, all as in effect now or hereafter amended or modified.

ARTICLE X

Shareholders

10.1 Meetings of Shareholders . A meeting of Shareholders may be called at any time by a majority of the Trustees or the President and shall be called by any Trustee for any proper purpose upon written request of Shareholders of the Trust holding in the aggregate not less than 51% of the outstanding Shares of the Trust, or the class or series of Shares having voting rights on the matter, such request specifying the purpose or purposes for which such meeting is to be called. Any Shareholder meeting shall be held within or without the State of Delaware on such day and at such time as the Trustees shall designate. The Trust shall not be required to hold annual meetings of the Shareholders.

10.2 Voting . Shareholders shall have no power to vote on any matter except matters on which a vote of Shares is expressly required by applicable law, this Declaration or resolution of the Trustees. In particular, no amendment of this declaration, merger, consolidation, share exchange or sale of assets of the Trust or any Series thereof, conversion of the Trust to any other form of organization or any other action of the Trust or Series thereof shall require any vote or other approval of any of the Shareholders except as provided by the foregoing sentence. Any matter required to be submitted for approval of any of the Shares and affecting more than one Series or Class shall require approval by the required vote of Shares of the affected Series or Classes voting together as a single Series or Class and, if such matter affects one or more Series or Class thereof differently from one or more other Series or Class, approval, to the extent provided by applicable law, this Declaration or resolution of the Trustees, by the required vote of Shares of each such Series or Class voting as a separate Series or Class shall be required in order to be approved with respect to such Series or Class; provided, however, that except to the extent required by the 1940 Act, there shall be no separate class votes on the election or removal of Trustees or the selection of auditors for the Trust and its Series. Share-holders of a particular

Series shall not be entitled to vote on any matter that affects the rights or interests of only one or more other Series. There shall be no cumulative voting in the election or removal of Trustees.

10.3 Notice of Meeting and Record Date . Notice of all meetings of Shareholders, stating the time, place and purposes of the meeting, shall be given by the Trustees by mail to each Shareholder of record entitled to vote thereat at its registered address, mailed at least 10 days and not more than 90 days before the meeting or otherwise in compliance with applicable law. Only the business stated in the notice of the meeting shall be considered at such meeting. Any adjourned meeting may be held as adjourned one or more times without further notice not later than 120 days after the record date. For the purposes of determining the Shareholders who are entitled to notice of and to vote at any meeting the Trustees may, without closing the transfer books, fix a date not more than 90 nor less than 10 days prior to the date of such meeting of Shareholders as a record date for the determination of the Persons to be treated as Shareholders of record for such purposes.

10.4 Quorum and Required Vote . (a) The holders of a majority of the Shares entitled to vote on any matter at a meeting present in person or by proxy shall constitute a quorum at such meeting of the Shareholders for purposes of conducting business on such matter. The holders of a majority of the outstanding Shares of the affected Series or Classes on the record date present in person or by proxy shall constitute a quorum at any meeting of the Shareholders for purposes of conducting business on which a vote of Shareholders of such Series or Classes is being taken. Shares underlying a proxy as to which a broker or other intermediary states its absence of authority or lack of instruction to vote with respect to one or more matters or fails to abstain or vote on or against one or more matters shall be treated as present for purposes of establishing a quorum or proportion of shares voted for taking action on any such matter only to the extent so determined by the Trustees at or prior to the meeting of Shareholders at which such matter is to be considered.

(b) Subject to any provision of applicable law, this Declaration or a resolution of the Trustees specifying or requiring a greater or lesser vote requirement for the transaction of any matter of business at any meeting of Share-holders, (i) the affirmative vote of a plurality of the Shares entitled to vote for the election of any Trustee or Trustees shall be the act of such Shareholders with respect to the election of such Trustee or Trustees, (ii) the affirmative vote of a majority of the Shares present in person or represented by proxy on any other matter and entitled to vote on such matter shall be the act of the Shareholders with respect to such matter, and (iii) where a separate vote of any Series or Class is required on any matter, the affirmative vote of a majority of the Shares of such Series or Class present in person or represented by proxy on such matter and entitled to vote on such matter shall be the act of the Shareholders of such Series or Class with respect to such matter.

10.5 Proxies, etc . At any meeting of Shareholders, any holder of Shares entitled to vote thereat may vote by properly executed proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Secretary, or with such other officer or agent of the Trust as the Secretary may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of a majority of the Trustees, proxies may be solicited in the name of one or more Trustees or one or more of the officers or employees of the Trust. No proxy shall be valid after the expiration of 11 months from the date thereof, unless

otherwise provided in the proxy. Only Shareholders of record shall be entitled to vote. Each full Share shall be entitled to one vote and fractional Shares shall be entitled to a vote of such fraction. When any Share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Share. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such Share is a minor or a person of unsound mind, and subject to guardianship or to the legal control of any other person as regards the charge or management of such Share, he may vote by his guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. The Trustees shall have the authority to make and modify from time to time regulations regarding the validity of proxies. In addition to signed proxies, such regulations may authorize facsimile, telephonic, internet and other methods of appointing a proxy that are subject to such supervision by or under the direction of the Trustees as the Trustees shall determine.

10.6 Reports . The Trustees shall cause to be prepared and sent to Shareholders at least annually and more frequently to the extent and in the form required by law, regulation a report of operations containing financial statements of the Trust prepared in conformity with generally accepted accounting principles and an opinion of an independent public accountant on such financial statements. Separate reports may be prepared for the various Series. Copies of such reports shall be mailed to all Shareholders of record of the applicable Series within the time required by the 1940 Act, and in any event within a reasonable period preceding the meeting of Shareholders. The Trustees may prepare and send to Shareholders of any Series or Class any other reports.

10.7 Inspection of Records . The records of the Trust shall be open to inspection by Persons who have been holders of record of at least $25,000 in net asset value or liquidation preference of Shares for a continuous period of not less than six months to the same extent and for the same purposes as is permitted under the Delaware General Business Corporation Law to shareholders of a Delaware business corporation.

10.8 Shareholder Action by Written Consent . Any action which may be taken by Shareholders by vote may be taken without a meeting if the holders entitled to vote thereon of the proportion of Shares required for approval of such action at a meeting of Shareholders pursuant to Section 10.4 consent to the action in writing and the written consents are filed with the records of the meetings of Share-holders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.

ARTICLE XI

Duration; Termination of Trust;

Amendment: Mergers, Etc.

11.1 Duration . Subject to possible termination in accordance with the provisions of Section 11.2 hereof, the Trust created hereby shall have perpetual existence.

11.2 Termination . (a) The Trust or any Series may be dissolved by the affirmative vote of a majority of the Trustees, and without any vote of the Shareholders thereof except as may be required by the 1940 Act. Upon the dissolution of the Trust or any Series:

(i) The Trust or such Series shall carry on no business except for the purpose of winding up its affairs.

(ii) The Trustees shall proceed to wind up the affairs of the Trust or such Series and all of the powers of the Trustees under this Declaration shall continue until the affairs of the Trust or such Series shall have been wound up, including the power to fulfill or discharge the contracts of the Trust or such Series, collect its assets, sell, convey, assign, exchange, merge where the Trust is not the survivor, transfer or otherwise dispose of all or any part of the remaining Series Property to one or more Persons at a public or private sale for consideration which may consist in whole or in part in cash, securities or other property of any kind, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; provided that any sale, conveyance, assignment, exchange, merger in which the Trust is not the survivor, transfer or other disposition of all or substantially all of the property of the Trust or any Series Property shall require approval of the principal terms of the transaction and the nature and amount of the consideration with the same vote as required for dissolution pursuant to paragraph (a) above.

(iii) After paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Series Property of any Series, in cash or in kind or partly in each, among the Share-holders of such Series according to their respective rights.

(b) After the winding up and termination of the Trust or any Series and distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination and shall execute and file a certificate of cancellation with the Secretary of State of the State of Delaware. Upon termination of the Trust, the Trustees shall thereupon be discharged from all further liabilities and duties hereunder, and the rights and interests of all Shareholders shall thereupon cease.

Upon termination of any Series, the Trustees shall thereunder be discharged from all further liabilities and duties with respect to such Series, and the rights and interests of all Shareholders of such Series shall thereupon cease.

11.3 Amendment Procedure .

(a) Subject to Section 11.3(b), this Declaration may be amended in any respect by the affirmative vote or approval in writing of two-thirds of the Trustees and without any vote of the Shareholders of the Trust or any Series or Class except as may be required by the 1940 Act.

(b) Nothing contained in this Declaration shall permit the amendment of this Declaration to impair the exemption from personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust or to permit assessments upon Shareholders. Expenses of the Trust charged directly to Shareholders pursuant to Section 3.8 hereof or fees or sales charges payable upon or in connection with redemptions of Shares pursuant to Section 8.1 hereof shall not constitute “assessments” for purposes of this Section 11.3(b).

(c) An amendment duly adopted by the requisite approval of the Board of Trustees and, if required, Shareholders as aforesaid, shall become effective at the time of such adoption or at such other time as may be designated by the Board of Trustees or Shareholders, as the case may be. A certification signed by a majority of the Trustees setting forth an amendment and reciting that it was duly adopted by the Trustees and, if required, Shareholders as aforesaid, or a copy of the Declaration, as amended, and executed by a majority of the Trustees, shall be conclusive evidence of such amendment when lodged among the records of the Trust or at such other time designated by the Board.

Notwithstanding any other provision hereof, until such time as Shares are issued and outstanding, this Declaration may be terminated or amended in any respect by the affirmative vote of a majority of the Trustees or by an instrument signed by a majority of the Trustees.

11.4 Merger, Consolidation and Sale of Assets . The Trust or any Series may merge or consolidate with any other corporation, association, trust or other organization or any Series, sub-trust or other designated portion thereof or may sell, lease or exchange all or substantially all of the property of the Trust or any Series Property including its good will or may acquire all or substantially all of the property of any other corporation, association, trust or other organization or any series, sub-trust or other designated portion thereof, upon such terms and conditions and for such consideration when and as authorized by two-thirds of the Trustees and without any vote by the Shareholders of the Trust or any Series or Class except as may be required by the 1940 Act, and any such merger, consolidation, sale, lease, exchange or purchase shall be determined for all purposes to have been accomplished under and pursuant to the statutes of the State of Delaware.

11.5 Subsidiaries . Without approval by Shareholders, the Trustees may cause to be organized or assist in organizing one or more corporations, trusts, partnerships, associations or other organizations to take over all of the Trust Property or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, convey and transfer all or a portion of the Trust Property or Series Property to any such corporation, trust, limited liability company, association or organization in exchange for the shares or securities thereof, or otherwise, and to lend money to, subscribe for the shares or securities of, and enter into any contracts with any such corporation, trust, limited liability company, partnership, association or organization, or any corporation, partnership, trust, limited liability company, association or organization in which the Trust or Series holds or is about to acquire shares or any other interests.

ARTICLE XII

Miscellaneous

12.1 Filing . (a) This Declaration and any amendment or supplement hereto shall be filed in such places as may be required or as the Trustees deem appropriate. Each amendment or supplement shall be accompanied by a certificate signed and acknowledged by a Trustee stating that such action was duly taken in a manner provided herein, and shall, upon insertion in the Trust’s minute book, be conclusive evidence of all amendments contained therein. A restated Declaration, containing the original Declaration and all amendments and supplements theretofore made, may be executed from time to time by a majority of the Trustees and shall, upon insertion in the Trust’s minute book, be conclusive evidence of all amendments and supplements contained therein and may thereafter be referred to in lieu of the original Declaration and the various amendments and supplements thereto.

(b) The Trustees hereby authorize and direct a Certificate of Trust, in the form attached hereto as Exhibit A, to be executed and filed with the Office of the Secretary of State of the State of Delaware in accordance with the Delaware Statutory Trust Act.

12.2 Resident Agent . The Trust shall maintain a resident agent in the State of Delaware, which agent shall initially be The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 The Trustees may designate a successor resident agent, provided, however, that such appointment shall not become effective until written notice thereof is delivered to the office of the Secretary of the State.

12.3 Governing Law . This Declaration is executed by the initial Trustee for the purpose of creating a “statutory trust” under the Delaware Statutory Trust Statue and establishing this Declaration as the “governing instrument” of the Trust within the meaning of the Delaware Statutory Trust Statute. The rights of all Persons hereunder and the validity and construction of every provision hereof shall be subject to and construed according to the laws of said State of Delaware and reference shall be specifically made to the business corporation law of the State of Delaware as to the construction of matters not specifically covered herein or as to which an ambiguity exists, although such law shall not be viewed as limiting the powers otherwise granted to the Trustees hereunder and any ambiguity shall be viewed in favor of such powers.

12.4 Counterparts . This Declaration may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts, together, shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart.

12.5 Reliance by Third Parties . Any certificate executed by an individual who, according to the records of the Trust, or of any recording office in which this Declaration may be recorded, appears to be a Trustee hereunder, certifying to: (a) the number or identity of Trustees or Shareholders, (b) the name of the Trust, (c) the due authorization of the execution of any instrument or writing, (d) the form of any vote passed at a meeting of Trustees or Shareholders, (e) the fact that the number of Trustees or Shareholders present at any meeting or executing any written instrument satisfies the requirements of this Declaration, (f) the form of any By Laws

adopted by or the identity of any officers elected by the Trustees, or (g) the existence of any fact or facts which in any manner relate to the affairs of the Trust, shall be conclusive evidence as to the matters so certified in favor of any person dealing with the Trustees and their successors.

12.6 Provisions in Conflict with Law or Regulation . (a) The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration; provided, however, that such determination shall not affect any of the remaining provisions of this Declaration or render invalid or improper any action taken or omitted prior to such determination.

(b) If any provision of this Declaration shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration in any jurisdiction.

IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the day and year first above written.



By:		/s/ Anne F. Ackerley
		Anne F. Ackerley
		Sole Trustee

Exhibit (d)

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, dated September , 2004, between BlackRock Bond Allocation Target Shares (the “Trust”), a Delaware statutory trust, and BlackRock Advisors, Inc. (the “Advisor”), a Delaware corporation.

WHEREAS, Advisor has agreed to furnish investment advisory services to each Series of the Trust specified on Annex A hereto (each, a “Fund”), an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);

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

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

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

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

3. Reserved .

4. Covenants . In the performance of its duties under this Agreement, the Advisor:

(1) shall at all times conform to, and act in accordance with, any requirements imposed by (i) the provisions of the 1940 Act and the Investment Advisers Act of 1940, as amended, and all applicable Rules and Regulations of the Securities and Exchange Commission (the “SEC”); (ii) any other applicable provision of law; (iii) the provisions of the Agreement and Declaration of Trust, as amended and restated, and By-Laws of the Trust, as such

documents are amended from time to time; (iv) the investment objectives and policies of each Fund as set forth in the Trust’s Registration Statement on Form N-1A; and (v) any policies and determinations of the Board of Trustees of the Trust;

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

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

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

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

which, in its judgment, will adversely affect the performance of its obligations under this Agreement.

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

7. Agency Cross Transactions . From time to time, the Advisor or brokers or dealers affiliated with it may find themselves in a position to buy for certain of their brokerage clients (each an “Account”) securities which the Advisor’s investment advisory clients wish to sell, and to sell for certain of their brokerage clients securities which advisory clients wish to buy. Where one of the parties is an advisory client, the Advisor or the affiliated broker or dealer cannot participate in this type of transaction (known as a cross transaction) on behalf of an advisory client and retain commissions from one or both parties to the transaction without the advisory client’s consent. This is because in a situation where the Advisor is making the investment decision (as opposed to a brokerage client who makes his own investment decisions), and the Advisor or an affiliate is receiving commissions from both sides of the transaction, there is a potential conflicting division of loyalties and responsibilities on the Advisor’s part regarding the advisory client. The Securities and Exchange Commission has adopted a rule under the Investment Advisers Act of 1940, as amended, which permits the Advisor or its affiliates to participate on behalf of an Account in agency cross transactions if the advisory client has given written consent in advance. By execution of this Agreement, the Trust authorizes the Advisor or its affiliates to participate in agency cross transactions involving an Account. The Trust may revoke its consent at any time by written notice to the Advisor.

8. Expenses . During the term of this Agreement, the Advisor will bear all costs and expenses of its employees and any overhead incurred in connection with its duties hereunder and shall bear the costs of any salaries or trustees fees of any officers or trustees of the Trust who are affiliated persons (as defined in the 1940 Act) of the Advisor. In addition, the Advisor will be responsible for the payment of, or reimburse the Trust for, all fees and expenses incurred by the Trust, except fees and expenses incurred by the Trust with respect to extraordinary expenses.

9. Compensation of the Advisor . The Investment Advisor shall not receive an advisory fee for the investment advisory or other services that it provides to the Trust pursuant to this Agreement.

10. Indemnity . (a) The Trust hereby agrees to indemnify the Advisor, and each of the Advisor’s directors, officers, employees, agents, associates and controlling persons and the directors, partners, members, officers, employees and agents thereof (including any individual who serves at the Advisor’s request as director, officer, partner, member, trustee or the like of another entity) (each such person being an “Indemnitee”) against any liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees (all as provided in accordance with applicable state law) reasonably

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

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

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

any proceeding shall be authorized shall be made in accordance with the immediately preceding clause (2) above.

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

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

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

12. Duration and Termination . This Agreement shall become effective as of the date hereof and, unless sooner terminated with respect to any Fund set forth on Annex A as of the date hereof as provided herein, shall continue in effect for a period of two years with respect to such Fund. New Funds may be added to Annex A by resolution of the Board of Trustees, approval by the shareholder or shareholders of such Fund and acceptance by the Advisor and this agreement with respect to each subsequent Fund shall become effective as of such time and, unless sooner terminated with respect to such Fund as provided herein, shall continue in effect for a period of two years with respect to such Fund. Thereafter, if not terminated, this Agreement shall continue in effect with respect to each Fund for successive periods of 12 months, provided such continuance is specifically approved at least annually by both (a) the vote of a majority of the Trust’s Board of Trustees or the vote of a majority of the outstanding voting securities of the Trust at the time outstanding and entitled to vote, and (b) by the vote of a majority of the Trustees who are not parties to this Agreement or interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding the foregoing, this Agreement may be terminated by the Trust with respect to any or all the Funds at any time, without the payment of any penalty, upon giving the Advisor 60 days’ notice (which notice may be waived by the Advisor), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Trustees of the Trust in office at the time or by the vote of the holders of a majority of the voting securities of the relevant Fund or Funds at the time outstanding and entitled to vote, or by the Advisor on 60 days’ written notice (which notice may be waived by the Trust). This Agreement will also immediately terminate in the event of its assignment. (As used in this Agreement, the terms “majority of the outstanding voting securities,” “interested person” and “assignment” shall have the same meanings of such terms in the 1940 Act.)

13. Notices . Any notice under this Agreement shall be in writing to the other party at such address as the other party may designate from time to time for the receipt of such

notice and shall be deemed to be received on the earlier of the date actually received or on the fourth day after the postmark if such notice is mailed first class postage prepaid.

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

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

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

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

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

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


BLACKROCK BOND ALLOCATION TARGET SHARES

By:
		Name: Anne F. Ackerley
		Title: Vice President


BLACKROCK ADVISORS, INC.

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

ANNEX A

Series of BlackRock Bond Allocation Target Shares

1) BATS: Series S Portfolio

2) BATS: Series C Portfolio

3) BATS: Series M Portfolio

4) BATS: Series P Portfolio

5) BATS: Series I Portfolio

Exhibit (e)

BLACKROCK BOND ALLOCATION TARGET SHARES

Distribution Agreement

Agreement dated as of , 2004 between BLACKROCK BOND ALLOCATION TARGET SHARES, a Delaware statutory trust (the “Company”), and BLACKROCK DISTRIBUTORS, INC., a Delaware corporation (the “Distributor”).

WHEREAS , the Company is an open-end management investment company and is so registered under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS , the Company desires to retain the Distributor as its distributor to provide for the sale and distribution of each class and series of shares (“shares”) in each of the Company’s investment portfolios (individually, a “Fund,” collectively, the “Funds”) as listed on Appendix A (as such Appendix may, from time to time, be supplemented (or amended)), and the Distributor is willing to render such services;

NOW, THEREFORE , in consideration of the premises and mutual covenants set forth and intending to be legally bound, the parties hereto agree as follows:

1. Appointment of Distributor . The Company hereby appoints the Distributor as distributor of each class and series of shares in each of the Company’s Funds on the terms and for the period set forth in this Agreement. The Distributor hereby accepts such appointment and agrees to render the services and duties set forth in Section 3 below. In the event that the Company establishes additional classes or investment portfolios other than the Funds listed on Appendix A with respect to which it desires to retain the Distributor to act as distributor hereunder, the Company shall notify the Distributor, whereupon such Appendix A shall be supplemented (or amended) and such portfolio shall become a Fund hereunder (upon written agreement of the Distributor) and shall be subject to the provisions of this Agreement to the same extent as the Funds (except to the extent that said provisions may be modified in writing by the Company and Distributor at the time).

2. Delivery of Documents . The Company has furnished or will furnish the Distributor with copies, properly certified or authenticated, of each of the following documents and will deliver to it all future amendments and supplements, if any:

a. The Company’s Certificate of Trust, filed with the Secretary of State of the State of Delaware on March 5, 2003, as amended, and the Company’s Amended and Restated Agreement and Declaration of Trust dated November 17, 2003 (collectively, the “Charter”);

b. The Company’s Bylaws, as amended and supplemented (“Code”);

c. The Company’s most recent amendment to its Registration Statement under the Securities Act of 1933, as amended (the “1933 Act”), and the 1940 Act on Form N-1A

as filed with the Securities and Exchange Commission (the “Commission”), relating to its Funds (the Registration Statement, as presently in effect and as amended or supplemented from time to time, is herein called the “Registration Statement”); and

d. The Company’s most recent Prospectuses and Statements of Additional Information and all amendments and supplements thereto (such Prospectuses and Statements of Additional Information and supplements thereto, as presently in effect and as from time to time amended and supplemented, are herein called the “Prospectuses”).

3. Services and Duties . The Distributor enters into the following covenants with respect to its services and duties:

a. The Distributor agrees to sell, as agent, from time to time during the term of this Agreement, shares upon the terms and at the current offering price as described in the Prospectuses. The Distributor will act only in its own behalf as principal in making agreements with selected dealers. No broker-dealer or other person which enters into a selling or servicing agreement with the Distributor shall be authorized to act as agent for the Company or its Funds in connection with the offering or sale of shares to the public or otherwise. The Distributor shall use its best efforts to sell shares of each class or series of each of the Funds but shall not be obligated to sell any certain number of shares.

b. The Distributor shall prepare or review, provide advice with respect to, and file with the federal and state agencies or other organizations as required by federal, state, or other applicable laws and regulations, all sales literature (advertisements, brochures and shareholder communications) for each of the Funds and any class or series thereof.

c. In performing all of its services and duties as Distributor, the Distributor will act in conformity with the Charter, Code, Prospectuses and resolutions and other instructions of the Company’s Board of Trustees and will comply with the requirements of the 1933 Act, the Securities Exchange Act of 1934, the 1940 Act and all other applicable federal or state law.

d. The Distributor will bear the cost of printing and distributing any Prospectus (including any supplement thereto) to persons who are not shareholders; provided , however , that the Distributor shall not be obligated to bear the expenses incurred by the Company in connection with the preparation and printing of any amendment to any Registration Statement or Prospectus necessary for the continued effective registration of the shares under the 1933 Act and state securities laws and the distribution of any such document to existing shareholders of the Company’s Funds.

e. The Company shall have the right to suspend the sale of shares at any time in response to conditions in the securities markets or otherwise, and to suspend the redemption of shares of any Fund at any time permitted by the 1940 Act or the rules and regulations of the Commission (“Rules”).

f. The Company reserves the right to reject any order for shares but will not do so without reasonable cause.

4. Payments Relating to Distribution Plans . Payments by the Company relating to any distribution plan within the meaning of Rule 12b-1 under the 1940 Act (a “Plan”) adopted by the Company’s Board of Trustees may be payable to the Distributor or its assignees, all in accordance with the terms and conditions of such Plan.

5. Payments of Sales Charges . Any front-end sales charges or deferred sales charges payable in connection with purchases of the Company’s shares shall be payable to the Distributor or its assignees, all in accordance with the Company’s Prospectus.

6. Forfeiture of Sales Charges . If any shares sold by the Distributor under the terms of this Agreement are redeemed or repurchased by the Fund or by the Distributor as agent or are tendered for redemption within seven business days after the date of confirmation of the original purchase of said shares, the Distributor shall forfeit the amount above the net asset value received by it in respect of such shares, provided that the portion, if any, of such amount re-allowed by the Distributor to broker-dealers or other persons shall be repayable to the Company only to the extent recovered by the Distributor from the broker-dealer or other person concerned. The Distributor shall include in the form of agreement with such broker-dealers and other persons a corresponding provision for the forfeiture by them of their concession with respect to shares sold by them or their principals and redeemed or repurchased by the Company or by the Distributor as agent (or tendered for redemption) within seven business days after the date of confirmation of such initial purchases.

7. Limitations of Liability . The Distributor shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. Notwithstanding anything in this Agreement to the contrary, (i) the Distributor shall not be liable for any losses or damages occurring directly or indirectly by reason of circumstances beyond its reasonable control and (ii) the Distributor shall not be liable for any consequential, special or indirect losses or damages (whether or not the likelihood of such losses or damages was known by the Distributor). The provisions of this Section 7 shall survive termination of this Agreement.

8. Proprietary and Confidential Information . The Distributor agrees on behalf of itself and its employees to treat confidentially and as proprietary information of the Company all records and other information relative to the Company and its Funds and prior, present or potential shareholders, and not to use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, records and information shall not be subject to the foregoing

obligations set forth in this Section 8 if they are required to be disclosed by the Distributor pursuant to a requirement of a court order, subpoena, governmental or regulatory agency or law (provided the Distributor will provide the Company written notice of such requirement, to the extent such notice is permitted).

9. Indemnification .

a. The Company represents and warrants to the Distributor that the Registration Statement contains, and that the Prospectuses at all times will contain, all statements required by the 1933 Act and the Rules of the Commission, will in all material respects conform to the applicable requirements of the 1933 Act and the Rules and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation or warranty in this Section 9 shall apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Distributor or PFPC Inc. expressly for use in the Registration Statement or Prospectuses.

b. The Company on behalf of each Fund agrees that each Fund will indemnify, defend and hold harmless the Distributor, its several officers, and directors, and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act, from and against any losses, claims, damages or liabilities, joint or several, to which the Distributor, its several officers, and directors, and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act, may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectuses or in any application or other document executed by or on behalf of the Company with respect to such Fund or are based upon information furnished by or on behalf of the Company with respect to such Fund filed in any state in order to qualify the shares under the securities or blue sky laws thereof (“Blue Sky application”) or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Distributor, its several officers, and directors, and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act, for any legal or other expenses reasonably incurred by the Distributor, its several officers, and directors, and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act, in investigating, defending or preparing to defend any action, proceeding or claim related thereto; provided , however , that the Company shall not be liable in any case to the extent that such loss, claim, damage or liability arises out of, or is based upon, any untrue statement, alleged untrue statement, or omission or alleged omission made in the Registration Statement, the Prospectus or any Blue Sky application with respect to such Fund in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Distributor or PFPC Inc. specifically for inclusion therein or arising out of the failure of the Distributor to deliver a current Prospectus.

c. The Company on behalf of each Fund shall not indemnify any person pursuant to this Section 9 unless the court or other body before which the proceeding was brought has rendered a final decision on the merits that such person was not liable by reason of his or her willful misfeasance, bad faith or gross negligence in the performance of his or her duties, or his or her reckless disregard of any obligations and duties, under this Agreement (“disabling conduct”) or, in the absence of such a decision, a reasonable determination (based upon a review of the facts) that such person was not liable by reason of disabling conduct has been made by the vote of a majority of a quorum of the trustees of the Company who are neither “interested parties” (as defined in the 1940 Act) nor parties to the proceeding, or by independent legal counsel in a written opinion.

d. The Distributor will indemnify and hold harmless the Company and each of its Funds and its several officers and trustees, and any person who controls the Company within the meaning of Section 15 of the 1933 Act, from and against any losses, claims, damages or liabilities, joint or several, to which any of them may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectus or any Blue Sky application, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company or any of its several officers and trustees by or on behalf of the Distributor or PFPC Inc. specifically for inclusion therein, and will reimburse the Company and its several officers, trustees and such controlling persons for any legal or other expenses reasonably incurred by any of them in investigating, defending or preparing to defend any action, proceeding or claim related thereto.

e. The obligations of each Fund under this Section 9 shall be the several (and not the joint or joint and several) obligation of each Fund.

f. The provisions of this Section 9 shall survive termination of this Agreement.

10. Duration and Termination . This Agreement shall become effective as of the date first written above and, unless sooner terminated as provided herein, shall continue until two years from the date first written above. Thereafter, if not terminated, this Agreement shall continue automatically for successive terms of one year, provided that such continuance is specifically approved at least annually (a) by a vote of a majority of those members of the Company’s Board of Trustees who are not parties to this Agreement or “interested persons” of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Company’s Board of Trustees or by vote of a “majority of the outstanding voting securities” of the Company; provided , however , that this Agreement may be terminated by the Company at any time, without the payment of any penalty, by vote of a majority of the entire

Board of Trustees or by a vote of a “majority of the outstanding voting securities” of the Company on 60-days’ written notice to the Distributor, or by the Distributor at any time, without the payment of any penalty, on 90-days’ written notice to the Company. This Agreement will automatically and immediately terminate in the event of its “assignment.” (As used in this Agreement, the terms “majority of the outstanding voting securities,” “interested person” and “assignment” shall have the same meanings as such terms have in the 1940 Act.).

11. Amendment of this Agreement . No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which an enforcement of the change, waiver, discharge or termination is sought.

12. Notices . Notices of any kind to be given to the Company hereunder by the Distributor shall be in writing and shall be duly given if mailed or delivered to the Company at BlackRock Bond Allocation Target Shares, 100 Bellevue Parkway, Wilmington, DE 19809, Attention: , with a copy to BlackRock Advisors, Inc., 40 East 52 ^nd Street, New York, New York 10022, Attention: Robert Connolly, Esq., or at such other address or to such individual as shall be so specified by the Company to the Distributor. Notices of any kind to be given to the Distributor hereunder by the Company shall be in writing and shall be duly given if mailed or delivered to BlackRock Distributors, Inc., 301 Bellevue Parkway, Wilmington, DE 19809, Attention: President, or at such other address or to such other individual as shall be so specified by the Distributor to the Company.

13. Miscellaneous .

a. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law, without regard to principles of conflicts of law.

b. The names “BlackRock Bond Allocation Target Shares” and “Trustees of BlackRock Bond Allocation Target Shares” refer specifically to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under the Amended and Restated Agreement and Declaration of Trust dated November 17, 2003, which is hereby referred to and a copy of which is on file at the principal office of the Company. The obligations of “BlackRock Bond Allocation Target Shares” entered into in the name or on behalf thereof by any of the Trustees, officers, representatives or agents are not made individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, representatives or agents of the Company personally, but bind only the Series Property (as defined in the Amended and Restated Agreement and Declaration of Trust), and all persons dealing with any series of shares of the Company must look solely to the Series Property belonging to such series for the enforcement of any claims against the Company.

c. The Company acknowledges that the Distributor may receive float benefits and/or investment earnings in connection with maintaining certain accounts required to provide services under this Agreement.

d. Notwithstanding any provision herein to the contrary, each party hereto agrees that any Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation S-P (“Regulation S-P”), promulgated under the Gramm-Leach-Bliley Act (the “Act”), disclosed by a party hereunder is for the specific purpose of permitting the other party to perform the services set forth in this Agreement. Each party agrees that, with respect to such information, it will comply with Regulation S-P and the Act and that it will not disclose any Nonpublic Personal Information received in connection with this Agreement to any other party, except to the extent as necessary to carry out the services set forth in this Agreement or as otherwise permitted by Regulation S-P or the Act.

e. To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Consistent with this requirement, the Distributor will request (or already has requested) the Company’s name, address and taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that party’s date of birth. The Distributor may also ask (and may have already asked) for additional identifying information, and the Distributor may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.

