SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK 10022-3897
_______
(212)735-3000
February 20, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Preliminary Proxy Materials for:
The BlackRock 1998 Term Trust Inc.
(the "Trust")
----------------------------------
Dear Sir or Madam:
On behalf of the Trust, electronically transmitted
herewith, pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934, as amended, and the Investment
Company Act of 1940, as amended, and the Rules promulgat-
ed thereunder, please find the preliminary proxy state-
ment of the Trust, the form of proxy to be furnished to
the Trust's shareholders, and the Schedule 14A informa-
tion.
Should you have any questions or require addi-
tional information with respect to the foregoing, please
contact theundersigned at (212)735-3532 or Philip H.
Harris at (212)735-3805.
Very truly yours,
/s/ Alexander B. Johnson
Alexander B. Johnson
(not admitted to practice
in New York)
Attachments
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
The BlackRock 1998 Term Trust Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.01 per share.
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
58,660,527 shares of Common Stock, par value $0.01 per share.
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE>
THE BLACKROCK 1998 TERM TRUST INC. ("BBT")
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC. ("BQT")
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
BLACKROCK 2001 TERM TRUST INC. ("BLK")
1285 Avenue of the Americas
New York, New York 10019
----------
NOTICE OF JOINT ANNUAL MEETING OF STOCKHOLDERS
----------
To Be Held on April 15, 1997
To the Stockholders of BBT, BQT, and BLK (collectively, the "Trusts"):
The Joint Annual Meeting of Stockholders of the Trusts will be held at One
Seaport Plaza, New York, New York on April 15, 1997 at 10:00 a.m. (New York
Time) for the following purposes:
1. With respect to BBT and BQT, to elect three Directors and with respect to
BLK, to elect four Directors, each to hold office for the term indicated
and until his successor shall have been elected and qualified;
2. To consider and act upon the ratification of the selection of Deloitte &
Touche LLP as independent auditors of each of the Trusts for the fiscal
year ending June 30, 1997 with respect to BLK and for the fiscal year
ending December 31, 1997 with respect to BBT and BQT;
3. With respect to BBT and BQT, to consider and act upon a proposal to
approve a new investment advisory agreement with BlackRock Financial
Management, Inc. that modifies the investment advisory fee schedules;
4. To consider and act upon a shareholder proposal to convert Trusts from
closed-end to open-end; and
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors of each Trust recommends that you vote "For"
Proposals 1, 2, 3 and 5 and "Against" Proposal 4.
We encourage you to contact BlackRock at (800) 227-7BFM (7236) if you have
any questions.
The stock transfer books will not be closed, but in lieu thereof, the
respective Boards of Directors has fixed the close of business on February 28,
1997 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the meeting.
By order of the respective Boards of Directors
Karen H. Sabath, Secretary
New York, New York
March 3, 1997
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON OR BY
PROXY; IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE APPROPRIATE ENCLOSED PROXY OR PROXIES IN THE ACCOMPANYING
ENVELOPE PROVIDED FOR YOUR CONVENIENCE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
THE BLACKROCK 1998 TERM TRUST INC.
THE BLACKROCK INVESTMENT QUALITY TERM TRUST INC.
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
THE BLACKROCK 2001 TERM TRUST INC.
1285 Avenue of the Americas
New York, New York 10019
----------
JOINT PROXY STATEMENT
----------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 15, 1997
INTRODUCTION
This joint proxy statement is furnished in connection with the solicitation
by the respective Boards of Directors or Trustees, as the case may be (the
"Boards"), of each of the Trusts of proxies to be voted at the Joint Annual
Meeting of Stockholders or Shareholders, as the case may be, (the "Meeting") of
the Trusts to be held at One Seaport Plaza, New York, New York, on April 15,
1997 at 10:00 a.m. (New York Time), and at any adjournments thereof, for the
purposes set forth in the accompanying Notice of Joint Annual Meeting of
Stockholders. Any such adjournment will require the affirmative vote of a
majority of the shares present in person or by proxy to be voted at the Meeting.
The persons named as proxies will vote in favor of any such adjournment those
proxies which instruct them to vote in favor of any of the proposals.
Conversely, they will vote against any such adjournment any proxies which
instruct them to vote against the proposals. As used in the Notice of Joint
Annual Meeting of Stockholders and as used herein, the term "Directors" shall
include Trustees and the term "Stockholders" shall include Shareholders where
the use of the terms "Trustees" or "Shareholders" would otherwise be
appropriate.
The Meeting is scheduled as a joint meeting of the respective stockholders
of the Trusts because the stockholders of all the Trusts are expected to
consider and vote on similar matters. The Board of each Trust has determined
that the use of a joint Proxy Statement for the Meeting is in the best interest
of each of the Trusts' stockholders. In the event that any stockholder present
at the Meeting objects to the holding of a joint meeting and moves for an
adjournment of his Trust's meeting to a time immediately after the Meeting, so
that his Trust's meeting may be held separately, the persons named as proxies
will vote in favor of such adjournment. Stockholders of each Trust will vote
separately on each of the Proposals relating to their Trust, and an unfavorable
vote on a Proposal by the stockholders of one Trust will not affect the
implementation of such a Proposal by another Trust if the Proposal is approved
by the stockholders of that Trust.
The cost of soliciting proxies will be borne by each of the Trusts in
proportion to the amount of proxies solicited on behalf of each Trust. In
addition, certain officers, directors and employees of each of the Trusts, Dean
Witter InterCapital Inc., Prudential Mutual Fund Management Inc., Princeton
Administrators L.P. (formerly Middlesex Administrators L.P.,), Mitchell Hutchins
Asset Management Inc. and BlackRock Financial Management, Inc. (the "Adviser")
(none of whom will receive additional compensation therefor) may solicit proxies
in person or by telephone, telegraph, or mail. In addition, certain of the
Trusts may employ
1
<PAGE>
Shareholder Communications Corporation pursuant to its standard contract as
proxy solicitor, the cost of which will be borne proportionately by each of the
Trusts and is estimated to be approximately $3,500 per Trust. The Adviser is
located at 345 Park Avenue, New York, New York 10154.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or otherwise as
provided therein. Abstentions will be counted as present but not voting with
respect to those proposals from which a stockholder abstains. Broker non-votes
will be treated as shares that are not present. Unless instructions to the
contrary are marked, shares represented by all properly executed proxies will be
voted "FOR" all the Proposals except that they will be voted "AGAINST" the
shareholder proposal to open-end the Trusts. Any proxy may be revoked at any
time prior to the exercise thereof by submitting another proxy bearing a later
date or by giving written notice to the Secretary of the applicable Trusts at
the applicable address indicated above or by voting in person at the Meeting.
