<PAGE> PAGE 1
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001 A000000 THE BLACKROCK GOVERNMENT INCOME TRUST
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002 A000000 199 WATER STREET
002 B000000 NEW YORK
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008 A000001 PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
008 B000001 A
008 C000001 801-31104
008 D010001 NEW YORK
008 D020001 NY
008 D030001 10292
008 A000002 BLACKROCK FINANCIAL MANAGEMENT, INC.
008 B000002 S
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008 D010002 NEW YORK
008 D020002 NY
008 D030002 10154
010 A000001 DELETE
011 A000001 PRUDENTIAL MUTUAL FUND DISTRIBUTORS, INC.
011 B000001 8-38739
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011 C020001 NY
011 C030001 10292
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<PAGE> PAGE 2
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011 C010002 NEW YORK
011 C020002 NY
011 C030002 10292
012 A000001 PRUDENTIAL MUTUAL FUND SERVICES, INC.
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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SIGNATURE EUGENE S. STARK
TITLE TREASURER
<TABLE> <S> <C>
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<CIK> 0000876173
<NAME> THE BLACKROCK GOVERNMENT INCOME TRUST
<SERIES>
<NUMBER> 001
<NAME> THE BLACKROCK GOVERNMENT INCOME TRUST (CLASS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 71,399,611
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<OVERDISTRIBUTION-GAINS> (159,383)
<ACCUM-APPREC-OR-DEPREC> (3,266,954)
<NET-ASSETS> 48,922,305
<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 786,134
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<REALIZED-GAINS-CURRENT> (1,253,706)
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<SHARES-REINVESTED> 1,891,073
<NET-CHANGE-IN-ASSETS> (24,834,613)
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<ACCUMULATED-GAINS-PRIOR> (2,735,223)
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<OVERDIST-NET-GAINS-PRIOR> 0
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<ARTICLE> 6
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<NAME> THE BLACKROCK GOVERNMENT INCOME TRUST
<SERIES>
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<PERIOD-END> JUN-30-1995
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<INVESTMENTS-AT-VALUE> 68,132,755
<RECEIVABLES> 7,350,842
<ASSETS-OTHER> 102,607
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<OVERDISTRIBUTION-GAINS> (159,383)
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<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
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<DISTRIBUTIONS-OF-INCOME> (3,233,448)
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<OVERDISTRIB-NII-PRIOR> 0
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<EXPENSE-RATIO> 1.68
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<AVG-DEBT-PER-SHARE> 0.00
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000876173
<NAME> THE BLACKROCK GOVERNMENT INCOME TRUST
<SERIES>
<NUMBER> 003
<NAME> THE BLACKROCK GOVERNMENT INCOME TRUST (CLASS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 71,399,611
<INVESTMENTS-AT-VALUE> 68,132,755
<RECEIVABLES> 7,350,842
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<SENIOR-EQUITY> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 786,134
<AVERAGE-NET-ASSETS> 1,000
<PER-SHARE-NAV-BEGIN> 9.26
<PER-SHARE-NII> 0.23
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<PER-SHARE-DIVIDEND> (0.33)
<PER-SHARE-DISTRIBUTIONS> 0.00
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</TABLE>
For the sixth months ended (a) 6/30/95
File number (c) 811-6334
SUB-ITEM 77C
Submission of Matters to a Vote of Security Holders
A Special Meeting of Shareholders was called for February 23, 1995. At
such meeting the shareholders approved the following proposals.
1. Approval of an amended Management Agreement between the Fund and
Prudential Mutual Fund Management, Inc. to take effect after the closing
of the acquisition of BlackRock Government Income Trust L.P. by PNC Bank,
N.A.
Affirmative Negative
votes cast votes cast
4,708,273 95,398
2. Approval of a new Subadvisory Agreement among the Fund, Prudential Mutual
Fund Management, Inc. and BlackRock Financial Management, Inc. to take
effect after the closing of the acquisition of BlackRock Government Income
Trust L.P. by PNC Bank, N.A.
Affirmative Negative
votes cast votes cast
4,715,088 99,348
Sub-Item 77Q1
THE BLACKROCK GOVERNMENT INCOME TRUST
Amended and Restated Certificate of Designation
The undersigned, being the Assistant Secretary of The BlackRock Government
Income Trust (hereinafter referred to as the "Trust"), a trust with transferable
shares of the type commonly called a Massachusetts business trust, DOES HEREBY
CERTIFY that, pursuant to the authority conferred upon the Trustees of the Trust
by Section 6.9 and Section 9.3 of the Declaration of Trust, dated June 13, 1991
as amended on to date (hereinafter referred to as the "Declaration of Trust"),
and by the affirmative vote of a majority of the Trustees at a meeting duly
called and held on October 7, 1994, the Certificate of Designation dated August
21, 1992 and filed with the Secretary of The Commonwealth of Massachusetts on
September 11, 1992 amending the Declaration of Trust is amended and restated
effective as of November 1, 1994, to read in its entirety as follows:
(1) The shares of beneficial interest of the Series of the Trust are
classified into three classes, designated "Class A Shares," "Class B Shares" and
"Class C shares," respectively, of which an unlimited number may be issued.
Class A Shares and Class B Shares of the Trust outstanding on the date on which
the amendments provided for herein become effective shall be and continue to be
Class A Shares and Class B Shares, respectively, of the Trust.
(2) The holders of Class A Shares, Class B Shares and Class C Shares of
each Series shall be considered Shareholders of such Series, and shall have the
relative rights and preferences set forth herein and in the Declaration of Trust
with respect to Shares of such Series, and shall also be considered Shareholders
of the Trust for all other purposes (including, without limitation, for purposes
of receiving reports and notices and the right to vote) and, for matters
reserved to the Shareholders of one or more other classes or series by the
Declaration of Trust or by any instrument establishing and designating a
particular class or series, or as required by the Investment Company Act of 1940
and/or the rules and regulations of the Securities and Exchange Commission
thereunder (collectively, as from time to time in effect, the "1940 Act") or
other applicable laws.