14. Counterparts . This Agreement may be executed in counterparts, all of which together shall constitute one and the same instrument.

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


BLACKROCK BOND ALLOCATION TARGET SHARES

By:
Title:

BLACKROCK DISTRIBUTORS, INC.

By:
Title:

APPENDIX

THIS APPENDIX A, dated as of , 2004, is Appendix A to that certain Distribution Agreement dated as of , 2004 between BlackRock Distributors, Inc. and BlackRock Bond Allocation Target Shares.

PORTFOLIOS

Series S Portfolio

Series C Portfolio

Series M Portfolio

Series P Portfolio

Series I Portfolio

Exhibit (g)

CUSTODIAN AGREEMENT

THIS AGREEMENT is made as of , 2004 by and between PFPC TRUST COMPANY (“PFPC Trust”), a limited purpose trust company incorporated under the laws of Delaware, and BLACKROCK BOND ALLOCATION TARGET SHARES, a Delaware statutory trust (the “Fund”).

WITNESSETH:

WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian services, and PFPC Trust wishes to furnish custodian services, either directly or through an affiliate or affiliates, as more fully described herein;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

1.	Definitions. As Used in This Agreement :

(a)

“ 1933 Act ” means the Securities Act of 1933, as amended.

(b)

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended.

(c)

“ Authorized Person ” means any officer of the Fund and any other person duly authorized by the Fund to give Oral or Written Instructions on behalf of the Fund. An Authorized Person’s scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto.

(d)

“ Book-Entry System ” means the Federal Reserve Treasury book-entry system for United States and federal agency securities, its successor or successors, and its

nominee or nominees and any book-entry system registered with the SEC under the 1934 Act.

(e)

“ CEA ” means the Commodities Exchange Act, as amended.

(f)

“ Oral Instructions ” means oral instructions addressed to PFPC Trust and received by PFPC Trust from an Authorized Person or from a person reasonably believed by PFPC Trust to be an Authorized Person. PFPC Trust may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions.

(g)

“ SEC ” means the Securities and Exchange Commission.

(h)

“ Securities Laws ” means the 1933 Act, the 1934 Act, the 1940 Act and the CEA.

(i)

“ Shares ” means the shares of beneficial interest of any series or class of the Fund.

(j)

“ Property ” means:

(i)

any and all securities and other investment items which the Fund may from time to time deposit, or cause to be deposited, with PFPC Trust or which PFPC Trust may from time to time hold for the Fund;

(ii)

all income in respect of any of such securities or other investment items;

(iii)

all proceeds of the sale of any of such securities or investment items; and

(iv)

all proceeds of the sale of securities issued by the Fund, which are received by PFPC Trust from time to time, from or on behalf of the Fund.

(k)

“ Written Instructions ” means (i) written instructions signed by an Authorized Person (or a person reasonably believed by PFPC Trust to be an Authorized Person) and addressed to and received by PFPC Trust or (ii) trade instructions transmitted to and received by PFPC Trust by means of an electronic transaction reporting system which requires the use of a password or other authorized identifier in order to gain access. Written Instructions may be delivered

electronically (provided that instructions delivered via electronic mail shall be treated as set forth under the definition of “Oral Instructions” above) or by hand, mail or facsimile sending device.

2.	Appointment . The Fund hereby appoints PFPC Trust to provide custodian services to the Fund as set forth herein, on behalf of each of its investment portfolios (each, a “Portfolio”), and PFPC Trust accepts such appointment and agrees to furnish such services.

3.	Compliance with Laws .

In performing its duties as described herein, PFPC Trust will (i) act in a manner not inconsistent with the Fund’s most recent Prospectuses and Statements of Additional Information and all amendments and supplements thereto (as presently in effect and as from time to time amended and supplemented) and resolutions of the Fund’s Board of Trustees of which PFPC Trust is informed by the Fund and (ii) comply with all applicable requirements of the Securities Laws and of any other laws, rules and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by PFPC Trust hereunder. Except as specifically set forth herein, PFPC Trust assumes no responsibility for compliance by the Fund or any other entity.

4.	Instructions .

(a)

Unless otherwise provided in this Agreement, PFPC Trust shall act only upon Oral Instructions or Written Instructions.

(b)

PFPC Trust shall be entitled to reasonably rely upon any Oral Instruction or Written Instruction it receives pursuant to this Agreement.

(c)

The Fund agrees to forward to PFPC Trust Written Instructions confirming Oral Instructions so that PFPC Trust receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by PFPC Trust or differ from the Oral Instructions shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions or PFPC Trust’s ability to rely upon such Oral Instructions.

5.	Right to Receive Advice .

(a)

Advice of the Fund . If PFPC Trust is in doubt as to any action it should or should not take, PFPC Trust may request directions or advice, including Oral Instructions or Written Instructions, from or on behalf of the Fund.

(b)

Advice of Counsel . If PFPC Trust shall be in doubt as to any question of law pertaining to any action it should or should not take, PFPC Trust may request advice at its own cost from counsel of its own choosing (who may be counsel for the Fund, the Fund’s investment adviser or PFPC Trust, at the option of PFPC Trust).

(c)

Conflicting Advice . In the event of a conflict between directions or advice or Oral Instructions or Written Instructions PFPC Trust receives from or on behalf of the Fund, and the advice it receives from counsel pursuant to subparagraph (b) of this Section 5, PFPC Trust shall be entitled to rely upon and follow the advice of counsel.

(d)

Protection of PFPC Trust . PFPC Trust shall be indemnified by the Fund and without liability for any action PFPC Trust takes or does not take in reasonable

reliance upon directions or advice or Oral Instructions or Written Instructions PFPC Trust receives from or on behalf of the Fund or from counsel pursuant to subparagraph (b) of this Section 5, and which PFPC Trust believes, in good faith, to be consistent with those directions or advice or Oral Instructions or Written Instructions. Nothing in this section shall be construed so as to impose an obligation upon PFPC Trust to seek such directions or advice or Oral Instructions or Written Instructions.

Books and Records . The books and records pertaining to the Fund, which are in the possession or under the control of PFPC Trust, shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations and shall, to the extent practicable, be maintained separately for each Portfolio of the Fund. The Fund, Authorized Persons and the Fund’s authorized representatives shall have access to such books and records at all times during PFPC Trust’s normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by PFPC Trust to the Fund or to an authorized representative of the Fund, at the Fund’s expense.

Confidentiality . Each party shall keep confidential any information relating to the other party’s business (“Confidential Information”) and neither party shall use the other party’s Confidential Information for any purpose other than in connection with the performance of this Agreement. Confidential Information shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates,

business plans, and internal performance results relating to the past, present or future business activities of the Fund or PFPC Trust; (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or PFPC Trust a competitive advantage over its competitors; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be subject to the foregoing obligations set forth in this Section 7 if: (a) it was already known to the receiving party at the time it was obtained; (b) it is or becomes publicly known or available through no wrongful act of the receiving party; (c) it was rightfully received from a third party who, to the best of the receiving party’s knowledge, was not under a duty of confidentiality; (d) it is released by the protected party to a third party without restriction; (e) it is required to be disclosed by the receiving party pursuant to a requirement of a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the other party written notice of such requirement, to the extent such notice is permitted); (f) release of such information by PFPC Trust is necessary in connection with the provision of services under this Agreement; (g) it is relevant to the defense of any claim or cause of action asserted against the receiving party; or (h) it has been or is independently developed or obtained by the receiving party.

8.	Cooperation with Accountants . PFPC Trust shall cooperate with the Fund’s independent public accountants and shall take all reasonable action to make all requested

information available to such accountants as reasonably requested by the Fund, including cooperation with respect to the examinations required by Rule 17f-2 under the 1940 Act.

PFPC System . PFPC Trust shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by PFPC Trust in connection with the services provided by PFPC Trust to the Fund.

10.

Disaster Recovery . PFPC Trust shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, PFPC Trust shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. PFPC Trust shall have no liability with respect to the loss of data or service interruptions caused by equipment failure provided such loss or interruption is not caused by PFPC Trust’s own willful misfeasance, bad faith, negligence or reckless disregard of its duties or obligations under this Agreement.

11.

Compensation . As compensation for custody services rendered by PFPC Trust during the term of this Agreement, the Fund will pay to PFPC Trust a fee or fees as may be agreed to in writing from time to time by the Fund and PFPC Trust. The Fund acknowledges that PFPC Trust may receive float benefits in connection with maintaining certain accounts required to provide services under this Agreement.

12.

Indemnification .

(a)

The Fund agrees to indemnify, defend and hold harmless PFPC Trust including its respective officers, directors and employees, from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly from any action or omission to act taken or omitted by or on behalf of PFPC Trust in connection with the provision of services to the Fund, provided that in each case in which indemnification is sought PFPC Trust has not acted contrary to the standard of care set forth in Section 13(a) of this Agreement. PFPC Trust shall not be indemnified against any liability to the Fund or its shareholders (or any expenses incident to such liability) arising out of PFPC Trust’s own willful misfeasance, bad faith, negligence or breach of this Agreement on its part in the performance of its duties under this Agreement. The obligations of each Portfolio under this Section 12(a) shall be the several (and not joint or joint and several) obligation of each Portfolio.

(b)

PFPC Trust agrees to indemnify, defend and hold harmless the Fund including its respective officers, directors and employees, from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, reasonable attorney’s fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky, laws) arising directly or indirectly out of PFPC Trust’s willful misfeasance, bad faith, negligence or

breach of this Agreement on PFPC Trust’s part in the performance of PFPC Trust’s duties under this Agreement.

(c)

The provisions of this Section 12 shall survive termination of this Agreement.

13.

Responsibility of PFPC Trust .

(a)

PFPC Trust shall be under no duty to take any action on behalf of the Fund except as specifically set forth herein or as may be specifically agreed to by PFPC Trust in writing. PFPC Trust shall be obligated to exercise reasonable care and diligence in the performance of its duties hereunder and to act in good faith in performing services provided for under this Agreement. PFPC Trust shall not be liable for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith, negligence or breach of this Agreement on PFPC’s part in the performance of its duties under this Agreement.

(b)

Notwithstanding anything in this Agreement to the contrary, (i) PFPC Trust shall not be liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation acts of God; action or inaction of civil or military authority; public enemy; war; terrorism; riot; fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; insurrection; elements of nature; or non-performance by a third party; and (ii) subject to Section 13(a) of this Agreement, PFPC Trust shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity,

authority or lack thereof, or truthfulness or accuracy or lack thereof, of any instruction, direction, notice or instrument believed by PFPC Trust to be genuine.

(c)

Notwithstanding anything in this Agreement to the contrary, neither PFPC Trust nor its affiliates shall be liable for any consequential, special or indirect losses or damages, whether or not the likelihood of such losses or damages was known by PFPC Trust or its affiliates.

(d)

Notwithstanding anything in this Agreement to the contrary (other than as specifically provided in Section 14(h)(ii)(B)(4) and Section 14(h)(iii)(A) of this Agreement), the Fund shall be responsible for all filings, tax returns and reports on any transactions undertaken pursuant to this Agreement, or in respect of the Property or any collections undertaken pursuant to this Agreement, which may be requested by any relevant authority. In addition, the Fund shall be responsible for the payment of all taxes and similar items (including without limitation penalties and interest related thereto).

(e)

The provisions of this Section 13 shall survive termination of this Agreement.

14.

Description of Services .

(a)

Delivery of the Property . The Fund will deliver or arrange for delivery to PFPC Trust, all the Property owned by the Portfolios, including cash received as a result of the issuance of Shares, during the term of this Agreement. PFPC Trust will not be responsible for any assets until actual receipt.

(b)

Receipt and Disbursement of Money . PFPC Trust, acting upon Written Instructions, shall open and maintain a separate account for each separate Portfolio of the Fund (each an “Account”) and shall maintain in the Account of a

particular Portfolio all Property, cash and other assets received from or for the Fund specifically designated to such Account.

PFPC

Trust shall make cash payments from or for the Account of a Portfolio only for:

(i)

purchases of securities in the name of a Portfolio, PFPC Trust, PFPC Trust’s nominee or a sub-custodian or nominee thereof as provided in sub-section (j) and for which PFPC Trust has received a copy of the broker’s or dealer’s confirmation or payee’s invoice, as appropriate;

(ii)

purchase or redemption of Shares of the Fund delivered to PFPC Trust;

(iii)

payment of, subject to Written Instructions, interest, dividends, taxes (provided that tax which PFPC Trust considers is required to be deducted or withheld “at source” will be governed by Section 14(h)(iii)(B) of this Agreement), administration, accounting, distribution, advisory, management and support services fees and similar expenses which are to be borne by a Portfolio;

(iv)

payment to, subject to receipt of Written Instructions, the Fund’s transfer agent, as agent for the shareholders, of an amount equal to the amount of dividends and distributions stated in the Written Instructions to be distributed in cash by the transfer agent to shareholders, or, in lieu of paying the Fund’s transfer agent, PFPC Trust may arrange for the direct payment of cash dividends and distributions to shareholders in accordance with procedures mutually agreed upon from time to time by and among the Fund, PFPC Trust and the Fund’s transfer agent;

(v)

payments, upon receipt of Written Instructions, in connection with the conversion, exchange or surrender of securities owned or subscribed to by the Fund and held by or delivered to PFPC Trust;

(vi)

payments of the amounts of dividends received with respect to securities sold short;

(vii)

payments made to a sub-custodian; and

(viii)

other payments, upon Written Instructions.

PFPC Trust is hereby authorized to endorse and collect all checks, drafts, negotiable instruments or other orders for the payment of money received as custodian for the Accounts.

(c)

Receipt of Securities; Subcustodians .

(i)

PFPC Trust shall hold all securities and non-cash Property received by it for the Accounts in a separate account that physically segregates such securities and non-cash Property from those of any other persons, firms or corporations, except for securities held in a Book-Entry System or through a sub-custodian or depository. All such securities and non-cash Property shall be held or disposed of only upon Written Instructions or otherwise pursuant to the terms of this Agreement. PFPC Trust shall have no power or authority to withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any such securities or investment, except upon the express terms of this Agreement or upon Written Instructions authorizing the transaction. In no case may any member of the Fund’s Board of Trustees or any officer, employee or agent of the Fund withdraw any securities.

(ii)

At PFPC Trust’s own expense and for its own convenience, PFPC Trust may enter into sub-custodian agreements with other banks or trust companies to perform duties with respect to domestic assets. Such bank or trust company shall have aggregate capital, surplus and undivided profits, according to its last published report, of at least one million dollars ($1,000,000), if it is a subsidiary or affiliate of PFPC Trust, or at least twenty million dollars ($20,000,000) if such bank or trust company is not a subsidiary or affiliate of PFPC Trust. In addition, such bank or trust company must be qualified to act as custodian and agree to comply with the relevant provisions of the 1940 Act and all applicable rules and regulations. Any such arrangement will not be entered into without prior written notice to the Fund (or as otherwise provided in the 1940 Act).

In addition, PFPC Trust may enter into arrangements with sub-custodians with respect to services regarding foreign assets. Any such arrangement will not be entered into without prior written notice to the Fund (or as otherwise provided in the 1940 Act).

PFPC Trust shall remain responsible for the acts and omissions of any sub-custodian chosen by PFPC Trust under the terms of this sub-section (c) to the same extent that PFPC Trust is responsible for its own acts and omissions under this Agreement.

(d)

Transactions Requiring Instructions . Upon receipt of Oral Instructions or Written Instructions and not otherwise, PFPC Trust shall:

(i)

deliver any securities held for a Portfolio against the receipt of payment for the sale of such securities or otherwise in accordance with standard market practice;

(ii)

execute and deliver to such persons as may be designated in such Oral Instructions or Written Instructions, proxies, consents, authorizations, and any other instruments received by PFPC Trust as custodian of the Property whereby the authority of a Portfolio as owner of any securities may be exercised;

(iii)

deliver any securities to the issuer thereof, or its agent, when such securities are called, redeemed, retired or otherwise become payable at the option of the holder; provided that, in any such case, the cash or other consideration is to be delivered to PFPC Trust;

(iv)

deliver any securities held for a Portfolio against receipt of other securities or cash issued or paid in connection with the liquidation, reorganization, refinancing, tender offer, merger, consolidation or recapitalization of any corporation, or the exercise of any conversion privilege;

(v)

deliver any securities held for a Portfolio to any protective committee, reorganization committee or other person in connection with the reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation, and receive and hold under the terms of this Agreement such certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery;

(vi)

make such transfer or exchanges of the assets of the Portfolios and take such other steps as shall be stated in said Oral Instructions or Written Instructions to be for the purpose of effectuating a duly authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund;

(vii)

release securities belonging to a Portfolio to any bank or trust company for the purpose of a pledge or hypothecation to secure any loan incurred by the Fund on behalf of that Portfolio; provided, however, that securities shall be released only upon payment to PFPC Trust of the monies borrowed, except that in cases where additional collateral is required to secure a borrowing already made, subject to proper prior authorization, further securities may be released for that purpose; and repay such loan upon redelivery to it of the securities pledged or hypothecated therefor and upon surrender of the note or notes evidencing the loan;

(viii)

release and deliver securities owned by a Portfolio in connection with any repurchase agreement entered into on behalf of that Portfolio, but only on receipt of payment therefor; and pay out monies of the Portfolio in connection with such repurchase agreements, but only upon the delivery of the securities;

(ix)

release and deliver or exchange securities owned by a Portfolio in connection with any conversion of such securities, pursuant to their terms, into other securities;

(x)

release and deliver securities to a broker in connection with the broker’s custody of margin collateral relating to futures and options transactions;

(xi)

release and deliver securities owned by the Fund for the purpose of redeeming in kind shares of the Fund upon delivery thereof to PFPC Trust; and

(xii)

release and deliver or exchange securities owned by the Fund for other purposes in accordance with Oral or Written Instructions.

(e)

Use of Book-Entry System or Other Depository . PFPC Trust will deposit in Book-Entry Systems and other securities depositories all securities belonging to the Portfolios eligible for deposit therein and will utilize Book-Entry Systems and other securities depositories to the extent possible in connection with settlements of purchases and sales of securities by the Portfolios, and deliveries and returns of securities loaned, subject to repurchase agreements or used as collateral in connection with borrowings. PFPC Trust shall continue to perform such duties until it receives Written Instructions or Oral Instructions authorizing contrary actions. Notwithstanding anything in this Agreement to the contrary, PFPC Trust’s use of a Book-Entry System shall comply with the requirements of Rule 17f-4 under the 1940 Act.

PFPC Trust shall administer a Book-Entry System or other securities depository as follows:

(i)

With respect to securities of each Portfolio which are maintained in a Book-Entry System or another securities depository, the records of PFPC Trust shall identify by book-entry or otherwise those securities as belonging to each Portfolio.

(ii)

Assets of each Portfolio deposited in a Book-Entry System or another securities depository will (to the extent consistent with applicable law and standard practice) at all times be segregated from any assets and cash

controlled by PFPC Trust in other than a fiduciary or custodian capacity but may be commingled with other assets held in such capacities.

PFPC Trust will provide the Fund with such reports on its own system of internal control as the Fund may reasonably request from time to time. In addition, PFPC Trust will provide the Fund with copies of any report obtained by PFPC Trust on the system of internal accounting control of the Book-Entry System promptly after receipt of such a report by PFPC Trust.

(f)

Registration of Securities . All securities held for a Portfolio which are issued or issuable only in bearer form, except such securities maintained in the Book-Entry System or in another depository, shall be held by PFPC Trust in bearer form; all other securities maintained for a Portfolio may be registered in the name of the Fund on behalf of that Portfolio, PFPC Trust, a Book-Entry System, another depository, a sub-custodian, or any duly appointed nominee of the Fund, PFPC Trust, Book-Entry System, depository or sub-custodian. The Fund reserves the right to instruct PFPC Trust as to the method of registration and safekeeping of the securities of the Fund. The Fund agrees to furnish to PFPC Trust appropriate instruments to enable PFPC Trust to maintain or deliver in proper form for transfer, or to register in the name of its nominee or in the name of the Book-Entry System or in the name of another appropriate entity, any securities which it may maintain for the Accounts. With respect to uncertificated securities which are registered in the name of the Fund or a Portfolio (or a nominee thereof), PFPC Trust will reflect such securities on its records based upon the holdings information provided to it by the issuer of such securities, but notwithstanding anything in this Agreement to the contrary PFPC Trust shall not be obligated to

safekeep such securities or to perform other duties with respect to such securities other than to make payment for the purchase of such securities upon receipt of Oral or Written Instructions, accept in sale proceeds received by PFPC Trust upon the sale of such securities of which PFPC Trust is informed pursuant to Oral or Written Instructions, and accept in other distributions received by PFPC Trust with respect to such securities or reflect on its records any reinvested distributions with respect to such securities of which it is informed by the issuer of the securities.

(g)

Voting and Other Action . Neither PFPC Trust nor its nominee shall vote any of the securities held pursuant to this Agreement by or for the account of a Portfolio, except in accordance with Written Instructions. PFPC Trust, directly or through the use of another entity, shall execute in blank and promptly deliver all notices, proxies and proxy soliciting materials received by PFPC Trust as custodian of the .Property to the registered holder of such securities. If the registered holder is not the Fund on behalf of a Portfolio, then Written Instructions or Oral Instructions must designate the person who owns such securities.

(h)

Transactions Not Requiring Instructions . Notwithstanding anything in this Agreement requiring instructions in order to take a particular action and in the absence of a contrary Written Instruction, PFPC Trust is authorized to take the following actions without the need for instructions:

(i)

Collection of Income and Other Payments . PFPC Trust is authorized to and shall:

(A)

collect and receive for the account of each Portfolio, all income, dividends (including stock dividends), distributions, coupons

(including bond coupons), rights, option premiums, other payments and similar items, included or to be included in the Property, and, in addition, promptly advise each Portfolio of such receipt and credit such income to the applicable Portfolio’s custodian account;

(B)

endorse and deposit for collection, in the name of the applicable Portfolio of the Fund, checks, drafts, negotiable instruments or other orders for the payment of money on the same day as received;

(C)

receive and hold for the account of each Portfolio all securities received as a distribution on the Portfolio’s securities as a result of a stock dividend, share split-up or reorganization, recapitalization, readjustment or other rearrangement or distribution of rights or similar securities issued with respect to any securities belonging to a Portfolio and held by PFPC Trust hereunder;

(D)

present for payment and collect the amount payable upon all securities which may mature or be called, redeemed, retired or otherwise become payable (on a mandatory basis) on the date such securities become payable; and

(E)

take any action which may be reasonably necessary and proper in connection with the collection and receipt of such income and other payments and the endorsement for collection of checks, drafts, and other negotiable instruments, including as described in subparagraph (n) of this Section 14.

(ii)

Miscellaneous Transactions .

(A)

PFPC Trust is authorized to deliver or cause to be delivered Property against payment or other consideration or written receipt therefor in the following cases:

(1)

for examination by a broker or dealer selling for the account of a Portfolio in accordance with street delivery custom;

(2)

for the exchange of interim receipts or temporary securities for definitive securities; and

(3)

for transfer of securities into the name of the Fund on behalf of a Portfolio or PFPC Trust or a sub-custodian or a nominee of one of the foregoing, or for exchange of securities for a different number of bonds, certificates, or other evidence, representing the same aggregate face amount or number of units bearing the same interest rate,

maturity date and call provisions, if any; provided that, in any such case, the new securities are to be delivered to PFPC Trust.

(B)

PFPC Trust shall:

(1)

pay all income items held by it which call for payment upon presentation, and hold the cash received by it upon such payment for the account of each Portfolio;

(2)

collect interest and cash dividends received, with notice to the Fund, to the account of each Portfolio;

(3)

hold for the account of each Portfolio all stock dividends, rights and similar securities issued with respect to any securities held by PFPC Trust; and

(4)

subject to receipt of such documentation and information as PFPC Trust may request, execute as agent on behalf of the Fund all necessary ownership certificates required by a national governmental taxing authority or under the laws of any U.S. state now or hereafter in effect, inserting the Fund’s name, on behalf of a Portfolio, on such certificate as the owner of the securities covered thereby, to the extent it may lawfully do so.

(iii)

Other Matters .

(A)

subject to receipt of such documentation and information as PFPC Trust may request, PFPC Trust will, in such jurisdictions as PFPC Trust may agree from time to time, seek to reclaim or obtain a reduction with respect to any withholdings or other taxes relating to assets maintained hereunder (provided that PFPC Trust will not be liable for failure to obtain any particular relief in a particular jurisdiction);

(B)

PFPC Trust is authorized to deduct or withhold any sum in respect of tax which PFPC Trust considers is required to be deducted or withheld “at source” by any relevant law or practice; and

(C)

PFPC Trust is authorized to release assets pursuant to any securities lending agreement to which the Fund and PFPC Trust are parties.

(i)

Segregated Accounts .

(i)

PFPC Trust shall upon receipt of Written Instructions or Oral Instructions establish and maintain segregated accounts on its records for and on behalf of each Portfolio. Such accounts may be used to transfer cash and securities, including securities in a Book-Entry System or other depository:

(A)

for the purposes of compliance by the Fund with the procedures required by a securities or option exchange, providing such procedures comply with the 1940 Act and any releases of the SEC relating to the maintenance of segregated accounts by registered investment companies; and

(B)

upon receipt of Written Instructions, for other purposes.

(ii)

PFPC Trust may upon agreement of the Fund and PFPC Trust arrange for the establishment of IRA custodian accounts for such shareholders holding Shares through IRA accounts, in accordance with the Fund’s prospectuses, the Internal Revenue Code of 1986, as amended (including regulations promulgated thereunder), and with such other procedures as are mutually agreed upon from time to time by and among the Fund, PFPC Trust and the Fund’s transfer agent.

(j)

Purchases of Securities . PFPC Trust shall settle purchased securities upon receipt of Oral Instructions or Written Instructions that specify:

(i)

the name of the issuer and the title of the securities, including CUSIP number if applicable;

(ii)

the number of shares or the principal amount purchased and accrued interest, if any;

(iii)

the date of purchase and date and location of settlement;

(iv)

the purchase price per unit;

(v)

the total amount payable upon such purchase;

(vi)

the Portfolio involved; and

(vii)

the name of the person from whom or the broker through whom the purchase was made. PFPC Trust shall upon receipt of securities purchased by or for a Portfolio (or otherwise in accordance with standard market practice) pay out of the monies held for the account of the Portfolio the total amount payable to the person from whom or the broker through whom the purchase was made, provided that the same conforms to the

total amount payable as set forth in such Oral Instructions or Written Instructions.

(k)

Sales of Securities . PFPC Trust shall settle sold securities upon receipt of Oral Instructions or Written Instructions that specify:

(i)

the name of the issuer and the title of the security, including CUSIP number if applicable;

(ii)

the number of shares or principal amount sold, and accrued interest, if any;

(iii)

the date of trade and settlement;

(iv)

the sale price per unit;

(v)

the total amount payable to the Fund upon such sale;

(vi)

the name of the broker through whom or the person to whom the sale was made;

(vii)

the location to which the security must be delivered and delivery deadline, if any; and

(viii)

the Portfolio involved.

PFPC Trust shall deliver the securities upon receipt of the total amount payable to the Portfolio upon such sale, provided that the total amount payable is the same as was set forth in the Oral Instructions or Written Instructions. Notwithstanding anything to the contrary in this Agreement, PFPC Trust may accept payment in such form as is consistent with standard market practice and may deliver assets and arrange for payment in accordance with standard market practice.

(l)

Reports; Proxy Materials .

(i)

PFPC Trust shall furnish to the Fund the following reports:

(A)

such periodic and special reports as the Fund may reasonably request;

(B)

a monthly statement summarizing all transactions and entries for the account of each Portfolio, listing the portfolio securities

belonging to each Portfolio (with the corresponding security identification number) held at the end of such month and stating the cash balance, including disbursements, of each Portfolio at the end of such month;

(C)

the reports required to be furnished to the Fund pursuant to Rule 17f-4 under the 1940 Act; and

(D)

such other information as may be agreed upon from time to time between the Fund and PFPC Trust.

(ii)

PFPC Trust shall transmit promptly to the Fund any proxy statement, proxy materials, notice of a call or conversion or similar communication received by it as custodian of the Property. Upon termination of this Agreement PFPC Trust shall have no responsibility to transmit such materials, notices or other similar communications.

(m)

Crediting of Accounts . PFPC Trust may in its sole discretion credit an Account with respect to income, dividends, distributions, coupons, option premiums, other payments or similar items prior to PFPC Trust’s actual receipt thereof, and in addition PFPC Trust may in its sole discretion credit or debit the assets in an Account on a contractual settlement date with respect to any sale, exchange or purchase applicable to the Account; provided that nothing in this Agreement or otherwise shall require PFPC Trust to make any advances or to credit any amounts until PFPC Trust’s actual receipt thereof. If PFPC Trust has credited an Account with respect to (a) income, dividends, distributions, coupons, option premiums, other payments or similar items on a contractual payment date or otherwise in advance of PFPC Trust’s actual receipt of the amount due, (b) the proceeds of any sale or other disposition of assets on the contractual settlement date or otherwise in advance of PFPC Trust’s actual receipt of the amount due or

(c) provisional crediting of any amounts due, and (i) PFPC Trust is subsequently unable to collect full and final payment for the amounts so credited within a reasonable time period using reasonable efforts or (ii) pursuant to standard industry practice, law or regulation PFPC Trust is required to repay to a third party such amounts so credited, or if any Property has been incorrectly credited, PFPC Trust shall have the absolute right in its sole discretion without demand to reverse any such credit or payment, to debit or deduct the amount of such credit or payment from the Account, and to otherwise pursue recovery of any such amounts so credited from the Fund. The Fund hereby grants a first priority contractual possessory security interest in and a right of setoff against the assets maintained in an Account under this Agreement to PFPC Trust or to any sub-custodian which makes an advance or credit with respect to such Account, in the amount necessary to secure the return and payment to PFPC Trust or to any such sub-custodian of any advance or credit made by PFPC Trust (including charges related thereto) with respect to such Account. PFPC Trust may, without a requirement to notify or obtain consent of the Fund, assign any of its rights under this Section 14(m) to a sub-custodian.

(n)

Collections . All collections of monies or other property in respect, or which are to become part, of the Property (but not the safekeeping thereof upon receipt by PFPC Trust) shall be at the sole risk of the Fund. If payment is not received by PFPC Trust within a reasonable time after proper demands have been made by PFPC Trust, PFPC Trust shall notify the Fund in writing, including copies of all demand letters, any written responses and memoranda of all oral responses thereto

and shall await instructions from the Fund. PFPC Trust shall not be obliged to take legal action for collection unless and until reasonably indemnified to its satisfaction. PFPC Trust shall also notify the Fund as soon as reasonably practicable whenever income due on securities is not collected in due course and shall provide the Fund with periodic status reports of such income collected after a reasonable time.

(o)

Foreign Exchange . PFPC Trust and/or sub-custodians may enter into or arrange foreign exchange transactions (at such rates as they may consider appropriate) in order to facilitate transactions under this Agreement, and such entities and/or their affiliates may receive compensation in connection with such foreign exchange transactions. Any foreign exchange transactions with affiliates of the Fund shall be subject to the applicable requirements of the 1940 Act.

(p)

Regulatory Requests . PFPC Trust will provide information and documentation relating to the Fund or other assistance relating to such information and documentation as the Fund may reasonably request to help the Fund respond to any government or regulatory request, including but not limited to a subpoena or request for information, provided, however, that if responding to such a request would cause an undue burden on PFPC Trust or would cause PFPC Trust to bear undue expense, PFPC Trust at its option may decline such request or shall be entitled to such fees or reimbursement of expense as agreed to by the Fund and PFPC Trust.