Some proposals require more votes than others to be approved. With respect
to each of the Trusts an affirmative vote of a simple majority of the shares
present and voting at the meeting is necessary to ratify the selection of
independent auditors. The affirmative vote of a plurality of the shares present
is necessary to elect the director nominees. The lesser of (i) a majority of the
outstanding shares or (ii) 67% of the shares voting at the Meeting if a quorum
is present (a "Majority") is necessary to approve the new advisory agreement for
BBT and BQT. The approval of at least 75% of all outstanding shares of the trust
and a majority of the Trust's Board of Directors is necessary to approve the
shareholder proposal to open-end the Trusts.
The Board of each Trust knows of no business other than that specifically
mentioned in the Notice of Meeting which will be presented for consideration at
the Meeting. If any other matters are properly presented, it is the intention of
the persons named in the enclosed proxy to vote thereon in accordance with their
best judgment.
The Board of each Trust has fixed the close of business on February 28,
1997, as the record date for the determination of stockholders of each Trust
entitled to notice of and to vote at the Meeting or any adjournment thereof.
Stockholders of each Trust on that date will be entitled to one vote on each
matter to be voted on by that Trust for each share held and a fractional vote
with respect to fractional shares with no cumulative voting rights.
Pursuant to the rules promulgated by the Securities and Exchange Commission
the following table sets forth the proposals to be voted on by each Trust with
auditors and the shareholder proposal to open-end the Trusts to be voted on by
all Trusts.
------------------------------------------------------
Vote on Vote on Directors
Fund Proposal 3 of Class Number
------------------------------------------------------
BBT Y II
------------------------------------------------------
BQT Y II
------------------------------------------------------
BLK I
------------------------------------------------------
At the close of business on February 28, 1997, BBT had outstanding
58,660,527 shares of Common Stock, par value $0.01 per share, BQT had
outstanding 36,810,639 shares of Common Stock, par value $0.01 per share and BLK
had outstanding 142,010,583 shares of Common Stock, par value $0.01 per share.
For each Trust, the class or classes of stock listed above is the only
authorized class of stock.
The principal executive offices of BBT and BQT, are located at Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102 and the principal
executive offices of BLK are located at 1285 Avenue of the Americas, New York,
New York 10019. The enclosed proxy or proxies and this proxy statement are first
being sent to the Trusts' stockholders on or about March 3, 1997.
2
<PAGE>
Each Trust will furnish, without charge, a copy of such Trust's most recent
Annual Report and the most recent Semi-Annual Report succeeding the Annual
Report, if any, to any stockholder upon request, provided such Annual or
Semi-Annual Report is not enclosed herein. Requests should be directed to 345
Park Avenue, New York, New York 10154 (telephone number (800) 227-7BFM(7236)).
As of February 28, 1997, to the knowledge of each Trust, no person
beneficially owned more than 5% of any Trust, except that 10,185,100 of the
outstanding common shares of BLK (or 7.2% of the outstanding common shares) are
held by the Federal Home Loan Mortgage Corporation which is located at 8200
Jones Branch Drive, McLean, VA 22102 and 2,955,500 of the outstanding common
shares of BQT (or 8.0% of the outstanding common shares) are held by Lowe,
Brockenbrough & Tattersall, Inc., which is located at 6620 W. Broad Street,
Suite 300, Richmond, Virginia 23230, who disclaimed beneficial ownership of such
shares.
PROPOSAL NO. 1.
ELECTION OF DIRECTORS
With respect to BLK, at the Meeting, Class I Directors will be elected to
serve for a term of three years and until their successors are elected and
qualified. With respect to BBT and BQT, at the Meeting, Class II Directors will
be elected to serve for a term of three years and until their successors are
elected and qualified. In addition, all Trusts will vote on the election of
Walter F. Mondale as a Class II Director. There are three nominees with respect
to BBT and BQT only four nominees with respect to BLK, because each Trust's
Board is classified into three classes and only one class is being elected at
the Meeting. The other classes will be elected at subsequent meetings of
stockholders. In addition, with respect to BBT, nominees elected as Directors of
BBT will be appointed by BBT to serve as Directors of its wholly owned
subsidiary, BBT Subsidiary Inc. ("BBTS"), which has the identical investment
objective and policies as BBT. For each of the Trusts, the affirmative vote of a
plurality of the shares present at the Meeting is required to elect the
nominees. It is the intention of the persons named in the enclosed proxy to vote
in favor of the election of the persons listed below. The Board of Directors of
each Trust recommends that you vote "FOR" the nominees.
The respective Boards of Directors of the Trusts know of no reason why any
of the nominees listed below will be unable to serve, but in the event of any
such unavailability, the proxies received will be voted for such substitute
nominees as the respective Boards of Directors may recommend.
Certain information concerning the nominees for each of the Trusts is set
forth below. Except for Walter F. Mondale, who was previously a Director of each
of the Trusts from inception to August 12, 1993, all of the nominees are
currently Directors of each of the Trusts, including BBTS, and have served in
such capacity since each of the Trusts commenced their respective operations
except that Richard E. Cavanagh has served as Director since his appointment by
each of the Boards on August 11, 1994 to fill a vacancy and with respect to BBT,
James Clayburn La Force, Jr. has served as Director since his election at the
Trust's annual meeting of stockholders on June 19, 1992. In addition to each of
the directorships listed below, all of the current Directors of the Trusts also
serve as Directors of The BlackRock Income Trust Inc., The BlackRock Target Term
Trust Inc. ("BTT"), The BlackRock Advantage Term Trust Inc. ("BAT"), The
BlackRock Strategic Term Trust Inc. ("BGT"), BBTS, The BlackRock Municipal
Target Term Trust Inc., The BlackRock North American Government Income Trust
Inc., The BlackRock Insured Municipal Term Trust Inc., The BlackRock Insured
Municipal 2008 Term Trust Inc., The BlackRock California Insured Municipal 2008
Term Trust Inc., The BlackRock New York Insured Municipal 2008 Term Trust Inc.,
The BlackRock Florida Insured Municipal 2008
3
<PAGE>
Term Trust, The BlackRock 1999 Term Trust Inc. ("BNN"), BNN Subsidiary Inc., The
BlackRock Investment Quality Municipal Trust Inc., The BlackRock Florida
Investment Quality Municipal Trust, The BlackRock California Investment Quality
Municipal Trust Inc., The BlackRock New York Investment Quality Municipal Trust
Inc., The BlackRock New Jersey Investment Quality Municipal Trust Inc., and The
BlackRock Broad Investment Grade 2009 Term Trust Inc. ("BCT") and Messrs. Fink
and Grosfeld serve as directors of BlackRock Fund Investors I, BlackRock Fund
Investors II, BlackRock Fund Investors III and BlackRock Asset Investors
(collectively, "BAI"), Mr. Fink serves as a director of BlackRock MQE Investors
and Messrs. Dixon, Fabozzi and Grosfeld served as directors of BFM Institutional
Trust ("BIT") during BIT's last fiscal year, until July, 1996 when BIT was
merged into the Compass Capital Funds. Except as indicated, each individual has
held the office shown or other offices in the same company for the last five
years. The "interested" Directors (as defined by Section 2(a)(19) of the 1940
Act) are indicated by an asterisk(*). Unless specified otherwise below, the
business address of the Directors and officers of each of the Trusts and the
Adviser is 345 Park Avenue, New York, New York 10154.