(3) The Class A Shares, Class B Shares and Class C Shares of each Series
shall represent an equal proportionate interest in the share of such class in
the Trust Property belonging to that Series, adjusted for any liabilities
specifically allocable to the Shares of that class, and each Share of any such
class shall have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that the expenses related directly or
indirectly to the distribution of the Shares of a class, and any service fees
to which such class is subject (as determined by the Trustees), shall be borne
solely by such class, and such expenses shall be appropriately reflected in the
determination of net asset value and the dividend, distribution and liquidation
rights of such class.
(4) (a) Class A Shares of each Series shall be subject to (i) a front-end
sales charge and (ii)(A) an asset-based sales charge pursuant to a plan under
Rule 12b-1 of the 1940 Act (a "Plan"), and/or (B) a service fee for the
maintenance of shareholder accounts and personal services, in such amounts as
shall be determined from time to time.
(b) Class B Shares of each Series shall be subject to (i) a
contingent deferred sales charge and (ii)(A) an asset-based sales charge
pursuant to a Plan, and/or (B) a service fee for the maintenance of shareholder
accounts and personal services, in such amounts as shall be determined from time
to time. (c) Class C Shares of each Series shall be subject to (i) a
contingent deferred sales charge and (ii)(A) an asset-based sales charge
pursuant to a Plan, and/or (B) a service fee for the maintenance of shareholder
accounts and personal services, in such amounts as shall be determined from time
to time.
(5) Shareholders of each Series and class shall vote as a separate series
or class, as the case may be, on any matter to the extent required by, and any
matter shall be deemed to have been effectively acted upon with respect to any
series or class as provided in, Rule 18f-2, as from time to time in effect,
under the 1940 Act, or any successor rule and by the Declaration of Trust.
Except as otherwise required by the 1940 Act, the Shareholders of each class of
any Series having more than one class of Shares, voting as a separate class,
shall have sole and exclusive voting rights with respect to the provisions of
any Plan applicable to Shares of such class, and shall have no voting rights
with respect to provisions of any Plan applicable solely to any other class of
Shares of such Series.
IN WITNESS WHEREOF, the undersigned has set his hand and seal this 31st day
of October, 1994.
/s/ Domenick Pugliese
Domenick Pugliese, Assistant Secretary
<PAGE>
A C K N O W L E D G M E N T
STATE OF NEW YORK )
SS.
COUNTY OF NEW YORK ) October 31, 1994
Then personally appeared before me the above named Domenick Pugliese,
Assistant Secretary, and acknowledged the foregoing instrument to be his free
act and deed.
/s/ Christine Kasner
Notary Public
[SEAL]
Sub-Item 77Q1
THE BLACKROCK GOVERNMENT INCOME TRUST
AMENDED MANAGEMENT AGREEMENT
Agreement made as of this 30th day of August, 1991 as amended this
28th day of February, 1995 between The BlackRock Government Income Trust,
a Massachusetts business trust, formerly The Blackstone Government Income
Trust (the "Fund"), and Prudential Mutual Fund Management, Inc., a
Delaware corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Fund is a diversified, open-end management investment
company registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Manager to render or
contract to obtain as hereinafter provided investment advisory services
to the Fund and the Fund also desires to avail itself of the facilities
available to the Manager with respect to the administration of its day-
to-day business affairs, and the Manager is willing to render such
investment advisory and administrative services.
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of
the Fund and administrator of its business affairs for the period
and on the terms set forth in this Agreement. The Manager accepts
such appointment and agrees to render the services herein described,
for the compensation herein provided. The Manager is authorized to
enter into a subadvisory agreement (the "Subadvisory Agreement") for
investment advisory services in connection with the management of
the Fund. Any such agreement may be entered into by the Manager on
such terms and in such manner as may be permitted or required by the
1940 Act and the rules thereunder. The Manager will continue to
have responsibility for all investment advisory services furnished
by the subadviser (the "Subadviser") pursuant to the Subadvisory
Agreement.
2. Subject to the supervision of the Trustees of the Fund,
the Manager shall administer the Fund's business affairs and, in
connection therewith, shall furnish the Fund with office facilities
and with clerical, bookkeeping and recordkeeping services at such
office facilities. Subject to Section 1 hereof and the Subadvisory
Agreement, the Manager shall manage the investment operations of the
Fund and the composition of the Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the
Fund's investment objectives, policies and restrictions as stated in
the Prospectus (hereinafter defined) and subject to the following
understandings:
(a) The Manager shall provide supervision of the Fund's
investments and determine from time to time what investments or
securities will be purchased, retained, sold or loaned by the
Fund, and what portion of the assets will be invested or held
uninvested as cash.
(b) The Manager, in the performance of its duties and
obligations under this Agreement, shall act in conformity with
the Declaration of Trust, By-Laws and Prospectus (hereinafter
defined) of the Fund and with the instructions and directions
of the Trustees of the Fund and will conform to and comply with
the requirements of the 1940 Act and all other applicable
federal and state laws and regulations.
(c) The Manager shall determine the securities and
futures contracts to be purchased or sold by the Fund and will
place orders pursuant to its determinations with or through
such persons, brokers, dealers or futures commission merchants
(including but not limited to Prudential Securities
Incorporated) in conformity with the policy with respect to
brokerage as set forth in the Fund's Registration Statement and
Prospectus (hereinafter defined) or as the Trustees may direct
from time to time, in conformity with federal securities laws.
In providing the Fund with investment supervision, it is
recognized that the Manager will give primary consideration to
securing the most favorable price and efficient execution.