(q)

Fund Information Requests . PFPC Trust will provide such information relating to the Fund as the Fund may reasonably request in connection with the services

provided by PFPC Trust to the Fund pursuant to this Agreement, provided, however, that if responding to such a request would cause an undue burden on PFPC Trust or would cause PFPC Trust to bear undue expense, PFPC Trust at its option may decline such request or shall be entitled to such fees or reimbursement of expense as agreed to by the Fund and PFPC Trust.

(r)

Other Services . PFPC Trust will provide such additional services to the Fund pursuant to this Agreement as shall be agreed in writing between the Fund and PFPC Trust from time to time.

15.

Duration and Termination . This Agreement shall continue in effect for a term of three years commencing as of the date hereof, and at the end of such three-year period shall automatically continue for successive one-year terms, provided, that the Fund’s Board of Trustees (“Board”) shall review this Agreement from time to time and at least annually in reference to the terms and conditions specifically set forth below in clauses (a)(i) to (iii) of this Section 15. Notwithstanding the above, this Agreement may be terminated:

(a)

during the first three years, without the payment of penalty for such termination:

(i)

by the Fund, on ninety (90) days prior written notice, as may be required by and consistent with the Board’s fiduciary obligations under the 1940 Act in connection with any annual review; however, in connection with such review of this Agreement by the Board, the Board acknowledges the fees to be received by PFPC Trust hereunder are fair and reasonable for a three-year term; or

(ii)

by the Fund, on sixty (60) days prior written notice, if PFPC Trust is in material breach of this Agreement and PFPC Trust has not remedied such breach within such sixty (60) day period; or

(iii)

by the Fund, on sixty (60) days prior written notice, if PFPC Trust:

(1)

enters into a transaction that would result in a change of control of greater than 50% of the beneficial ownership of the shares of beneficial interest of PFPC Trust, other than any such change of control where the Board determines the successor entity has similar financial standing and ability to provide services hereunder as PFPC Trust; or

(2)

files a petition for bankruptcy, or another comparable filing by PFPC Trust has occurred; or

(3)

has a materially impaired financial condition; or

(4)

has a significant regulatory problem or is the subject of a significant regulatory investigation; and

in the case of subsections (1) through (4) above, the Board determines in the exercise of its fiduciary obligations under the 1940 Act that such event materially impairs PFPC Trust’s ability to perform its duties under this Agreement; or

(iv)

by PFPC Trust, on one hundred fifty (150) days prior written notice, if the Fund is in material breach of the Agreement; and

(b)

any time after the first three years, without the payment of any penalty, on ninety (90) days prior written notice by the Fund or on one hundred fifty (150) days prior written notice by PFPC Trust.

In the event of termination by the Fund pursuant to Sections 15(a)(i) or (b) or by PFPC Trust after a material breach of this Agreement by the Fund, all expenses (which shall not be deemed a penalty) associated with movement (or duplication) of records and materials, deconversion and conversion to a successor custodian or other service provider incurred by PFPC Trust, will be borne by the Fund.

During the first three years commencing as of the date hereof, BlackRock Advisors, Inc. will not recommend termination of this Agreement provided such action or inaction by BlackRock Advisors, Inc. is not contrary to its fiduciary obligations to the Fund.

In the event this Agreement is terminated (pending appointment of a successor to PFPC Trust or vote of the shareholders of the Fund to dissolve or to function without a custodian of its cash, securities or other property), PFPC Trust shall not deliver cash, securities or other Property of the Portfolios to the Fund. It may deliver them to a bank or trust company of PFPC Trust’s choice, having aggregate capital, surplus and undivided profits, as shown by its last published report, of not less than twenty million dollars ($20,000,000), as a custodian for the Fund to be held under terms similar to those of this Agreement. PFPC Trust shall not be required to make any delivery or payment of assets upon termination until full payment shall have been made to PFPC Trust of all of its fees, compensation, costs and expenses. PFPC Trust shall have a first priority contractual possessory security interest in and shall have a right of setoff against the Property as security for the payment of its fees, compensation, costs and expenses.

16.

Notices . Notices shall be addressed (a) if to PFPC Trust, at 8800 Tinicum Boulevard, 3rd Floor, Philadelphia, Pennsylvania 19153, Attention: Sam Sparhawk; (b) if to the Fund, at , Attention: ; or (c) if to neither of the foregoing, at such other address as shall have been given by like notice to the sender of any such notice or other communication by the other party. If notice is sent by confirming electronic delivery, hand or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered.

17.

Amendments . This Agreement, or any term hereof, may be changed or waived only by a written amendment, signed by the party against whom enforcement of such change or waiver is sought.

18.

Assignment . PFPC Trust may assign this Agreement to any affiliate of PFPC Trust or of The PNC Financial Services Group, Inc., provided that PFPC Trust obtains the Fund’s prior written consent to such assignment.

19.

Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

20.

Miscellaneous .

(a)

embody in one or more separate documents their agreement, if any, with respect to delegated duties.

(b)

No Representations or Warranties . Except as expressly provided in this Agreement, PFPC Trust hereby disclaims all representations and warranties, express or implied, made to the Fund or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided under this Agreement. PFPC Trust disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.

(c)

No Changes that Materially Affect Obligations . Notwithstanding anything in this Agreement to the contrary, the Fund agrees that no modifications to its registration statement and no policies which it may adopt or resolutions which the Board may adopt will affect materially the obligations or responsibilities of PFPC Trust hereunder without the prior written approval of PFPC Trust, which approval shall not be unreasonably withheld or delayed.

(d)

Captions . The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(e)

Information . The Fund will provide such information and documentation as PFPC Trust may reasonably request in connection with services provided by PFPC Trust to the Fund.

(f)

Governing Law . This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law, without regard to principles of conflicts of law.

(g)

Partial Invalidity . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. Notwithstanding the foregoing sentence, if any provision of this Agreement relating directly or indirectly to the term of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the parties shall immediately negotiate in good faith in order to agree upon a new provision which is either (i) economically equivalent to the invalid provision or (ii) acceptable to the party adversely affected by the invalidity of the prior provision.

(h)

Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

(i)

Facsimile Signatures . The facsimile signature of any party to this Agreement shall constitute the valid and binding execution hereof by such party.

(j)

Customer Identification Program Notice . To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Consistent with this requirement, PFPC Trust may request (or may have already requested) the Fund’s name, address and

taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that party’s date of birth. PFPC Trust may also ask (and may have already asked) for additional identifying information, and PFPC Trust may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.

(k)

Liability of Trustees, Etc . The names “BlackRock Bond Allocation Target Shares” and “Trustees of BlackRock Bond Allocation Target Shares” refer specifically to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under a Declaration of Trust dated November 17, 2003, which is hereby referred to and a copy of which is on file at the office of the State Secretary of the State of Delaware and at the principal office of the Fund. The obligations of “BlackRock Bond Allocation Target Shares” entered into in the name or on behalf thereof by any of the Trustees, officers, representatives or agents are not made individually, but in such capacities, and are not binding upon any of the Trustees, officers, shareholders, representatives or agents of the Fund personally, but bind only the Fund’s assets, and all persons dealing with any class of shares of the Fund must look solely to the assets belonging to such class for the enforcement of any claims against the Fund.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of , 2004.


PFPC TRUST COMPANY

By:

Title:

BLACKROCK BOND ALLOCATION TARGET SHARES

By:

Title:

By executing this joinder to this Agreement, BlackRock Advisors, Inc. hereby agrees to be bound by all of the terms, provisions, covenants and obligations set forth in Section 15 of this Agreement.


BLACKROCK ADVISORS, INC.

By:

Title:

Exhibit (h)(1)

TRANSFER AGENCY AGREEMENT

THIS AGREEMENT is made as of this day of September, 2004 by and between PFPC INC., a Massachusetts corporation (“PFPC”), and BLACKROCK BOND ALLOCATION TARGET SHARES, a Delaware business trust (the “Fund”).

W I T N E S S E T H:

WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Fund wishes to retain PFPC to serve as transfer agent, registrar, dividend disbursing agent and shareholder servicing agent to its investment portfolios listed on Exhibit A attached hereto and made a part hereof, as such Exhibit A may be amended from time to time (each a “Portfolio”), and PFPC wishes to furnish such services as more fully described herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Definitions. As Used in this Agreement :

(a)

“ 1933 Act ” means the Securities Act of 1933, as amended.

(b)

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended.

(c)

“ Authorized Person ” means any officer of the Fund and any other person duly authorized by the Fund to give Oral Instructions or Written Instructions on behalf of the Fund. An Authorized Person’s scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto.

(d)

“ CEA ” means the Commodities Exchange Act, as amended.

(e)

“ Oral Instructions ” means oral instructions addressed to PFPC and received by PFPC from an Authorized Person or from a person reasonably believed by PFPC

to be an Authorized Person. PFPC may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions.

(f)

“ SEC ”, means the Securities and Exchange Commission.

(g)

“ Securities Laws ” means the 1933 Act, the 1934 Act, the 1940 Act and the CEA.

(h)

“ Shares ” means the shares of beneficial interest of any series or class of the Fund.

(i)

“ Written Instructions ” means (i) written instructions signed by an Authorized Person (or a person reasonably believed by PFPC to be an Authorized Person) and addressed to and received by PFPC or (ii) trade instructions transmitted to and received by PFPC by means of an electronic transaction reporting system which requires use of a password or other authorized identifier in order to gain access. Written Instructions may be delivered by hand, mail, tested telegram, cable, telex or facsimile sending device.

2. Appointment . The Fund hereby appoints PFPC to serve as transfer agent, registrar, dividend disbursing agent and shareholder servicing agent to the Fund in accordance with the terms set forth in this Agreement. PFPC accepts such appointment and agrees to furnish such services.

3. Compliance with Laws . In performing its duties as described herein, PFPC will (i) act in a manner not inconsistent with the Fund’s most recent Prospectuses and Statements of Additional Information and all amendments and supplements thereto (as presently in effect and as from time to time amended and supplemented) and resolutions of the Fund’s Board of Trustees of which PFPC is informed by the Fund and (ii) will comply with all applicable requirements of the Securities Laws and of any other laws, rules and regulations of governmental

authorities having jurisdiction with respect to the duties to be performed by PFPC hereunder. Except as specifically set forth herein, PFPC assumes no responsibility for compliance by the Fund or any other entity.

4. Instructions .

(a)

Unless otherwise provided in this Agreement, PFPC shall act only upon Oral Instructions or Written Instructions.

(b)

PFPC shall be entitled to reasonably rely upon any Oral Instruction or Written Instruction it receives pursuant to this Agreement.

(c)

The Fund agrees to forward to PFPC Written Instructions confirming Oral Instructions so that PFPC receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by PFPC or differ from the Oral Instructions shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions or PFPC’s ability to rely upon such Oral Instructions.

5. Right to Receive Advice .

(a)

Advice of the Fund . If PFPC is in doubt as to any action it should or should not take, PFPC may request directions or advice, including Oral Instructions or Written Instructions, from or on behalf of the Fund.

(b)

Advice of Counsel . If PFPC shall be in doubt as to any question of law pertaining to any action it should or should not take, PFPC may request advice at its own cost from counsel of its own choosing (who may be counsel for the Fund, the Fund’s investment adviser or PFPC, at the option of PFPC).

(c)

Conflicting Advice . In the event of a conflict between directions or advice or Oral Instructions or Written Instructions PFPC receives from or on behalf of the Fund, and the advice it receives from counsel pursuant to Section 5(b), PFPC may rely upon and follow the advice of counsel.

(d)

Protection of PFPC . PFPC shall be indemnified by the Fund and without liability for any action PFPC takes or does not take in reasonable reliance upon directions or advice or Oral Instructions or Written Instructions PFPC receives from or on behalf of the Fund or from counsel pursuant to paragraph (b) of this Section 5 and which PFPC believes, in good faith, to be consistent with those directions or advice or Oral Instructions or Written Instructions. Nothing in this Section 5 shall be construed so as to impose an obligation upon PFPC to seek such directions or advice or Oral Instructions or Written Instructions.

6. Books and Records . The books and records pertaining to the Fund, which are in the possession or under the control of PFPC, shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. Such books and records shall, to the extent practicable, be maintained separately for each Portfolio of the Fund. The Fund, Authorized Persons and the Fund’s authorized representatives shall have access to such books and records at all times during PFPC’s normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by PFPC to the Fund or to an authorized representative of the Fund, at the Fund’s expense.

7. Confidentiality .

(a)

Each party shall keep confidential any information relating to the other party’s business (“Confidential Information”) and neither party shall use the other party’s Confidential Information for any purpose other than in connection with the performance of this Agreement. Confidential Information shall include:

(i)

any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Fund or PFPC;

(ii)

any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or PFPC a competitive advantage over its competitors;

(iii)

all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and

(iv)

anything designated as confidential.

(b)

Notwithstanding the foregoing, information shall not be subject to the foregoing obligations set forth in this Section 7 if:

(i)

it was already known to the receiving party at the time it was obtained;

(ii)

it is or becomes publicly known or available through no wrongful act of the receiving party;

(iii)

it was rightfully received from a third party who, to the best of the receiving party’s knowledge, was not under a duty of confidentiality;

(iv)

it is released by the protected party to a third party without restriction;

(v)

it is required to be disclosed by the receiving party pursuant to a requirement of a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the other party written notice of such requirement, to the extent such notice is permitted);

(vi)

release of such information by PFPC is necessary in connection with the provision of services under this Agreement;

(vii)

it is relevant to the defense of any claim or cause of action asserted against the receiving party; or

(viii)

it has been or is independently developed or obtained by the receiving party.

8. Cooperation with Accountants . PFPC shall cooperate with the Fund’s independent public accountants and shall take all reasonable actions in the performance of its obligations under this Agreement to ensure that the necessary information is made available to such accountants for the expression of their opinion, as reasonably required by the Fund from time to time.

9. PFPC System . PFPC shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by PFPC in connection with the services provided by PFPC to the Fund. Notwithstanding the foregoing, the parties acknowledge that the Fund shall retain all ownership rights in Fund data which resides on the PFPC System.

10. Disaster Recovery . PFPC shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, PFPC shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. PFPC shall have no liability with respect to the loss of data or service interruptions caused by equipment failure provided such loss or interruption is not caused by PFPC’s own willful misfeasance, bad faith, negligence or reckless disregard of its duties or obligations under this Agreement.

11. Compensation . As compensation for services rendered by PFPC during the term of this Agreement, the Fund will pay to PFPC a fee or fees as may be agreed to in writing from

time to time by the Fund and PFPC. The Fund acknowledges that PFPC may receive float benefits and/or investment earnings in connection with maintaining certain accounts required to provide services under this Agreement.

12. Indemnification .

(a)

The Fund agrees to indemnify, defend and hold harmless PFPC and its affiliates, including their respective officers, directors and employees, from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly from any action or omission to act taken or omitted by or on behalf of PFPC in connection with the provision of services to the Fund, provided that in each case in which indemnification is sought PFPC has not acted contrary to the standard of care set forth in Section 13(a) of this Agreement. Neither PFPC, nor any of its affiliates, shall be indemnified against any liability to the Fund or its shareholders (or any expenses incident to such liability) arising out of PFPC’s or its affiliates’ own willful misfeasance, bad faith, negligence or breach of this Agreement on its part in the performance of its duties under this Agreement, provided that in the absence of a finding to the contrary the acceptance, processing and/or negotiation of a fraudulent payment for the purchase of Shares shall be presumed not to have been the result of PFPC’s or its affiliates’ own willful misfeasance, bad faith, negligence or breach of this Agreement. The obligations of each Portfolio under this Section 12(a) shall be the several (and not joint or joint and several) obligation of each Portfolio.

(b)

PFPC agrees to indemnify, defend and hold harmless the Fund and its affiliates, including their respective officers, directors and employees, from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, reasonable attorney’s fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly out of PFPC’s willful misfeasance, bad faith, negligence or breach of this Agreement on its part in the performance of PFPC’s duties under this Agreement.

(c)

The provisions of this Section 12 shall survive termination of this Agreement.

13. Responsibility of PFPC .

(a)

PFPC shall be under no duty to take any action on behalf of the Fund except as specifically set forth herein or as may be specifically agreed to by PFPC in writing. PFPC shall be obligated to exercise reasonable care and diligence in the performance of its duties hereunder and to act in good faith in performing services provided for under this Agreement. PFPC shall not be liable for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith, negligence or breach of this Agreement on PFPC’s part in the performance of its duties under this Agreement.

(b)

Notwithstanding anything in this Agreement to the contrary, (i) PFPC shall not be responsible or liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation acts of God; action or inaction of civil or

military authority; public enemy; war; terrorism; riot; fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; insurrection; elements of nature; or non-performance by a third party; (ii) PFPC shall be responsible (pursuant to the standard of care set forth in Section 13(a) of this Agreement) for the accuracy of files containing monthly statement information or other information (if any) that PFPC is required to produce and provide electronically to the Fund pursuant to this Agreement, but in no event shall PFPC be responsible or liable for the accuracy or inaccuracy of any subsequent indexing and presentation by any entity other than PFPC of such monthly statement information or other information or for any subsequent data integrity errors in such monthly statement information or other information; and (iii) subject to Section 13(a) of this Agreement, PFPC shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity, authority or lack thereof, or truthfulness or accuracy or lack thereof, of any instruction, direction, notice or instrument believed by PFPC to be genuine.

(c)

Notwithstanding anything in this Agreement to the contrary, neither PFPC nor its affiliates shall be liable for any consequential, special or indirect losses or damages, whether or not the likelihood of such losses or damages was known by PFPC or its affiliates.

(d)

The provisions of this Section 13 shall survive termination of this Agreement.

14. Description of Services .

(a)

Services Provided on an Ongoing Basis, If Applicable .

(i)

Calculate 12b-1 payments;

(ii)

Maintain shareholder registrations;

(iii)

Review new applications and correspond with shareholders to complete or correct information;

(iv)

Direct payment processing of checks or wires;

(v)

Prepare and certify stockholder lists in conjunction with proxy solicitations;

(vi)

Countersign share certificates;

(vii)

Prepare and mail to shareholders confirmation of activity;

(viii)

Calculate front-end sales charges and deferred sales charges payable in connection with the purchase of Series A Investor Class Shares and Series B Investor Class Shares, respectively, and provide for the payment of all such sales charges to or on behalf of the Fund’s distributor (unless otherwise instructed by the Fund or the Fund’s distributor);

(ix)

Provide toll-free lines for direct shareholder use, plus customer liaison staff for on-line inquiry response;

(x)

Mail duplicate confirmations to broker-dealers of their clients’ activity, whether executed through the broker-dealer or directly with PFPC;

(xi)

Provide periodic shareholder lists and statistics to the Fund;

(xii)

Provide detailed data for underwriter/broker confirmations in accordance with such procedures as may be agreed between the Fund and PFPC;

(xiii)

Prepare periodic mailing of year-end tax and statement information;

(xiv)

Notify on a timely basis the investment adviser, accounting agent, and custodian of fund activity;

(xv)

Perform other participating broker-dealer shareholder services as agreed upon from time to time;

(xvi)

Accept and post daily Share purchases and redemptions;

(xvii)

Accept, post and perform shareholder transfers and exchanges;

(xviii)

Issue and cancel certificates (when requested in writing by the shareholder); and

(xix)

Upon reasonable request, furnish monthly reports of transactions in Fund Shares reflecting such information as agreed between the Fund and PFPC from time to, time.

(b)

Purchase of Shares . PFPC shall issue and credit an account of an investor, in the manner described in the Portfolio’s prospectus, once it receives:

(i)

A purchase order in completed proper form;

(ii)

Proper information to establish a shareholder account; and

(iii)

Confirmation of receipt or crediting of funds for such order to the Portfolio’s custodian.

(c)

Redemption of Shares . PFPC shall process requests to redeem Shares as follows:

(i)

All requests to transfer or redeem Shares and payment therefor shall be made in accordance with the Portfolio’s prospectus, when the shareholder tenders Shares in proper form, accompanied by such documents as PFPC reasonably may deem necessary.

(ii)

PFPC reserves the right to refuse to transfer or redeem Shares until it is reasonably satisfied that the endorsement on the instructions is valid and genuine and that the requested transfer or redemption is legally authorized, and it shall incur no liability for the reasonable refusal, in good faith, to process transfers or redemptions which PFPC, in its good judgment, deems improper or unauthorized, or until it is reasonably satisfied that there is no basis to any claims adverse to such transfer or redemption.

(iii)

When Shares are redeemed, PFPC shall deliver to the Portfolio’s custodian (the “Custodian”) and the Fund or its designee a notification setting forth the number of Shares redeemed. Such redeemed Shares shall be reflected on appropriate accounts maintained by PFPC reflecting outstanding Shares of the Fund and Shares attributed to individual accounts.

(iv)

PFPC shall, upon receipt of the monies provided to it by the Custodian for the redemption of Shares, pay such monies as are received from the Custodian, all in accordance with the procedures established from time to time between PFPC and the Fund.

(v)

When a broker-dealer notifies PFPC of a redemption desired by a customer, and the Custodian provides PFPC with funds, PFPC shall prepare and send the redemption check to the broker-dealer and made payable to the broker-dealer on behalf of its customer, unless otherwise instructed in writing by the broker-dealer.

(vi)

PFPC shall not process or effect any redemption requests with respect to Shares after receipt by PFPC or its agent of notification of the suspension of the determination of the net asset value of the applicable Portfolio.

(d)

Dividends and Distributions . Upon receipt of a resolution of the Fund’s Board of Trustees authorizing the declaration and payment of dividends and distributions, PFPC shall pay such dividends and distributions in cash. Such payment, as well as payments upon redemption as described above, shall be made after deduction and payment of the required amount of funds to be withheld in accordance with any applicable tax laws or other laws, rules or regulations. PFPC shall mail to the Fund’s shareholders such tax forms and other information, or permissible substitute notice, relating to dividends and distributions paid by the Fund as are required to be filed and mailed by applicable law, rule or regulation. PFPC shall prepare, maintain and file with the IRS and other appropriate taxing authorities reports relating to all dividends above a stipulated amount paid by the Fund to its shareholders as required by tax or other law, rule or regulation.

(e)

Shareholder Account Services .

(i)

PFPC may arrange, in accordance with the Portfolio’s prospectus and such procedures and controls as are mutually agreed upon from time to time among the Fund, PFPC and the Custodian for issuance of Shares obtained through:

•

Any pre-authorized check plan; and

•

Direct purchases through broker wire orders, checks and applications.

(ii)

•

Exchange of Shares for shares of another fund with which the Fund has exchange privileges;

•

Automatic redemption from an account where that shareholder participates in an automatic redemption plan; and/or

•

Redemption of Shares from an account with a checkwriting privilege.

(f)

Communications to Shareholders .

(i)

Upon timely Written Instructions, PFPC shall mail communications by the Fund to its shareholders, including, without limitation:

(A)

Reports to shareholders;

(B)

Confirmations of purchases and redemptions of Shares;

(C)

Quarterly statements or (subject to the second sentence of sub-item (ii) below) monthly statements;

(D)

Dividend and distribution notices; and

(E)

Tax form information.

(ii)

Upon timely Written Instructions PFPC will, with respect only to shareholder accounts that are maintained on PFPC’s Order Entry Pass institutional transfer agency system (but not its other transfer agency systems) (“OEP System”), provide the Fund with monthly statement information from the OEP System which information relates to such shareholder accounts by the fifth business day of each month in a mutually agreeable electronic format. PFPC will continue to mail associated monthly statements to shareholders whose monthly statement information is provided electronically to the Fund pursuant to the preceding sentence, except that PFPC will not mail such monthly statements to such shareholders if such shareholders request via appropriate electronic means acceptable to the Fund and PFPC that PFPC suppress such mailings.

(iii)

PFPC will answer such correspondence from shareholders, securities brokers and others relating to its duties hereunder and such other correspondence as may from time to time be mutually agreed upon between PFPC and the Fund.

(g)

Records . PFPC shall maintain records of the accounts for each shareholder showing the following information:

(i)

Name, address and United States Tax Identification or Social Security number;

(ii)

Number and class of Shares held and number and class of Shares for which certificates, if any, have been issued, including certificate numbers and denominations;

(iii)

Historical information regarding the account of each shareholder, including: (a) information relating to dividends and distributions paid, (b)

the date and price for all transactions relating to a shareholder’s account, and (c) information necessary to calculate, in accordance with the Fund’s registration statement, the appropriate contingent deferred sales charge (“CDSC”) payable with respect to Series B Investor Class Shares;

(iv)

Any stop or restraining order placed against a shareholder’s account;

(v)

Any correspondence relating to the current maintenance of a shareholder’s account;

(vi)

Information with respect to withholdings; and

(vii)

Any information required in order for PFPC to perform any calculations required by this Agreement.

With respect to shareholder accounts maintained on the OEP System, PFPC shall maintain sub-accounts for each shareholder requesting such services in connection with Shares held by such shareholder in separate accounts on the OEP System. Each such sub-account shall contain the same information as that described above for accounts.

(h)

Lost or Stolen Certificates . PFPC shall place a stop notice against any certificate reported to be lost or stolen and comply with all applicable federal regulatory requirements for reporting such loss or alleged misappropriation. A new certificate shall be registered and issued only upon:

(i)

The shareholder’s pledge of a lost instrument bond or such other appropriate indemnity bond issued by a surety company approved by PFPC; and

(ii)

Completion of a release and indemnification agreement signed by the shareholder to protect PFPC and its affiliates.

(i)

Shareholder Inspection of Stock Records . PFPC will, upon request from a Portfolio shareholder to inspect stock records, notify the Fund and the Fund will issue instructions granting or denying each such request. Unless PFPC has acted contrary to Fund instructions, the Fund agrees to and does hereby release PFPC from any liability for reasonable refusal of permission for a particular shareholder to inspect the Fund’s stock records.

(j)

Withdrawal of Shares and Cancellation of Certificates . Upon receipt of Written Instructions, PFPC shall cancel outstanding certificates surrendered by the Fund to reduce the total amount of outstanding shares by the number of shares surrendered by the Fund.

(k)

Lost Shareholders . PFPC shall perform such services as are required in order to comply with rule 17Ad-17 of the 1934 Act (the “Lost Securityholder Rule”), including, but not limited to, those set forth below. PFPC may, in its sole discretion, use the services of a third party to perform some of or all such services.

(i)

documentation of search policies and procedures;

(ii)

execution of required searches;

(iii)

tracking results and maintaining data sufficient to comply with the Lost Securityholder Rule; and

(iv)

preparation and submission of data required under the Lost Securityholder Rule. Except as set forth above, PFPC shall have no responsibility for any escheatment services.

(l)

Retirement Plans.

(i)

In connection with the individual retirement accounts, simplified employee pension plans, rollover individual retirement plans, educational IRA’s and ROTH individual retirement accounts (“IRA Plans”), 403(b) Plans and money purchase and profit sharing plans (“Qualified Plans”)

(collectively, the “Retirement Plans”) within the meaning of Section 408 of the Internal Revenue Code of 1986, as amended (the “Code”) sponsored by the Fund for which contributions of the Fund’s shareholders (the “Participants”) are invested solely in Shares of the Fund, PFPC shall provide the following administrative services:

(A)

Establish a record of types and reasons for distributions (i.e., attainment of age 59-1/2, disability, death, return of excess contributions, etc.);

(B)

Record method of distribution requested and/or made;

(C)

Receive and process designation of beneficiary forms requests;

(D)

Examine and process requests for direct transfers between custodians/trustees, transfer and pay over to the successor assets in the account and records pertaining thereto as requested;

(E)

Prepare any annual reports or returns required to be prepared and/or filed by a custodian of a Retirement Plan, including, but not limited to, an annual fair market value report, Forms 1099R and 5498; and file same with the IRS and provide same to Participant/Beneficiary, as applicable; and

(F)

Perform applicable federal withholding and send Participants/Beneficiaries an annual TEFRA notice regarding required federal tax withholding.

(ii)

PFPC shall arrange for PFPC Trust Company to serve as custodian for the Retirement Plans sponsored by the Fund.

(iii)

With respect to the Retirement Plans, PFPC shall provide the Fund with the associated Retirement Plan documents for use by the Fund and PFPC shall be responsible for the maintenance of such documents in compliance with all applicable provisions of the Code and the regulations promulgated thereunder.

(m)

Print Mail . The Fund hereby engages PFPC as its exclusive print/mail service provider with respect to those items and for such fees as agreed to from time to time in writing by the Fund and PFPC.

(n)

Proxy Advantage . The Fund hereby engages PFPC as its exclusive proxy solicitation service provider with respect to those items and for such fees as agreed to from time to time in writing by the Fund and PFPC. If so agreed from

time to time in writing by the Fund and PFPC, such services may include mailing proxy statements and proxy cards to shareholders.

(o)

IMPRESSNet ^R Services . PFPC shall provide to the Fund the services specified in Exhibit B attached hereto and made a part hereof, subject to and in accordance with the terms set forth in such Exhibit B, as such Exhibit B may be amended from time to time.

(p)

Wrap Processing Services . With respect to Shares attributable to the Wrap Program (as defined below), instead of the services set forth in this Agreement, PFPC shall perform the services specified in Exhibit C attached hereto and made a part hereof, subject to and in accordance with the terms set forth in such Exhibit C, as such Exhibit C may be amended from time to time, for the benefit of the “Wrap Program Participants” (as defined below) who maintain Shares through Wrap Programs. PFPC may subcontract with “Clients” (as defined below) to link PFPC’s system with the Clients, in order for Clients to maintain Fund Share positions for each Wrap Program Participant and/or perform certain services identified in Exhibit C. For purposes of this Section 14(p) and Exhibit C, the following terms have the following meanings: “Clients” means financial institutions which offer Wrap Programs; “Wrap Programs” means mutual funds- only asset allocation, supermarket and/or other similar products offered by Clients which require sub-transfer agent and sub-accounting services; “Wrap Program Participants” means customers of Clients to whom Wrap Programs are offered. In the event of a conflict between (i) the specific terms of this Section 14(p) and/or Exhibit C and (ii) the remaining provisions of this Agreement, the terms of this

Section 14(p) and Exhibit C control as to the services set forth in this Section 14(p) and Exhibit C.

(q)

Anti-Money Laundering . PFPC shall perform reasonable actions necessary for the Fund to be in compliance with United States federal anti-money laundering (“AML”) laws applicable to investor activity, including the Bank Secrecy Act and the USA PATRIOT Act of 2001. In this regard, PFPC shall: (A) establish and implement written policies, procedures and internal controls reasonably designed to prevent the Fund from being used to launder money or finance terrorist activities; (B) provide for independent testing, by an employee who is not responsible for the operation of PFPC’s AML program or by an outside party, for compliance with PFPC’s established AML policies and procedures; (C) designate a person or persons responsible for implementing and monitoring the operation and internal controls of PFPC’s AML program; and (D) provide ongoing training of PFPC personnel relating to the prevention of money-laundering activities. PFPC shall provide to the Fund: (X) a copy of PFPC’s written AML policies and procedures (it being understood such information is to be considered confidential and treated as such and afforded all protections provided to confidential information under this Agreement); (Y) at the option of PFPC, a copy of a written assessment or report prepared by the party performing the independent testing for compliance, or a summary thereof, or a certification that the findings of the independent party are satisfactory; and (Z) a summary of the AML training provided for appropriate PFPC personnel. PFPC agrees to permit inspections relating to PFPC’s AML program by United States federal departments or

regulatory agencies with appropriate jurisdiction and to make available to examiners from such departments or regulatory agencies such information and records relating to PFPC’s AML program as such examiners shall reasonably request.