<TABLE>
<CAPTION>
Trust % of
Principal Occupations or Shares Shares
Name and Age Employment in Past 5 Years Owned(*) Outstanding
- ------------ -------------------------- -------- -----------
<S> <C> <C> <C>
Andrew F. Brimmer President of Brimmer & Company, Inc., a BBT 10 (1)
4400 MacArthur Blvd., Washington, D.C.-based economic and BQT 10
N.W. Suite 302 financial consulting firm. Formerly BLK 10
Washington, DC 20007 member of the Board of Governors of the
Age: 70 Federal Reserve System. Director,
Class III (**) Airbourne Express, BankAmerica
Corporation (Bank of America), Carr
America Realty Corporation, E.I. du Pont
de Nemours & Company, Gannett Company
(publishing), Navistar International
Corporation (truck manufacturing) and
PHH Corporation (car leasing).
Richard E. Cavanagh President and Chief Executive Officer of BBT 100 (1)
845 Third Avenue The Conference Board, Inc., a leading BQT 100
New York, NY 10022 global business membership organization. BLK 100
Age: 50 Former Executive Dean of the John F.
Class I (**) Kennedy School of Government at Harvard
University from 1988-1995. Acting
Director, Harvard Center for Business
and Government (1991-1993). Formerly
Partner (principal) of McKinsey &
Company, Inc. (1980-1988). Former
Executive Director of Federal Cash
Management, White House Office of
Management and Budget (1977-1979).
Co-author, The Winning Performance (best
selling management book published in 13
national editions.) Trustee, Wesleyan
University, Director, Olin Corp.
(chemicals and metals) and Fremont Group
(investments).
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Trust % of
Principal Occupations or Shares Shares
Name and Age Employment in Past 5 Years Owned(*) Outstanding
- ------------ -------------------------- -------- -----------
<S> <C> <C> <C>
Kent Dixon Consultant/Investor. Former President BBT 100 (1)
9495 Blind Pass Road and Chief Executive Officer of Empire BQT 100
Unit #602 Federal Savings Bank of America and Banc BLK 100
St. Petersburg, FL 33706 PLUS Savings Association, former
Age: 59 Chairman of the Board, President and
Class III (**) Chief Executive Officer of Northeast
Savings. Former Director of ISFA (the
owner of INVEST, a national securities
brokerage service designed for banks and
thrift institutions).
Frank J. Fabozzi Consultant. Editor of The Journal of BBT 10 (1)
858 Tower View Circle Portfolio Management and Adjunct BQT 10
New Hope, PA 18938 Professor of Finance at the School of BLK 10
Age: 48 Organization and Management at Yale
Class II (**) University. Director, Guardian Mutual
Funds Group. Author and editor of
several books on fixed income portfolio
management. Visiting Professor of
Finance and Accounting at the Sloan
School of Management, Massachusetts
Institute of Technology from 1986 to
August 1992.
Laurence D. Fink* Chairman and Chief Executive Officer of BBT 10 (1)
Age: 44 the Adviser. Formerly Managing Director BQT 630
Class III (**) of The First Boston Corporation, member BLK 10
of its Management Committee, co-head of
its Taxable Fixed Income Department, and
head of its Mortgage and Real Estate
Products Group. Chairman of the Board of
each of the Trusts. Trustee, New York
University Medical Center, Dwight
Englewood School, VIMRx Pharmaceuticals,
National Outdoor Leadership School,
Innouir Laboratories, Inc.
James Grosfeld Consultant/Investor. Formerly Chairman BBT 10 (1)
20500 Civic Center Drive of the Board and Chief Executive Officer BQT 10
Suite 3000 of Pulte Corporation (homebuilding and BLK 10
Southfield, MI 48076 mortgage banking and finance) (May
Age: 59 1974-April 1990).
Class I (**)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Trust % of
Principal Occupations or Shares Shares
Name and Age Employment in Past 5 Years Owned(*) Outstanding
- ------------ -------------------------- -------- -----------
<S> <C> <C> <C>
James Clayburn LaForce, Jr. Dean Emeritus of The John E. Anderson BBT 10 (1)
P.O. Box 1595 Graduate School of Management, BQT 10
Pauma Valley, CA 92061 University of California since July 1, BLK 10
Age: 68 1993. Director, Eli Lilly and Company
Class I (**) (pharmaceuticals), Imperial Credit
Industries (mortgage banking), Jacobs
Engineering Group, Inc., Rockwell
International Corporation, Payden &
Rygel Investment Trust (mutual fund),
Provident Investment Counsel Funds
(investment companies), Timken Company
(roller bearing and steel). Acting Dean
of The School of Business, Hong Kong
University of Science and Technology
1990-1993. From 1978 to September 1993,
Dean of The John E. Anderson Graduate
School of Management, University of
California.
Walter F. Mondale Partner, Dorsey & Whitney, a law firm
220 South Sixth Street (December 1996-, September 1987-August
Minneapolis, MN 55402 1993). Formerly, U.S. Ambassador to
Age: 69 Japan (1993-1996). Formerly Vice
Class II (**) President of the United States, U.S.
Senator and Attorney General of the
State of Minnesota. 1984 Democratic
Nominee for President of the United
States.
Ralph L. Schlosstein* President of the Adviser. Formerly BBT 100 (1)
Age: 46 Managing Director of Lehman Brothers and BQT 100
Class II (**) co-head of its Mortgage and Savings BLK 100
Institutions Group. President of each of
the Trusts. Trustee Denison University,
Director of the Fund for New York City
Public Education, Member Visiting Board
of Overseers of the John F. Kennedy
School of Government at Harvard
University, Member Board of Children's
Television Workshop, Member Board of
Pulte Home Corporation.
<FN>
- ----------
(1) Less than 1%.
(*) If the Trust is not listed the Director does not own any shares of the
Trust.
(**) Except for Mr. Mondale, who is being elected as a Class II Director by
all the Trusts, only Class I Directors are being elected by BLK and only Class
II Directors are being elected by BBT, and BQT.
</FN>
</TABLE>
6
<PAGE>
All Directors and officers as a group owned less than 1% of the shares of
each of the Trusts as of February 28, 1997. Each Trust has an executive
committee composed of Messrs. Fink and Schlosstein.