Consistent with this policy, the Manager may consider the
financial responsibility, research and investment information
and other services provided by brokers, dealers or futures
commission merchants who may effect or be a party to any such
transaction or other transactions to which other clients of the
Manager may be a party. It is understood that Prudential
Securities Incorporated may be used as principal broker for
securities transactions but that no formula has been adopted
for allocation of the Fund's investment transaction business.
It is also understood that it is desirable for the Fund that
the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers
or futures commission merchants and that such brokers may
execute brokerage transactions at a higher cost to the Fund
than may result when allocating brokerage to other brokers or
futures commission merchants on the basis of seeking the most
favorable price and efficient execution. Therefore, the
Manager is authorized to pay higher brokerage commissions for
the purchase and sale of securities and futures contracts for
the Fund to brokers or futures commission merchants who provide
such research and analysis, subject to review by the Fund's
Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the
services provided by such broker or futures commission merchant
may be useful to the Manager in connection with its services to
other clients.
On occasions when the Manager deems the purchase or sale
of a security or a futures contract to be in the best interest
of the Fund as well as other clients of the Manager or the
Subadviser, the Manager, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to,
aggregate the securities or futures contracts to be so sold or
purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event,
allocation of the securities or futures contracts so purchased
or sold, as well as the expenses incurred in the transaction,
will be made by the Manager in the manner it considers to be
the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(d) The Manager shall maintain all books and records with
respect to the Fund's portfolio transactions and shall render
to the Fund's Trustees such periodic and special reports as the
Board may reasonably request.
(e) The Manager shall be responsible for the financial
and accounting records to be maintained by the Fund (including
those being maintained by the Fund's Custodian).
(f) The Manager shall provide the Fund's Custodian on
each business day with information relating to all transactions
concerning the Fund's assets.
(g) The investment management services of the Manager to
the Fund under this Agreement are not to be deemed exclusive,
and the Manager shall be free to render similar services to
others.
3. The Manager shall authorize and permit any of its
directors, officers and employees who may be elected as Trustees or
officers of the Fund to serve in the capacities in which they are
elected. All services to be furnished by the Manager under this
Agreement may be furnished through the medium of any such directors,
officers or employees of the Manager.
4. The Fund has delivered to the Manager copies of each of
the following documents and will deliver to it all future amendments
and supplements, if any:
(a) Declaration of Trust of the Fund, as filed with the
Commonwealth of Massachusetts (such Declaration of Trust, as in
effect on the date hereof and as amended from time to time, is
herein called the "Declaration of Trust");
(b) By-Laws of the Fund (such By-Laws, as in effect on
the date hereof and as amended from time to time, are herein
called the "By-Laws");
(c) Certified resolutions of the Trustees of the Fund
authorizing the appointment of the Manager and approving the
form of this agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the
"Registration Statement"), as filed with the Securities and
Exchange Commission (the "Commission") relating to the Fund and
shares of beneficial interest of the Fund and all amendments
thereto;
(e) Notification of Registration of the Fund under the
1940 Act on Form N-8A as filed with the Commission and all
amendments thereto; and
(f) Prospectus of the Fund (such Prospectus and Statement
of Additional Information, as currently in effect and as
amended or supplemented from time to time, being herein called
the "Prospectus").
5. The Manager shall keep the Fund's books and records
required to be maintained by it pursuant to paragraph 2 hereof,
including all books and records prescribed by Rule 31a-1 under the
1940 Act other than those books and records kept by the Fund or
agents of the Fund. The Manager agrees that all records which it
maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any such records upon the Fund's
request; provided, however, that the Manager may retain a copy of
such records. The Manager further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any such records
as are required to be maintained by the Manager pursuant to
paragraph 2 hereof.
6. During the term of this Agreement, the Manager shall pay
the following expenses:
(i) the salaries and expenses of all personnel of the
Fund and the Manager except the fees and expenses of Trustees
who are not affiliated persons of the Manager or the
Subadviser,
(ii) all expenses incurred by the Manager or by the Fund
in connection with managing the ordinary course of the Fund's
business other than those assumed by the Fund herein, and
(iii) the fees and other expenses payable to the
Subadviser pursuant to the Subadvisory Agreement. The Fund
assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Fund in
connection with the management of the investment and
reinvestment of the Fund's assets,
(b) the fees and expenses of Trustees who are not
affiliated persons of the Manager or the Subadviser,
(c) the fees and expenses of the Custodian that
relate to (i) the custodial function and the recordkeeping
connected therewith, (ii) preparing and maintaining the
general accounting records of the Fund and the providing
of any such records to the Manager useful to the Manager
in connection with the Manager's responsibility for the
accounting records of the Fund pursuant to Section 31 of
the 1940 Act and the rules promulgated thereunder, (iii)
the pricing of the shares of the Fund, including the cost
of any pricing service or services which may be retained
pursuant to the authorization of the Trustees of the Fund,
and (iv) for both mail and wire orders, the cashiering
function in connection with the issuance and redemption of
the Fund's securities,
(d) the fees and expenses of the Fund's Transfer and
Dividend Disbursing Agent, which may be the Custodian,
that relate to the maintenance of each shareholder
account,
(e) the charges and expenses of legal counsel and
independent accountants for the Fund,
(f) brokers' commissions and any issue or transfer
taxes chargeable to the Fund in connection with its
securities and futures transactions,
(g) all taxes and business fees payable by the Fund
to federal, state or other governmental agencies,
(h) the fees of any trade associations of which the
Fund may be a member,
(i) the cost of share certificates representing,
and/or non-negotiable share deposit receipts evidencing,
shares of the Fund,
(j) the cost of fidelity, Trustees and officers and
errors and omissions insurance,
(k) the fees and expenses involved in registering
and maintaining registration of the Fund and of its shares
with the Securities and Exchange Commission, registering
the Fund as a broker or dealer and qualifying its shares
under state securities laws, including the preparation and
printing of the Fund's registration statements,
prospectuses and statements of additional information for
filing under federal and state securities laws for such
purposes,
(l) allocable communications expenses with respect
to investor services and all expenses of shareholders' and
Trustees' meetings and of preparing, printing and mailing
reports to shareholders in the amount necessary for
distribution to the shareholders,
(m) litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary
course of the Fund's business, and
(n) any expenses assumed by the Fund pursuant to a
Plan of Distribution adopted in conformity with Rule 12b-1
under the 1940 Act.