(r)

Regulatory Requests . PFPC will provide information and documentation relating to the Fund or other assistance relating to such information and documentation as the Fund may reasonably request to help the Fund respond to any government or regulatory request, including but not limited to a subpoena or request for information, provided, however, that if responding to such a request would cause an undue burden on PFPC or would cause PFPC to bear undue expense, PFPC at its option may decline such request or shall be entitled to such fees or reimbursement of expenses as agreed to by the Fund and PFPC.

(s)

Fund Information Requests . PFPC will provide such information relating to the Fund as the Fund may reasonably request in connection with the services provided by PFPC to the Fund pursuant to this Agreement, provided, however, that if responding to such a request would cause an undue burden on PFPC or would cause PFPC to bear undue expense, PFPC at its option may decline such request or shall be entitled to such fees or reimbursement of expenses as agreed to by the Fund and PFPC.

(t)

Other Services . PFPC will provide such additional services to the Fund pursuant to this Agreement as shall be agreed in writing between the Fund and PFPC from time to time.

15. Duration and Termination . This Agreement shall continue in effect for a term of three years commencing as of the date hereof, and at the end of such three-year period shall automatically continue for successive one-year terms, provided , that the Fund’s Board of Trustees (“Board”) shall review this Agreement from time to time and at least annually in reference to the terms and conditions specifically set forth below in clauses (a)(i) to (a)(iii) of this Section 15. Notwithstanding the above, this Agreement may be terminated:

(a)

during the first three years, without the payment of any penalty for such termination:

(i)

by the Fund, on ninety (90) days prior written notice, as may be required by and consistent with the Board’s fiduciary obligations under the 1940 Act in connection with any annual review; however, in connection with such review of this Agreement by the Board, the Board acknowledges the fees to be received by PFPC hereunder are fair and reasonable for a three-year term; or

(ii)

by the Fund, on sixty (60) days prior written notice, if PFPC is in material breach of this Agreement and PFPC has not remedied such breach within such sixty (60) day period; or

(iii)

by the Fund, on sixty (60) days prior written notice, if PFPC:

(1)

enters into a transaction that would result in a change of control of greater than 50% of the beneficial ownership of the shares of beneficial interest of PFPC, other than any such change of control where the Board determines the successor entity has similar financial standing and ability to provide services hereunder as PFPC; or

(2)

files a petition for bankruptcy, or another comparable filing by PFPC has occurred; or

(3)

has a materially impaired financial condition; or

(4)

has a significant regulatory problem or is the subject of a significant regulatory investigation; and in the case of subsections (1) through (4) above, the Board determines in the exercise of its fiduciary obligations under the 1940 Act

that such event materially impairs PFPC’s ability to perform its duties under this Agreement; or

(iv)

by PFPC, on one hundred fifty (150) days prior written notice, if the Fund is in material breach of the Agreement; and

(b)

at any time after the first three years, without the payment of any penalty, on ninety (90) days prior written notice by the Fund or on one hundred fifty (150) days prior written notice by PFPC.

In the event of termination by the Fund pursuant to Sections 15(a)(i) or (b) or by PFPC after a material breach of this Agreement by the Fund, all expenses (which shall not be deemed a penalty) associated with movement (or duplication) of records and materials, deconversion and conversion to a successor transfer agent or other service provider incurred by PFPC, will be borne by the Fund.

16. Notices . Notices shall be addressed (a) if to PFPC, at 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: President; (b) if to the Fund, at BlackRock Bond Allocation Target Shares, 40 East 52 ^nd Street, New York, New York 10022, Attention: Robert Connolly, Esq. or (c) if to neither of the foregoing, at such other address as shall have been given by like notice to the sender of any such notice or other communication by the other party. If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered.

17. Amendments . This Agreement, or any term hereof, may be changed or waived only by a written amendment, signed by the party against whom enforcement of such change or waiver is sought.

18. Assignment . PFPC may assign this Agreement to any affiliate of PFPC or of The PNC Financial Services Group, Inc., provided that PFPC obtains the Fund’s prior written consent to such assignment.

19. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

20. Further Actions . Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.

21. Registration as a Transfer Agent . PFPC represents that it is currently registered with the appropriate Federal agency for the registration of transfer agents, and that it will remain so registered for the duration of this Agreement. PFPC agrees that it will promptly notify the

Fund in the event of any material change in its status as a registered transfer agent. Should PFPC fail to be registered with the appropriate Federal agency as a transfer agent at any time during this Agreement, the Fund may, on written notice to PFPC, immediately terminate this Agreement as to any or all Portfolios of the Fund.

22. Miscellaneous .

(a)

Entire Agreement . This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties.

(b)

No Changes that Materially Affect Obligations . Notwithstanding anything in this Agreement or otherwise to the contrary, the Fund agrees that no modifications to its registration statement and no policies which it may adopt or resolutions which the Board may adopt will affect materially the obligations or responsibilities of PFPC hereunder without the prior written approval of PFPC, which approval shall not be unreasonably withheld or delayed.

(c)

Captions . The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(d)

Information . The Fund will provide such information and documentation as PFPC may reasonably request in connection with services provided by PFPC to the Fund.

(e)

Governing Law . This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law, without regard to principles of conflicts of law.

(f)

Partial Invalidity . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. Nothwithstanding the foregoing sentence, if any provision of this Agreement relating directly or indirectly to the term of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the parties shall immediately negotiate in good faith in order to agree upon a new provision which is either (i) economically equivalent to the invalid provision or (ii) acceptable to the party adversely affected by the invalidity of the prior provision.

(g)

Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

(h)

No Representations or Warranties . Except as expressly provided in this Agreement, PFPC hereby disclaims all representations and warranties, express or implied, made to the Fund or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided under this Agreement. PFPC disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.

(i)

Facsimile Signatures . The facsimile signature of any party to this Agreement shall constitute the valid and binding execution hereof by such party.

(j)

Privacy . Each party hereto acknowledges and agrees that, subject to the reuse and re-disclosure provisions of Regulation S-P, 17 CFR Part 248.11, it shall not disclose the non-public personal information of investors in the Fund obtained under this Agreement, except as necessary to carry out the services set forth in this Agreement or as otherwise permitted by law or regulation.

(k)

Customer Identification Program Notice . To help the United States government fight the funding of terrorism and money laundering activities, United States federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Certain of PFPC’s affiliates are financial institutions, and PFPC may, as a matter of policy, request (or may have already requested) the Fund’s name, address and taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that party’s date of birth. PFPC may also ask (and may have already asked) for additional identifying information, and PFPC may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.

(l)

Liability of Trustees, etc . The names “BlackRock Bond Allocation Target Shares” and “Trustees of BlackRock Bond Allocation Target Shares” refer specifically to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under the Amended and Restated Agreement and

Declaration of Trust dated November 17, 2003, which is hereby referred to and a copy of which is on file at the principal office of the Fund. The obligations of “BlackRock Bond Allocation Target Shares” entered into in the name or on behalf thereof by any of the Trustees, officers, representatives or agents are not made individually, but in such capacities, and are not binding upon any of the Trustees, officers, shareholders, representatives or agents of the Fund personally, but bind only Series Property (as defined in the Amended and Restated Agreement and Declaration of Trust), and all persons dealing with any series of shares of the Fund must look solely to the Series Property belonging to such series for the enforcement of any claims against the Fund.

23. Customer Identification Program Services .

(a)

To help the Fund comply with its Customer Identification Program (which the Fund is required to have under regulations issued under Section 326 of the USA PATRIOT Act) PFPC will do the following:

(i)

Implement procedures under which new accounts in the Portfolios are not established unless PFPC has obtained the name, date of birth (for natural persons only), address and taxpayer identification number (for United States persons) or taxpayer identification number, passport number and country of issuance, alien identification card number and country of issuance or any other government-issued document evidencing nationality or residence (collectively, the “Data Elements”) for each corresponding “Customer” (as defined in 31 CFR 103.131).

(ii)

Use collected Data Elements to attempt to reasonably verify the identity of each new Customer promptly before or after each corresponding new account is opened. Methods of verification may consist of non-documentary methods (for which PFPC may use unaffiliated information vendors to assist with such verifications) and documentary methods (as permitted by 31 CFR 103.131), and may include procedures under which PFPC personnel perform enhanced due diligence to verify the identities of Customers the identities of whom were not successfully verified through the first-level (which will typically be reliance on results obtained from an information vendor) verification process(es).

(iii)

Record the Data Elements and maintain records relating to verification of new Customers consistent with 31 CFR 103.131(b)(3).

(iv)

Determine whether any Customer’s name appears on a list of known or suspected terrorists or terrorist organizations designated by the Department of the Treasury, if any, consistent with 31 CFR 103.131(b)(4).

(v)

Regularly report to the Fund about measures taken under (i)-(iv) above.

(vi)

If PFPC provides services by which prospective Customers may subscribe for shares in the Fund via the Internet or telephone, work with the Fund to notify prospective Customers, consistent with 31 CFR 103.131(b)(5), about the Fund’s Customer Identification Program.

(vii)

Annually, or upon the Fund’s reasonable request, certify that PFPC continues to implement its duties set forth under this Section 23(a).

(b)

Notwithstanding anything in this Agreement or otherwise to the contrary, and without expanding the scope of the express language set forth above in Section 23(a), PFPC need not collect the Data Elements for (or verify) prospective customers (or accounts) beyond the requirements of relevant customer identification program regulations (for example, PFPC will not verify customers opening accounts through NSCC) and PFPC need not perform any task that need not be performed for the Fund to be in compliance with relevant customer identification program regulations.

(c)

Notwithstanding anything in this Agreement or otherwise to the contrary, PFPC need not perform any of the steps described above in this Section 23 with respect to persons purchasing Shares via exchange privileges.

(d)

The Fund shall provide PFPC with the Fund’s Anti-Money Laundering Policy dated April 23, 2002 (as well as any supplements or amendments thereto) and the Fund’s Customer Identification Program dated September 30, 2003 (as well as any supplements or amendments thereto).

IN WITNESS WHEREOF, the parties hereto have caused this amendment and restatement to be executed as of September , 2004.


PFPC INC.

By:
		Title:


BLACKROCK BOND ALLOCATION TARGET SHARES

By:
		Title:

By executing this joinder to this Agreement, BlackRock Advisors, Inc. hereby agrees to be bound by all of the terms, provisions, covenants and obligations set forth in Section 15 of this Agreement.


BLACKROCK ADVISORS, INC. By:

By:
		Title:

DRAFT

EXHIBIT A

THIS EXHIBIT A, dated as of September , 2004, is Exhibit A to that certain Transfer Agency Agreement dated of even date between PFPC Inc. and BlackRock Bond Allocation Target Shares.

PORTFOLIOS

Series S Portfolio

Series C Portfolio

Series M Portfolio

Series P Portfolio

Series I Portfolio

DRAFT

EXHIBIT B

IMPRESSNet ^R SERVICES

1. Definitions . Any term not herein defined in this Exhibit B shall have the meaning given such term in the Agreement. The following definitions shall apply to this Exhibit B:

(a) “End-User” means any Shareholder that accesses the PFPC System via IMPRESSNet ^R .

(b) “Fund Web Site” means the collection of electronic documents, electronic files and pages residing on any computer system(s) maintained on behalf of the Fund, connected to the Internet and accessible by hypertext link through the World Wide Web to and from IMPRESSNet ^R .

(c) “IMPRESSNet ^R Services” means the services identified in Section 2 hereof to be provided by PFPC utilizing the Fund Web Site, the Internet and certain software, equipment and systems provided by PFPC, telecommunications carriers and security providers which have been certified by ICSA or a nationally-recognized audit firm (including but not limited to firewalls and encryption), whereby Inquires may be performed and Transactions may be requested by accessing IMPRESSNet ^R via hypertext link from the Fund Web Site.

(d) “Inquiry” means any access to the PFPC System via IMPRESSNet ^R initiated by an End-User which is not a Transaction.

(e) “Internet” means the communications network comprised of multiple communications networks linking education, government, industrial and private computer networks.

(f) “IMPRESSNet ^R ” means the collection of electronic documents, electronic files and pages residing on PFPC’s computer system(s) (or those elements of the computer system of one or more Internet Service Providers (“ISPs”) retained by PFPC and necessary for PFPC’s services hereunder), connected to the Internet and accessible by hypertext link from the Fund Web Site through the World Wide Web, where the Inquiry and Transaction data fields and related screens provided by PFPC may be viewed.

(g) “Shareholder” means the record owner or authorized agent of the record owner of shares of the Fund.

(h) “Transaction” shall mean purchase, redemption, exchange or any other activity involving the movement of Shares initiated by an End-User.

2. PFPC Responsibilities . Subject to the provisions of this Exhibit B, PFPC shall provide or perform, or shall retain other persons to provide or perform, the following, at PFPC’s expense (unless otherwise provided herein):

(a) provide all computers, telecommunications equipment, encryption technology and other materials and services reasonably necessary to develop and maintain IMPRESSNet ^R to permit persons to be able to view information about the Fund and to permit End-Users with appropriate identification and access codes to perform Inquiries and initiate Transactions;

(b) address and mail, at the Fund’s expense, notification and promotional mailings and other communications provided by the Fund to Shareholders regarding the availability of IMPRESSNet ^R Services;

(c) prepare and process new account applications received through IMPRESSNet ^R from Shareholders determined by the Fund to be eligible for such services and in connection with such, the Fund agrees as follows:

(i) to permit the establishment of Shareholder bank account information over the Internet in order to facilitate purchase activity through the Automated Clearing House (“ACH”);

(ii) the ACH prenote process will be waived and the ACH status will be set to active; and

(iii) the Fund shall be responsible for any resulting gain/loss liability associated with the ACH process.

(d) process the set up of personal identification numbers (“PIN”), as described in the IMPRESSNet ^R Product Guide provided to the Fund, which shall include verification of initial identification numbers issued, reset and activation of personalized PIN’s and reissue of new PIN’s in connection with lost PIN’s;

(e) provide installation services which shall include, review and approval of the Fund’s network requirements, recommending method of establishing (and, as applicable, cooperate with the Fund to implement and maintain) a hypertext link between IMPRESSNet ^R and the Fund Web Site and testing the network connectivity and performance;

(f) establish systems to guide, assist and permit End-Users who access IMPRESSNet ^R from the Fund Web Site to electronically perform Inquires and create and transmit Transaction requests to PFPC;

(g) deliver to the Fund one (1) copy of the PFPC IMPRESSNet ^R Product Guide, as well as all updates thereto on a timely basis;

(h) deliver a monthly billing report to the Fund, which shall include a report of Inquiries and Transactions;

(i) provide a form of encryption that is generally available to the public in the United States for standard Internet browsers and establish, monitor and verify firewalls and other security features (commercially reasonable for this type of information and data) and exercise commercially reasonable efforts to attempt to maintain the security and integrity of IMPRESSNet ^R ;

(j) exercise reasonable efforts to maintain all on-screen disclaimers and copyright, trademark and service mark notifications, if any, provided by the Fund to PFPC in writing from time to time, and all “point and click” features of IMPRESSNet ^R relating to Shareholder acknowledgment and acceptance of such disclaimers and notifications;

(k) provide periodic site visitation (hit reports) and other information regarding End-User activity under this Exhibit B as agreed by PFPC and the Fund from time to time;

(l) monitor the telephone lines involved in providing IMPRESSNet ^R Services and inform the Fund promptly of any malfunctions or service interruptions;

(m) periodically scan PFPC’s Internet interfaces and IMPRESSNet ^R for viruses and promptly remove any such viruses located thereon; and

(n) maintenance and support of IMPRESSNet ^R , which includes providing error corrections, minor enhancements and interim upgrades to IMPRESSNet ^R which are made generally available to IMPRESSNet ^R customers and providing help desk support to provide assistance to Fund employees with the Fund’s use of IMPRESSNet ^R ; maintenance and support shall not include (i) access to or use of any substantial added functionality, new interfaces, new architecture, new platforms, new versions or major development efforts, unless made generally available by PFPC to IMPRESSNet ^R clients, as determined solely by PFPC; or (ii) maintenance of customized features.

Notwithstanding anything in this Exhibit B or the Agreement to the contrary, the Fund recognizes and acknowledges that (i) a logon I.D. and PIN are required by End-Users to access PFPC’s IMPRESSNet ^R ; (ii) End-User’s Web Browser and ISP must support Secure Socket Layer (SSL) encryption technology; and (iii) PFPC will not provide any software for access to the Internet; software must be acquired from a third-party vendor.

3. Fund Responsibilities . Subject to the provisions of this Exhibit B and the Agreement, the Fund shall at its expense (unless otherwise provided herein):

(a) provide, or retain other persons to provide, all computers, telecommunications equipment, encryption technology and other materials, services, equipment and software reasonably necessary to develop and maintain the Fund Web Site, including the functionality necessary to maintain the hypertext links to IMPRESSNet ^R ;

(b) promptly provide PFPC written notice of changes in Fund policies or procedures requiring changes to the IMPRESSNet ^R Services;

(c) work with PFPC to develop Internet marketing materials for End-Users and forward a copy of appropriate marketing materials to PFPC;

(d) revise and update the applicable prospectus(es) and other pertinent materials, such as user agreements with End-Users, to include the appropriate consents, notices and disclosures for IMPRESSNet ^R Services, including disclaimers and information reasonably requested by PFPC;

(e) maintain all on-screen disclaimers and copyright, trademark and service mark notifications, if any, provided by PFPC to the Fund in writing from time to time, and all “point and click” features of the Fund Web Site relating to acknowledgment and acceptance of such disclaimers and notifications; and

(f) design and develop the Fund Web Site functionality necessary to facilitate, implement and maintain the hypertext links to IMPRESSNet ^R and the various Inquiry and Transaction web pages and otherwise make the Fund Web Site available to End-Users.

4. Standards of Care for Internet Services .

(a) Notwithstanding _. anything in the Agreement or this Exhibit B to the contrary (other than as set forth in the immediately succeeding sentence) with respect to the provision of services set forth in this Exhibit B (i) PFPC shall be liable only for its own willful misfeasance, bad faith, negligence or reckless disregard in the provision of such services and (ii) the Fund shall indemnify, defend and hold harmless PFPC and its affiliates (including their respective officers, directors, agents and employees) from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, attorneys’ fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) incurred by such indemnified parties with respect to such services except for those for which PFPC is liable under sub-clause (i) of this sentence. For clarity, the provisions of the immediately preceding sentence shall not limit Sections 13(b) or 13(c) of the Agreement or Section 7(c) of this Exhibit B. The provisions of this Section 4(a) shall survive termination of the Agreement and the provision of services set forth in this Exhibit B.

(b) Notwithstanding anything to the contrary contained in the Agreement or this Exhibit B, PFPC shall not be obligated to ensure or verify the accuracy or actual receipt, or the transmission, of any data or information contained in any transmission via IMPRESSNet ^R Services or the consummation of any Inquiry or Transaction request not actually received by PFPC. The Fund shall advise End-Users to promptly notify the Fund or PFPC of any errors or inaccuracies in Shareholder data or information transmitted via IMPRESSNet ^R Services.

5. Proprietary Rights .

(a) Each of the parties acknowledges and agrees that it obtains no rights in or to any of the software, hardware, processes, trade secrets, proprietary information or distribution and communication networks of the other under this Exhibit B. Any software, interfaces or other programs a party provides to the other under this Exhibit B shall be used by such receiving party only during the term of this Exhibit B and only in accordance with the provisions of this Exhibit B and the Agreement. Any interfaces, other software or other programs developed by one party shall not be used directly or indirectly by or for the other party or any of its affiliates to connect such receiving party or any affiliate to any other person, without the first party’s prior written

approval, which it may give or withhold in its sole discretion. Except in the normal course of business and in conformity with federal copyright law or with the other party’s consent, neither party nor any of its affiliates shall disclose, use, copy, decompile or reverse engineer any software or other programs provided to such party by the other in connection herewith.

(b) The Fund Web Site and IMPRESSNet ^R may contain certain intellectual property, including, but not limited to, rights in copyrighted works, trademarks and trade dress that is the property of the other party. Each party retains all rights in such intellectual property that may reside on the other party’s web site, not including any intellectual property provided by or otherwise obtained from such other party. To the extent the intellectual property of one party is cached to expedite communication, such party grants to the other a limited, non-exclusive, non-transferable license to such intellectual property for a period of time no longer than that reasonably necessary for the communication. To the extent that the intellectual property of one party is duplicated within the other party’s web site to replicate the “look and feel,” “trade dress” or other aspect of the appearance or functionality of the first site, that party grants to the other a limited, non-exclusive, non-transferable license to such intellectual property for the duration of this Exhibit B. This license is limited to the intellectual property needed to replicate the appearance of the first site and does not extend to any other intellectual property owned by the owner of the first site. Each party warrants that it has sufficient right, title and interest in and to its web site and its intellectual property to enter into these obligations, and that to its knowledge, the license hereby granted to the other party does not and will not infringe on any United States patent, United States copyright or other United States proprietary right of a third party .

(c) Each of the parties hereto agrees that the nonbreaching party would not have an adequate remedy at law in the event of the other party’s breach or threatened breach of its obligations under Sections 5(a) or 5(b) of this Exhibit B and that the nonbreaching party would suffer irreparable injury and damage as a result of any such breach. Accordingly, in the event either party breaches or threatens to breach the obligations set forth in Sections 5(a) or 5(b) of this Exhibit B, in addition to and not in lieu of any legal or other remedies a party may pursue hereunder or under applicable law, each party hereto hereby consents to the granting of equitable relief (including the issuance of a temporary restraining order, preliminary injunction or permanent injunction) against it by a court of competent jurisdiction, without the necessity of proving actual damages or posting any bond or other security therefor, prohibiting any such breach or threatened breach. In any proceeding upon a motion for such equitable relief, a party’s ability to answer in damages shall not be interposed as a defense to the granting of such equitable relief. The provisions of this Section 5(c) shall survive termination of the Agreement and the provision of services set forth in this Exhibit B.

6. Representation and Warranty . Neither party shall knowingly insert into any interface, other software, or other program provided by such party to the other hereunder, or accessible on IMPRESSNet ^R or the Fund Web Site, as the case may be, any “back door,” “time bomb,” “Trojan Horse,” “worm,” “drop dead device,” “virus” or other computer software code or routines or hardware components designed to disable, damage or impair the operation of any system, program or operation hereunder. For failure to comply with this warranty, the non-complying party shall immediately replace all copies of the affected work product, system or software. All costs incurred with replacement including, but not limited to, cost of media, shipping, deliveries and installation shall be borne by such party.

7. Liability Limitations; Indemnification .

(a) The Internet . Each party acknowledges that the Internet is an unsecured, unstable, unregulated, unorganized and unreliable network, and that the ability of the other party to provide or perform services or duties hereunder is dependent upon the Internet and equipment, software, systems, data and services provided by various telecommunications carriers, equipment manufacturers, firewall providers, encryption system developers and other vendors and third parties. Each party agrees that the other shall not be liable in any respect for the functions or malfunctions of the Internet. Each party agrees the other shall not be liable in any respect for the actions or omissions of any third party wrongdoers (i.e., hackers not employed by such party or its affiliates) or of any third parties involved in the IMPRESSNet ^R Services and shall not be liable in any respect for the selection of any such third party, unless such party selected the third party in bad faith or in a negligent manner.

(b) PFPC’s Explicit Disclaimer of Certain Warranties . EXCEPT AS SPECIFICALLY PROVIDED IN SECTIONS 2 AND 4 OF THIS EXHIBIT B, ALL SOFTWARE AND SYSTEMS DESCRIBED IN THIS EXHIBIT B ARE PROVIDED “AS-IS” ON AN “AS-AVAILABLE” BASIS, AND PFPC HEREBY SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.

(c) Cross-Indemnity . Each party hereto agrees to indemnify, defend and hold harmless the other party and its affiliates (and their respective officers, directors, agents and employees) from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, attorneys’ fee and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) (“Liabilities”) arising in connection with any claims that any IMPRESSNet ^R Services or related work product infringes any proprietary or other rights or any infringement claim against any of such persons based on the party’s intellectual property licensed to the other party hereunder (provided the other party has used such intellectual property in conformity with the product guidelines), except to the extent such Liabilities result directly from the negligence or knowing or willful misconduct of the other party or its related indemnified parties. The provisions of this Section 7(c) shall survive termination of the Agreement and the provision of services set forth in this Exhibit B.

8. Miscellaneous .

(a) Independent Contractor . The parties hereto are and shall remain independent contractors, and nothing herein shall be construed to create a partnership or joint venture between them and none of them shall have the power or authority to bind or obligate the other in any manner not expressly set forth herein. Any contributions to IMPRESSNet ^R by the Fund and any contributions to the Fund Web Site by PFPC shall be works for hire pursuant to Section 101 of the Copyright Act.

(b) Conflict with Agreement . In the event of a conflict between specific terms of this Exhibit B and the Agreement, this Exhibit B shall control as to IMPRESSNet ^R Services.

DRAFT

EXHIBIT C

WRAP PROCESSING SERVICES

1. Transmit to the Fund purchase, redemption and related instructions and facilitate money settlement with respect to the Omnibus Accounts, which shall be registered as “PFPC F/B/O Client Wrap Programs and their Customers” or “PFPC F/B/O Client Wrap Programs,” as appropriate. Such activities shall be performed as set forth in the attached Schedule 1 of Exhibit C.

2. Facilitate payment to Wrap Program Participants of the proceeds of redemptions, dividends and other distributions.

3. Coordinate with a third party print mail provider, and at the request of the Fund, provide that third party with such information as is necessary for it to mail to Wrap Program Participants, among other things: (a) periodic account statements, (b) 1099R documentation, and (c) proxies, prospectus supplements, and annual reports of the Fund, all as are provided by the Fund.

4. Reconcile share positions for each Wrap Program and upon request provide certification to the Fund with respect thereto. In connection therewith, the Fund shall provide to PFPC daily confirmation of all trade activity and share positions for the Omnibus Account.

5. Maintain records for each Wrap Program Participant which shall reflect shares purchased and redeemed, as well as account and share balances.

6. Act as service agent in connection with dividend and distribution functions; perform shareholder account and administrative agent functions in connection with the issuance, transfer, and redemption or repurchase of Fund Shares. PFPC shall create and maintain all records required of it pursuant to its duties under Section 14(p) of the Agreement and this Exhibit C and as set forth in this Exhibit C pursuant to applicable laws, rules and regulations, including records required by Section 31 (a) of the 1940 Act. Where applicable, such records shall be maintained for the periods and in the places required by rule 31 a-2 under the 1940 Act.

DRAFT

SCHEDULE 1 OF EXHIBIT C

On each day the New York Stock Exchange (the “Exchange”) is open for business (each, a “Business Day”), PFPC or its agents may receive trade instructions with respect to the Wrap Programs and/or Wrap Program Participants for the purchase or redemption of shares of the Portfolios (“Trade Instructions”). Trade Instructions received in good order and accepted by PFPC or its agents prior to the close of regular trading on the Exchange (the “Close of Trading”) on any given Business Day and transmitted to the Fund (i) by 11:59 p.m. Eastern Time if automated, and (ii) by 6:00 p.m. Eastern Time if manual on such Business Day will be executed by the Fund at the net asset value determined as of the Close of Trading on such Business Day. Any Trade Instructions received by PFPC, or its agents, on such day but after the Close of Trading will be executed by the Fund at the net asset value determined as of the Close of Trading on the next Business Day following the day of receipt of such Trade Instructions. The day on which a Trade Instruction is executed by the Fund pursuant to the provisions set forth above is referred to herein as the “Effective Trade Date.”

Upon the timely receipt from PFPC of the Trade Instructions described in the above paragraph, the Fund will execute the purchase or redemption transactions (as the case may be) with respect to each Wrap Program at the net asset value computed as at the Close of Trading on the Effective Trade Date. Such purchase and redemption transactions will settle on the Business Day next following the Effective Trade Date. Payments for net purchase and net redemption orders shall be made through the NSCC’s settlement process or by wire transfer by PFPC (for net purchases) or by the Fund (for net redemptions) to the account designated by the appropriate receiving party on the Business Day following the Effective Trade Date. On any Business Day when the Federal Reserve Wire Transfer System is closed, all communication and processing rules will be suspended for the settlement of Trade Instructions. Trade Instructions will be settled on the next Business Day on which the Federal Reserve Wire Transfer System is open and the Effective Trade Date will apply.

In the event that PFPC is in receipt of Trade Instructions in good order and is unable to transmit the Trade Instructions to the Fund by the above referenced deadlines, the Fund will accept the trades after such deadlines and before 10:00 a.m. Eastern Time on the day following the Effective Trade Date. PFPC will furnish the Fund with an estimate of the net purchase or net redemption activity no later than 10:00 a.m. Eastern Time on the day following the Effective Trade Date. Payments for purchases and redemptions shall be made by wire transfer on the day following the Effective Trade Date.

ADMINISTRATION AGREEMENT

Exhibit (h)(2)

THIS AGREEMENT is made as of , 2004 by and between PFPC INC. (the “Administrator”), a Massachusetts corporation and BLACKROCK BOND ALLOCATION TARGET SHARES (the “Company”), a Delaware statutory trust.

W I T N E S S E T H:

WHEREAS, the Company is registered with the Securities and Exchange Commission (the “Commission”) as an open-end, management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Company desires to retain the Administrator to provide certain administration services as set forth herein and certain accounting services as set forth herein for each class of units of beneficial interest (“shares”) in each of the Company’s investment portfolios (individually, a “Fund,” and collectively, the “Funds”) as listed on Appendix A hereto (as such Appendix may, from time to time, be supplemented (or amended)), and the Administrator is willing to furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows:

(i) Appointment of Administrator . The Company hereby appoints the Administrator to provide the administration services set forth herein and the accounting services set forth herein, on the terms and for the periods set forth in this Agreement. The Administrator accepts such appointment and agrees to perform such services in return for the compensation provided for in Section 6 below.

In the event that the Company establishes an additional investment portfolio other than the investment portfolios listed on Appendix A with respect to which it desires to retain the Administrator to provide the administration services and the accounting services set forth herein, the Company shall notify the Administrator, whereupon with the consent of the Administrator such Appendix A shall be supplemented (or amended) and such portfolio shall be subject to the provisions of this Agreement to the same extent as the investment portfolios currently listed on Appendix A (except to the extent that said provisions, including the compensation payable on behalf of such new class or investment portfolio, may be modified in writing by the Company and the Administrator at the time). Additional classes beyond the initial class of a Fund may be added upon agreement of the Company and the Administrator.

2. Instructions . The Administrator shall be entitled to rely upon any Oral Instruction or Written Instruction it receives pursuant to this Agreement. For purposes of this Agreement: (1) “Authorized Persons” means any officer of the Company and any other person duly authorized by the Company to provide oral or written instructions on behalf of the Company; (2) “Oral Instructions” means oral instructions received by the Administrator from an Authorized Person or a person reasonably believed by the Administrator to be an Authorized Person (the Administrator may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person (or a person reasonably believed by the

Administrator to be an Authorized Person) via electronic mail as Oral Instructions); and (3) “Written Instructions” means (i) written instructions received by the Administrator and signed by an Authorized Person or a person reasonably believed by the Administrator to be an Authorized Person or (ii) trade instructions received by the Administrator if the trade instruction was transmitted by means of an electronic transaction reporting system which requires the use of a password or other authorized identifier in order to gain access. Written Instructions may be delivered electronically (provided that instructions delivered via electronic mail shall be treated as set forth under the definition of “Oral Instructions” above) or by hand, mail or facsimile sending device. The Company agrees to forward to the Administrator a Written Instruction confirming any Oral Instruction so that the Administrator receives the confirming Written Instruction by the close of business on the same day that such Oral Instruction is received; the fact that such confirming Written Instruction is not received by the Administrator or differs from the Oral Instruction shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instruction or the Administrator’s ability to rely upon such Oral Instruction.