None of the Trusts has a compensation or nominating committee of the Board
of Directors, or committees performing similar functions. Each of the Trusts has
an audit committee composed of all the Directors who are not interested persons
of such Trust or the Adviser (the "Independent Directors") which is charged with
recommending a firm of independent accountants to its respective Trust and
reviewing accounting matters with the accountants. With respect to BLK, there
was one meeting of the audit committee held between July 1, 1995 and June 30,
1996. With respect to BBT and BQT there was one meeting of the audit committee
held between January 1, 1996 and December 31, 1996. With respect to each of the
Trusts, all members except for Mr. Grosfeld attended at least 75% of the
meetings.
Six meetings of the Board of Directors of BLK were held between July 1, 1995
and June 30, 1996. Six meetings of the Board of Directors of BBT were held
between January 1, 1996 and December 31, 1996. Seven meetings of the Board of
Directors of BQT were held between January 1, 1996 and December 31, 1996. With
respect to each of the Trusts, all Directors except for Mr. Grosfeld attended at
least 75% of the meetings.
In addition to Messrs. Fink and Schlosstein all the following executive
officers hold the same position with each of the Trusts and have done so since
that Trust's commencement of operations (unless otherwise indicated).
<TABLE>
<CAPTION>
Name and Age Title Other Principal Occupations in Past 5 Years
- ------------ ----- -------------------------------------------
<S> <C> <C>
Scott Amero Vice President Managing Director of the Adviser since February 1995.
Age: 33 From 1985 to 1990 Vice President at The First Boston
Corporation in the Fixed Income Research Department.
Keith T. Anderson Vice President Managing Director of the Adviser. From February 1987 to
Age: 37 April 1988 Vice President at The First Boston
Corporation in the Fixed Income Research Department.
Previously Vice President and Senior Portfolio Manager
at Criterion Investment Management Company.
Michael C. Huebsch Vice President Managing Director of the Adviser. From July 1985 to
Age: 38 January 1989 Vice President at The First Boston
Corporation in the Fixed Income Research Department.
Robert S. Kapito Vice President Managing Director and Vice Chairman of the Adviser.
Age: 40 Formerly Vice President at The First Boston Corporation
in the Mortgage Products Group.
Henry Gabbay Treasurer Managing Director and Chief Operating Officer of the
Age: 49 Adviser. From September 1984 to February 1989 Vice
President at The First Boston Corporation.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name and Age Title Other Principal Occupations in Past 5 Years
- ------------ ----- -------------------------------------------
<S> <C> <C>
James Kong Assistant Treasurer Managing Director of the Adviser. From April 1987 to
Age: 36 April 1989 Assistant Vice President at the The First
Boston Corporation in the CMO/ABO Administration
Department. Previously affiliated with Deloitte, Haskins
& Sells (now Deloitte & Touche LLP).
Karen H. Sabath Secretary Managing Director of the Adviser. From June 1986 to July
Age: 31 1988 Associate at The First Boston Corporation in the
Mortgage Finance Department. From August 1988 to
December 1992 Associate, Vice President of the Adviser.
Richard Shea, Esq. Vice President/Tax Principal of the Adviser. From December 1988 to February
Age: 37 1993 Tax Counsel at Prudential Securities, Inc. From
August 1984 to December 1988 Senior Tax Specialist at
Lavanthol & Horwath.
</TABLE>
REMUNERATION
The following table sets forth certain information regarding the
compensation of the Fund's directors and officers.
Total Compensation
<TABLE>
<CAPTION>
Aggregate Compensation from the Fund Complex
Name of Person and Position from the Trusts Paid to Directors and Officers*
- --------------------------- --------------- -------------------------------
<S> <C> <C>
Andrew R. Brimmer ................ $36,000 $160,000(21)
Richard E. Cavanagh .............. $36,000 $160,000(21)
Kent Dixon ....................... $36,000 $161,250(22)
Frank J. Fabozzi ................. $36,000 $161,250(22)
James Grosfeld ................... $24,000 $146,658(26)
James Claybourne LaForce, Jr. .... $36,000 $160,000(21)
<FN>
- ----------
*Represents the total compensation paid to such persons during the calendar year
ended December 31, 1996 by investment companies (including the Trust) from which
such person receives compensation that are considered part of the same fund
complex as the Fund because they have common or affiliated investment advisers.
The number in parentheses represents the number of such investment companies.
</FN>
</TABLE>
The attendance fees of each Independent Director of the Trusts are reduced
proportionately, based on each respective Trust's net assets, so that the
aggregate per meeting fee for all meetings of the Trusts held on a single day
does not exceed $20,000 for any Director. The $6,000 per annum fee for serving
on each Board is also reduced proportionately, based on each respective Trust's
net assets. For BLK, fees of $69,000 were accrued by the Trust between July 1,
1995 and June 30, 1996. For BBT and BQT fees of $69,000 were accrued by each
Trust from January 1, 1996 to December 31, 1996. None of the Directors received
any pension or retirement benefits. None of the ten officers of the Trusts
received any compensation, including pension or
8
<PAGE>
retirement benefits, from the Trusts for such period. Messrs. Fink, Schlosstein,
Amero, Anderson, Huebsch, Kapito, Gabbay, Kong, Shea and Ms. Sabath, officers
and/or Directors of the Trusts, are also affiliated with the Adviser. They
receive compensation from the Adviser although under the terms of the investment
advisory agreements some portion of their compensation could be reimbursable by
a particular Trust to the extent such person's working time is devoted to that
particular Trust's operations.
The Board of Directors of each Trust recommends that you vote "FOR" the
nominees. The affirmative vote of a plurality of the shares present is necessary
to elect the director nominees.
PROPOSAL NO. 2.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Deloitte & Touche LLP ("D&T") has been selected as the independent auditors
by a majority of each of the Trusts' Board of Directors, including a majority of
the Independent Directors, by vote cast in person subject to ratification by the
stockholders at the Meeting to audit the accounts of each of the Trusts for and
during each Trust's fiscal year ending in 1997. In addition, with respect to
BBT, ratification of the selection of D&T as independent auditors for BBT will
cause BBT to ratify the selection of D&T as the independent auditors of its
wholly-owned subsidiary BBTS. None of the Trusts know of any direct or indirect
financial interest of D&T in the Trusts.
Representatives of D&T will attend the Meeting, will have the opportunity to
make a statement if they desire to do so and will be available to answer
questions.
The affirmative vote of a simple majority of shares present and voting at
the meeting is required to ratify the selection of D&T.
The Board of Directors of each Trust recommends that you vote "FOR" the
ratification of the selection of independent auditors. An affirmative vote of a
simple majority of the shares present and voting is necessary to ratify the
selection of independent auditors.
PROPOSAL NO. 3
MODIFICATION OF ADVISORY FEE SCHEDULE
FOR BBT AND BQT
BlackRock Financial Management, Inc. acts as investment adviser to each of
BBT and BQT (the "Term Trusts") pursuant to separate investment advisory
agreements with each Term Trust. As discussed in detail below, you are being
asked to approve a change in the schedule of fees paid to the Adviser. The
proposed fees are competitive relative to other fees prevailing in the industry
and are identical to the fees payable to the Adviser in 1996 and the new
advisory agreements are identical to the advisory agreements that were in place
in 1996 except for the proposed change to their fee schedules. The form of the
advisory agreement is attached as Appendix A. The Board of Directors of each
Term Trust recommends that you vote "FOR" this proposal.