7. In the event the expenses of the Fund for any fiscal year
(including the fees payable to the Manager but excluding interest,
taxes, brokerage commissions, distribution fees and litigation and
indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business) exceed the
lowest applicable annual expense limitation established and enforced
pursuant to the statute or regulations of any jurisdictions in which
shares of the Fund are then qualified for offer and sale, the
compensation due the Manager will be reduced by the amount of such
excess, or, if such reduction exceeds the compensation payable to
the Manager, the Manager will pay to the Fund the amount of such
reduction which exceeds the amount of such compensation.
8. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay to the Manager as full
compensation therefor a fee at an annual rate of .50 of 1% of the
Fund's average daily net assets. This fee will be computed daily
and will be paid to the Manager monthly. Any reduction in the fee
payable and any payment by the Manager to the Fund pursuant to
paragraph 7 shall be made monthly. Any such reductions or payments
are subject to readjustment during the year.
9. The Manager shall not be liable for any error of judgment
or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation
for services (in which case any award of damages shall be limited to
the period and the amount set forth in Section 36(b)(3) of the 1940
Act) or 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.
10. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such con-
tinuance is specifically approved at least annually in conformity
with the requirements of the 1940 Act; provided, however, that this
Agreement may be terminated by the Fund at any time, without the
payment of any penalty, by the Trustees of the Fund or by vote of a
majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Manager at any time, without the
payment of any penalty, on not more than 60 days' nor less than 30
days' written notice to the other party. This Agreement shall
terminate automatically in the event of its assignment (as defined
in the 1940 Act).
11. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Manager who may
also be a Trustee, officer or employee of the Fund to engage in any
other business or to devote his or her time and attention in part to
the management or other aspects of any business, whether of a
similar or dissimilar nature, nor limit or restrict the right of the
Manager to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
12. Except as otherwise provided herein or authorized by the
Trustees of the Fund from time to time, the Manager shall for all
purposes herein be deemed to be an independent contractor and shall
have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
13. During the term of this Agreement, the Fund agrees to
furnish the Manager at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, and other
material prepared for distribution to shareholders of the Fund or
the public, which refer in any way to the Manager, prior to use
thereof and not to use such material if the Manager reasonably
objects in writing within five business days (or such other time as
may be mutually agreed) after receipt thereof. In the event of
termination of this Agreement, the Fund will continue to furnish to
the Manager copies of any of the above-mentioned materials which
refer in any way to the Manager. Sales literature may be furnished
to the Manager hereunder by first-class or overnight mail, facsimile
transmission equipment or hand delivery. The Fund shall furnish or
otherwise make available to the Manager such other information
relating to the business affairs of the Fund as the Manager at any
time, or from time to time, reasonably requests in order to
discharge its obligations hereunder.
14. This Agreement may be amended by mutual consent, but the
consent of the Fund must be obtained in conformity with the require-
ments of the 1940 Act.
15. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered
or mailed by registered mail, postage prepaid, (1) to the Manager at
One Seaport Plaza, New York, N.Y. 10292, Attention: Secretary; or
(2) to the Fund at One Seaport Plaza, New York, N.Y. 10292,
Attention: President.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
17. This Agreement embodies the entire agreement and under-
standing between the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
18. Should any part of this Agreement be held 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.
19. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
20. The name "The BlackRock Government Income Trust" is the
designation of the Trustees under a Declaration of Trust dated June
13, 1991, as amended and all persons dealing with the Fund must look
solely to the property of the Fund for the enforcement of any claims
against the Fund as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations entered
into on behalf of the Fund.
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.
THE BLACKROCK GOVERNMENT INCOME TRUST
By /s/ Robert F. Gunia
Robert F. Gunia
Vice President
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
By /s/ Richard A. Redeker
Richard A. Redeker
President
Sub-Item 77Q1
THE BLACKROCK GOVERNMENT INCOME TRUST
SUBADVISORY AGREEMENT
Agreement made as of this 28th day of February, 1995 among
Prudential Mutual Fund Management, Inc., a Delaware corporation (the
"Manager"), BlackRock Financial Management, Inc., (the "Subadviser"), a
wholly-owned indirect subsidiary of PNC Bank, N.A. and The BlackRock
Government Income Trust, formerly The Blackstone Government Income Trust
(the "Fund"), a Massachusetts business trust and a diversified open-end
management investment company registered under the Investment Company Act
of 1940 (the "1940 Act").
W I T N E S S E T H
WHEREAS, the Manager has entered into a Management Agreement, dated
August 30, 1991 and amended on February 28, 1995 (the "Management
Agreement"), with the Fund, pursuant to which Prudential Mutual Fund
Management, Inc. will act as Manager of the Fund; and
WHEREAS, the Manager and the Fund each desire to retain the
Subadviser to provide investment advisory services to the Fund in
connection with the management of the Fund and the Subadviser is willing
to render such investment advisory services;
NOW, THEREFORE, the parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the
Trustees of the Fund, the Subadviser shall manage the investment
operations of the Fund and the composition of the Fund's portfolio,
including the purchase, retention and disposition thereof, in
accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus (such Prospectus and
Statement of Additional Information as currently in effect and as
amended or supplemented from time to time, being herein called the
"Prospectus"), and subject to the following understandings:
(i) The Subadviser shall provide supervision of the
Fund's investments and determine from time to time what
investments and securities will be purchased, retained, sold or
loaned by the Fund, and what portion of the assets will be
invested or held uninvested as cash.