3. Right to Receive Advice . If the Administrator is in doubt as to any action it should or should not take, it may request directions or advice, including Oral Instructions or Written Instructions, from or on behalf of the Company. If the Administrator shall be in doubt as to any question of law pertaining to any action it should or should not take, it may request advice at its own cost from such counsel of its own choosing (who may be counsel for the Company, the Company’s investment adviser or the Administrator, at the option of the Administrator). In the event of a conflict between directions or advice or Oral Instructions or Written Instructions the Administrator receives from or on behalf of the Company, and the advice it receives from counsel, the Administrator shall be entitled to rely upon and follow the advice of counsel. The Administrator shall be indemnified by the Company and without liability for any action it takes or does not take in reasonable reliance upon directions or advice or Oral Instructions or Written Instructions it receives from or on behalf of the Company or from counsel and which the Administrator believes, in good faith, to be consistent with those directions or advice or Oral Instructions or Written Instructions. Nothing in this Section 3 shall be construed so as to impose an obligation upon the Administrator to seek such directions or advice or Oral Instructions or Written Instructions.

4. Services and Duties .

a. The Administrator is responsible only for the services that it has specifically agreed to provide in the Agreement, and not for any other services.

b. The Administrator shall provide the following services:

(1) Maintaining daily records of investment, capital share and income and expense activities and installing and maintaining a system of internal accounting controls appropriate for entities of the size and complexity of the respective Funds of the Company;

(2) Verifying investment buy/sell trade tickets when received from a Fund’s investment adviser (the “Adviser”) and transmitting trades to the Fund’s custodian (the “Custodian”) for proper settlement;

(3) Maintaining individual ledgers for investment securities;

(4) Maintaining historical tax lots for each security;

(5) Reconciling cash and investment balances of a Fund with the Custodian, and providing the Adviser with the beginning cash balance available for investment purposes;

(6) Updating the cash availability throughout the day as required by the Adviser;

(7) Posting to and preparing the Statement of Assets and Liabilities and the Statement of Operations for the annual and semi-annual shareholder reports;

(8) Calculating various contractual expenses (e.g., advisory fees);

(9) Upon receipt of necessary information from the Company, assisting in the monitoring and budgeting of expense accruals;

(10) Controlling all disbursements and authorizing such disbursements upon receipt of electronic mail instructions or Written Instructions;

(11) Calculating capital gains and losses in accordance with the relevant Fund’s Prospectus and resolutions of the Company’s Board of Trustees;

(12) Determining net income in accordance with the relevant Fund’s Prospectus and resolutions of the Company’s Board of Trustees;

(13) Obtaining security market quotes from independent pricing sources approved by the Adviser, or if such quotes are unavailable, then obtaining such prices from the Adviser, and in either case calculating the market value of the Fund’s investments;

(14) Transmitting or mailing a copy of the daily portfolio valuation to the Adviser;

(15) Computing net asset value;

(16) As appropriate, computing yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity;

(17) Preparing quarterly broker security transactions summaries;

(18) Preparing monthly security transaction listings;

(19) Supplying various normal and customary Fund and Company statistical data as requested on an ongoing basis;

(20) Preparing for execution and filing the Company’s Federal and state tax returns;

(21) With the assistance of Company officers and counsel, preparing and filing the Company’s Semi-Annual Reports with the Commission on Form N-SAR;

(22) With the assistance of Company officers and counsel, preparing and filing the Company’s Semi-Annual Reports with the Commission on Form N-CSR;

(23) With the assistance of Company officers and counsel, preparing and filing with the Commission the Company’s annual and semi-annual shareholder reports;

(24) Assisting in the preparation of registration statements and other filings relating to the registration of the Company’s shares;

(25) Monitoring each Fund’s status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended;

(26) Monitoring the Company’s compliance with the amounts and conditions of each state blue sky qualification, filing documentation with such states as the Company shall direct relating to the initial or ongoing registration or qualification of shares in such states, and furnishing state-by-state blue sky registration reports to the Company;

(27) Assisting in the preparation of materials for meetings of the Company’s Board of Trustees and shareholders;

(28) With the assistance of Company officers and counsel, preparing for execution and filing the Company’s Form 24F-2;

(29) Acting as liaison with the Company’s independent public accountants, and providing account analyses, fiscal year summaries and other audit related schedules with respect to each Fund. The Administrator shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as such may be reasonably required by the Company from time to time;

(30) Providing to the Company the DataPath ^SM Internet access services as set forth on Exhibit Y attached hereto and made a part hereof (as such Exhibit Y may be amended from time to time), subject to the terms of this Agreement and the terms set forth in such Exhibit Y. Persons who are Company “Authorized

Individuals” to access DataPath ^SM are set forth on Exhibit Z attached hereto and made a part hereof, as such Exhibit Z may be amended from time to time;

(31) Reporting the net asset value of each Fund on a daily basis to NASDAQ with respect to each share class that qualifies under NASDAQ reporting requirements;

(32) Providing periodic reports to the Company regarding “investment company taxable income” and “net capital gain” distributions in connection with certain tax related distribution requirements applicable to the Company;

(33) Providing periodic reports to the specified Adviser regarding a Fund’s unrealized and realized capital gains, containing such standard information and employing such form of report as the Administrator may from time to time determine;

(34) Calculating the amount of fees payable with respect to the Company’s distribution and service plan and any amended or successor plan (the “Plan”) on a daily basis and upon instruction from the Company remitting such fees pursuant to the Plan;

(35) Calculating and reporting to third party industry data services (e.g., NASDAQ, Lipper Analytical Services) certain performance and other information;

(36) Providing information and documentation relating to the Company or other assistance relating to such information and documentation as the Company may reasonably request to help the Company respond to any government or regulatory request, including but not limited to a subpoena or request for information, provided, however, that if responding to such a request would cause an undue burden on the Administrator or would cause the Administrator to bear undue expense, the Administrator at its option may decline such request or shall be entitled to such fees or reimbursement of expense as agreed to by the Company and the Administrator;

(37) Providing such information relating to the Company as the Company may reasonably request in connection with the services provided by the Administrator to the Company pursuant to this Agreement, provided, however, that if responding to such a request would cause an undue burden on the Administrator or would cause the Administrator to bear undue expense, the Administrator at its option may decline such request or shall be entitled to such fees or reimbursement of expense as agreed to by the Company and the Administrator; and

(38) Providing such additional services to the Company pursuant to this Agreement as shall be agreed in writing between the Company and the Administrator from time to time.

c. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrator agrees that all records which it maintains for the Company are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company’s request. Copies of any such records maintained by the Administrator will be provided by the Administrator to the Company upon the Company’s reasonable request and at the Company’s expense. The Administrator further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under said Act but only to the extent that such records necessarily and specifically relate to the services required to be performed by the Administrator hereunder.

d. The Administrator agrees that (i) in the event of equipment failures affecting the services designated to the Administrator hereunder the Administrator shall, at no additional expense to the Company, take reasonable steps to minimize service interruptions but shall have no liability with respect thereto and (ii) The Administrator shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provision for emergency use of electronic data processing equipment to the extent appropriate equipment is available.

5. Expenses Assumed as Administrator. The Administrator will bear all expenses incurred by it in performing the services and duties designated to it under this Agreement, except as otherwise expressly provided herein. Other expenses to be incurred in the operation of the Funds, including taxes, interest, brokerage fees and commissions, if any, salaries and fees of officers and trustees who are not officers, directors, shareholders or employees of the Administrator or the distributor for the Funds, Commission fees and state Blue Sky qualification fees, advisory and administration fees, charges of custodians, transfer and dividend disbursing agents’ fees, certain insurance premiums, outside auditing and legal expenses, costs of outside pricing services, costs of maintaining corporate existence, typesetting and printing of prospectuses for regulatory purposes and for distribution to current shareholders of the Funds, costs of shareholders’ reports and corporate meetings and any extraordinary expenses, will be borne by the Company, provided , however , that the Company will not bear, directly or indirectly, the cost of any activity which is primarily intended to result in the sale of shares of the Funds otherwise than pursuant to the Plan.

6. Compensation.

(a) For the services provided pursuant to Section 4 above and the related expenses assumed with respect to those services, the Company will pay to the Administrator a fee as agreed to between the Administrator and the Company from time to time, together with out-of-pocket expenses.

(b) For the purpose of determining the fees payable to the Administrator under this Agreement, the value of net assets shall be computed as required by the Funds’ Prospectuses, generally accepted accounting principles and resolutions of the Company’s Board of Trustees.

7. Proprietary and Confidential Information . The Administrator shall keep confidential any information relating to the Company’s business and shall not use such confidential information for any purpose other than in connection with its performance under this Agreement and the Company shall keep confidential any information relating to the Administrator’s business and shall not use such confidential information for any purpose other than in connection with its performance under this Agreement. Information subject to such confidentiality obligations shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Company (with respect to the Administrator’s confidentiality obligations) or the Administrator (with respect to the Company’s confidentiality obligations); (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Company (with respect to the Administrator’s confidentiality obligations) or the Administrator (with respect to the Company’s confidentiality obligations) a competitive advantage over its competitors; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be subject to the foregoing obligations set forth in this Section 7 if: (a) it was already known to the receiving party at the time it was obtained; (b) it is or becomes publicly known or available through no wrongful act of the receiving party; (c) it was rightfully received from a third party who, to the best of the receiving party’s knowledge, was not under a duty of confidentiality; (d) it is released by the protected party to a third party without restriction; (e) it is required to be disclosed by the receiving party pursuant to a requirement of a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the protected party written notice of such requirement, to the extent such notice is permitted); (f) release of such information by the Administrator is necessary in connection with the provision of the Administrator’s services under this Agreement; (g) it is relevant to the defense of any claim or cause of action asserted against the receiving party; or (h) it has been or is independently developed or obtained by the receiving party.

8. Responsibility of Administrator .

a. The Administrator shall exercise reasonable care and diligence in rendering its services listed in Section 4 above. The Administrator is not liable for any loss suffered by the Company in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith, negligence or breach of this Agreement on its part in the performance of its duties under this Agreement. Any person, even though also an officer, director, employee or agent of the Administrator, who may be or become an officer, employee or agent of the Company, shall be deemed, when rendering services to the Company or acting on any business of the Company (other than services or business in connection with the Administrator’s duties hereunder) to be rendering such services to or acting solely for the Company and not as an officer, director, employee or agent or one under the control or direction of the Administrator even though paid by it.

b. Notwithstanding anything in this Agreement to the contrary, neither the Administrator nor its affiliates shall be liable for any consequential, special or indirect losses or damages, regardless of whether the likelihood of such losses or damages was known by the Administrator or its affiliates.

c. Notwithstanding anything in this Agreement to the contrary, (i) the Administrator shall not be liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation acts of God; action or inaction of civil or military authority; public enemy; war; terrorism; riot; fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; insurrection; elements of nature; or non-performance by a third party; and (ii) the Administrator shall not be under any duty or obligation to inquire into nor shall it be liable for the validity or invalidity, authority or lack thereof, or truthfulness or accuracy or lack thereof, of any instruction, direction, notice, instrument or other information reasonably believed by it to be genuine.

d. In performing its duties as described herein, the Administrator (i) will act in a manner not inconsistent with the Company’s most recent Prospectuses and Statements of Additional Information and all amendments and supplements thereto (as presently in effect and as from time to time amended and supplemented) and resolutions of the Company’s Board of Trustees of which the Administrator is informed by the Company and (ii) will comply with all applicable requirements of the 1940 Act, of the Securities Act of 1933, of the Securities Exchange Act of 1934 and of any other laws, rules and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by the Administrator hereunder to the extent that such requirements are applicable to the duties to be performed by the Administrator hereunder. Except as specifically set forth herein, the Administrator assumes no responsibility for compliance by the Company or any other entity.

e. The provisions of this Section 8 shall survive termination of this Agreement.

9. Indemnification .

a. The Company agrees to indemnify, defend and hold harmless the Administrator (including its respective officers, directors and employees) from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under any securities laws or blue sky laws) arising directly or indirectly from any action or omission to act taken or omitted by or on behalf of the Administrator (i) in connection with the provision of services hereunder; (ii) at the request or on the direction of or in reasonable reliance on the advice of the Company; or (iii) upon Oral Instructions or Written Instructions reasonably believed to be genuine; provided, that in each case in which indemnification is sought the Administrator has not acted contrary to the standard of care set forth in Section 8(a) of this Agreement and provided, further, that the Administrator shall not be indemnified against any liability (or any expenses incident to such liability) arising out of its own willful misfeasance, bad faith, negligence or breach of this Agreement on its part in the performance of its duties under this Agreement.

b. The Administrator agrees to indemnify, defend and hold harmless the Company (and its respective officers, directors and employees), from all taxes, charges,

expenses, assessments, claims and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under any securities laws or blue sky laws) arising directly or indirectly out of the Administrator’s willful misfeasance, bad faith, negligence or breach of this Agreement on the Administrator’s part in the performance of the Administrator’s duties under this Agreement.

c. The provisions of this Section 9 shall survive termination of this Agreement.

10. Duration and Termination .

This Agreement shall continue in effect for a term of three years commencing as of the date hereof, and at the end of such three-year period shall automatically continue for successive one-year terms, provided , that the Company’s Board of Trustees (“Board”) shall review this Agreement from time to time and at least annually in reference to the terms and conditions specifically set forth below in clauses (i)(A)-(C) of this Section 10. Notwithstanding the above, this Agreement may be terminated:

(i) during the first three years, without the payment of any penalty for such termination:

(A) by the Company, on ninety (90) days prior written notice to the Administrator, as may be required by and consistent with the Board’s fiduciary obligations under the 1940 Act in connection with any annual review; however, in connection with such review of this Agreement by the Board, the Board acknowledges the fees to be received by the Administrator are fair and reasonable for a three-year term; or

(B) by the Company, on sixty (60) days prior written notice to the Administrator, if the Administrator is in material breach of this Agreement and the Administrator has not remedied such breach within such sixty (60) day period; or

(1)

enters into a transaction that would result in a change of control of greater than 50% of the beneficial ownership of the shares of beneficial interest of the Administrator, other than any such change of control where the Board determines the successor entity has similar financial standing and ability to provide services hereunder as the Administrator; or

(2)

files a petition for bankruptcy, or another comparable filing by the Administrator has occurred; or

(3)

has a materially impaired financial condition; or

(4)

has a significant regulatory problem or is the subject of a significant regulatory investigation; and

in the case of subsections (1) through (4) above, the Board determines in the exercise of its fiduciary obligations under the 1940 Act that such event materially impairs the Administrator’s ability to perform its duties under this Agreement; or

(D) by the Administrator, on one hundred fifty (150) days prior written notice to the Company, if the Company is in material breach of the Agreement; and

(ii) at any time after the first three years, without the payment of any penalty, on ninety (90) days prior written notice by the Company to the Administrator, or on one hundred fifty (150) days prior written notice by the Administrator to the Company.

In the event of termination of this Agreement by the Company pursuant to subsections (i)(A) or (ii) of this Section 10 or by the Administrator after a material breach of this Agreement by the Company, all expenses (which shall not be deemed a penalty) associated with movement (or duplication) of records and materials, deconversion and conversion to a successor administrator or other service provider incurred by the Administrator, will be borne by the Company.

11. Amendment of this Agreement . No provision of this Agreement may be changed, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought.

12. Assignment . The Administrator may assign its rights and duties hereunder to any affiliate of itself or of The PNC Financial Services Group, Inc., provided that the Administrator obtains the Company’s prior written consent to such assignment.

13. Notices . Notices shall be addressed if to the Company at , Attention: or at such other address or to such other individual as shall be so specified by the Company to the Administrator. Notices shall be addressed if to the Administrator at PFPC Inc., 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Neal Andrews with a copy to 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: John Fulgoney, Esq. or at such other address or to such other individual as shall be so specified by the Administrator to the Company.

14. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15. Further Actions . Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.

16. Miscellaneous .

a. Entire Agreement . This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties.

b. No Representations or Warranties . Except as expressly provided in this Agreement, the Administrator hereby disclaims all representations and warranties, express or implied, made by it to the Company or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided by it under this Agreement. The Administrator disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.

c. No Changes that Materially Affect Obligations . Notwithstanding anything in this Agreement to the contrary, the Company agrees that no modifications to its registration statement and no policies which it may adopt or resolutions which the Board may adopt will affect materially the obligations or responsibilities of the Administrator hereunder without the prior written approval of the Administrator, which approval shall not be unreasonably withheld or delayed.

d. Captions . The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

e. Information . The Company will provide such information and documentation as the Administrator may reasonably request in connection with services provided by the Administrator to the Company.

f. Governing Law . This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law, without regard to principles of conflicts of law.

g. Partial Invalidity . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. Notwithstanding the foregoing sentence, if any provision of this Agreement relating directly or indirectly to the term of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the parties shall immediately negotiate in good faith in order to agree upon a new provision which is either (i) the economic equivalent of the invalid provision or (ii) acceptable to the party adversely affected by the invalidity of the prior provision.

h. Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

i. Facsimile Signatures . The facsimile signature of any party to this Agreement shall constitute the valid and binding execution hereof by such party.

j. Customer Identification Program Notice . To help the U.S. government

fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Certain of the Administrator’s affiliates are financial institutions, and the Administrator may, as a matter of policy, request (or may have already requested) the Company’s name, address and taxpayer identification number or other government-issued identification number, and, if such party is a natural person, that party’s date of birth. The Administrator may also ask (and may have already asked) for additional identifying information, and the Administrator may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.

k. Systems . The Administrator shall retain title to and ownership of any and all of its own data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by the Administrator in connection with the services provided by the Administrator to the Company.

l. Liability of Trustees, etc. The names “BlackRock Bond Allocation Target Shares” and “Trustees of BlackRock Bond Allocation Target Shares” refer specifically to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under a Declaration of Trust dated , which is hereby referred to and a copy of which is on file at the office of the State Secretary of the State of Delaware and at the principal office of the Company. The obligations of “BlackRock Bond Allocation Target Shares” entered into in the name or on behalf thereof by any of the Trustees, officers, representatives or agents are not made individually, but in such capacities, and are not binding upon any of the Trustees, officers, shareholders, representatives or agents of the Company personally, but bind only the Company’s assets, and all persons dealing with any class of shares of the Company must look solely to the assets belonging to such class for the enforcement of any claims against the Company.

m. Legal Advice . Notwithstanding anything in this Agreement to the contrary, the services of the Administrator do not constitute, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Company or any other person.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of , 2004.


BLACKROCK BOND ALLOCATION TARGET SHARES

By:

PFPC INC.

By:

By executing this joinder to this Agreement, BlackRock Advisors, Inc. hereby agrees to be bound by all of the terms, provisions, covenants and obligations set forth in Section 10 of this Agreement.


BLACKROCK ADVISORS, INC.

By:

APPENDIX A

to the

Administration Agreement

Names of Portfolios

Series S Portfolio

Series C Portfolio

Series M Portfolio

Series P Portfolio

Series I Portfolio

EXHIBIT Y

DataPath ^SM Access Services

1.	Administrator Services. The Administrator will:

(a)

Provide Internet access to PFPC DataPath ^SM (“DataPath ^SM ”) at www.pfpcdatapath.com or other site operated by the Administrator (the “Site”) for Company portfolio data otherwise supplied by the Administrator to Company service providers via other electronic and manual methods. Types of information to be provided on the Site include: (i) data relating to portfolio securities, (ii) general ledger balances and (iii) net asset value-related data, including NAV and net asset, distribution and yield detail (collectively, the “Accounting Services”).

(b)

Supply each of the Authorized Individuals specified on Exhibit Z as permissible users of DataPath ^SM (the “Users”) with a logon ID and Password;

(c)

Provide to Users access to the information listed in (a) above using standard inquiry tools and reports. With respect to the Accounting Services, Users will be able to modify standard inquiries to develop user-defined inquiry tools; however, the Administrator will review computer costs for running user-defined inquiries and may assess surcharges for those requiring excessive hardware resources. In addition, costs for developing custom reports or enhancements will be billed separately to and payable by the Company.

(d)

Utilize a form of encryption that is generally available to the public in the U.S. for standard Internet browsers and establish, monitor and verify firewalls and other security features (commercially reasonable for this type of information and these types of users) and exercise commercially reasonable efforts to attempt to maintain the security and integrity of the Site; and

(e)

Monitor the telephone lines involved in providing the Accounting Services and inform the Company promptly of any malfunctions or service interruptions.

2.	Duties of the Company and the Users. The Company and the Users (to the extent applicable) will:

(a)

Provide and maintain a web browser supporting Secure Sockets Layer 128-bit encryption; and

(b)

Keep logon IDs and passwords confidential and notify the Administrator immediately in the event that a logon ID or password is lost, stolen or if the Company has reason to believe that the logon ID and password are being used by an unauthorized person.

3.	Limitations of Liability.

(a)

Nothing in this Section 3 shall in any way serve to limit any limitation of liability provision otherwise applicable to The Administrator under the Agreement.

(b)

The Company acknowledges that the Internet is an “open,” publicly accessible network and not under the control of any party. the Administrator’s provision of Accounting Services is dependent upon the proper functioning of the Internet and services provided by telecommunications carriers, firewall providers, encryption system developers and others. The Company agrees that the Administrator shall not be liable in any respect for the actions or omissions of any third party wrongdoers (i.e., hackers not employed by such party or its affiliates) or of any third parties involved in the Accounting Services and shall not be liable in any respect for the selection of any such third party, unless that selection constitutes a breach of the Administrator’s standard of care under the Agreement.

(c)

Without limiting the generality of the foregoing or any other provisions of this Exhibit or the Agreement, the Administrator shall not be liable for delays or failures to perform any of the Accounting Services or errors or loss of data occurring directly or indirectly by reason of circumstances beyond the Administrator’s reasonable control, including without limitation the items referenced in Section 8(c) of the Agreement and including without limitation functions or malfunctions of the Internet or telecommunications services, firewalls, encryption systems or security devices occurring directly or indirectly by reason of circumstances beyond the Administrator’s reasonable control or by reason of laws or regulations imposed after the effective date of this Agreement.

4.	Duration, Termination and Changes to Terms.

(a)

The Administrator shall have the right at any time to provide notice to the Company of changes to the terms and fees set forth in this Exhibit or otherwise relating to DataPath ^SM and/or the Accounting Services. Such changes will become effective and bind the parties hereto after sixty (60) days from the date the Administrator notifies the Company of such changes, unless the Company terminates this Exhibit pursuant to Section 4(b) below or the parties agree otherwise at such time.

(b)

The Company or the Administrator may terminate this Exhibit upon sixty (60) days’ prior written notice to the other. Any outstanding fees must be paid before this Exhibit terminates, unless the Administrator waives such requirement.

5.	Miscellaneous. In the event of a conflict between specific terms of this Exhibit and the balance of the Agreement, this Exhibit shall control as to the Accounting Services.

EXHIBIT Z

DataPath ^SM Authorized Individuals

The following individuals shall be Company Authorized Individuals to access the Administrator DataPath ^SM :


Name		Company or Firm		Signature

Exhibit I

October 15, 2004

BlackRock Bond Allocation Target Shares

40 East 52 ^nd Street

New York, New York 10022

RE:

BlackRock Bond Allocation Target Shares Registration

Statement on Form N-1A (File Nos. 333-109980 and 811-21457)

Ladies and Gentlemen:

We have acted as special counsel to BlackRock Bond Allocation Target Shares, a Delaware statutory trust created under the Delaware Statutory Trust Act (the “Trust”), in connection with Pre-Effective Amendment No. 2 to be filed with the Securities and Exchange Commission (the “Commission”) on the date hereof to the Trust’s Registration Statement on Form N-1A, originally filed with the Commission on October 24, 2003 and amended on March 3, 2004 (as heretofore amended and to be amended, the “Registration Statement”), relating to the registration of an indefinite number of shares of beneficial interest, par value of $0.001 per share (the “Shares”), of the BATS: Series S Portfolio, BATS: Series C Portfolio, BATS: Series M Portfolio, BATS: Series P Portfolio and BATS: Series I Portfolio and to the sale of such Shares in accordance with Rule 24f-2 under the Investment Company Act of 1940, as amended (the “1940 Act”).

In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Notification of Registration of the Trust as an investment company under the 1940 Act on Form N-8A, dated October 24, 2003, (ii) the Registration Statement, (iii) the Agreement and Declaration of Trust of the Trust executed by the Trustees named therein (the “Declaration of Trust”), (iv) the By-laws of the Trust, (v) the Certificate of Trust of the Trust filed with the Secretary of State of the State of Delaware on March 5, 2003 and (vi) copies of certain resolutions adopted by the Trustees of the Trust relating to the issuance and sale of the Shares, the filing of any Registration Statement and related matters. We also have examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Trust and such agreements, certificates of public officials, certificates of officers or other representatives of the Trust and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein.

BlackRock Bond Allocation Target Shares

October 15, 2004

Page 2

In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals of such latter documents. In making our examination of documents we have assumed that the parties thereto, other than the Trust, had or will have the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Trust and others.

Members of our firm are admitted to the Bar in the State of Delaware, and we do not express any opinion as to the laws of any jurisdiction other than the Delaware Statutory Trust Act.

Based upon and subject to the assumptions, qualifications and limitations set forth herein, and assuming that all the Shares will be issued and sold for cash at a per-share public offering price not less than the net asset value per share on the date of their sale in accordance with resolutions adopted by the Trustees of the Trust and the Declaration of Trust, it is our opinion that, when issued and sold by the Trust, the Shares will be validly issued, fully paid and nonassessable. We bring to your attention, however, the last sentence of Section 3.8 of the Declaration of Trust.

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the rules and regulations of the Commission.

Very truly yours,

/s/ Skadden Arps, Slate, Meagher & Flom LLP

Exhibit (j)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Pre-Effective Amendment No. 2 to Registration Statement No. 333-109980 of BlackRock Bond Allocation Target Shares (the “Portfolio”) on Form N-1A of our report dated October 8, 2004 and to the reference to us under the heading “Independent Registered Public Accountants” appearing in this Prospectus, which is a part of this Registration Statement.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania

October 15, 2004

Exhibit (L)

PURCHASE AGREEMENT

BlackRock Bond Allocation Target Shares (the “Fund”), a Delaware statutory trust, and BlackRock Funding, Inc. (“BFI”), a Delaware corporation, hereby agree as follows:

1. The Fund hereby offers BFI and BFI hereby purchases 10,000 shares of each of the BATS: Series C, BATS: Series M and BATS: Series S Portfolios (the “Shares”) for $10 per Share. The Fund hereby acknowledges receipt from BFI of funds in full payment for the foregoing Shares.

2. BFI represents and warrants to the Fund that the foregoing Shares are being acquired for investment purposes and not with a view to the distribution thereof.

IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the parties hereto have executed this Purchase Agreement as of October 1, 2004.


BLACKROCK BOND ALLOCATION TARGET SHARES

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


BLACKROCK FUNDING, INC.

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

Exhibit (P)(1)

BLACKROCK FUNDS ^SM

BLACKROCK BOND ALLOCATION TARGET SHARES

(EACH, A “FUND”)

Code of Ethics

I.	Introduction .

The purpose of this Code of Ethics is to prevent Access Persons (as defined below) of a Fund from engaging in any act, practice or course of business prohibited by paragraph (b) of Rule 17j-1 (the “Rule”) under the Investment Company Act of 1940, as amended (the “Act”). This Code of Ethics is required by paragraph (c) of the Rule. A copy of the Rule is attached to this Code of Ethics as Appendix 1.

Access Persons of the Fund, in conducting their personal securities transactions, owe a fiduciary duty to the shareholders of the Fund. The fundamental standard to be followed in personal securities transactions is that Access Persons may not take inappropriate advantage of their positions. All personal securities transactions by Access Persons must be conducted in such a manner as to avoid any actual or potential conflict of interest between the Access Person’s interest and the interests of the Fund, or any abuse of an Access Person’s position of trust and responsibility. Potential conflicts arising from personal investment activities could include buying or selling securities based on knowledge of the Fund’s trading position or plans (sometimes referred to as front-running), and acceptance of personal favors that could influence trading judgments on behalf of the Fund. While this Code of Ethics is designed to address identified conflicts and potential conflicts, it cannot possibly be written broadly enough to cover all potential situations and, in this regard, Access Persons are expected to adhere not only to the letter, but also the spirit, of the policies contained herein.

II.	Definitions .

In order to understand how this Code of Ethics applies to particular persons and transactions, familiarity with the key terms and concepts used in this Code of Ethics is necessary. Those key terms and concepts are:

1. “Access Person” means any trustee, officer or “advisory person” of the Fund. A list of the Fund’s Access Persons is attached as Appendix 2 to this Code of Ethics and will be updated from time to time.

2. “Advisory person” means (a) any employee of the Fund or of any company in a control relationship to the Fund, who, in connection with his regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a “Covered Security” by the Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (b) any natural person in a control relationship to the Fund who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of “Covered Securities”.

3. “Beneficial ownership” has the meaning set forth in Rule 16a-1(a)(2) of the Securities Exchange Act of 1934, as amended, a copy of which is included as Appendix 3. The determination of direct or indirect beneficial ownership shall apply to all securities which an Access Person has or acquires.

4. “BDI” means BlackRock Distributors, Inc., each Fund’s principal underwriter.

5. “BDI Code” means the Code of Ethics adopted by BDI and approved by the Board.

6. “BlackRock” means BlackRock, Inc. and certain of its affiliates that act as investment adviser and sub-adviser to the Funds.

7. “BlackRock Code” means the Employee Investment Transaction Policy adopted by BlackRock and approved by each Fund’s Board.

8. “Control” has the meaning set forth in Section 2(a)(9) of the Act.

9. “Covered Security” has the meaning set forth in Section 2(a)(36) of the Act, except that it shall not include: direct obligations of the Government of the United States; bankers’ acceptances, bank certificates of deposit, commercial paper, and high-quality short-term debt instruments, including repurchase agreements; and shares issued by registered open-end investment companies. A high-quality short-term debt instrument is one with a maturity at issuance of less than 366 days and that is rated in one of the two highest rating categories by a nationally recognized statistical rating organization.

10. “Independent trustee” means a trustee of the Fund who is not an “interested person” of the Fund within the meaning of Section 2(a)(19) of the Act.

11. “Investment Personnel” of the Fund means (a) any employee of the Fund (or of any company in a control relationship to the Fund) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund and (b) any natural person who controls the Fund and who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund.

12. “IPO” means an offering of securities registered under the Securities Act of 1933, the issuer or which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act.

13. “Limited Offering” means an offering exempt from registration under the Securities Act of 1933 pursuant to Section 4(2), 4(6) or Rule 504, 505 or 506 under the Securities Act of 1933.

14. “Purchase or sale of a Covered Security” includes, among other things, the writing of an option to purchase or sell a Covered Security.

III.	Restrictions Applicable to Directors, Officers and Employees of BlackRock and BDI .

1. All Directors, officers and employees of BlackRock’s investment advisory companies and BDI shall be subject to the restrictions, limitations and reporting responsibilities set forth in the BlackRock Code and BDI Code, respectively, as if fully set forth herein.

2. Persons subject to this Section III shall not be subject to the restrictions, limitations and reporting responsibilities set forth in Sections IV. and V. below.

IV.	Prohibitions; Exemptions .

Prohibited Purchases and Sales .

A. No Access Person may purchase or sell, directly or indirectly, any Covered Security in which that Access Person has, or by reason of the transaction would acquire, any direct or indirect beneficial ownership and which to the actual knowledge of that Access Person at the time of such purchase or sale:

(1)

is being considered for purchase or sale by the Fund; or

(2)

is being purchased or sold by the Fund.

Exemptions From Certain Prohibitions .