The Adviser has been managing the Term Trusts to seek each Term Trust's
objective of returning $10 per share on or about each Term Trust's termination
date while providing high monthly income. The investment
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<PAGE>
advisory fee schedule for the Term Trusts was initially determined and
predicated on an anticipated reduction in the level of portfolio management
activity and portfolio yield over the life of the Term Trusts and thus included
a scheduled "step-down" in advisory fees. As a result of substantial and
fundamental changes in the Term Trusts' investment strategies, including with
respect to BBT a shareholder approved migration from AAA securities, which
required no credit analysis, to investment grade securities, which require both
credit and cash flow analysis, the Adviser projects that the originally
anticipated reduction in investment advisory activity in the Term Trusts has
been and will continue to be replaced instead by at least equal, if not greater,
investment advisory responsibilities which will continue through the remaining
term of the Term Trusts. This increased investment management effort is credited
with the expectation of a higher than otherwise expected dividend over the
remaining life of the Term Trusts and, most importantly, a greater probability
of meeting the trusts' primary investment objective of returning the original
offering price to shareholders while providing a high current income.
Accordingly, the Board of Directors and the Adviser believe that the scheduled
step- down in advisory fees no longer makes sense in light of the increase in
the Adviser's management activities.
This proposal seeks approval from Shareholders, already granted by the Board
of Directors, to eliminate a scheduled reduction in fees payable to the Adviser
(or reinstatement of the recently revised fees in the case of BBT) and NOT to
seek an increase in such advisory fees. The Boards of Directors of the Term
Trusts believe this is appropriate in light of the changes in the way the Term
Trusts are managed and in light of the unanticipated increase in investment
advisory activities provided to the Term Trusts by the Adviser.
As compensation for the services rendered by the Adviser, each current
investment advisory agreement provides that each Term Trust shall pay to the
Adviser a monthly fee which is currently equal to the following annual
percentage of each Term Trust's weekly net investment assets: BBT, .30% and BQT,
.60%. Pursuant to its investment advisory agreement's current advisory fee
step-down schedule, the investment advisory fees for BBT were automatically
stepped-down on December 31, 1996 from .40% to .30%. With respect to BQT, its
current advisory fees of .60% are scheduled to step-down to .50% on December 31,
1998, and again from .50% to .40% on December 3, 2002.
The Adviser has requested, and the Board of Directors has approved as being
in the best interests of Shareholders, subject to Shareholder approval, amending
each Term Trust's current investment advisory agreement so that, with respect to
BQT, its current fees of .60% would be continued until its termination date with
no step-downs and, with respect to BBT, the previous level of investment
advisory fees of .40% would be reinstated from April 15, 1997 to termination and
a one-time payment from BBT to the Adviser would be made of $166,505 on the
effective date of the new agreement. This payment from BBT equals the product of
(i) the differential between its December 31, 1996 fees and the fees currently
in effect as a result of the step-down, times (ii) its net assets on December
31, 1996 times .288, which represents the part of the year between January 1,
1997 and April 15, 1997. It is this continuation of the fees prevailing in 1996
and the elimination of step-downs that the Board of Directors is asking
Shareholders to consider and approve.
As the analysis below illustrates, the Boards of Directors of the Term
Trusts believe that the proposed fee schedules are appropriate by the level of
investment advisory activity of the Adviser and particularly because of their
fair level relative to other funds investing in similar securities.
Background
The first finite term closed-end fund managed by the Adviser was issued in
November 1988 and was followed with 7 additional taxable term trusts issued
through 1993, each with the primary investment
10
<PAGE>
objective of paying high income and returning the original offering price at the
end of its respective term. As initially contemplated, the portfolio management
strategy for the first series of term trusts anticipated more than one
investment phase: (i) the earlier stages of a trust's term with active
management among all mortgage and Treasury sectors and (ii) the latter stages of
a trust's term with a more passive management style as primarily AAA securities
with defined cash flows, including zero coupon bonds and Treasury securities,
were intended to grow to the trust's maturity value. Advisory fee structures
were set reflecting this investment management plan and, accordingly, were set
to decline over the latter stages of a term, parallel to the anticipated
reduction in the level of portfolio management activity and relative portfolio
yield.
Since the first term trust, the original investment strategy has evolved to
reflect changes in the market. Originally, the first term trust portfolios were
required, in varying degrees, to invest in a sufficient amount of AAA securities
with defined cash flows, including zero coupon bonds and Treasury securities,
such that their maturing value would be at least equal to the terminal target
value of the trust. The most recent and most fundamental change to investment
strategy was approved in May 1995 when shareholders granted the Adviser
authority to buy investment grade bonds for certain trusts, specifically for
BBT, BNN, BTT, BLK, BGT and BAT. Although BQT had this authority since
inception, its assets, to some extent, have been invested with a similar
management effort and investment strategy as these other trusts. This change in
investment guidelines, however, has given the Adviser more flexibility with
respect to the selection of securities with well defined cash flows as each Term
Trust approaches termination and has had the effect of strengthening the Term
Trusts' ability to achieve their respective investment objectives.
Credit and Risk Management
With the exception of BQT, the term trusts originally envisioned investing
solely in AAA securities, including zero coupon bonds and Treasury securities.
In varying degrees, it was anticipated that their investment style would evolve
over time from an aggressively and actively managed portfolio to a nearly
totally passively managed portfolio as the proportion of assets in AAA
securities with defined cash flows, including zero coupon bonds and Treasury
securities, increased to nearly 100% at each such trust's termination date.
Prior to 1995 when BBT, BNN, BTT, BLK, BGT and BAT received authority from
shareholders to invest in securities with BBB or greater ratings, those trusts
could only invest in AAA or government securities. This expanded investment
authority has permitted the trusts to respond to changing capital market
conditions as well as to reduce their cash flow risk as the term trusts come
closer to their termination date by expanding the types of securities they can
purchase that are higher yielding than certain AAA securities. This authority
has to date produced positive results for the shareholders in a period of low
and declining interest rates and, at the same time, has resulted in a material
change in the investment strategy originally envisioned when the term trusts,
with the exception of BQT, were created. Indeed, the proportion of non-AAA
assets in the term trusts continues to grow dramatically. Accordingly, the
Adviser has had to significantly increase its monitoring of credit, risk and
portfolio capabilities as a result of these expanded investment guidelines.
These investment responsibilities and effort were not anticipated in the
original fee schedules.