(ii) In the performance of its duties and obligations
under this Agreement, the Subadviser shall act in conformity
with the Declaration of Trust, By-Laws and Prospectus of the
Fund and with the instructions and directions of the Manager
and of the Trustees of the Fund and will conform to and comply
with the requirements of the 1940 Act, the Internal Revenue
Code of 1986 and all other applicable federal and state laws
and regulations.
(iii) The Subadviser shall determine the securities and
futures contracts to be purchased or sold by the Fund and will
place orders with or through such persons, brokers, dealers or
futures commission merchants (including but not limited to
Prudential Securities Incorporated) to carry out the policy
with respect to brokerage as set forth in the Fund's
Registration Statement and Prospectus or as Trustees may direct
from time to time, in conformity with federal securities laws.
In providing the Fund with investment supervision, it is
recognized that the Subadviser will give primary consideration
to securing the most favorable price and efficient execution.
Within the framework of this policy, the Subadviser may
consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or
futures commission merchants who may effect or be a party to
any such transaction or other transactions to which the
Subadviser's other clients may be a party. It is understood
that Prudential Securities Incorporated may be used as
principal broker for securities transactions but that no
formula has been adopted for allocation of the Fund's
investment transaction business. It is also understood that it
is desirable for the Fund that the Subadviser have access to
supplemental investment and market research and security and
economic analysis provided by brokers or futures commission
merchants who may execute brokerage transactions at a higher
cost to the Fund than may result when allocating brokerage to
other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the Subadviser is
authorized to place orders for the purchase and sale of
securities and futures contracts for the Fund with such brokers
or futures commission merchants, subject to review by the
Fund's Trustees from time to time with respect to the extent
and continuation of this practice. It is understood that the
services provided by such brokers or futures commission
merchants may be useful to the Subadviser in connection with
the Subadviser's services to other clients.
On occasions when the Subadviser deems the purchase
or sale of a security or futures contract to be in the best
interest of the Fund as well as other clients of the
Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations may, but shall be under no
obligation to, aggregate the securities or futures contracts to
be sold or purchased in order to obtain the most favorable
price or lower brokerage commissions and efficient execution.
In such event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in
the manner the Subadviser considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and
to such other clients.
(iv) The Subadviser shall maintain all books and records
with respect to the Fund's portfolio transactions required by
subparagraphs (b)(5), (6), (7), (9), (10) and (11) and
paragraph (f) of Rule 31a-1 under the 1940 Act and shall render
to the Fund's Trustees such periodic and special reports as the
Trustees of the Fund may reasonably request.
(v) The Subadviser shall provide the Fund's Custodian on
each business day with information relating to all transactions
concerning the Fund's assets and shall provide the Manager with
such information upon request of the Manager.
(vi) The investment management services provided by the
Subadviser hereunder are not to be deemed exclusive, and the
Subadviser shall be free to render similar services to others.
(b) The Subadviser shall authorize and permit any of its
partners, officers and employees who may be elected as Trustees or
officers of the Fund to serve in the capacities in which they are
elected. Services to be furnished by the Subadviser under this
Agreement may be furnished through the medium of any of such
partners, officers or employees.
(c) The Subadviser shall keep the Fund's books and records
required to be maintained by the Subadviser pursuant to paragraph
1(a) hereof and shall timely furnish to the Manager all information
relating to the Subadviser's services hereunder needed by the
Manager to keep the other books and records of the Fund required by
Rule 31a-1 under the 1940 Act. The Subadviser agrees that all
records which it maintains for the Fund are the property of the Fund
and the Subadviser will surrender promptly to the Fund any of such
records upon the Fund's request; provided, however, that the
Subadviser may retain a copy of such records. The Subadviser
further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained
by it pursuant to paragraph 1(a) hereof.
2. The Manager shall continue to have responsibility for all
services to be provided to the Fund pursuant to the Management
Agreement and shall oversee and review the Subadviser's performance
of its duties under this Agreement.
3. The Manager has delivered to the Subadviser copies of each
of the following documents and will deliver to it all future
amendments and supplements, if any:
(a) Declaration of Trust of the Fund, as filed with the
Commonwealth of Massachusetts (such Declaration of Trust, as in
effect on the date hereof and as amended from time to time, are
herein called the "Declaration of Trust");
(b) By-Laws of the Fund (such By-Laws, as in effect on
the date hereof and as amended from time to time, are herein
called the "By-Laws");
(c) Certified resolutions of the Trustees of the Fund
authorizing the appointment of the Manager and the Subadviser
and approving the form of this agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the
"Registration Statement"), as filed with the Securities and
Exchange Commission (the "Commission") relating to the Fund and
the Fund's shares of beneficial interest and all amendments
thereto;
(e) Notification of Registration of the Fund under the
1940 Act on Form N-8A as filed with the Commission and all
amendments thereto; and
(f) Prospectus of the Fund (such Prospectus and Statement
of Additional Information, as currently in effect and as
amended or supplemented from time to time, being herein called
the "Prospectus").
4. For the services provided in this Agreement, the Manager
will pay to the Subadviser as full compensation therefor a fee at an
annual rate of .25 of 1% of the Fund's average daily net assets.
This fee will be computed daily and paid to the Subadviser monthly.
5. The Subadviser shall not be liable for any error of
judgment or for any loss suffered by the Fund or the Manager in
connection with the matters to which this Agreement relates, except
a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on the Subadviser's part
in the performance of its duties or from its reckless disregard of
its obligations and duties under this Agreement.
6. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such
continuance is specifically approved at least annually in conformity
with the requirements of the 1940 Act; provided, however, that this
Agreement may be terminated by the Fund at any time, without the
payment of any penalty, by the Trustees of the Fund or by vote of a
majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Manager or the Subadviser at any
time, without the payment of any penalty, on not more than 60 days'
nor less than 30 days' written notice to the other parties. This
Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act) or upon the termination of
the Management Agreement.