A. The prohibited purchase and sale transactions described in paragraph IV.1 above do not apply to the following personal securities transactions:

(1)

purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control;

(2)

purchases or sales which are non-volitional on the part of either the Access Person or the Fund;

(3)

purchases which are part of an automatic dividend reinvestment plan (other than pursuant to a cash purchase plan option);

(4)

purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent the rights were acquired from that issuer, and sales of the rights so acquired;

(5)

any purchase or sale, or series of related transactions, involving 500 shares or less in the aggregate, if the issuer has a market capitalization (outstanding shares multiplied by the current price per share) greater than $1 billion;

(6)

any purchase or sale which the Compliance Officer of BlackRock (as defined in the BlackRock Code) approves on the grounds that its potential harm to the Fund is remote.

Prohibited Recommendations .

An Access Person may not recommend the purchase or sale of any Covered Security to or for the Fund without having disclosed his or her interest, if any, in such security or the issuer thereof, including without limitation:

A. any direct or indirect beneficial ownership of any Covered Security of such issuer, including any Covered Security received in a private securities transaction;

B. any contemplated purchase or sale by such person of a Covered Security;

C. any position with such issuer or its affiliates; or

D. any present or proposed business relationship between such issuer or its affiliates and such person or any party in which such person has a significant interest.

Pre-approval of Investments in Initial Public Offerings or Limited Offerings .

A. No Investment Personnel shall purchase any security (including, but not limited to, any Covered Security) issued in an initial public offering (“IPO”) or a Limited Offering unless an officer of the Fund approves the transaction in advance. The Secretary shall maintain a written record of any decisions to permit these transactions, along with the reasons supporting the decision.

V.	Reporting .

Initial Holdings Reports .

No later than ten (10) days after a person becomes an Access Person, he or she must report to the Fund the following information:

(i) the title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person;

(ii) the name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and

(iii) the date that the report is submitted by the Access Person.

Quarterly Reporting .

A. Every Access Person shall either report to the Fund the information described in paragraphs B and C below with respect to transactions in any Covered Security in which the Access Person has, or by reason of the transaction acquires, any direct or indirect

beneficial ownership in the security or, in the alternative, make the representation in paragraph D below.

B. Every report shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected and shall contain the following information:

(1)

the date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Covered Security involved;

(2)

the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(3)

the price at which the transaction was effected;

(4)

the name of the broker, dealer or bank with or through whom the transaction was effected;

(5)

the date that the report is submitted by the Access Person; and

(6)

a description of any factors potentially relevant to an analysis of whether the Access Person may have a conflict of interest with respect to the transaction, including the existence of any substantial economic relationship between the transaction and securities held or to be acquired by the Fund.

C. With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person, no later than 10 days after the end of a calendar quarter, an Access Person shall provide a report to the Fund containing the following information:

(1)

the name of the broker, dealer or bank with whom the Access Person established the account;

(2)

the date the account was established; and

(3)

the date that the report is submitted by the Access Person.

D. If no transactions were conducted by an Access Person during a calendar quarter that are subject to the reporting requirements described above, such Access Person shall, not later than 10 days after the end of that calendar quarter, provide a written representation to that effect to the Fund.

Annual Reporting .

A. Every Access Person shall report to the Fund the information described in paragraph B below with respect to transactions in any Covered Security in which the Access

Person has, or by reason of the transaction acquires, any direct or indirect beneficial ownership in the security.

B. Annually, within 30 days of the end of each calendar year, the following information (which information must be current as of a date no more than 30 days before the report is submitted):

(1)

The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership;

(2)

The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and

(3)

The date that the report is submitted by the Access Person.

Exceptions to Reporting Requirements .

A. An Access Person is not required to make a report otherwise required under paragraphs 1, 2 or 3 above with respect to any transaction effected for any account over which the Access Person does not have any direct or indirect influence or control; provided, however, that if the Access Person is relying upon the provisions of this paragraph 4(A) to avoid making such a report, the Access Person shall, not later than 10 days after the end of each calendar quarter, identify any such account in writing and certify in writing that he or she had no direct or indirect influence over any such account.

B. An independent trustee of the Fund who would be required to make a report pursuant to paragraphs 1, 2 or 3 above solely by reason of being a trustee of the Fund is not required to make an initial holdings report under paragraph 1 above and an annual report under paragraph 3 above, and is only required to make a quarterly report under paragraph 2 above if the independent trustee, at the time of the transaction, knew or, in the ordinary course of fulfilling the independent trustee’s official duties as a trustee of the Fund, should have known that (a) the Fund has engaged in a transaction in the same security within the last 15 days or is engaging or going to engage in a transaction in the same security within the next 15 days, or (b) the Fund or BlackRock has within the last 15 days considered a transaction in the same security or is considering a transaction in the same security or within the next 15 days is going to consider a transaction in the same security.

Annual Certification .

A. All Access Persons are required to certify that they have read and understand this Code of Ethics and recognize that they are subject to the provisions hereof and will comply with the policy and procedures stated herein. Further, all Access Persons are required to certify annually that they have complied with the requirements of this Code of Ethics and that they have reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of such policies. A copy of the certification form to be used in complying with this paragraph A is attached to this Code of Ethics as Appendix 4.

B. The Fund, BlackRock and BDI shall prepare an annual report to the Board of Trustees of the Fund to be presented at the first regular meeting of the Board after March 31 of each year and which shall:

(1)

Summarize existing procedures concerning personal investing, including preclearance policies and the monitoring of personal investment activity after preclearance has been granted, and any changes in the procedures during the past year;

(2)

describe any issues arising under the Code of Ethics or procedures since the last report to the Board including, but not limited to, information about any material violations of the Code of Ethics or procedures and the sanctions imposed during the past year;

(3)

identify any recommended changes in existing restrictions or procedures based upon experience under this Code of Ethics, evolving industry practice or developments in applicable laws and regulations;

(4)

contain such other information, observations and recommendations as deemed relevant by the Fund, BlackRock or BDI; and

(5)

certify that the Fund, BlackRock and BDI have adopted Codes of Ethics with procedures reasonably necessary to prevent Access Persons from violating the provisions of Rule 17j-1(b) or this Code.

Notification of Reporting Obligation and Review of Reports .

Each Access Person shall receive a copy of this Code of Ethics and be notified of his or her reporting obligations. All reports shall be promptly submitted upon completion to the Fund’s Secretary who shall review such reports.

Miscellaneous .

A. Any report under this Code of Ethics may contain a statement that the report shall not be construed as an admission by the person making the report that the person has any direct or indirect beneficial ownership in the securities to which the report relates.

VI.	Confidentiality .

No Access Person shall reveal to any other person (except in the normal course of his or her duties on behalf of the Fund) any information regarding securities transactions by the Fund or consideration by the Fund or BlackRock of any such securities transaction.

All information obtained from any Access Person hereunder shall be kept in strict confidence, except that reports of securities transactions hereunder will be made available to the Securities and Exchange Commission or any other regulatory or self-regulatory organization to the extent required by law or regulation.

VII.	Sanctions .

Upon discovering a violation of this Code of Ethics, the Board of Trustees of the Fund may impose any sanctions it deems appropriate, including a letter of censure, the suspension or termination of any trustee, officer or employee of the Fund, or the recommendation to the employer of the violator of the suspension or termination of the employment of the violator.

Dated: September 10, 2004

Appendix 1

Rule 17j-1 under the 1940 Act

a.	Definitions. For purposes of this section:

Access Person means:

Any director, officer, general partner or Advisory Person of a Fund or of a Fund’s investment adviser.

If an investment adviser is primarily engaged in a business or businesses other than advising Funds or other advisory clients, the term Access Person means any director, officer, general partner or Advisory Person of the investment adviser who, with respect to any Fund, makes any recommendation, participates in the determination of which recommendation will be made, or whose principal function or duties relate to the determination of which recommendation will be made, or who, in connection with his or her duties, obtains any information concerning recommendations on Covered Securities being made by the investment adviser to any Fund.

An investment adviser is “primarily engaged in a business or businesses other than advising Funds or other advisory clients” if, for each of its most recent three fiscal years or for the period of time since its organization, whichever is less, the investment adviser derived, on an unconsolidated basis, more than 50 percent of its total sales and revenues and more than 50 percent of its income (or loss), before income taxes and extraordinary items, from the other business or businesses.

ii.

Any director, officer or general partner of a principal underwriter who, in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of Covered Securities by the Fund for which the principal underwriter acts, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Fund regarding the purchase or sale of Covered Securities.

Advisory Person of a Fund or of a Fund’s investment adviser means:

Any employee of the Fund or investment adviser (or of any company in a control relationship to the Fund or investment adviser) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Covered Securities by a Fund, or whose

functions relate to the making of any recommendations with respect to the purchases or sales; and

ii.

Any natural person in a control relationship to the Fund or investment adviser who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of Covered Securities by the Fund.

Control has the same meaning as in section 2(a)(9) of the Act.

Covered Security means a security as defined in section 2(a)(36) of the Act, except that it does not include:

Direct obligations of the Government of the United States;

ii.

Bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; and

iii.

Shares issued by open-end Funds.

Fund means an investment company registered under the Investment Company Act.

An Initial Public Offering means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of sections 13 or 15(d) of the Securities Exchange Act of 1934.

Investment Personnel of a Fund or of a Fund’s investment adviser means:

Any employee of the Fund or investment adviser (or of any company in a control relationship to the Fund or investment adviser) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund.

ii.

Any natural person who controls the Fund or investment adviser and who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund.

A Limited Offering means an offering that is exempt from registration under the Securities Act of 1933 pursuant to section 4(2) or section 4(6) or pursuant to rule 504 , rule 505 , or rule 506 under the Securities Act of 1933.

Purchase or sale of a Covered Security includes, among other things, the writing of an option to purchase or sell a Covered Security.

10.

Security Held or to be Acquired by a Fund means:

Any Covered Security which, within the most recent 15 days:

Is or has been held by the Fund; or

Is being or has been considered by the Fund or its investment adviser for purchase by the Fund; and

ii.

Any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in paragraph (a)(10)(i) of this section.

Unlawful Actions. It is unlawful for any affiliated person of or principal underwriter for a Fund, or any affiliated person of an investment adviser of or principal underwriter for a Fund, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Fund:

To employ any device, scheme or artifice to defraud the Fund;

To make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading;

To engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or

To engage in any manipulative practice with respect to the Fund.

c.	Code of Ethics.

Adoption and Approval of Code of Ethics.

Every Fund (other than a money market fund or a Fund that does not invest in Covered Securities) and each investment adviser of and principal underwriter for the Fund, must adopt a written code of ethics containing provisions reasonably necessary to prevent its Access Persons from engaging in any conduct prohibited by paragraph (b) of this section.

ii.

The board of directors of a Fund, including a majority of directors who are not interested persons, must approve the code of ethics of the Fund, the code of ethics of each investment adviser and principal underwriter of the Fund, and any material changes to these codes. The board must base its approval of a code and any material changes to the code on a determination that the code contains provisions reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by paragraph (b) of this section. Before approving a code of a Fund, investment adviser or principal underwriter or any amendment to the code, the board of directors must receive a certification from the Fund, investment adviser or principal underwriter that it has

adopted procedures reasonably necessary to prevent Access Persons from violating the Funds, investment adviser’s, or principal underwriter’s code of ethics. The Fund’s board must approve the code of an investment adviser or principal underwriter before initially retaining the services of the investment adviser or principal underwriter. The Fund’s board must approve a material change to a code no later than six months after adoption of the material change.

iii.

If a Fund is a unit investment trust, the Fund’s principal underwriter or depositor must approve the Fund’s code of ethics, as required by paragraph (c)(1)(ii) of this section. If the Fund has more than one principal underwriter or depositor, the principal underwriters and depositors may designate, in writing, which principal underwriter or depositor must conduct the approval required by paragraph (c)(1)(ii) of this section, if they obtain written consent from the designated principal underwriter or depositor.

Administration of Code of Ethics.

The Fund, investment adviser and principal underwriter must use reasonable diligence and institute procedures reasonably necessary to prevent violations of its code of ethics.

ii.

No less frequently than annually, every Fund (other than a unit investment trust) and its investment advisers and principal underwriters must furnish to the Fund’s board of directors, and the board of directors must consider, a written report that:

Describes any issues arising under the code of ethics or procedures since the last report to the board of directors, including, but not limited to, information about material violations of the code or procedures and sanctions imposed in response to the material violations; and

Certifies that the Fund, investment adviser or principal underwriter, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating the code.

Exception for Principal Underwriters. The requirements of paragraphs (c)(1) and (c)(2) of this section do not apply to any principal underwriter unless:

The principal underwriter is an affiliated person of the Fund or of the Fund’s investment adviser; or

ii.

An officer, director or general partner of the principal underwriter serves as an officer, director or general partner of the Fund or of the Fund’s investment adviser.

d.	Reporting Requirements of Access Persons.

Reports Required. Unless excepted by paragraph (d)(2) of this section, every Access Person of a Fund (other than a money market fund or a Fund that does not invest in Covered Securities) and every Access Person of an investment adviser of or principal underwriter for the Fund, must report to that Fund, investment adviser or principal underwriter:

Initial Holdings Reports. No later than 10 days after the person becomes an Access Person, the following information:

The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person;

The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and

The date that the report is submitted by the Access Person.

ii.

Quarterly Transaction Reports. No later than 10 days after the end of a calendar quarter, the following information:

With respect to any transaction during the quarter in a Covered Security in which the Access Person had any direct or indirect beneficial ownership:

The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Covered Security involved;

The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

The price of the Covered Security at which the transaction was effected;

The name of the broker, dealer or bank with or through which the transaction was effected; and

The date that the report is submitted by the Access Person.

With respect to any account established by the Access Person in which any securities were held during the

quarter for the direct or indirect benefit of the Access Person:

The name of the broker, dealer or bank with whom the Access Person established the account;

The date the account was established; and

The date that the report is submitted by the Access Person.

iii.

Annual Holdings Reports. Annually, the following information (which information must be current as of a date no more than 30 days before the report is submitted):

The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership;

The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and

The date that the report is submitted by the Access Person.

Exceptions from Reporting Requirements.

A person need not make a report under paragraph (d)(1) of this section with respect to transactions effected for, and Covered Securities held in, any account over which the person has no direct or indirect influence or control.

ii.

A director of a Fund who is not an “interested person” of the Fund within the meaning of section 2(a)(19) of the Act, and who would be required to make a report solely by reason of being a Fund director, need not make:

An initial holdings report under paragraph (d)(1)(i) of this section and an annual holdings report under paragraph (d)(1)(iii) of this section; and

A quarterly transaction report under paragraph (d)(1)(ii) of this section, unless the director knew or, in the ordinary course of fulfilling his or her official duties as a Fund director, should have known that during the 15-day period immediately before or after the director’s transaction in a Covered Security, the Fund purchased or sold the Covered Security, or the Fund or its investment adviser considered purchasing or selling the Covered Security.

iii.

An Access Person to a Fund’s principal underwriter need not make a report to the principal underwriter under paragraph (d)(1) of this section if:

The principal underwriter is not an affiliated person of the Fund (unless the Fund is a unit investment trust) or any investment adviser of the Fund; and

The principal underwriter has no officer, director or general partner who serves as an officer, director or general partner of the Fund or of any investment adviser of the Fund.

iv.

An Access Person to an investment adviser need not make a quarterly transaction report to the investment adviser under paragraph (d)(1)(ii) of this section if all the information in the report would duplicate information required to be recorded under §§275.204-2(a)(12) or 275.204- 2(a)(13) of this chapter.

An Access Person need not make a quarterly transaction report under paragraph (d)(1)(ii) of this section if the report would duplicate information contained in broker trade confirmations or account statements received by the Fund, investment adviser or principal underwriter with respect to the Access Person in the time period required by paragraph (d)(1)(ii), if all of the information required by that paragraph is contained in the broker trade confirmations or account statements, or in the records of the Fund, investment adviser or principal underwriter.

Review of Reports. Each Fund, investment adviser and principal underwriter to which reports are required to be made by paragraph (d)(1) of this section must institute procedures by which appropriate management or compliance personnel review these reports.

Notification of Reporting Obligation. Each Fund, investment adviser and principal underwriter to which reports are required to be made by paragraph (d)(1) of this section must identify all Access Persons who are required to make these reports and must inform those Access Persons of their reporting obligation.

Beneficial Ownership. For purposes of this section, beneficial ownership is interpreted in the same manner as it would be under Rule 16a-1(a)(2) of this chapter in determining whether a person is the beneficial owner of a security for purposes of section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder. Any report required by paragraph (d) of this section may contain a statement that the report will not be construed as an admission that the person making the report has any direct or indirect beneficial ownership in the Covered Security to which the report relates.

Pre-approval of Investments in IPOs and Limited Offerings. Investment Personnel of a Fund or its investment adviser must obtain approval from the Fund or the Fund’s investment adviser before directly or indirectly acquiring beneficial ownership in any securities in an Initial Public Offering or in a Limited Offering.

f.	Recordkeeping Requirements.

Each Fund, investment adviser and principal underwriter that is required to adopt a code of ethics or to which reports are required to be made by Access Persons must, at its principal place of business, maintain records in the manner and to the extent set out in this paragraph (f), and must make these records available to the Commission or any representative of the Commission at any time and from time to time for reasonable periodic, special or other examination:

A copy of each code of ethics for the organization that is in effect, or at any time within the past five years was in effect, must be maintained in an easily accessible place;

A record of any violation of the code of ethics, and of any action taken as a result of the violation, must be maintained in an easily accessible place for at least five years after the end of the fiscal year in which the violation occurs;

A copy of each report made by an Access Person as required by this section, including any information provided in lieu of the reports under paragraph (d)(2)(v) of this section, must be maintained for at least five years after the end of the fiscal year in which the report is made or the information is provided, the first two years in an easily accessible place;

A record of all persons, currently or within the past five years, who are or were required to make reports under paragraph (d) of this section, or who are or were responsible for reviewing these reports, must be maintained in an easily accessible place; and

A copy of each report required by paragraph (c)(2)(ii) of this section must be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place.

A Fund or investment adviser must maintain a record of any decision, and the reasons supporting the decision, to approve the acquisition by investment personnel of securities under paragraph (e) , for at least five years after the end of the fiscal year in which the approval is granted.

Appendix 2

The following are “Access Persons” for purposes of the foregoing Code of Ethics:


Name		Title
Stuart E. Eizenstat		Trustee
Laurence D. Fink		Trustee and President
Robert M. Hernandez		Trustee, Vice Chairman of the Board
Matina Horner		Trustee
David R. Wilmerding, Jr.		Chairman of the Board
Paul Audet		Treasurer
Anne Ackerley		Vice President
Ellen L. Corson		Assistant Treasurer
Brian P. Kindelan		Secretary
Vincent Tritto		Assistant Secretary
Bart Battista		Anti-Money Laundering Compliance Officer, Chief Compliance Officer

Portfolio Managers of the Fund

Appendix 3

Rule 16a-1(a)(2) under the Securities Exchange Act

Other than for purposes of determining whether a person is a beneficial owner of more than ten percent of any class of equity securities registered under Section 12 of the Act, the term beneficial owner shall mean any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the equity securities, subject to the following:

The term pecuniary interest in any class of equity securities shall mean the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the subject securities.

ii.

The term indirect pecuniary interest in any class of equity securities shall include, but not be limited to:

Securities held by members of a person’s immediate family sharing the same household; provided, however, that the presumption of such beneficial ownership may be rebutted; see also Rule 16a-1(a)(4) ;

A general partner’s proportionate interest in the portfolio securities held by a general or limited partnership. The general partner’s proportionate interest, as evidenced by the partnership agreement in effect at the time of the transaction and the partnership’s most recent financial statements, shall be the greater of:

The general partner’s share of the partnership’s profits, including profits attributed to any limited partnership interests held by the general partner and any other interests in profits that arise from the purchase and sale of the partnership’s portfolio securities; or

The general partner’s share of the partnership capital account, including the share attributable to any limited partnership interest held by the general partner.

A performance-related fee, other than an asset-based fee, received by any broker, dealer, bank, insurance company, investment company, investment adviser, investment manager, trustee or person or entity performing a similar function; provided, however, that no pecuniary interest shall be present where:

The performance-related fee, regardless of when payable, is calculated based upon net capital gains and/or net capital appreciation generated from the portfolio or from the fiduciary’s overall performance over a period of one year or more; and

Equity securities of the issuer do not account for more than ten percent of the market value of the portfolio. A right to a nonperformance-related fee alone shall not represent a pecuniary interest in the securities;

A person’s right to dividends that is separated or separable from the underlying securities. Otherwise, a right to dividends alone shall not represent a pecuniary interest in the securities;

A person’s interest in securities held by a trust, as specified in Rule 16a-8(b) ; and

A person’s right to acquire equity securities through the exercise or conversion of any derivative security, whether or not presently exercisable.

iii.

A shareholder shall not be deemed to have a pecuniary interest in the portfolio securities held by a corporation or similar entity in which the person owns securities if the shareholder is not a controlling shareholder of the entity and does not have or share investment control over the entity’s portfolio.

Appendix 4

CERTIFICATION FORM

This is to certify that I have read and understand the Code of Ethics of the Fund and that I recognize that I am subject to the provisions thereof and will comply with the policy and procedures stated therein.

This is to further certify that I have complied with the requirements of such Code of Ethics and that I have reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of such Code of Ethics.


Please sign your name here:

Please print your name here:

Please date here:

Please sign two copies of this Certification Form, return one copy to Mr. Bart Battista, c/o BlackRock, 40 East 52 ^nd Street, New York, New York 10022, and retain the other copy, together with a copy of the Code of Ethics, for your records.

Exhibit (P)(2)

EMPLOYEE INVESTMENT TRANSACTION POLICY.

For

B LACKROCK I NVESTMENT A DVISER C OMPANIES

Effective March 1, 2000

EMPLOYEE INVESTMENT TRANSACTION POLICY

Table of Contents


TABLE OF CONTENTS					i

I.	PREAMBLE				1

	A.		General Principles		1

	B.		The General Scope Of The Policy’s Application To Personal Investment Transactions		3

	C.		The Organization Of This Policy		3

	D.		Questions		4

II.	PERSONAL INVESTMENT TRANSACTIONS				4

	A.		In General		4

	B.		Reporting Obligations		4

		1.	Use Of Broker-Dealers And Futures Commission Merchants		4

		2.	Initial Report		5

		3.	New Accounts		6

		4.	Timely Reporting Of Investment Transactions		6

		5.	Related Accounts		6

		6.	Annual Holdings Report		6

		7.	Exemptions From Reporting		7

	C.		Prohibited Or Restricted Investment Transactions		8

		1.	Initial Public Offerings		8

		2.	Private Placements -		8

	D.		Investment Transactions Requiring Prior Notification		9

		1.	Prior Notification Procedure		9

		2.	Exemptions From Prior Notification		10

			(a)	Transactions Exempt From Prior Notification	10

			(b)	Securities Exempt From Prior Notification	11

			(c)	Futures Contracts Exempt From Prior Notification	11

	E.		Ban On Short-Term Trading Profits		11

	F.		Blackout Periods		12

		1.	Specific Blackout Periods		13

		2.	Exemptions From Blackout Restrictions		13


III.	INSIDE INFORMATION AND SERVICE AS A DIRECTOR			13

	A.		Inside Information	13

	B.		Service As A Director	14

IV.	EXEMPTIONS			14

V.	COMPLIANCE			14

	A.		Certifications	14

		1.	Upon Receipt Of This Policy	14

		2.	Annual Certificate Of Compliance	15

	B.		Supervisory Procedures	15

		1.	The Compliance Committee	15

		2.	The Compliance Officer	16

		3.	Post-Trade Monitoring And Investigations	16

		4.	Remedial Actions	17

		5.	Reports Of Material Violations	17

		6.	Annual Reports	17

VI.	EFFECTIVE DATE			18

Appendices


I.		Definitions Of Capitalized Terms

II.		Acknowledgment Of Receipt Of The Policy

III.		Annual Certification Of Compliance With The Policy

III-A.		Annual Holdings Report

IV.		Initial Report Of Accounts

V-A.		Request For Duplicate Broker Reports (For persons not associated with

		BlackRock Investments, Inc.)

V-B.		Request For Duplicate Broker Reports (For persons associated with BlackRock

		Investments, Inc.)

VI.		Investment Transaction Prior Notification Form

VII.		Fully Discretionary Account Form

EMPLOYEE INVESTMENT TRANSACTION POLICY

FOR B LACKROCK , I NVESTMENT A DVISER C OMPANIES

I.	PREAMBLE

General Principles

This Employee Investment Transaction Policy (the “Policy”) is based on the principle that you, as an officer, director or other Advisory Employee of an Advisor affiliated with BlackRock, Inc. (“BlackRock ^” ), owe a fiduciary duty of undivided loyalty to the registered investment companies, institutional investment clients, personal trusts and estates, guardianships, employee benefit trusts, and other Advisory Clients which that Advisor serves. ¹ Accordingly, you must avoid transactions, activities, and relationships that might interfere or appear to interfere with making decisions in the best interests of those Advisory Clients.

At all times, you must observe the following general principles:

You must place the interests of Advisory Clients first. As a fiduciary you must scrupulously avoid serving your own personal interests ahead of the interests of Advisory Clients. You must adhere to this general fiduciary principle as well as comply with the Policy’s specific provisions. Technical compliance with the Policy will not automatically insulate from

This Policy uses a number of capitalized terms, e.g., Advisor, Advisory Client, Advisory Employee, Beneficial Ownership, Exempt Security, Fixed Income Security, Fully Discretionary Account, Futures Contract, Immediate Family, Investment Transaction, Personal Account, Portfolio Employee, Portfolio Manager, Related Account, and Security. The first time a capitalized term is used, a definition is stated in the text or in a footnote. The full definitions of these capitalized terms are set forth in Appendix I . To understand your responsibilities under the Policy, it is important that you review and understand all of the definitions of capitalized terms in Appendix I . As indicated in Appendix I:

The term “ Advisor ” means any entity affiliated with BlackRock, whether now in existence or formed after the date hereof, that is registered as (i) an investment advisor under the Investment Advisers Act of 1940, as amended, or (ii) a broker-dealer under the Securities Exchange Act of 1934, as amended, other than any such investment advisor or broker-dealer that has adopted its own employee investment transaction policy.

The term “ Advisory Client ” means a registered investment company, an institutional investment client, a personal trust or estate, a guardianship, an employee benefit trust, or another client with which the Advisor by which you are employed or with which you are associated has an investment management, advisory or sub-advisory contract or relationship.

The term “ Advisory Employee ” means an officer, director, or employee of an Advisor, or any other person identified as a “control person” on the Form ADV or the Form BD filed by the Advisor with the U.S. Securities and Exchange Commission, (1) who, in connection with his or her regular functions or duties, generates, participates in, or obtains information regarding that Advisor’s purchase or sale of a Security by or on behalf of an Advisory Client; (2) whose regular functions or duties relate to the making of any recommendations with respect to such purchases or sales; (3) who obtains information or exercises influence concerning investment recommendations made to an Advisory Client of that Advisor, or (4) who has line oversight or management responsibilities over employees described in (1), (2) or (3), above.

scrutiny any Investment Transaction ² that indicates an abuse of your fiduciary duties or that creates an appearance of such abuse.

Your fiduciary obligation applies not only to your personal Investment Transactions but also to actions taken on behalf of Advisory Clients. In particular, you may not cause an Advisory Client to take action, or not to take action, for your personal benefit rather than for the benefit of the Advisory Client. For example, you would violate this Policy if you caused an Advisory Client to purchase a Security you owned for the purpose of increasing the value of that Security. If you are a Portfolio Employee, ³ you would also violate this Policy if you made a personal investment in a Security that might be an appropriate investment for an Advisory Client without first considering the Security as an investment for the Advisory Client.

²	For purposes of this Policy, the tern “ Investment Transaction ” means any transaction in a Security or Futures Contract in which you have, or by reason of the transaction will acquire, a Beneficial Ownership interest.

As a general matter, the term “ Security ” means any stock, note, bond, debenture or other evidence of indebtedness (including any loan participation or assignment), limited partnership interest or investment contract other than an Exempt Security (as defined above). The term “Security” includes an option on a Security, an index of Securities, a currency or a basket of currencies, including such an option traded on the. Chicago Board of Options Exchange or on the New York, American, Pacific or Philadelphia Stock Exchanges as well as such an option traded in the over-the-counter market. The term “Security” does not include a physical commodity or a Futures Contract.

The term “ Futures Contract ” includes (a) a futures contract and an option on a futures’ contract traded on a U.S. or foreign board of trade, such as the Chicago Board of Trade, the Chicago Mercantile Exchange, the New York Mercantile Exchange, or the London International Financial Futures Exchange (a ^“ Publicly-Traded Futures Contract”), as well as (b) a forward contract, a “swap”, a “cap”, a “collar”, a “floor” and an over-the-counter option (other than an option on a foreign currency, an option on a basket of currencies, an option on a Security or an option on an index of Securities) (a “Privately-Traded Futures Contract”).

As a general matter, you are considered to have a “ Beneficial Ownership ” interest in a Security or Futures Contract if you have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in that Security or Futures Contract. You are presumed to have a Beneficial Ownership interest in any Security or Futures Contract held, individually or jointly, by you and/or by a member of your Immediate Family (as defined below). In addition, unless specifically excepted by the Compliance Officer based on a showing that your interest or control is sufficiently attenuated to avoid the possibility of a conflict, you will be considered to have a Beneficial Ownership interest in a Security held by: (1) a joint account to which you are a party, (2) a partnership in which you are a general partner, (3) a limited liability company in which you are a manager-member, (4) a trust in which you or a member of your Immediate Family has a pecuniary interest or (S) an investment club in which you are a member.

See Appendix I for more complete definitions of the terms “Beneficial Ownership,” “Futures Contract,” and “Security.”

The term “ Portfolio Employee ” means a Portfolio Manager or an Advisory Employee who provides information or advice to a Portfolio Manager, who helps execute a Portfolio Manager’s decisions, or who directly supervises a Portfolio Manager. The term “ Portfolio Manager ” means any employee of an Advisor who has the authority, whether sole or shared or only from time to time, to make investment decisions or to direct trades affecting an Advisory Client.

You must conduct all of your personal Investment Transactions in full compliance with this Policy, the BlackRock, Inc. Insider Trading Policy, the PNC Code of Ethics, and the other policies of The PNC Financial Services Group, Inc. (“PNC”) and BlackRock (including the policies that prohibit insider trading or that restrict trading in PNC Securities). BlackRock encourages you and your family to develop personal investment programs. However, those investment programs must remain within boundaries reasonably necessary to insure that appropriate safeguards exist to protect the interests of our Advisory Clients and to avoid even the appearance of unfairness or impropriety. Doubtful situations should be resolved in favor of our Advisory Clients and against your personal Investment Transactions.

You must not take inappropriate advantage of your position. The receipt of investment opportunities, perquisites, gifts or gratuities from persons seeking to do business, directly or indirectly, with BlackRock, an affiliate, or an Advisory Client could call into question the independence of your business judgment. Doubtful situations should be resolved against your personal interests.

The General Scope Of The Policy’s Application To Personal Investment Transactions

Rule 17j-l under the Investment Company Act of 1940, as amended, requires reporting of all personal Investment Transactions in Securities (other than certain “Exempt Securities”) by Advisory Employees, whether or not they are Securities that might be purchased or sold by or on behalf of an Advisory Client. This Policy implements that reporting requirement.

However, since a primary purpose of the Policy is to avoid conflicts of interest arising from personal Investment Transactions in Securities and other instruments that are held or might be acquired on behalf of Advisory Clients, this Policy only places restrictions on personal Investment Transactions in such investments. This Policy also requires reporting and restricts personal Investment Transactions in certain Futures Contracts which, although they are not Securities, are instruments that Advisors buy and sell for Advisory Clients.

Although this Policy applies to all officers, directors and other Advisory Employees of BlackRock, the Policy recognizes that Portfolio Managers, and the other Portfolio Employees who provide them with advice and who execute their decisions, occupy more sensitive positions than other Advisory Employees, and that it is appropriate to subject their personal Investment Transactions to greater restrictions.