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<PAGE>
Competitive Analysis
The proposed advisory fees for the Term Trusts are competitive relative to
their respective peer groups and generally are near or below the average for
both the U.S. Mortgage Term Trust category and the Investment Grade Bond Fund
category in the following table. The table provides a summary of the proposed
fees for the Term Trusts and the average current fees applicable to funds in
each of those two categories.
Avg. Avg.
U.S. Mortgage Investment Grade
BBT BQT Term Trust2 Bond Fund3
- --------------------------------------------------------------------------------
Advisory Fee1 .40% .60% .65% .56%
Total Expense Ratio4 .67% .91% .91% .82%
- --------------------------------------------------------------------------------
1 Proposed advisory fees shown as a percentage of total net assets.
2 This category is comprised of the total number (32) of U.S. Mortgage Term
Trusts tracked by Lipper Analytical Services, Inc.
3 This category is comprised of the total number (16) of Investment Grade Bond
Funds tracked by Lipper Analytical Services, Inc.
4 Aggregate proposed fees applicable to the funds, inclusive of advisory,
administration and other operating expenses.
As the above table highlights, even with the maintenance of the fees
prevailing in 1996, the Adviser's investment advisory fees generally would be
near or below the levels of other funds in their peer groups. The Boards of
Directors of the Term Trusts believe that the proposed fees are not only
justified by the level of investment advisory activity by the Adviser, but are
also fair relative to the fees prevailing in the industry.
The following required table illustrates fees payable to the Adviser by
other trusts the Adviser manages having similar investment objectives to the
Term Trusts and also states the size of such other trusts:
<TABLE>
<CAPTION>
Trust BAT BNN BGT BLK BTT3 BCT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fee1 .50% .40% .45% .40% .30% .55
Net Assets2 $96,028,113 $206,004,373 $526,115,842 $1,265,055,428 $936,043,721 $39,758,630
- -------------------------------------------------------------------------------------------------------
<FN>
1 As of April 15, 1997.
2 As of December 31, 1996.
3 The shareholders of BTT are being asked to approve a proposal to restore its
current advisory fees to their December 31, 1996 level
of .45%.
</FN>
</TABLE>
The Current and Proposed Fee Schedules
The Boards of Directors of the Term Trusts recommend that the Shareholders
approve new advisory agreements between each Term Trust and the Adviser so as,
with respect to BQT, to eliminate the scheduled future reduction in advisory
fees and, with respect to BBT, to restore the advisory fees to those in effect
on December 31, 1996 and for BBT to make a one-time cash payment to the Adviser
in an amount equal to the fees that would have been paid from January 1, 1997 to
April 15, 1997 had there been no step-down.
The following tables illustrate the current and proposed fee schedules:
Current Scheduled Scheduled Fees Proposed Cash
Advisory Step- After Step-Down Advisory Fees Payment to the
Trust Fees1 Down Date Adviser2
- --------------------------------------------------------------------------------
BBT .30% n/a .30% .40% $166,505
BQT .60% 12/31/98 .50% .60% n/a
12/31/02 .40%
- --------------------------------------------------------------------------------
12
<PAGE>
1 Current Advisory Fees represent those in effect on April 15, 1997.
Accordingly, the fees for BBT were reduced on December 31, 1996 from its then
current fees of .40%, to its current fees of .30%.
2 This amount is equal to the product of (i) the differential between the
December 31, 1996 fees of .40% for BBT and the fees currently in effect as a
result of the step-down, times (ii) its net assets on December 31, 1996 times
.288, which represents the part of the year between January 1, 1997 and April
15, 1997.
The required table below shows the current fee arrangements applicable to
each of the Term Trusts and illustrates the pro forma effect on fees that the
proposed fee schedule would have had on fees payable by each Trust during each
Trust's last fiscal year ended December 31, 1996 if the proposed fees were then
in effect instead of the now current fees.
- --------------------------------------------------------------------------------
Annual Operating Expenses Management Other Operat- Total Annual
(as a percentage of net assets) Fees ing Expenses1 Expenses1
BBT Current .30% .27% .57%
Pro Forma .40% .27% .67%
BQT Current .60% .31% .91%
Pro Forma .60% .31% .91%
- --------------------------------------------------------------------------------
1 Actual amounts may be greater or less than those shown. There is no assurance
that the Term Trusts' actual expenses will be greater or less than their
current actual expense.
EXAMPLE
The following required example shows what you would pay on a $1,000
investment over various time periods, assuming a 5% annual rate of return. This
example is based upon the Pro Forma expenses for each Trust as listed under
"Total Annual Expenses" above.
- --------------------------------------------------------------------------------
Trust1 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
BBT $7 $21 $37 $ 83
BQT $9 $29 $50 $112
- --------------------------------------------------------------------------------
1 The example should not be considered a representation of future expenses and
actual expenses may be greater or less than those shown. Moreover, a Trust's
actual rate of return may be greater or less than the hypothetical 5% return
shown in this example. This example assumes that the percentage amounts listed
under "Total Annual Expenses" remain the same in each of the periods.
During the last fiscal year for each fund, BBT and BQT paid total fees to
the Adviser of $2,311,481 and $2,006,371, respectively. Had the proposed fee
schedule been in effect for such period, the Adviser would have received the
same fees, representing a percentage change of zero percent. In addition, the
advisory contracts with the Adviser for BBT and BQT, each dated February 28,
1995, were last submitted for a vote of the shareholders on February 15, 1995 in
order to approve new investment advisory agreements for each Term Trust
necessitated by the acquisition of the Adviser by PNC Bank, N.A.
As the above tables illustrate, this proposal does not seek to increase the
fee amounts payable to the Adviser from each Term Trust's last fiscal year.
Rather, it seeks, with respect to BQT, to eliminate a scheduled future reduction
in advisory fees and, with respect to BBT, to restore the advisory fees to the
level before the scheduled reduction took place on December 31, 1996, because
the scheduled reduction is no longer appropriate in light of the changes in the
way that the Term Trusts are managed and the changes in objectives, policies and
market conditions.
13
<PAGE>
Summary
In summary, in light of these changes in objectives, policies and market
conditions, the Adviser's scope of management activities and personnel committed
to the Term Trusts has expanded significantly. As discussed above, to reflect
these changes you are being asked to approve a change in the schedule of fees
payable to the Adviser. Such proposed fees are competitive relative to other
fees prevailing in the industry. Accordingly, because the Adviser's activities
have expanded, rather than diminished as contemplated when the original fee
schedules were created, the Boards of Directors of the Term Trusts recommend
amending each Term Trust's current investment advisory agreement so that, with
respect to BQT, its fees of .60% would be continued until its termination date
with no step-downs and, with respect to BBT, the previous level of investment
advisory fees of .40% would be reinstated from April 15, 1997 to termination and
a one-time payment from BBT to the Adviser would be made of $166,505 on the
effective date of the new agreement. This payment from BBT equals the product of
(i) the differential between its December 31, 1996 fees and the fees currently
in effect as a result of the step-down, times (ii) its net assets on December
31, 1996 times .288, which represents the part of the year between January 1,
1997 and April 15, 1997.