7. Nothing in this Agreement shall limit or restrict the
right of any of the Subadviser's partners, officers or employees who
may also be a Trustee, officer or employee of the Fund to engage in
any other business or to devote his or her time and attention in
part to the management or other aspects of any business, whether of
a similar or a dissimilar nature, nor limit or restrict the
Subadviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association.
8. During the term of this Agreement, the Manager agrees to
furnish the Subadviser at its principal office all prospectuses,
proxy statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Fund or
the public, which refer to the Subadviser or its clients in any way,
prior to use thereof and not to use material if the Subadviser
reasonably objects in writing five business days (or such other time
as may be mutually agreed) after receipt thereof. The Manager
agrees to use its best efforts to ensure that materials prepared by
employees or agents of the Manager or its affiliates which refer to
the Subadviser or its clients in any way are consistent with those
materials previously approved by the Subadviser as referenced in the
preceding sentence. Sales literature may be furnished to the
Subadviser hereunder by first-class or overnight mail, facsimile
transmission equipment or hand delivery.
9. This Agreement may be amended by mutual consent, but the
consent of the Fund must be obtained in conformity with the
requirements of the 1940 Act.
10. This Agreement shall be governed by the laws of the State
of New York.
11. This Agreement embodies the entire agreement and under-
standing between the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
12. Should any part of this Agreement be held 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.
13. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
14. The name "The BlackRock Government Income Trust" is the
designation of the Trustees under a Declaration of Trust dated June
13, 1991, as amended and all persons dealing with the Fund must look
solely to the property of the Fund for the enforcement of any claims
against the Fund as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations entered
into on behalf of the Fund.
15. The Fund has only a license to the use of the word
"BlackRock" in its name. If BlackRock Financial Management, Inc.
ceases to be investment adviser to the Fund, the Fund will cease
using such name as promptly as practicable and will use all
reasonable efforts to change its name, including calling a special
meeting of shareholders.
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.
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
By /s/ Richard A. Redeker
Richard A. Redeker
President
BLACKROCK FINANCIAL MANAGEMENT, INC.
By /s/ Ralph L. Schlosstein
Ralph L. Schlosstein
President
THE BLACKROCK GOVERNMENT INCOME TRUST
By /s/ Robert F. Gunia
Robert F. Gunia
Vice President
For fiscal year ended (a) June 30, 1995
File number (c) 811-6334
SUB-ITEM 77J
Reclassification of Capital Accounts
The BlackRock Government Income Trust accounts for and reports
distributions to shareholders in accordance with the A.I.C.P.A.'s Statement of
Position 93-2: Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. During the fiscal year ended June 30, 1995, the Fund decreased
distributions in excess of net investment income by $15,864 and decreased paid-
in capital by $15,864 due to the reclassification of distributions in excess of
net investment income (tax return of capital distributions). Net investment
income, net realized gains, and net assets were not affected by this change.
- 2 -
11815.DOC - Windows - August 28, 1995
Board of Directors or Trustees of:
Prudential Adjustable Rate Prudential Government Income Fund
Securities Fund Prudential Growth Opportunity Fund
The BlackRock Government Income Prudential High Yield Fund
Trust Prudential IncomeVertible Fund
Global Utility Fund Prudential Intermediate Global
Nicholas-Applegate Fund Income Fund
Prudential Allocation Fund (2 Prudential Multi-Sector Fund
Portfolios) Prudential Municipal Bond Fund (3
Prudential California Municipal Portfolios)
Fund (2 Portfolios) Prudential Municipal Series Fund
Prudential Diversified Bond (13 Portfolios)
Fund Prudential National Municipals Fund
Prudential Equity Fund Prudential Pacific Growth Fund
Prudential Equity Income Fund Prudential Short-Term Global Income
Prudential GNMA Fund Fund
Prudential Global Fund Prudential Structured Maturity Fund
Prudential Global Genesis Fund Prudential U.S. Government Fund
Prudential Global Natural Prudential Utility Fund
Resources Fund
We have examined the accompanying description of the Prudential Multiple Class
Pricing Worksheet (the "Worksheet") application of State Street Bank and Trust
Company ("State Street"), custodian and recordkeeper for the Prudential Mutual
Funds (the "Funds"). Our examination included procedures to obtain reasonable
assurance about whether (1) the accompanying description presents fairly, in all
material respects, the aspects of State Street's policies and procedures that
may be relevant to a Fund's internal control structure relating to the
Worksheet, (2) the control structure policies and procedures included in the
description were suitably designed to achieve the control objectives specified
in the description, if those policies and procedures were complied with
satisfactorily, and (3) such policies and procedures had been placed in
operation as of June 30, 1995. The control objectives were specified by
Prudential Mutual Fund Management. Our examination was performed in accordance
with standards established by the American Institute of Certified Public
Accountants and included those procedures we considered necessary in the
circumstances to obtain a reasonable basis for rendering our opinion.
In our opinion, the accompanying description of the aforementioned application
presents fairly, in all material respects, the relevant aspects of State
Street's policies and procedures that had been placed in operation as of
June 30, 1995. Also, in our opinion, the policies and procedures, as described,
are suitably designed to provide reasonable assurance that the specified control
objectives would be achieved if the described policies and procedures were
complied with satisfactorily.
In addition to the procedures we considered necessary to render our opinion as
expressed in the previous paragraph, we applied tests to specific policies and
procedures, listed in Section I, to obtain evidence about their effectiveness in
meeting the control objectives, described in Section I during the period from
July 1, 1994 to June 30, 1995. The nature, timing, extent, and results of the
tests are listed in Section II. In our opinion, the policies and procedures
that were tested, as described in Section II, were operating with sufficient
effectiveness to provide reasonable, but not absolute, assurance that the
control objectives specified in Section I were achieved during the period from
July 1, 1994 to June 30, 1995.