The Organization Of This Policy

The remainder of this Policy is divided into four main topics. Section II concerns personal investment transactions . Section III describes restrictions that apply to Advisory Employees who receive inside information or seek to serve on a board of directors or similar governing body . Section IV outlines the procedure for seeking case-by-case exemptions from

the Policy’s requirements. Section V summarizes the methods for ensuring compliance under this Policy. In addition, the following Appendices are also a part of this Policy:

I.	Definitions Of Capitalized Terms

II.	Acknowledgment Of Receipt Of The Policy

III.	Annual Certification Of Compliance With The Policy

IV.	Initial Report Of Accounts

V.	Request For Duplicate Broker Reports

VI.	Investment Transaction Prior Notification Form

VII.	Fully Discretionary Account Form

Questions

Questions regarding this Policy should be addressed to the Compliance Officer. If you have any question regarding the interpretation of this Policy or its application to a potential Investment Transaction, you should consult the Compliance Officer before you execute that transaction.

II.

PERSONAL INVESTMENT TRANSACTIONS

In General

Subject to the limited exceptions described below, you are required to report all Investment Transactions in Securities and Futures Contracts made by you, a member of your Immediate Family, a trust or an investment club in which you have an interest, or on behalf of any account in which you have an interest or which you direct. ⁴ In addition, you must provide prior notification of certain Investment Transactions in Securities and Futures Contracts that an Advisor holds or may acquire on behalf of an Advisory Client. (The exercise of an option is an Investment Transaction for purposes of these requirements.) The details of these reporting and prior notification requirements are described below.

Reporting Obligations

Use Of Broker-Dealers And Futures Commission Merchants

You must use a registered broker-dealer or futures commission merchant to engage in any purchase or sale of a publicly traded Security or Futures Contract. This requirement also

⁴

The term “ Immediate Family ” means any of the following persons who reside in your household or who depend on you for basic living support : your spouse, any child, stepchild, grandchild, parent, stepparent, grandparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including any adoptive relationships.

applies to any purchase or sale of a Security or Futures Contract in which you have, or by reason of the Investment Transaction will acquire, a Beneficial Ownership interest. Thus, as a general matter, any Securities or Futures Contract transactions by members of your Immediate Family will need to be made through a registered broker-dealer or futures commission merchant.

Initial Report

Within 10 days of commencing employment or within 10 days of any event that causes you to become subject to this Policy, you must supply to the Compliance Officer copies of the most recent statements for each and every Personal Account and Related Account that holds or is likely to hold a Security or Futures Contract in which you have a Beneficial Ownership interest, as well as copies of confirmations for any and all transactions subsequent to the effective dates of those statements.[5] These documents should be supplied to the Compliance Officer by attaching them to the form attached hereto as Appendix IV.

On that same form you should supply the name of any registered broker-dealer and/or futures commission merchant and the number for any Personal Account and Related Account that holds or is likely to hold a Security or Futures Contract in which you have a Beneficial Ownership interest for which you cannot supply the most recent account statement. You must also certify, where indicated on the form, that the contents of the form and the documents attached thereto disclose all such Personal Accounts and Related Accounts.

In addition, you must also supply, where indicated on the form, the following information for each Security or Futures Contract in which you have a Beneficial Ownership interest, to the extent that this information is not available from the statements attached to the form:

⁵	The term “ Personal Account ” means the following accounts that hold or are likely to hold a Security or Futures Contract in which you have a Beneficial Ownership interest:

•

any account in your individual name;

•

any joint or tenant-in-common account in which you have an interest or are a participant;

•

any account for which you act as trustee, executor, or custodian; and

•

any account over which you have investment discretion or have the power (whether or not exercised) to direct the acquisition or disposition of Securities or Futures Contracts (other than an Advisory Client’s account that you manage or over which you have investment discretion), including the accounts of any individual or entity that is managed or controlled directly or indirectly by or through you, such as the account of an investment club to which you belong. There is a presumption that you can control accounts held by members of your Immediate Family sharing the same household. This presumption may be rebutted only by convincing evidence.

The term “ Related Account ” means any account, other than a Personal Account, that holds a Security or Futures Contract in which you have a direct or indirect Beneficial Ownership interest (other than an account over which you have no investment discretion and cannot otherwise exercise control) and any account (other than an Advisory Client’s account) of any individual or entity to whom you give advice or make recommendations with regard to the acquisition or disposition of Securities or Futures Contracts (whether or not such advice is acted upon).

A description of the Security or Futures Contract, including its name or title;

The quantity (e.g., in terms of numbers of shares, units or contracts) and value (in dollars) of the Security or Futures Contract; and

The custodian of the Security or Futures Contract

New Accounts

Upon the opening of a new Personal Account or a Related Account that holds or is likely to hold a Security or a Futures Contract in which you have a Beneficial Ownership interest, you must give written notice to the Compliance Officer of the name of the registered broker-dealer or futures commission merchant for that account, the identifying number for that Personal Account or Related Account and the date that the account was established.

Timely Reporting Of Investment Transactions

You must cause each broker-dealer or futures commission merchant that maintains a Personal Account or a Related Account that holds a Security or a Futures Contract in which you have a Beneficial Ownership interest to provide to the Compliance Officer, on a timely basis, duplicate copies of confirmations of all transactions in that account and of periodic statements for that account (“Duplicate Broker Reports”). A form for that purpose is attached hereto as Appendix V.

In addition, you must report to the Compliance Officer, on a timely basis, any transaction in a Security or Futures Contract in which you have or acquired a Beneficial Ownership interest that was made without the use of a registered broker-dealer or futures commission merchant.

Related Accounts

The reporting obligations described above also apply to any Related Account (as defined in Appendix I) and to any Investment Transaction in a Related Account.

It is important that you recognize that the definitions of “Personal Account,” “Related Account” and “Beneficial Ownership” in Appendix I probably will require you to provide, or to arrange for the broker-dealer or futures commission merchant to furnish, copies of reports for any account used by or for a member of your Immediate Family or a trust in which you or a member of your Immediate Family has an interest, as well as for any other accounts in which you may have the opportunity, directly or indirectly, to profit or share in the profit derived from any Investment Transaction in that account, including the account of any investment club to which you belong.

Annual Holdings Report

You must report to the Compliance Officer on an annual basis holdings of all Securities and Futures Contracts in which you have a Beneficial Ownership interest. This requirement can

generally be satisfied by causing each broker-dealer or futures commission merchant that maintains a Personal Account and/or a Related Account that holds a Security or Futures Contract in which you have a Beneficial Ownership interest to provide to the Compliance Officer, on a timely basis, Duplicate Broker Reports in accordance with the requirements under Section II.B.4 above. If you have a Beneficial Ownership Interest in a Security or Futures Contract that is not held in an account with a broker-dealer or a futures commission merchant or other custodian from whom the Compliance Officer receives a periodic statement of your Personal Account and/or Related Accounts, you must complete the Annual Holdings Report attached hereto as Appendix III-A and submit it to the Compliance Officer at the time you make your Annual Certification of Compliance in accordance with the requirements under Section V.A.2 of this Policy. The information in the Annual Holdings Report must be current as of a date no more than 30 days before the report is submitted.

You must supply, where indicated on the form, the following information for each Security or Futures Contract:

Name of the person who owns the Security or Futures Contract;

A description of the Security or Futures Contract, including its name or title;

The quantity (e.g., in terms of numbers of shares, units or contracts) and. value (in dollars) of the Security or Futures Contract;

The valuation date of the Security or Futures Contract; and

The custodian of the Security or Futures Contract.

Exemptions From Reporting

You need not report Investment Transactions in any account, including a Fully Discretionary Account, ⁶ over which neither you nor an Immediate Family Member has or had any direct or indirect influence or control. For example, Investment Transactions in the account of your spouse in an employee benefit plan would not have to be reported if neither you nor your spouse has any influence or control over those Investment Transactions.

⁶

The term “Fully Discretionary Account” means a Personal Account or Related Account managed or held by a broker-dealer, futures commission merchant, investment advisor or trustee as to which neither you nor an Immediate Family Member: (a) exercises any investment discretion; (b) suggests or receives notice of transactions prior to their execution; and (c) you do not otherwise have any direct or indirect influence or control. In addition, to qualify as a Fully Discretionary Account, the individual broker, registered representative or merchant responsible for that account must not be responsible for nor receive advance notice of any purchase or sale of a Security or Futures Contract on behalf of an Advisory Client. To qualify an account as a Fully Discretionary Account, the Compliance Officer must receive and approve a written notice, in the form attached hereto, as Appendix VIII, that the account meets the foregoing qualifications as a Fully Discretionary Account.

You also need not report Investment Transactions in Exempt Securities nor need you furnish, or require a broker-dealer or futures commission merchant to furnish, copies of confirmations or periodic statements for accounts that hold only Exempt Securities. ⁷ This includes accounts that only hold U.S. Government securities, money market interests, or shares in registered open-end investment companies (i.e., mutual funds). This exemption from reporting will end immediately, however, at such time as there is an Investment Transaction in that account in a Security that is not an Exempt Security.

Prohibited Or Restricted Investment Transactions

Initial Public Offerings

As an Advisory Employee, you may not acquire Beneficial Ownership of any Security in an initial public offering, except that, with the approval of the Compliance Committee and the General Counsel of BlackRock, you may acquire Beneficial Ownership of a Security in an initial public offering directed or sponsored by BlackRock. For purposes of this Policy, an initial public offering shall not include the purchase of a Security in an initial public offering by (i) a savings bank to its depositors, (ii) a mutual insurance company to its policyholders, (iii) an issuer of debt securities (other than debt securities convertible into common or preferred stock) or (iv) with respect to an Advisory Employee employed by BlackRock International, Ltd. a building society to its depositors.

Private Placements

If you are a Portfolio Employee, you may not acquire Beneficial Ownership of any Security in a private placement, or subsequently sell that interest, unless you have received the prior written approval of the Compliance Officer and of any supervisor designated by the Compliance Officer. Approval will not be given unless a determination is made that the investment opportunity should not be reserved for one or more Advisory Clients, and that the opportunity to invest has not been offered to you by virtue of your position with an Advisor.

If you have acquired Beneficial Ownership of Securities in a private placement, you must disclose that investment to your supervisor when you play a part in any consideration of any investment by an Advisory Client in the issuer of the Securities, and any decision to make such an investment must be independently reviewed by a Portfolio Manager who does not have a Beneficial Ownership interest in any Securities of the issuer.

⁷	The term “ Exempt Security ” means any Security (as defined in Appendix I) not included within the definition of Security in SEC Rule 17j-l (a)(4) under the Investment Company Act of 1940, as amended, including:

A direct obligation of the Government of the United States;

Shares of registered open-end investment companies ( i.e. , mutual funds); and

High quality short-term debt instruments, including, but not limited to, bankers’ acceptances, bank certificates of deposit, commercial paper and repurchase agreements.

See Appendix I for a more complete definition of “Exempt Security.”

Investment Transactions Requiring Prior Notification

You must give prior notification to the Compliance Officer of any Investment Transaction in Securities or Futures Contracts in a Personal Account or Related Account, or in which you otherwise have or will acquire a Beneficial Ownership interest, unless that Investment Transaction, Security or Futures Contract falls into one of the following categories that are identified as “exempt from prior notification.” The purpose of prior notification is to permit the Compliance Officer and the Compliance Committee to take reasonable steps to investigate whether that Investment Transaction is in accordance with this Policy. Satisfaction of the prior notification requirement does not, however, constitute approval or authorization of any Investment Transaction for which you have given prior notification. As a result, the primary responsibility for compliance with this Policy rests with you.

Prior Notification Procedure

Prior notification must be given by completing and submitting to the Compliance Officer a copy of the prior notification form attached hereto as Appendix VII. No Investment Transaction requiring prior notification may be executed prior to notice by the Compliance Officer that the prior notification process has been completed. The time and date of that notice will be reflected on the prior notification form. Unless otherwise specified, an Investment Transaction requiring prior notification must be placed and executed by the end of trading in New York City or, in the case of Advisory Employees employed by BlackRock International, Ltd., by the end of trading in the United Kingdom on the day of notice from the Compliance Officer that the prior notification process has been completed. If a proposed Investment Transaction is not executed (with the exception of a limit order) within the time specified, you must repeat the prior notification process before executing the transaction. A notice from a Compliance Officer that the prior notification process has been completed is no longer effective if you discover, prior to executing your Investment Transaction, that the information on your prior notification form is no longer accurate, or if the Compliance Officer revokes his or her notice for any other reason.

The Compliance Officer may undertake such investigation as he or she considers necessary to investigate whether an Investment Transaction for which prior notification has been sought complies with the terms of this Policy and is consistent with the general principles described at the beginning of this Policy.

As part of that investigation, the Compliance Officer or a designee of the Compliance . Officer will determine whether there is a pending buy or sell order in the same equity Security or Futures Contract, or a Related Security, on behalf of an Advisory Client. ⁸ If such an order exists, the Compliance Officer will not provide notice that the prior notification process has been completed until the Advisory Client’s order is executed or withdrawn.

⁸	The term “ Related Security ” means, as to any Security, any instrument related in value to that Security, including, but not limited to, any option or warrant to purchase or sell that Security, and any Security convertible into or exchangeable for that Security.

Exemptions From Prior Notification

Prior notification will not be required for the following Investment Transactions, Securities and Futures Contracts. They are exempt only from the Policy’s prior notification requirement, and, unless otherwise indicated, remain subject to the Policy’s other requirements, including its reporting requirements.

(a)

Transactions Exempt From Prior Notification

Prior notification is not required for any of the following Investment Transactions:

Any Investment Transaction in a Fully Discretionary Account that has been approved as such by the Compliance Officer.

Purchases of Securities under dividend reinvestment plans.

Purchases of Securities by an exercise of rights issued to the holders of a class of Securities pro rata , to the extent those rights are issued with respect to Securities of which you have Beneficial Ownership.

Acquisitions or dispositions of Securities as the result of a stock dividend, stock split, reverse stock split, merger, consolidation, spin-off or other similar corporate distribution or reorganization applicable to all holders of a class of Securities of which you have Beneficial Ownership.

Purchases of common stock of BlackRock, Inc. under the BlackRock, Inc. Employee Stock Purchase Plan.

With respect to Advisory Employees who are employed by BlackRock International, Inc., automatic investments by direct debit into a personal equity plan (PEP), or similar type of plan in Exempt Securities if the pre-notification process was completed for the first such investment.

Investment Transactions made by a person who serves on the Board of Directors of an Advisor and is not involved with the Advisory operations of such Advisor nor engages in the type of activities described under (1) (2) or (3) under the term Advisory Employee as defined in Appendix I.

Investment Transactions in Exchange Traded Funds (“ETFs”), such as the Nasdaq-100 Index Tracking Stock, (QQQ), SPDR Trust, (SPY), DIAMONDS Trust, (DIA), Merrill Lynch Semiconductor HOLDRS, (SMH), iSHARES MSCI Japan, (EWJ), Merrill Lynch Biotech HOLDRS, (BBH), Select Sector SPDR Fund - Technology, (XLK), Select Sector SPDR Fund – Financial, (XLF), MidCap SPDR Trust, (MDY), and other ETF’s as determined from time to time by the Compliance Committee to have sufficient liquidity as not to present the type of conflict that this policy is designed to protect against. Any questions about whether an

ETF not listed in this Section II.D.2.(a) is exempt from prior notification should be directed to the Compliance Officer.

(b)

Securities Exempt From Prior Notification

Prior notification is not required for an Investment Transaction in an Exempt Security, as defined in Appendix I, e.g _., U.S. Government securities, shares in registered open-end investment companies ( i e, mutual funds) and “high quality short-term debt instruments” (as defined in Appendix I).

(c)

Futures Contracts Exempt From Prior Notification

Prior notification is not required for an Investment Transaction in the following Futures Contracts:

Currency futures.

U.S. Treasury futures.

Eurodollar futures.

Physical commodity futures ( e.g. , contracts for future delivery of grain, livestock, fiber or metals).

Futures contracts to acquire Fixed Income Securities issued by a U.S. Government agency, a foreign government, or an international or supranational agency.

Futures contracts on the Standard and Poor’s 500 (S&P 500) or the Dow Jones Industrial Average or NASDAQ 100 stock indexes.

For Advisory Employees who are employed by BlackRock International, Ltd., futures contracts on the Financial Times Stock Exchange 100 (FTSE) Index.

Ban On Short-Term Trading Profits

You may not profit from the purchase and sale, or the sale and purchase, within 60 calendar days, of the same Securities and/or Related Security. Any such short-term trade must be reversed or unwound, or if that is not practical, the profits must be disgorged and distributed in a manner determined by the Compliance Committee.

This short-term trading ban does not apply to Investment Transactions in Exempt Securities (as defined in Appendix I) or in Futures Contracts. This ban also does not apply to a purchase or sale in connection with a Transaction Exempt From Prior Notification (as described above in Section II.D.2.(a)), a transaction in a Fully Discretionary Account or a transaction exempt from the “blackout” periods pursuant to Section II.F.2 below.

You are considered to profit from a short-term trade if Securities of which you have Beneficial Ownership (including Securities held by Immediate Family members) are sold for more than their purchase price, even though the Securities purchased and the Securities sold are held of record or beneficially by different persons or entities.

Blackout Periods

Your ability to engage in certain Investment Transactions may be prohibited or restricted during the “blackout” periods described below:

Specific Blackout Periods

You may not purchase or sell a Security, a Related Security, or Futures Contract at a time when you intend or know of another’s intention to purchase or sell that same Security, a Related Security, or Futures Contract, on behalf of an Advisory Client of any Advisor (the “Specific Knowledge Blackout Period”).

In addition, if you are a Portfolio Employee , you may not purchase or sell a Security, a Related Security or a Futures Contract which you are actively considering or which you have actively considered and rejected for purchase or sale for an Advisory Client within the previous 15 calendar days (the “15-Day Blackout Period”) unless the Compliance Officer, after consultation with your supervisor, has approved your Investment Transaction. ⁹

Finally, if you are a Portfolio Manager , you may not purchase or sell a Security, a Related Security, or Futures Contract within 7 calendar days before or after a transaction in that Security, a Related Security, or Futures Contract, by an Advisory Client for which you are responsible (the “7 Day Blackout Period”).

For Portfolio Employees or Portfolio Managers, the Compliance Officer will not give such notice until any applicable 15-Day Blackout Period or 7-Day Blackout Period has expired or any required approvals or exemptions have been obtained. An Investment Transaction that violates one of these Blackout restrictions must be reversed or unwound, or if that is not practical, the profits must be disgorged and distributed in a manner determined by the Compliance Committee.

⁹

SEC Rule 17j-l places restrictions on the purchase or sale of any “security held or to be acquired” by a registered investment company. Rule 17j-1(a)(10) defines a “security held or to be acquired” by a registered investment company as including any security which, within the most recent 15 days, “is being or has been considered by such company or its investment adviser for purchase by such company.”

Exemptions From Blackout Restrictions

The foregoing blackout period restrictions do not apply to Investment Transactions in:

Exempt Securities, as defined in Appendix I.

Securities of a company listed on the Standard & Poor’s 100 (S & P 100) Index.

A Futures Contract Exempt From Prior Notification under this Policy (as described above).

A Fully Discretionary Account.

With respect to Advisory Employees who are employed by BlackRock International, Ltd., securities of a company listed on the Financial Times Stock Exchange 100 (FTSE 100).

Exchange Traded Funds Exempt From Prior Notification under this Policy (as described above).

III.

INSIDE INFORMATION AND SERVICE AS A DIRECTOR

Inside Information

As an employee of a subsidiary of PNC and BlackRock, Inc., you must comply with the PNC Insider Trading Policy and the BlackRock, Inc. Insider Trading Policy. A copy of the PNC Insider Trading Policy is included in Section E of the PNC Code of Ethics. A copy of the BlackRock, Inc. Insider Trading Policy was furnished to all employees at the time of its adoption and is furnished to all new employees at the commencement of their employment. In addition, as an Advisory Employee, you must notify the General Counsel of BlackRock if you receive or expect-to receive material non-public information about an entity that issues securities. The General Counsel will determine the restrictions, if any, that will apply to your communications and activities while in possession of that information. In general, those restrictions will include:

An undertaking not to trade, either on your own behalf or on behalf of an Advisory Client, in the securities of the entity about which you have material non-public information.

An undertaking not to disclose material non-public information to other Advisory Employees.

An undertaking not to participate in discussions with or decisions by ^‘ other Advisory Employees relating to the entity about which you have material non-public information.

The General Counsel, in cooperation with the Compliance Officer, will maintain a “restricted list” of entities about which Advisory Employees may have material non-public information. This “restricted list” will be available to ^. the Compliance Officer when he or she conducts

investigations or reviews related to the Prior Notification Procedure described previously in Section II(D)(1) or the Post-Trade Monitoring process described below in Section V(B)(3).

Service As A Director

You may not serve on the board of directors or other governing board of any entity unless you have received the prior written approval of the General Counsel of PNC, to the extent such approval is required under the terms of the PNC Code of Ethics, and the General Counsel of BlackRock. If permitted to serve on a governing board, an Advisory Employee will be isolated from those Advisory Employees who make investment decisions regarding the securities of that entity, through a “Chinese wall” or other procedures determined by the General Counsel of BlackRock. In general, the “Chinese wall ^” or other procedures will include:

An undertaking not to trade or to cause a trade on behalf of an Advisory Client in the securities of the entity on whose board you serve.

An undertaking not to disclose material non-public information about that entity to other Advisory Employees.

An undertaking not to participate in discussions with or decisions by other Advisory Employees relating to the entity on whose board you serve.

Any entity on whose board an Advisory Employee serves will be included on the “restricted list” referenced in subsection A, above.

IV.

EXEMPTIONS

The Compliance Committee, in its discretion, may grant case-by-case exceptions to any of the foregoing requirements, restrictions or prohibitions, except that the Compliance Committee may not exempt any Investment Transaction in a Security (other than an Exempt Security) or a Futures Contract from the Policy’s reporting requirements. Exemptions from the Policy’s prior notification requirements and from the Policy’s restrictions on acquisitions in initial -public offerings, short-term trading and trading during blackout periods will require a determination by the Compliance Committee that the exempted transaction does not involve a realistic possibility of violating the general principles described at the beginning of this Policy. An application for a case-by-case exemption, in accordance with this paragraph, should be made in writing to the Compliance Officer, who will promptly forward that written request to the members of the Compliance Committee.

V.	COMPLIANCE

Certifications

Upon Receipt Of This Policy

Upon commencement of your employment or the effective date of this Policy, whichever occurs later, you will be required to acknowledge receipt of your copy of this Policy by completing and returning to the Compliance Officer a copy of the form attached hereto as Appendix II. By that acknowledgment, you will also agree:

To read the Policy, to make a reasonable effort to understand its provisions, and to ask the Compliance Officer questions about those provisions you find confusing or difficult to understand.

To comply with the Policy, including its general principles, its reporting requirements, its prohibitions, its prior notification requirements, its short-term trading and blackout restrictions.

To advise the members of your Immediate Family about the existence of the Policy, its applicability to their personal Investment Transactions, and your responsibility to assure that their personal Investment Transactions comply with the Policy.

To cooperate fully with any investigation or inquiry by or. on behalf of the Compliance Officer or the Compliance Committee to determine your compliance with the provisions of the Policy.

In addition, your acknowledgment will recognize that any failure to comply with the Policy and to honor the commitments made by your acknowledgment may result in disciplinary action, including dismissal.

Annual Certificate Of Compliance

You are required to certify on an annual basis, on a copy of the form attached hereto as Appendix III, that you have complied with each provision of your initial acknowledgment (see above). In particular, your annual certification will require that you certify that you have read and that you understand the Policy, that you recognize that you are subject to its provisions, that you complied with the requirements of the Policy during the period to which it applies, and that you have disclosed, reported, or caused to be reported all Investment Transactions required to be disclosed or reported pursuant to the requirements of the Policy and that you have disclosed, reported or caused to be reported all Personal Accounts and Related Accounts that hold or are likely to hold a Security or Futures Contract in which you have a Beneficial Ownership interest. In addition, you will be required to confirm the accuracy of the record of information on file with the Advisor with respect to such Personal Accounts and Related Accounts. If you have a Beneficial Ownership Interest in a Security or Futures Contract that is not reported to the Compliance Officer on a periodic basis through Duplicate Broker Reports, you must complete the Annual Holdings Report (Appendix III-A) as described under Section II.B.6 above and submit it to the Compliance Officer at the time you make your Annual Certification of Compliance. The information in the Annual Holdings Report must be current as of a date no more than 30 days before the report is submitted.

Supervisory Procedures

The Compliance Committee

The Policy will be implemented, monitored and reviewed by the Compliance Committee. The initial members of the Compliance Committee will be appointed by the management committee of BlackRock. The Compliance Committee, by a simple majority of its members,

may appoint new members of the Committee, may replace existing members of the Committee, and may fill vacancies on the Committee. Among other responsibilities, the Compliance Committee will consider requests for case-by-case exemptions (described above) and will conduct investigations (described below) of any actual or suspected violations of the Policy. The Compliance Committee will determine what remedial actions, if any, should be taken by an Advisor in response to a violation of the Policy. The Compliance Committee will also provide reports (described below) regarding significant violations of the Policy and the procedures to implement the Policy. The Compliance Committee may recommend changes to those procedures or to the Policy to the management of the Advisors. Finally, the Compliance Committee will designate one person to act as Compliance Officer for all Advisors.

The Compliance Officer

The Compliance Officer designated by the Compliance Committee will be responsible for the day-to-day administration of the Policy for all Advisors, subject to the direction and control of the Compliance Committee. Based on information supplied by the management of each Advisor, the Compliance Officer will forward a copy of the Policy to each Advisory Employee subject to the Policy and will notify each such person of his or her designation as an Advisory Employee, Portfolio Employee or Portfolio Manager. The Compliance Officer will also be responsible for administration of the reporting and prior notification functions described in the Policy, and will maintain the reports required by those functions. In addition, the Compliance Officer will attempt to answer any questions from an Advisory Employee regarding the interpretation or administration of the Policy. When necessary or desirable, the Compliance Officer will consult with the Compliance Committee about such questions. The Compliance Officer may designate one or more Assistant Compliance Officers to whom the Compliance Officer may delegate any of the duties described in this paragraph or in the succeeding paragraph, and who shall be empowered to act on the Compliance Officer’s behalf when the Compliance Officer is absent or unavailable.

Post-Trade Monitoring And Investigations

The Compliance Officer will review the Duplicate Broker Reports and other information supplied for each Advisory Employee so that the Compliance Officer can detect and prevent potential violations of the Policy. This information may also be disclosed to the Advisor’s auditors, attorneys and regulators. If, based on his or her review of information supplied for an Advisory Employee, or based on other information, the Compliance Officer suspects that the Policy may have been violated, the Compliance Officer will perform such investigations and make such inquiries as he or she considers necessary. You should expect that, as a matter of course, the Compliance Officer will make inquiries regarding any personal Investment Transaction in a Security or Futures Contract that occurs on the same day as a transaction in the same Security or Futures Contract on behalf of an Advisory Client. If the Compliance Officer reaches a preliminary conclusion that an Advisory Employee may have violated this Policy, the Compliance Officer will report that preliminary conclusion in a timely manner to the Compliance Committee and will furnish to the Committee all information that relates to the Compliance Officer’s preliminary conclusion. The Compliance Officer may also report his or her preliminary conclusion and the information relating to that preliminary conclusion to the Advisor’s auditors, attorneys and regulators.

Promptly after receiving the Compliance Officer’s report of a possible violation of the Policy, the Compliance Committee, with the aid and assistance of the Compliance Officer, will conduct an appropriate investigation to determine whether the Policy has been violated and will determine what remedial action should be taken by the Advisor in response to any such violation(s). For purposes of these determinations, a majority of the Compliance Committee will constitute a quorum and action taken by a simple-majority of that quorum will constitute action by the Committee.

Remedial Actions

The remedial actions that may be recommended by the Compliance Committee may include, but are not limited to, disgorgement of profits, imposition of a fine, censure, demotion, suspension or dismissal. As part of any sanction, e.g., for violation of the Policy’s restrictions on short-term trading or trading during blackout periods, you may be required to reverse or unwind a transaction and to forfeit any profit or to absorb any loss from the transaction. If an Investment Transaction may not be reversed or unwound, you may be required to disgorge any profits associated with the transaction, which profits will be distributed in a manner prescribed by the Compliance Committee in the exercise of its discretion. Profits derived from Investment Transactions in violation of this Policy may not be offset by any losses from Investment Transactions in violation of this Policy. Finally, evidence suggesting violations of criminal laws will be reported to the appropriate authorities, as required by applicable law.

In determining what, if any, remedial action is appropriate in response to a violation of the Policy, the Compliance Committee will consider, among other factors, the gravity of your violation, the frequency of your violations, whether any violation caused harm or the potential of harm to any Advisory Client, whether you knew or should have known that your Investment Transaction violated the Policy, whether you engaged in an Investment Transaction with a view to making a profit on the anticipated market action of a transaction by an Advisory Client, your efforts to cooperate with the Compliance Officer’s investigation, and your efforts to correct any conduct that led to a violation. In rare instances, the Compliance Committee may find that, for equitable reasons, no remedial action should be taken.

Reports Of Material Violations

In a timely manner, and not less frequently than annually, the Compliance Committee will report to the management committee of BlackRock, and to the directors or trustees of each investment company that is an Advisory Client, any known material violation of the Policy and sanctions imposed in response to the material violation. Evidence suggesting violations of criminal laws will be reported to the appropriate authorities, as required by applicable law.

Annual Reports

The Compliance Committee will furnish an annual report to the management committee of BlackRock, and to the directors or trustees of each investment company that is an Advisory Client, that, at a minimum, will:

Summarize existing procedures and restrictions concerning personal investing by Advisory Employees and any changes in those procedures and restrictions that were made during the previous year;

Describes any issues arising under the Policy since the last report, including, but not limited to, information about any material violations of the Policy or procedures and the sanctions imposed in response to those violations; and

Describe any changes in existing procedures or restrictions that the Compliance Committee recommends based upon its experience under the Policy, evolving industry practices, or developments in applicable laws or regulations.

VI.

EFFECTIVE DATE

The provisions of this Policy will take effect on October 1, 1998. Amendments to this Policy will take effect at the time such amendments are promulgated and distributed to the Advisory Employees governed by this Policy.

APPENDIX I

Definitions Of Capitalized Terms

The following definitions apply to the capitalized terms used in the Policy:

Advisor

The term “Advisor” means any entity affiliated with BlackRock, whether now in existence or formed after the date hereof, that is registered as (i) an investment advisor under the Investment Advisers Act of 1940, as amended, or (ii) a broker-dealer under the Securities Exchange Act of 1934, as amended, other than any such investment advisor or broker-dealer that has adopted its own employee investment transaction policy.

Advisory Client

The term “Advisory Client” means a registered investment company, an institutional investment client, a personal trust or estate, a guardianship, an employee benefit trust, or another client with which the Advisor by which you are employed or with which you are associated has an investment management, advisory or sub-advisory contract or relationship.

Advisory Employee

The term “Advisory Employee” means an officer, director, or employee of an Advisor, or any other person identified as a “control person” on the Form ADV or the Form BD filed by the Advisor with the U.S. Securities and Exchange Commission, (1) who, in connection with his or her regular functions or duties, generates, participates in, or obtains information regarding that Advisor’s purchase or sale of a Security by or on behalf of an Advisory Client; (2) whose regular functions or duties relate to the making of any recommendations with respect to such purchases or sales; or (3) who obtains information or exercises influence concerning investment recommendations made to an Advisory Client of that Advisor or who has line oversight or management responsibilities over employees who obtain such information or who exercise such influence.