The Boards of Directors of the Term Trusts unanimously recommend that you
vote "FOR" this proposal to amend the Term Trusts' investment advisory
agreements to remove the scheduled step-down in advisory fees for BQT and, with
respect to BBT, to restore the fees to the level that existed on December 31,
1996 and for BBT to compensate the Adviser for the fees it would have received
during the period from January 1, 1997 to April 15, 1997 had there been no
step-down. To pass, this proposal must be approved by the lesser of a majority
of the outstanding shares of each Term Trust or by 67% of the Shares of each
Term Trust voting at the meeting if a quorum is present. We encourage you to
contact BlackRock at (800) 227-7BFM (7236) if you have any questions.
PROPOSAL NO. 4
SHAREHOLDER PROPOSAL TO CONVERT THE
TRUSTS FROM CLOSED-END TO OPEN-END
Two individuals submitted substantially similar proposals to be presented
for a vote of the Stockholders at the Joint Annual Meeting of Stockholders. The
name, address and number of shares held by each such individual may be obtained
by writing to the Adviser at 345 Park Avenue, New York, New York 10154 or by
telephoning the Adviser at (800) 277-7BFM (7326). The two proposals are as
follows:
1. This a formal request to enhance the market value of the following
BlackRock Funds: BlackRock Investment Quality Term Trust, BlackRock 1998
Term Trust Inc., and BlackRock 2001 Term Trust Inc., to reflect the net
asset value of each prospective fund by convert ing the fund from a
closed end to an open ended fund.
2. I am making a formal proposal that will increase shareholder value by
converting the trust [BQT] from a closed end fund to an open end fund.
OPPOSING STATEMENT
For the following reasons, the Board of Directors and the Adviser recommend
a vote "AGAINST" this proposal.
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<PAGE>
The investment objective of each of the Trusts is to manage a portfolio of
fixed income securities and return its initial public offering price per share
to investors on a specific future termination date while providing high monthly
income. The Trusts' portfolios have been structured with these objectives in
mind and the Adviser expects to fulfill each Trust's investment objective of
returning $10 per share at each Trust's respective termination date.
Accordingly, at termination, there is anticipated to be no discount to net asset
value. Therefore, the Adviser and the Board of Directors believe that this
proposal is NOT in the best interests of Stockholders.
As currently structured and managed, the portfolios are designed to meet the
investment objective of returning $10 per share at termination and are not
suited to satisfying the redemption requests associated with open-end funds. To
open-end the Trusts would require restructuring the Trusts' portfolios,
including changing the Trusts' investment policies and imposing new costs on
Stockholders, and therefore potentially reducing the Trusts' return on assets.
Given that the Trusts anticipate satisfying the objectives of returning the
initial offering price while providing current income, there is no apparent
reason to convert the Trusts. Consequently, the Board of Directors and the
Adviser believe that continuing the closed-end structure of the Trusts provides
a better means of satisfying the Trusts' investment objectives and policies and
is in the best interests of Stockholders.
For the above reasons the Board of Directors, by a unanimous vote, and the
Adviser both recommend that you vote "AGAINST" the proposal to open-end each
Trust. In order to pass, this proposal must be approved by at least 75% of all
outstanding shares of the Trust and a majority of the Trust's Board of
Directors. We encourage you to contact BlackRock at (800) 227- 7BFM (7236) if
you have any questions.
ADDITIONAL INFORMATION
INVESTMENT ADVISER
The Adviser was founded in April 1988 by Laurence D. Fink and Ralph L.
Schlosstein. The Adviser is a subsidiary of PNC Asset Management Group,which is
a division of PNC Bank, the nation's eleventh largest banking organization. The
Adviser is registered as an investment adviser under the Investment Advisers Act
of 1940.
The executive officers of the Adviser are:
Name Position
---- --------
Laurence D. Fink Chairman and Chief Executive Officer
Ralph L. Schlosstein President
Robert S. Kapito Vice Chairman
Henry Gabbay Chief Operating Officer
Messrs. Fink and Schlosstein are officers and Directors, and Messrs. Gabbay and
Kapito are officers of the Trusts.
FINANCIAL STATEMENTS
Each Trust will furnish, without charge, a copy of such Trust's most recent
Annual Report and the most recent Semi-Annual Report succeeding the Annual
Report, if any, to any stockholder upon request, provided
15
<PAGE>
such Annual or Semi-Annual Report is not enclosed herein. Requests should be
directed to 345 Park Avenue, New York, New York 10154 (telephone number (800)
227-7BFM(7236)).
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual Meeting of
the Stockholders of each of the Trusts must be received by October 15, 1997 to
be included in the proxy statement and the form of proxy relating to that
meeting as the Trust expects that the 1998 Annual Meeting will be held in May of
1998.
OTHER MATTERS
The management knows of no other matters which are to be brought before the
Meeting. However, if any other matters not now known or determined properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of proxy to vote such proxy in accordance with their judgment on such
matters.
All proxies received will be voted in favor of all the proposals, unless
otherwise directed therein.
Very truly yours,
LAURENCE D. FINK
Chairman and Chief Executive Officer
RALPH L. SCHLOSSTEIN
President
March 3, 1997
16
<PAGE>
Appendix A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated , 1997, between
(the "Trust"), a corporation, and BlackRockFinancial Management, Inc.
(the "Adviser"), a Delaware corporation.
In consideration of the mutual promises and agreement 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 Adviser agrees, all as more fully set forth herein, to act as investment
adviser to the Trust with respect to the investment of the Trust's assets and to
supervise and arrange the purchase of securities for and the sale of securities
held in the investment portfolio of the Trust.
2. Duties and obligations of the Adviser with respect to investments of
assets of the Trust
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Trust's Board of Directors, the Adviser
shall (i) act as investment adviser for and supervise and manage the
investment and reinvestment of the Trust's assets and in connection
therewith have complete discretion in purchasing and selling securities and
other assets for the Trust and in voting, exercising consents and exercising
all other rights appertaining to such securities and other assets on behalf
of the Trust; (ii) supervise continuously the investment program of the
Trust and the composition of its investment portfolio; and (iii) arrange,
subject to the provisions of paragraph 3 hereof, for the purchase and sale
of securities and other assets held in the investment portfolio of the
Trust.
(b) In the performance of its duties under this Agreement, the Adviser
shall at all times conform to, and act in accordance with, any requirements
imposed by (i) the provisions of the Investment Company Act of 1940 (the
"Act"), and of any rules or regulations in force thereunder; (ii) any other
applicable provision of law; (iii) the provisions of the Articles of
Incorporation and By-Laws of the Trust, as such documents are amended from
time to time; (iv) the investment objective and policies of the Trust as set
forth in its Registration Statement on Form N-2; and (v) any policies and
determinations of the Board of Directors of the Trust.