The relative effectiveness and significance of specific policies and procedures
at State Street, and their effect on assessments of control risk on the Funds
are dependent on their interaction with the policies, procedures, and other
factors present at individual Funds. We have performed no procedures to
evaluate the effectiveness of policies and procedures at individual Funds in
connection with this report.
The description of policies and procedures at State Street is as of June 30,
1995, and information about tests of the operating effectiveness of specified
policies and procedures covers the period from July 1, 1994 to June 30, 1995.
Any projection of such information to the future is subject to the risk that,
because of change, the description may no longer portray the system in
existence. The potential effectiveness of specified policies and procedures at
State Street is subject to inherent limitations and, accordingly, errors or
irregularities may occur and not be detected. Furthermore, the projection of
any conclusions, based on our findings, to future periods is subject to the risk
that changes may alter the validity of such conclusions.
This report is intended solely for use by the management and Boards of
Directors/Trustees of the Funds, the independent auditors of the Funds and the
Securities and Exchange Commission.
August 21, 1995
SECTION I
Policies and Procedures Placed in Operation
Prudential Multiple Class Pricing Worksheet
The Prudential Mutual Funds (the "Funds") have adopted a multiple class pricing
system. The multiple class pricing system consists of three classes of shares
(Class A, Class B, and Class C). Class A shares are subject to an initial sales
charge, and Class B and Class C shares are subject to a contingent deferred
sales charge. Each of the classes of shares represent interests in the same
portfolio of investments of the respective Fund and are identical in all
respects, except that each class is subject to different distribution expenses
and has exclusive voting rights with respect to the Rule 12b-1 distribution plan
pursuant to which such distribution expenses are paid.
In order to allocate income and expenses among the classes of shares, State
Street Bank and Trust Company (the Funds' custodian and recordkeeper) utilizes
the Prudential Multiple Class Pricing Worksheet (the "Worksheet") (see Exhibit
I). The Worksheet is a supplementary application that extracts relevant data
from the Funds' primary accounting system, allocates income and expenses among
the classes of shares and computes the daily net asset value and, if applicable,
the dividend/distribution for each class of shares. Internal accounting
controls that are relevant to the Fund can be divided into two components -
controls related to the mutual fund accounting system resident at State Street
Bank and Trust Company (the "primary accounting system") and controls related to
the Worksheet.
The specific control objectives and policies and procedures relating to the
Worksheet are described on pages 4, 5 and 6. A description of the tests of the
policies and procedures designed to obtain evidence about the operating
effectiveness of those policies and procedures in achieving the specific control
objectives is included in Section II.
Control Objectives and Policies and Procedures
Prudential Multiple Class Pricing Worksheet
The Worksheet is a supplementary application to the Funds' primary accounting
system. Certain data is extracted from the primary accounting system to
allocate income and expenses and to calculate the daily net asset value and, if
applicable, dividends/distributions for each class of shares. The primary
accounting system includes the details of transactions in accordance with the
Investment Company Act of 1940, as amended.
The following represents the internal accounting control objectives and policies
and procedures for the allocation of income and expenses and the computation of
the net asset value and, if applicable, the dividend/distribution for each class
of shares utilizing the Worksheet. It does not cover the internal accounting
control policies and procedures surrounding the processing of information into
the Funds' primary accounting system.
CONTROL POLICIES CONTROL
OBJECTIVES AND PROCEDURES
A.Capital share activity as reported by the 1. Daily, the transfer agent
forwards reports of
Fund's transfer agent is recorded for each capital share activity
for each class which
class in an accurate and timely manner by includes a summary of
subscriptions,
the Fund. redemptions, exchanges and other
information (the "Supersheet"). The
opening day's balance for shares
outstanding
and current day activity is recorded
on the Worksheet.
2. Estimated interim share
activity for the current day not
recorded in the Supersheet is received
via telefax from the transfer agent and
is recorded for each class on the
Worksheet.
3. A report of outstanding shares
eligible for dividends is received from
the transfer agent and is recorded for
each class on the Worksheet.
B. Net Asset Value ("NAV") and, if
applicable, 1. The prior days
ending NAV per share
the dividend/distribution for each class
(unrounded) for each class is agreed to
the
are accurately computed on a daily
basis. prior day's Worksheet.
2. The daily net capital stock
activity for each class for the current
day is agreed to the Supersheet as
described in Control Procedures A.1, 2.
and 3., above.
CONTROL POLICIES
CONTROL OBJECTIVES AND PROCEDURES
3. Percentage Assets by Class and
Percentage Dividend Assets by Class are
calculated for each class based upon
information from the prior day
Worksheet, the Supersheet and the
telefax from the transfer agent.
4. Allocate investment income
among classes based on the appropriate
asset allocation percentage for each
class.
5. Agree composite income
accounts, management fees, other
expenses, realized gains and losses, and
unrealized appreciation/depreciation to
the primary accounting system of the
Fund.
6. Allocate expenses among
classes as follows:
a. Expenses directly
attributable
to each class (12b-1
distribution
expenses) are
calculated and
recorded to that
class.
b. Expenses attributable to
all classes
are allocated in
accordance with the
appropriate asset
allocation
percentage for each
class.
7. Allocate realized and
unrealized gains and losses
among the classes in accordance with the
appropriate asset allocation percentage
of each class.
8. Record dividends/distributions to
shareholders of each class in the
primary accounting system.
9. Aggregate the net assets for each
class and agree to the total net assets
per the primary accounting system.
10. For each class, reconcile the
current day's NAV and, if applicable,
the dividend/distribution to the
previous day's NAV and
dividend/distribution for each class.
CONTROL POLICIES
CONTROL OBJECTIVES AND PROCEDURES
11. The above procedures are reviewed
by the Fund supervisor or manager.
SECTION II
Tests of Operating Effectiveness
Prudential Multiple Class Pricing Worksheet
July 1, 1994 to June 30, 1995
We reviewed the methodology and procedures for calculating the daily net asset
value and, if applicable, the dividends/distributions of the classes of shares
and the allocation of income and expenses among the classes of shares.
The following are the detailed procedures which we performed with respect to the
Worksheet. These procedures were performed for selected days encompassing all
Funds subject to multiple class pricing during the year ended June 30, 1995,
which we believe is a representative sample, to test compliance with the control
policies and procedures as described in Section I.
Prudential Mutual Fund Management, Inc. is the manager of the Funds and has
represented to us that adequate facilities are in place to ensure implementation
of the methodology and procedures for calculating the net asset value and
dividends/distributions of the classes of shares and the allocation of income
and expenses among the classes of shares. Based on our review of the
description of the policies and procedures of the Worksheet, as described in
Section I, and performance of tests of operating effectiveness as described in
Section II, we concur with such representation.
Agreed "Prior Day NAV Per Share" to the previous day's Worksheet.
Agreed "Shares Outstanding Beginning of the Day" to the previous day's
Worksheet and to the transfer agency records for each class.
Recalculated "Activity/Estimate" by adding the estimated interim share
activity reported via fax from the transfer agent and the current day's
"Capital Stock Activity" reported on the Supersheet for each class.
Recalculated "Current Shares Outstanding" by adding "Shares
Outstanding Beginning of the Day" and "Activity/Estimate" for each class.
Recalculated for each class "Adjusted Total Assets" by multiplying
"Prior Day NAV Per Share" by "Current Shares Outstanding".
Recalculated "Percentage Assets-Class A/Front End" by dividing
"Adjusted Total Assets-Class A/Front End" by "Adjusted Total Assets
Composite".
Recalculated "Percentage Assets-Class B(C)/Back End" by dividing
"Adjusted Total Assets-Class B(C)/Back End" by "Adjusted Total Assets
Composite".
Agreed "Dividend Shares" to the transfer agency records for each
class.
Recalculated "Current Dividend Shares" by adding "Dividend Shares
Beginning of Day" and "Activity/Estimate" for each class.
Recalculated for each class "Adjusted Dividend Assets" by multiplying
"Prior Day NAV Per Share" by "Current Dividend Shares".
Recalculated "Percentage Dividend Assets-Class A/Front End" by
dividing "Adjusted Dividend Assets-Class A/Front End" by "Adjusted Dividend
Assets Composite".
Recalculated "Percentage Dividend Assets-Class B(C)/Back End" by
dividing "Adjusted Dividend Assets-Class B(C)/Back End" by "Adjusted
Dividend Assets Composite".
Agreed composite total of each component of income to the primary
accounting system.
Recalculated the allocation for each class of each component of income
for daily dividend funds by multiplying the composite total by "Percentage
Dividend Assets-Class A/Front End" and "Percentage Dividend Assets-Class
B(C)/Back End," and for non-daily dividend funds by multiplying the
composite total by "Percentage Assets-Class A/Front End" and "Percentage
Assets-Class B(C)/Back End".
Recalculated "Daily Income," composite and for each class, by totaling
each component of income.
Agreed composite total "Management Fee" and "Other Fixed Expenses" to
the primary accounting system.
Recalculated the allocation for each class of "Management Fee" and
"Other Fixed Expenses" for daily dividend funds by multiplying the
composite total by "Percentage Dividend Assets-Class A/Front End" and
"Percentage Dividend Assets-Class B(C)/Back End," and non-daily dividend
funds by multiplying the composite total by "Percentage Assets-Class
A/Front End" and "Percentage Assets-Class B(C)/Back End".
Agreed the "12b-1 Fee-Class A/Front End" and "12b-1 Fee-Class
B(C)/Back End" to the respective "PC Expense Worksheet".
Recalculated "Daily Expense," composite and for each class, by
totaling "Management Fee," "12b-1 Fee" and "Other Fixed Expenses".
Recalculated "Daily Net Income" for each class by subtracting "Daily
Expense" from "Daily Income".
Recalculated "Dividend Rate" for each class for daily dividend funds
by dividing "Daily Net Income" by "Dividend Shares Beginning of Day-Class
A/Front End" and "Dividend Shares Beginning of Day-Class B(C)/Back End".
Agreed "Daily Income" and "Income Distribution" for each class to the
primary accounting system.
Agreed the "Capital Gain Distribution" to the amount recorded in the
primary accounting system.
Agreed composite total "Realized Gain/Loss" and "Unrealized
Appreciation/Depreciation" to the primary accounting system.
Recalculated the allocation for each class of "Realized Gain/Loss" and
"Unrealized Appreciation/Depreciation" by multiplying the composite amount
by the "Percentage Assets-Class A/Front End" and "Percentage Assets-Class
B(C)/Back End".
Agreed "Prior Days Net Assets" to the previous day's Worksheet.
Recalculated "Net Assets", composite and for each class, by totaling
"Daily Net Income", "Income Distributed", "Capital Stock Activity",
"Capital Gain Distribution", "Realized Gain/Loss", "Unrealized
Appreciation/Depreciation", and "Prior Days Net Assets".
Recalculated "NAV Per Share" dividing the "Net Assets-Class A/Front
End" and "Net Assets - Class B(C)/Back End" by "Current Shares Outstanding
- Class A/Front End" and "Current Shares Outstanding - Class B(C)/Back
End", respectively.
Recalculated "Offering Price" for Class A shares by applying the
"Load" percentage as stated in the fund's prospectus.
NSAR2.DOC - Windows - May 30, 1995
PRINT ON COMPAQ
The Board of Trustees of
The BlackRock Government Income Trust:
In planning and performing our audit of the financial statements of The
BlackRock Government Income Trust ("Fund") for the year ended June 30, 1995, we
considered its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
June 30, 1995.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
August 21, 1995