Beneficial Ownership

As a general matter, you are considered to have a “Beneficial Ownership” interest in a Security or Futures Contract if you have the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in that Security. You are presumed to have a Beneficial Ownership interest in any Security or Futures Contract held, individually or jointly, by you and/or by a member of your Immediate Family (as defined below). In addition, unless specifically excepted by the Compliance Officer based on a showing that your interest or control is sufficiently attenuated to avoid the possibility of a conflict, you will be considered to have a Beneficial Ownership interest in a Security or Futures Contract held by: (1) a joint account to which you are a party, (2) a partnership in which you are a general -partner, (3) a limited liability company in which you are a manager-member, or (4) a trust in which you or a member of your Immediate Family has a pecuniary interest. Although you may have a

Beneficial Ownership interest in a Security or Futures Contract held in a Fully Discretionary Account (as defined below), the application of this Policy to such a Security or Futures Contract may be modified by the special exemptions provided for Fully Discretionary Accounts.

As a technical matter , the term “Beneficial Ownership” for purposes of this Policy will be interpreted in the same manner as it would be under SEC Rule 16a- I (a)(2) in determining whether a person has beneficial ownership of a security for purposes of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

BlackRock

The term “BlackRock” means BlackRock, Inc.

Compliance Committee

The term “Compliance Committee” means the committee of persons who have responsibility for implementing, monitoring and reviewing the Policy, in accordance with Section V(B)(1) of the Policy.

Compliance Officer

The term “Compliance Officer” means the person designated by the Compliance Committee as responsible for the day-today administration of the Policy in accordance with Section V(B)(2) of the Policy.

Duplicate Broker Reports

The term “Duplicate Broker Reports” means duplicate copies of confirmations of transactions in your Personal or Related Accounts and of periodic statements for those accounts.

Exempt Security

The term “Exempt Security” means any Security (as defined below) not included within the definition of Security in SEC Rule 17j-1(a)(4) under the Investment Company Act of 1940, as amended, including:

A direct obligation of the Government of the United States;

Shares of registered open-end investment companies; and

High quality short-term debt instruments , including; but not limited to, bankers’ acceptances, bank certificates of deposit, commercial paper and repurchase agreements. For these purposes, a “high quality short-term debt instrument” means any instrument having a maturity at issuance of less than 366 days and which is rated in one of the highest two rating categories by a Nationally Recognized Statistical Rating Organization, or which is unrated but is of comparable quality.

For Advisory Employees employed by BlackRock International, Ltd., shares of authorized unit trusts, open-ended investment companies (OEIC’s) and direct obligations of the Government of the United Kingdom.

Fixed Income Securities

For purposes of this Policy, the term “Fixed Income Securities” means fixed income Securities issued by agencies or instrumentalities of, or unconditionally guaranteed by, the Government of the United States, corporate debt Securities, mortgage-backed and other asset backed Securities, fixed income Securities issued by state or local governments or the political subdivisions thereof, structured notes and loan participations, foreign government debt Securities, and debt Securities of international agencies or supranational agencies. For purposes of this Policy, the term “Fixed Income Securities” will not be interpreted to include U.S. Government Securities or any other Exempt Security (as defined above).

Fully Discretionary Account

The term “Fully Discretionary Account” means a Personal Account or Related Account (as defined below) managed or held by a broker-dealer, futures commission merchant, investment advisor or trustee as to which neither you nor an Immediate Family Member (as defined below): (a) exercises any investment discretion; (b) suggests or receives notice of transactions prior to their execution; and (c) otherwise has any direct or indirect influence or control. In addition, to qualify as a Fully Discretionary Account, the individual broker, registered representative or merchant responsible for that account must not be responsible for nor receive advance notice of any purchase or sale of a Security or Futures Contract on behalf of an Advisory Client. To qualify an account as a Fully Discretionary Account, the Compliance Officer must receive and approve a written notice, in the form attached hereto as Appendix VIII, that the account meets the foregoing qualifications as a Fully Discretionary Account.

Futures Contract

The term “Futures Contract” includes (a) a futures contract and an option on a futures contract traded on a U.S. or foreign board of trade, such as the Chicago Board of Trade, the Chicago Mercantile Exchange, the New York Mercantile Exchange, or the London International Financial Futures Exchange (a “Publicly-Traded Futures Contract”), as well as (b) a forward contract, a “swap”, a “cap”, a “collar”, a “floor” and an over-the-counter option (other than an option on a foreign currency, an option on a basket of currencies, an option on a Security or an option on an index of Securities, which fall within the definition of “Security’) (a “Privately-Traded Futures Contract”). You should consult with the Compliance Officer if you have any doubt about whether a particular Investment Transaction you contemplate involves a Futures Contract. For purposes of this definition, a Publicly-Traded Futures Contract is defined by its expiration month, i.e. , a Publicly-Traded Futures Contract on a U.S. Treasury Bond that expires in June is treated as a separate Publicly-Traded Futures Contract, when compared to a Publicly-Traded Futures Contract on a U.S. Treasury Bond that expires in July.

Immediate Family

The term “Immediate Family” means any of the following persons who reside in your household or who depend on you for basic living support : your spouse, any child, stepchild, grandchild, parent, stepparent, grandparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including any adoptive relationships.

Investment Transaction

For purposes of this Policy, the term “Investment Transaction” means any transaction in a Security or Futures Contract in which you have, or by reason of the transaction will acquire, a Beneficial Ownership interest. The exercise of an option to acquire a Security or Futures Contract is an Investment Transaction in that Security or Futures Contract.

Personal Account

The term “Personal Account” means the following accounts that hold or are likely to hold a Security or Futures Contract in which you have a Beneficial Ownership interest:

•

any account in your individual name;

•

any joint or tenant-in-common account in which you have an interest or are a participant;

•

any account for which you act as trustee, executor, or custodian; and

•

any account over which you have investment discretion or have the power (whether or not exercised) to direct the acquisition or disposition of Securities or Futures Contracts (other than an Advisory Client’s account that you manage or over which you have investment discretion), including the accounts of any individual or entity that is managed or controlled directly or indirectly by or through you. There is a presumption that you can control accounts held by members of your Immediate Family sharing the same household. This presumption may be rebutted only by convincing evidence.

Policy

The term “Policy” means this Employee Investment Transaction Policy.

Portfolio Employee

The term “Portfolio Employee” means a Portfolio Manager or an Advisory Employee who provides information or advice to a Portfolio Manager, who helps execute a Portfolio Manager’s decisions, or who directly supervises a Portfolio Manager.

Portfolio Manager

The term “Portfolio Manager” means any employee of an Advisor who has the authority, whether sole or shared or only from time to time, to make investment decisions or to direct trades affecting an Advisory Client.

Related Account

The term “Related Account” means any account, other than a Personal Account, that holds a Security or Futures Contract in which you have a direct or indirect Beneficial Ownership interest (other than an account over which you have no investment discretion and cannot otherwise exercise control) and any account (other than an Advisory Client’s account) of any individual or entity to whom you give advice or make recommendations with regard to the acquisition or disposition of Securities or Futures Contracts (whether or not such advice is acted upon).

Related Security

The term “Related Security” means, as to any Security, any instrument related in value to that Security, including, but not limited to, any option or warrant to purchase or sell that: Security, and any Security convertible into or exchangeable for that Security. For example, the purchase and exercise of an option to acquire a Security is subject to the same restrictions that would apply to the purchase of the Security itself.

Security

As a general matter , the term “Security” means any stock, note, bond, debenture or other evidence of indebtedness (including any loan participation or assignment), limited partnership interest, or investment contract, other than an Exempt Security (as defined above). The term “Security” includes an option on a Security, an index of Securities, a currency or a basket of currencies, including such an option traded on the Chicago Board of Options Exchange or on the New York, American, Pacific or Philadelphia Stock Exchanges as well as such an option traded in the over-the-counter market. The term “Security” does not include a physical commodity or a Futures Contract. The term “Security” may include an interest in a limited liability company (LLC) or in a private investment fund.

As a technical matter , the term “Security” has the meaning set forth in Section 2(a)(36) of the Investment Company Act of 1940, which defines a Security to mean:

Any note, stock, treasury stock, bond debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of

interest or instrument commonly known as a “security”, or any certificate of interest. or participation in, temporary or interim certificate for, receipt for, guarantee of, warrant or right to subscribe to or purchase any of the foregoing,

except that the term “Security” does not include any Security that is an Exempt Security (as defined above), a Futures Contract (as defined above), or a physical commodity (such as foreign exchange or a precious metal).

Exhibit (P)(3)

PFPC DISTRIBUTORS, INC.

CODE OF CONDUCT

April 20, 2001

This Code of Conduct has been adopted by the Firm’s Board of Directors for the purpose of avoiding and preventing certain actions constituting conflicts of interest with the investment activities of a Fund or Funds for which the Firm acts as distributor. This Code of Conduct applies to all officers, directors, employees or associated persons of the Firm. The terms and conditions of this Code shall supersede those of the PFPC Worldwide, Inc. Code of Conduct (the “PFPC Code”) to the extent that any term or condition of this Code is inconsistent with the PFPC Code.

I.	Definitions

The following definitions shall apply herein:

1. “Access Person” shall mean any Firm director or officer who, in the ordinary course of business, makes, participates in or obtains information regarding the purchase or sale of Covered Securities by a Fund for which the Firm acts as distributor, or whose functions or duties as part of the ordinary course of his or her business relate to the making of any recommendation to such Fund regarding the purchase or sale of Covered Securities. An individual shall be considered as Access Person only with respect to the Fund to which the foregoing definition applies. A list of the current Access Persons is attached to this Code as Appendix A.

2. “Beneficial Ownership” shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder. Application of this definition is explained in more detail in Appendix B hereto.

3. “Code” shall mean this Code of Conduct.

4. “Covered Security” (in the plural, “Covered Securities”) shall mean any security or securities referred to in Section 2(a)(36) of the Investment Company Act of 1940 (the “1940 Act”) (including any option, contract, warrant or exercisable right to purchase or sell any security) with the following exceptions: direct obligations issued or guaranteed by the United States; short-term securities issued or guaranteed by an agency or instrumentality of the United States; commercial paper; bankers’ acceptances; bank certificates of deposit; commercial paper and high quality short-term debt instruments, including repurchase agreements; shares of open-end registered investment companies; and any other securities excepted by Rule 17j-l under the 1940 Act.

5. “Firm” shall mean PFPC Distributors, Inc.

6. “Designated Person” shall mean any person designated by the Firm to be authorized to take actions to carry out policies and procedures set forth in the Code. As of the date of this Code, the President and Chief Compliance Officer for the Finn has been named the Designated Persons.

7. “Employee” (in the plural, “Employees”) shall mean each person registered as a representative of the Firm with the National Association of Securities Dealers, Inc.

8. “Fund” (in the plural, “Funds”) shall mean any registered investment company or investment portfolio for which the Firm acts as distributor.

9. “Material Information” shall mean information (i) which can reasonably be expected to have a material impact on the financial condition or operations of a Firm or (ii) which an investor would consider important in determining whether to buy or sell securities of an issuer.

10. “Personal Account” shall mean any account used for the purchase and sale of securities in which an Employee has a direct or indirect Beneficial Ownership.

11. “Purchase or Sale of a Covered Security” includes, among other things, the writing of an option to purchase or sell a Covered Security.

12. “Security Held or to be Acquired by the Fund” shall mean any Covered Security, which; within the most recent 15 days: (a) is being held by the Fund; or (b) is being or has been considered by the Fund or its investment adviser for purchase by the Fund, and any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security.

II.

Reporting Requirements

Initial Holdings Reports

No later than 10 days after a person becomes an Access Person, every Access Person must file with the Chief Compliance Officer an initial holdings report which shall set forth the following information:

(a) the title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person;

(b) the name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and

A sample of the form of report is attached to this Code as Appendix C.

Quarterly Transaction Reports

Every Access Person must file with the Chief Compliance Officer not later than 10 days after the end of each calendar quarter a confidential personal securities transaction report for such quarter setting forth for every transaction in a Covered Security in the Access Person’s Personal Account the following information:

(a) the date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Covered Security involved;

(b) the nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition including gifts, exercise of conversion rights, exercise or sale of subscription rights, reinvestment of dividends and receipt of stock splits or stock dividends);

(d) the name of the broker, dealer, bank, other corporation, or person with or through whom the transaction was effected; and

(e) the date the report is submitted by the Access Person.

A sample of the form of report is attached to this Code as Appendix D.

An Access Person need not make a quarterly transaction report if the report would duplicate information contained in the broker trade confirmations or account statements received by the Firm with respect to the Access Person, if all of the information required is contained in the broker trade confirmations or accounts statements or the records of the Firm.

Annual Holdings Reports

Annually every Access Person must file with the Chief Compliance Officer a confidential personal securities transaction report (which must be current as of a date no more than 30 days before the report is submitted) setting forth for every transaction in a Covered Security in the Access Person’s Personal Account the following information:

(a) the title, number of shares and principal amount of each Covered Security in which the Access Person had a direct or indirect beneficial ownership;

(b) the name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and

A sample of the form of report is attached to this Code as Appendix E.

Statement Regarding Beneficial Ownership

Any such report may contain a statement to the effect that such report shall not be construed as an admission by the reporting person as to any direct or indirect beneficial ownership of the Security or Securities to which the report relates.

Exception to Reporting Requirements

No Access Person shall be required to make the foregoing report where the Firm (i) is not an affiliated person of any Fund or any investment adviser of any Fund and (ii) has no officers,

directors or general partners who serve as officers, directors or general partners of such Fund or any such investment adviser. As of the date of this Code, the foregoing exception to reporting applies to all Access Persons. The Designated Supervisory Person shall notify all Access Persons immediately in the event that the exception to the reporting requirement is no longer applicable.

III.

Restrictions on Personal Securities Transactions by Employees

Unlawful Actions

It is unlawful for any Employee, Firm director or Firm officer, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Fund:

(a) to employ any device scheme or artifice to defraud the Fund;

(b) to make any untrue statement of a material fact to the Fund or to omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances in which they are made, not misleading;

(c) to engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or

(d) to engage in any manipulative practice with respect to the Fund.

Trading Restrictions During Certain Periods

No Employee, Firm director or Firm officer may, directly or indirectly, purchase or sell a Covered Security for his or her Personal Account if such individual knows or, in the ordinary course of fulfilling his or her duties as an Employee, Firm director or Firm officer, should know that (i) a purchase or sale of such Covered Security by a Fund is being considered by the Fund or its investment adviser, or (ii) during the five (5) business day period immediately preceding the date of the transaction in a Covered Security by the Employee, Firm director or Firm officer, such Security was purchased or sold by a Fund.

Trading Restrictions While in Possession of Non-Public Material Information

No Employee, Firm director or Firm officer may, directly or indirectly, purchase or sell a Covered Security for his or her Personal Account while such individual possesses non-public Material Information relating to that Covered Security or its issuer. The most common examples of information that is “non-public” are: (i) information that has neither been published by any news agency nor filed with the Securities and Exchange Commission as part of a publicly available filing and (ii) information that has been discussed only within the confines of a board meeting.

Violations

Any Employee, Firm officer or Firm director who has violated Sections III(A), (B) or (C) of the Code or who knows of such a violation by another Employee, Firm director or Firm officer shall immediately notify the Designated Person, in writing, of such violation.

General

Apart from the specific restrictions set forth in Sections II and III of the Code, purchases and sales should be arranged in such a way as to avoid transactions contrary to the intent of this Code. Any attempt by an Employee, Firm director or Firm officer to do indirectly what this Code is meant to prohibit will be deemed a direct violation hereof. If there is any doubt whether your transactions may be in conflict with the intent of this Code you should check before buying or selling with the Designated Person.

Registered Investment Adviser Employees

Certain associated persons of the Firm may also be employees of a registered investment adviser and, accordingly, subject to codes of conduct, including restrictions on personal securities transactions, more stringent than those set forth in this Code. The Firm will rely on the registered investment advisers to enforce their codes of conduct.

Sanctions

If the Designated Person determines that a violation of the Code has occurred, she shall so advise the Firm’s Board of Directors for referral to the Executive Management Committee of PFPC Worldwide, Inc., the parent of the Firm (the “Committee”). The Committee may impose such sanctions as it deems appropriate, including, inter alia , a letter of censure or suspension or termination of the employment of the violator. In any event, (i) any Employee, Firm director or Firm officer who violates Section III(A) or (B) of the Code shall be subject to disciplinary action which may include termination of registration with the Firm and (ii) any profit realized from a securities transaction that violates Section III(A) or (B) of the Code shall be disgorged as directed by the Committee.

IV.

Annual Certification

On an annual basis, each Employee, Firm director and Firm officer shall certify in writing that such individual has read and understands the Code and has complied with all of its provisions during the preceding year in which the Code was in effect. The annual certification is attached to the Code. (Upon employment, each employee will receive the Code and sign an initial “Certification of Receipt.”)

V.	Miscellaneous

Administration of the Code

1. The Firm shall use reasonable diligence and institute procedures reasonably necessary to prevent violations of this Code.

2. No less frequently than annually, the Firm shall furnish to the Fund’s board of directors a written report that

(a) describes any issues arising under the Code since the last report to the board of directors, including, but not limited to, information about material violations of the Code and sanctions imposed in response to material violations; and

(b) certifies that the Firm has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

Records

1. The Firm shall maintain records in the manner and to the extent set forth below, which records may be maintained in any manner described in Rule 31a-2(f)(1) under the 1940 Act, as follows:

(a) a copy of the Code and any other code which is, or at any time within the past five years has been in effect, shall be preserved in an easily accessible place;

(b) a record of any violation of the Code, and of any action taken as a result of such violation, shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs;

(c) a copy of each certification made by an Employee, Firm director or Firm officer pursuant to the Code (including any information provided in lieu of reports under Section II(B) of the Code) shall be preserved for a period of not less than five years from the end of the fiscal year in which it is made, for the first two years in an easily accessible place;

(d) a record of all persons, currently or within the last five years, who are or were required to make reports under Section II of the Code, or who are or were responsible for reviewing these reports, shall be preserved in an easily accessible place; and

(e) a copy of each report required by Section V(A)(2) shall be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place.

2. The Firm shall make such records available for examination at the Firm headquarters by representatives of the Securities and Exchange Commission at such time as said representatives may reasonably request.

3. Except as may be required pursuant to Section III(E) and Section V(A)(2) of the Code, all reports and any other information of a personal nature shall be treated as confidential by the Designated Supervisory Person.

Interpretation of Code

The Designated Person in consultation with the Firm’s Chief Legal Officer shall determine how the provisions of the Code shall be interpreted, and may from time to time establish administrative procedures to assist in carrying out the intent of the Code.

APPENDIX A

LIST OF ACCESS PERSONS


NAME	TITLE	ACCESS PERSON?
Brian Burns	Director, President, Chief Executive Officer & Chairman	No*
Michael DeNofrio	Director	No*
Nicholas Marsini	Director	No*
Timothy Mahoney	Director	No*
Salvatore Faia	Secretary & Clerk	No*
Rita Adler	Chief Compliance Officer	No*
Christine Ritch	Chief Legal Officer, Assistant Secretary & Assistant Clerk	No*
Craig Stokarski	Treasurer and Financial and Operations Principal	No*
Bradley Stearns	Assistant Secretary & Assistant Clerk	No*
Doug Castagna	Controller & Assistant Treasurer	No*
Julie Bartos	Assistant Secretary & Assistant Clerk	No*
Linda Toepel	Assistant Secretary & Assistant Clerk	No*

Not an Access Person because (1) such person does not in the ordinary course of his/her business make, participate in or obtain information regarding the purchase or sale of securities for a Fund; and (2) such person’s duties as part of the ordinary course of his/her business do not relate to the making of any recommendation to such Fund regarding the purchase or sale of securities.

APPENDIX B

This Code of Conduct relates to the purchase or sale of securities of which a person has a direct or indirect “beneficial ownership” except for purchases or sales in accounts over which the person has no direct or indirect influence or control as described below.

Beneficial Ownership

“Beneficial ownership” means that one directly or indirectly, by written or unwritten understanding, has a (or shares a direct or indirect) financial interest regardless of who is the owner of record. Financial interest means the opportunity, directly or indirectly, to participate in the risks and rewards of a transaction. Securities owned by a person or by a trust of which one has a beneficial ownership or a similar arrangement include, but are not limited to:

(1) Securities owned by your spouse, your minor children and relatives of you and your spouse who live in your home, including trusts of which such persons are beneficiaries (other than interests in a trust over which neither you nor such person has any direct or indirect influence or control over investments);

(2) A proportionate interest in securities held by a partnership of which you are a general partner;

(3) Securities in which you have a right to dividends that is separated or separable from the underlying securities;

(4) Securities that you have a right to acquire through the exercise or conversion of another security, whether or not presently exercisable; and

(5) Securities held in accounts from which you receive a performance related fee based on less than one year’s performance.

You do not have a financial interest in securities held by a corporation of which you are not a controlling shareholder and do not have or share investment control over its portfolio.

No Influence or Control

The Code does not apply to purchases and sales of securities effected in any account over which you do not have “any direct or indirect influence or control”. However, this “no direct or indirect influence or control” exception is limited to few situations. The principal one is that described in paragraph (1) above, where securities are held in a trust, in which you have a beneficial interest, but where you are not the Trustee and have no control or influence over the Trustee.

APPENDIX C

Initial Holdings Reports

In accordance with the PFPC Distributors, Inc. Code of Conduct governing personal securities transactions to which I am subject, I have attached to this form copies of the most recent statements for each and every Personal Account and Related Account, including Fully Discretionary Accounts, that holds or is likely to hold a Security or Futures Contract in which I have a Beneficial Ownership interest, as well as copies of confirmations for any and all transactions subsequent to the effective dates of those statements.

In addition, I hereby supply the following information for each and every Personal Account and Related Account in which I have a Beneficial Ownership interest for which I cannot supply the most recent account statement:


(1) The person in whose name the account is held (if different from mine):

The relationship of that person to me:

(2) Name of the firm ( e.g . securities broker- dealer or futures commission merchant) at which the account is maintained:

Address of that firm:



The account number at that firm:

(3) Name of the representative responsible for that account:

His or her telephone number:

NOTE: This Report must be submitted to Compliance within 5 days of being designated a fund officer / access person.

(4)

Account holdings:


	Identity of Security Or Futures Contract	Cusip	Quantity	Value	Valuation Date
(a)

(b)

(c)

(d)

I also supply the following information for each and every Security or Futures Contract in which I have a Beneficial Ownership interest, to the extent this information is not available elsewhere on this form or from the statements and confirmations attached to this form:

Person Who Owns

the Security Or

Futures Contract

Description of
the Security
Or Futures
Contract

Cusip

Quantity

Value

Valuation
Date

Custodian

(a)

(b)

(c)

(d)

(Attach additional sheets if necessary)

I hereby certify that this form and the documents attached hereto (if any) identify all of the Securities and Futures Contracts in which I have a Beneficial Ownership interest as of this date.



Date:
								Print Name


Dept. Number and Location								Signature

NOTE: This Report must be submitted to Compliance within 5 days of being designated a fund officer / access person.

APPENDIX D

To:	All Employees who are Access Persons of PFPC Distributors, Inc.

Re:	Personal Securities Transaction Report

Effective immediately, PLEASE COMPLETE THIS FORM AND RETURN WITHIN 5 DAYS AFTER THE END OF THE CALENDAR QUARTER TO PFPC DISTRIBUTORS, INC. COMPLIANCE DEPARTMENT, MAIL STOP W3-F400-01-9

Note: Failure to submit your report within the required timeframe will be considered a breach of PFPC Distributors, Inc.’s Code of Conduct and may be reportable to the Board of Directors. Include in this report any transaction in any security in which you have, or will have as a result of the transaction, any direct or indirect beneficial ownership in the security.

Date Of Transaction

Nature of
Transaction
(Purchase, Sale
Other)

CUSIP number
for each

Security

Issue Name,
Class of Stock,
Interest Rate,
Maturity Date
(if applicable)

Principal Amount of
each Security

Number of Units
or Shares

Price at which
Transaction was
effected

Broker/Dealer
Bank/through
whom effected

Include in this report: All personal securities transactions including options, warrants and futures contracts. Exclude in this report: Securities issued by the U.S. Government and its agencies, money market instruments, options and futures on U.S. Governments and money market instruments, shares of a registered open-end investment company, dividend reinvestment plans, purchases in PNC Stock Purchase Plan and, PNC Bank Corp.’s Incentive Savings Plan

To: Employees who serve as officers of funds, please list:

Fund Name

Officer Title


PERSONAL SECURITIES TRANSACTIONS REPORT
FOR THE CALENDAR QUARTER ENDED		Print Name	Dept #
	(Month/Date/Year)


		Signature	Date

APPENDIX E

Annual Holdings Report

As of December 31, 20



To:		PFPC Distributors, Inc. Chief Compliance Officer

From:
		Employee Name



(1)		The person in whose name the account is held
		(if different from mine):

		The relationship of that person to me:

(2)		Name of the firm ( e.g . securities broker-
		dealer or futures commission merchant) at
		which the account is maintained:

		Address of that firm:

		The account number at that firm:

(3)		Name of the representative responsible
		for that account:

		His or her telephone number:

NOTE: This Report must be submitted to Compliance within 20 days after year-end.

(4)	Account holdings:


	Identity of Security Or Futures Contract	Cusip	Quantity	Value	Valuation Date
(a)

(b)

(c)

(d)

Person Who Owns

the Security Or

Futures Contract

Description of
the Security
Or Futures
Contract

Cusip

Quantity

Value

Valuation
Date

Custodian

(a)

(b)

(c)

(d)

(Attach additional sheets if necessary)

I hereby certify that this form and the documents attached hereto identify all of the Securities and Futures Contracts in which I have a Beneficial Ownership interest as of December 31, 20 .

NOTE: This Report must be submitted to Compliance within 20 days after year-end.

Annual Acknowledgement Form

PFPC Distributors, Inc. Code of Conduct

I am a representative of PFPC Distributors, Inc. I have received a copy of the PFPC Distributors, Inc. Code of Conduct.

I understand that I may not enter into any personal securities transactions on the basis of information with respect to fund portfolio transactions received in connection with my employment by, or association with, PFPC, until such information has become publicly available.

I acknowledge and fully understand my responsibilities as outlined in the PFPC Distributors, Inc. Code of Conduct.

I agree to submit written reports of my securities transactions within five days of the end of the calendar quarter should I become an “Access Person” as such term is defined in the Code of Conduct.

I understand that failure to timely remit my written report of personal securities transactions within the time required constitutes a breach of PFPC Distributors, Inc.’s Code of Conduct and may be reportable to PFPC Distributors, Inc.’s Board of Directors.

I agree to comply with all aspects of PFPC Distributors, Inc. Code of Conduct’s requirements and standards as outlined.



Full Name (print)		_____________________________

Signature		_____________________________

Date		_____________________________



Please return your completed acknowledgement to:		PFPC Distributors, Inc.
		Compliance Dept
		Mail Stop: W3-F400-01-9

Exhibit X

BlackRock Funds ^SM

BlackRock Bond Allocation Target Shares

POWER OF ATTORNEY

Stuart E. Eizenstat, whose signature appears below, hereby constitutes and appoints David R. Wilmerding, Jr., Laurence D. Fink, Anne Ackerley, Brian P. Kindelan, Robert P. Connolly and Paul Audet, and each of them, his true and lawful attorneys and agents, with full power and authority of substitution and resubstitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents, or any of them, may deem necessary or advisable or which may be required to enable BlackRock Funds ^SM and BlackRock Bond Allocation Target Shares (each, a “Company”) to comply with the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended (collectively, the “Acts”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the filing and effectiveness of any and all amendments (including post-effective amendments) to the Company’s Registration Statement on Form N-1A and any other registration statements pursuant to said Acts (including Registration Statements on Form N-14), including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as a trustee and/or officer of the Company any and all such amendments and registration statements filed with the Securities and Exchange Commission under said Acts, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

/s/ Stuart Eizenstat

Stuart E. Eizenstat

Date: September 10, 2004

BlackRock Funds ^SM

BlackRock Bond Allocation Target Shares

POWER OF ATTORNEY

Laurence D. Fink, whose signature appears below, hereby constitutes and appoints David R. Wilmerding, Jr., Anne Ackerley, Brian P. Kindelan, Robert P. Connolly and Paul Audet, and each of them, his true and lawful attorneys and agents, with full power and authority of substitution and resubstitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents, or any of them, may deem necessary or advisable or which may be required to enable BlackRock Funds ^SM and BlackRock Bond Allocation Target Shares (each, a “Company”) to comply with the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended (collectively, the “Acts”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the filing and effectiveness of any and all amendments (including post-effective amendments) to the Company’s Registration Statement on Form N-1A and any other registration statements pursuant to said Acts (including Registration Statements on Form N-14), including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as a trustee and/or officer of the Company any and all such amendments and registration statements filed with the Securities and Exchange Commission under said Acts, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

/s/ Laurence D. Fink

Laurence D. Fink

Date: September 10, 2004

BlackRock Funds ^SM

BlackRock Bond Allocation Target Shares

POWER OF ATTORNEY

Robert M. Hernandez, whose signature appears below, hereby constitutes and appoints David R. Wilmerding, Jr., Laurence D. Fink, Anne Ackerley, Brian P. Kindelan, Robert P. Connolly and Paul Audet, and each of them, his true and lawful attorneys and agents, with full power and authority of substitution and resubstitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents, or any of them, may deem necessary or advisable or which may be required to enable BlackRock Funds ^SM and BlackRock Bond Allocation Target Shares (each, a “Company”) to comply with the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended (collectively, the “Acts”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the filing and effectiveness of any and all amendments (including post-effective amendments) to the Company’s Registration Statement on Form N-1A and any other registration statements pursuant to said Acts (including Registration Statements on Form N-14), including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as a trustee and/or officer of the Company any and all such amendments and registration statements filed with the Securities and Exchange Commission under said Acts, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

/s/ Robert M. Hernandez

Robert M. Hernandez

Date: September 10, 2004

BlackRock Funds ^SM

BlackRock Bond Allocation Target Shares

POWER OF ATTORNEY

Matina Horner, whose signature appears below, hereby constitutes and appoints David R. Wilmerding, Jr., Laurence D. Fink, Anne Ackerley, Brian P. Kindelan, Robert P. Connolly and Paul Audet, and each of them, her true and lawful attorneys and agents, with full power and authority of substitution and resubstitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents, or any of them, may deem necessary or advisable or which may be required to enable BlackRock Funds ^SM and BlackRock Bond Allocation Target Shares (each, a “Company”) to comply with the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended (collectively, the “Acts”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the filing and effectiveness of any and all amendments (including post-effective amendments) to the Company’s Registration Statement on Form N-1A and any other registration statements pursuant to said Acts (including Registration Statements on Form N-14), including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as a trustee and/or officer of the Company any and all such amendments and registration statements filed with the Securities and Exchange Commission under said Acts, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

/s/ Matina Horner

Matina Horner

Date: September 10, 2004

BlackRock Funds ^SM

BlackRock Bond Allocation Target Shares

POWER OF ATTORNEY

David R. Wilmerding, Jr., whose signature appears below, hereby constitutes and appoints Laurence D. Fink, Anne Ackerley, Brian P. Kindelan, Robert P. Connolly and Paul Audet, and each of them, his true and lawful attorneys and agents, with full power and authority of substitution and resubstitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents, or any of them, may deem necessary or advisable or which may be required to enable BlackRock Funds ^SM and BlackRock Bond Allocation Target Shares (each, a “Company”) to comply with the Investment Company Act of 1940, as amended, and the Securities Act of 1933, as amended (collectively, the “Acts”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the filing and effectiveness of any and all amendments (including post-effective amendments) to the Company’s Registration Statement on Form N-1A and any other registration statements pursuant to said Acts (including Registration Statements on Form N-14), including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as a trustee and/or officer of the Company any and all such amendments and registration statements filed with the Securities and Exchange Commission under said Acts, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

/s/ David R. Wilmerding, Jr.

David R. Wilmerding, Jr.

Date: September 10, 2004