(c) The Adviser will bear all costs and expenses of its partners and
employees and any overhead incurred in connection with its duties hereunder
and shall bear the costs of any salaries or directors fees of any officers
or directors of the Trust who are affiliated persons (as defined in the Act)
of the Adviser except that the Board of Directors of the Trust may approve
reimbursement to the Adviser of the pro rata portion of the salaries,
bonuses, health insurance, retirement benefits and all similar employment
costs for the time spent on Trust operations (other than the provisions of
investment advice) of all personnel employed by the Adviser who devote
substantial time to Trust operations or the operations of other investment
companies advised by the Adviser.
(d) The Adviser shall give the Trust the benefit of its best judgment
and effort in rendering services hereunder, but the Adviser shall not be
liable for any act or omission or for any loss sustained by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Adviser or any partner,
officer, employee or other affiliate thereof from acting as investment
adviser for any other person, firm or corporation, or from engaging in any
other
A-1
<PAGE>
lawful activity, and shall not in any way limit or restrict the Adviser or
any of its partners, 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 Adviser
will undertake no activities which, in its judgment, will adversely affect
the performance of its obligations under this Agreement.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase and sale of the Trust's
portfolio securities, to employ such securities dealers as may, in the judgment
of the Adviser, implement the policy of the Trust to obtain the best net results
taking into account such factors as price, including dealer spread, the size,
type and difficulty of the transaction involved, the firm's general execution
and operational facilities and the firm's risk in positioning the securities
involved. Consistent with this policy, the Adviser is authorized to direct the
execution of the Trust's portfolio transactions to dealers and brokers
furnishing statistical information or research deemed by the Adviser to the
useful or valuable to the performance of its investment advisory functions for
the Trust.
4. Compensation of the Adviser
(a) The Trust agrees to pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered by the Adviser as
such, a fee computed and payable monthly in an amount equal to [BBT: .40%,
BQT: .60%] of the Trust's average weekly net asset value on an annualized
basis until termination of the Trust pursuant to its Articles of
Incorporation. For any period less than a month during which this Agreement
is in effect, the fee shall be prorated according to the proportion which
such period bears to a full month of 28, 29, 30 or 31 days, as the case may
be.
(b) For purposes of this Agreement, the net assets of the Trust shall be
calculated pursuant to the procedures adopted by resolutions of the
Directors of the Trust for calculating the net asset value of the Trust's
shares or delegating such calculations to third parties.
5. Indemnity
(a) The Trust hereby agrees to indemnify the Adviser and each of the
Adviser's partners, officers, employees, agents, associates and controlling
persons and the partners, officers, employees and agents thereof (including
any individual who serves at the Advisers request as director, officer,
partner, trustee or the like of another corporation) (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 corporate
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
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 Section 5 or thereafter by reason of his having acted in any
such capacity, except with respect to any matter as to which he shall have
been adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust and furthermore, in
the case of any criminal proceeding, so long as he 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 his 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
A-2
<PAGE>
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 his 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 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 he is entitled to such
indemnification and if the directors 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 his undertaking, (B) the Trust shall be insured
against losses arising by reason of any lawful advances, or (C) a majority
of a quorum consisting of directors of the Trust who are neither "interested
persons" of the Trust (as defined in Section 2(a)(19) of the Act) nor
parties to the proceeding ("Disinterested Non-Party Directors") or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall
be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such indemnitee is not liable by
reason of disabling conduct or, (2) in the absence of such a decision, by
(i) a majority vote of a quorum of the Disinterested Non-party Directors 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 he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective on the date it is approved by the
stockholder of the Trust and shall continue in effect for a period of two years
and thereafter from year to year, but only so long as such continuation is
specifically approved at least annually in accordance with the requirements of
the Act.
This Agreement may be terminated by the Adviser at any time without penalty
upon giving the Trust sixty days written notice (which notice may be waived by
the Trust) and may be terminated by the Trust at any time without penalty upon
giving the Adviser sixty days notice (which notice may be waived by the
Adviser), provided that such termination by the Trust shall be directed or
approved by the vote of a majority of the Directors of the Trust in office at
the time or by the vote of the holders of a "majority" (as defined in the Act)
of the voting securities of the Trust at the time outstanding and entitled to
vote. This Agreement shall terminate automatically in the event of its
assignment (as "assignment" is defined in the Act).
7. 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 pre-paid.
A-3
<PAGE>
8. Governing Law
This Agreement shall be 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 Act.
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.
THE BLACKROCK TRUSTS
By---------------------------------------
Ralph L. Schlosstein,
President
BLACKROCK FINANCIAL MANAGEMENT, INC.
By---------------------------------------
Laurence D. Fink,
Chairman & Chief Executive Officer
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<PAGE>
PROXY
The BlackRock
1998 Term Trust Inc.
Common Stock
This Proxy Is Solicited on behalf of the Board of Directors.
The undersigned hereby appoints Karen H. Sabath, Robert S. Kapito and Henry
Gabbay as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse hereof,
all the shares of common stock of The BlackRock 1998 Term Trust Inc. (the
"Trust") held of record by the undersigned on February 28, 1997 at the Annual
Meeting of stockholders of the Trust to be held on April 15, 1997 or any
adjournments therof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted For Proposals 1, 2, 3 and 5 and AGAINST Proposal 4.
- --------------------------------------------------------------------------------
Please mark boxes in blue or black ink. Date and Return the Proxy Card Promptly
using the Enclosed Postage Paid Envelope.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
Left Col.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------------------------------------
The BlackRock
1998 Term Trust Inc.
- --------------------------------------------------------------------------------
Common Stock
--------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- ----Shareholder sign here------------------------Co-owner sign here-------------
Right Col.
With- For All
For hold Execpt
1.) Election of Directors. [ ] [ ] [ ]
Frank J. Fabozzi, Ralph L. Schlosstein and Walter F. Mondale
Instruction: To withhold authority for any individual nominee, mark the "For
All Except" box and strike a line through the nominee's name in the list
above.
For Against Abstain
2.) To consider and act upon [ ] [ ] [ ]
the ratification of the
selection of Deloitte &
Touche LLP, as auditors of
the Trust for the Trust's
fiscal year ended December
31, 1997.
For Against Abstain
3.) To consider and act upon a [ ] [ ] [ ]
proposal to approve a new
investment advisory agree-
ment with BlackRock Finan-
cial Management, Inc. that
modifies the investment
advisory fee schedule.
For Against Abstain
4.) To consider and act upon a [ ] [ ] [ ]
shareholder proposal to
convert the Trust from
closed-end to open-end.
For Against Abstain
5.) To transact such other [ ] [ ] [ ]
business as may properly
come before the meeting or
any adjournments thereof.
Mark box at right if comments or address change have [ ]
been noted on the reverse side of this card.
RECORD DATE SHARES:
