--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISOR
--------------------------------------------------------------------------------
November 30, 2000
Dear Shareholder:
The continued trend of economic growth boosted by strong consumer
confidence, a tight labor market and inflation concerns caused the Federal
Reserve to aggressively tighten during the first part of the year. As a result,
the Fed raised the discount rate to 6.50% during the period in an attempt to
achieve its objective of engineering a "soft landing" for the explosive U.S.
economy. The third quarter of 2000 saw a sharp decline in market expectations
for further Fed tightenings amidst evidence of significant deceleration in
growth, peaking inflation pressures and a sharp reversal in the stock market
wealth effect globally.
The reduction in Fed tightening fears and the potential for a slower pace
of Treasury buybacks due to a more expansionary fiscal policy enabled high
quality spread products to outperform Treasuries in the third quarter of 2000.
Looking forward we believe that both consumers and corporations face
significant headwinds that suggest a likely GDP growth rate close to the Fed
target of 3.5%-4.0%. The risk, however, is even slower growth. While consumer
confidence is still high, a sharp reversal of the wealth effect year-to-date,
higher oil prices that have acted as a tax on the consumer and muted employment
growth should lead personal consumption growth to decline to 3.0%. We believe
that the Fed may eventually be required to ease interest rates to ensure a soft
landing. Monetary conditions are restrictive globally; in the absence of a
fiscal stimulus the Fed may have to ease policy moderately. The end scenario is
likely to be favorable to financial assets and the performance of spread assets
versus Treasuries.
This annual report contains a summary of market conditions during the
annual period and a review of portfolio strategy by your Trust's managers in
addition to the Trust's audited financial statements and a detailed list of the
portfolio's holdings. Continued thanks for your confidence in BlackRock. We
appreciate the opportunity to help you achieve your long-term investment goals.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
------------------- ------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
November 30, 2000
Dear Shareholder:
We are pleased to present the audited annual report for The BlackRock
North American Government Income Trust Inc. ("the Trust") for the fiscal year
ended October 31, 2000. We would like to take this opportunity to review the
Trust's stock price and net asset value (NAV) performance, summarize market
developments in the United States and Canada and discuss recent portfolio
management activity.
The Trust is a non-diversified, actively managed closed-end bond fund
whose shares are traded on the New York Stock Exchange under the symbol "BNA".
The Trust's investment objective is to provide high monthly income consistent
with the preservation of capital. The Trust seeks this objective by investing
in Canadian and U.S. dollar-denominated investment grade fixed income
securities. The U.S. portion of the portfolio is expected to consist primarily
of mortgage-backed securities backed by U.S. Government agencies (such as
Fannie Mae, Freddie Mac or Ginnie Mae) and, to a lesser extent, U.S. Government
securities, asset-backed securities and privately issued mortgage-backed
securities. All of the Trust's assets must be rated "BBB" by Standard & Poor's,
"Baa" by Moody's, or determined by the advisors to be of similar quality at
time of purchase or be issued or guaranteed by the Canadian or U.S. governments
or their agencies.
The table below summarizes the performance of the Trust's stock price and
NAV over the year:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
10/31/00 10/31/99 CHANGE HIGH LOW
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK PRICE $ 9.75 $ 9.6875 0.65% $ 10.0625 $ 9.00
-------------------------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $ 11.03 $ 11.45 (3.67)% $ 11.60 $ 10.93
-------------------------------------------------------------------------------------------------
CURRENCY EXCHANGE RATE $ 0.6563 $ 0.6794 (3.40)% $ 0.6970 $ 0.6530
-------------------------------------------------------------------------------------------------
10-YEAR U.S. TREASURY NOTE 5.75% 6.02% (4.49)% 6.79% 5.58%
-------------------------------------------------------------------------------------------------
</TABLE>
THE U.S. AND CANADIAN FIXED INCOME MARKETS
The rapid expansion of U.S. GDP witnessed throughout much of the period
finally slowed dramatically in the third quarter. After expanding at nearly a
6.0% annualized rate in the first half of the year, growth in the third quarter
slowed to 3.0%. Higher oil prices and declines in global equity markets led to
declines in consumer spending, residential investment and manufacturing
activity. According to the minutes of the October 3, 2000 FOMC meeting, "Recent
data have indicated that the expansion of aggregate demand has moderated to a
pace closer to the enhanced rate of growth of the economy's potential to
produce. The more rapid advances in productivity also continue to help contain
costs and hold down underlying price pressures." The Federal Reserve raised the
discount rate by 0.25% at their meetings in November 1999, February, and March
2000 and raised the discount rate by 0.5% in May 2000 to bring the current
discount rate to 6.50%.
Treasury yields were inverted for much of the period as yields rose on the
short-end of the yield curve in response to the Fed's increases in the discount
rate, and yields on the long-end of the curve fell below the short-end in
reaction to the announcement that the Treasury would buy back $30 billion of
Treasuries with maturities ranging from 10 to 30 years. In the second half of
the period, concerns over rising inflation from a surge in oil prices, weaker
stock markets and signs of slower growth all caused the bond market to price in
a neutral Federal Reserve. This shift in market sentiment caused significant
yield curve disinversion during the third quarter of 2000. As the slower growth
scenario plays out, the curve is likely to steepen further. For the annual
period, the 10-year Treasury fell from 6.02% on October 31, 1999 to 5.75% on
October 31, 2000.
For the annual period ending October 31, 2000 mortgages posted positive
returns and outperformed the broader market. Mortgages as measured by the
LEHMAN BROTHERS MORTGAGE INDEX, posted a 7.56% total return versus 7.30% for
the LEHMAN BROTHERS AGGREGATE INDEX. GNMAs performed well during this period as
mortgage rates hovering near 8% throughout the year caused prepayments to
decline and resulted in an increased demand for GNMAs and other mortgage-backed
securities.
2
<PAGE>
The yield of the 10-year Canadian Treasury note fell 26 basis points from
6.08% to 5.82%. Canadian economic growth slowed to about 3.25% in the third
quarter. The unemployment rate rose to 7.1% in August from a recent 24-year low
of 6.6% in June. Wages have not moved into inflationary territory and core CPI
inflation remains on target. Productivity, as measured by GDP per hour worked,
rose nearly 2% in the second quarter from a year ago. This is about double the
pace of recent years. Trend inflation has remained unchanged. This, coupled
with diminished expectations of Fed tightening, suggests the Bank Rate will
remain steady for a little longer than was initially anticipated. The Canadian
dollar has traded with diminished strength against the U.S. dollar in recent
weeks. As of October 31, 2000 the currency exchange rate between the Canadian
and U.S. dollar was $0.6563. Good fundamentals, like a sizeable current account
and fiscal surpluses and low inflation, have been offset by negative rate
spreads and a strong U.S. dollar.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market outlook and the Trust's investment objectives. The
total portfolio's duration (or interest rate sensitivity) is managed to
approximate the duration of the U.S. 10-year Treasury note. The Trust's
Canadian and U.S. holdings are managed as two separate portfolios. The Trust's
Canadian dollar and asset exposure may be adjusted in relation to BlackRock's
views and expectations regarding interest rates and changes in the currency
exchange rates between the U.S. and Canadian dollar.
The following chart compares the Trust's current and October 31, 1999
asset composition:
---------------------------------------------------------------------------
SECTOR BREAKDOWN
---------------------------------------------------------------------------
COMPOSITION OCTOBER 31, 2000 OCTOBER 31, 1999
---------------------------------------------------------------------------
CANADIAN PORTFOLIO ALLOCATION 54% 59%
---------------------------------------------------------------------------
Canadian Government Securities 24% 27%
---------------------------------------------------------------------------
Canadian Corporate Bonds 14% 17%
---------------------------------------------------------------------------
Nova Scotia 5% 3%
---------------------------------------------------------------------------
Ontario 4% 5%
---------------------------------------------------------------------------
New Brunswick 2% 4%
---------------------------------------------------------------------------
Newfoundland 2% 1%
---------------------------------------------------------------------------
Prince Edward Island 2% 2%
---------------------------------------------------------------------------
Saskatchewan 1% -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
U.S. PORTFOLIO ALLOCATION 46% 41%
---------------------------------------------------------------------------
Interest Only Mortgage-Backed Securities 13% 7%
---------------------------------------------------------------------------
Adjustable & Inverse Floating Rate Mortgages 9% 5%
---------------------------------------------------------------------------
FHA Project Loans 6% 7%
---------------------------------------------------------------------------
U.S. Government Securities 6% 3%
---------------------------------------------------------------------------
Principal Only Mortgage-Backed Securities 5% 5%
---------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 4% 5%
---------------------------------------------------------------------------
Agency Mortgage Pass-Throughs 3% 7%
---------------------------------------------------------------------------
Commercial Mortgage-Backed Securities -- 1%
---------------------------------------------------------------------------
Non-Agency Multiple Class Mortgage Pass-Throughs -- 1%
---------------------------------------------------------------------------
3
<PAGE>
The Trust moderately decreased its exposure to both Canadian corporate
bonds and Canadian Government Securities during the annual period as we view
current yield levels as offering insufficient value compared to the U.S.
government and sector markets. The Bank of Canada continues to shadow the
policy of the Federal Reserve as it increased discount rates three times over
the period. On the U.S. side, the Trust has continued to emphasize mortgage
products. The Trust also purchased additional IOs (Interest-Only securities)
and ARMs (Adjustable Rate Mortgage Securities) throughout the period as a
defensive strategy, as they offered attractive yield spreads to other spread
products.
The Trust expects to offset approximately 50% of its current year's (2000)
and next year's (2001) investment income with Canadian currency losses
generated in prior years. The use of these currency losses will not reduce the
Trust's current market value. While the Trust would be seeking to earn
approximately its current dividend from ordinary income, the ability to offset
such income with currency losses will result in the reclassification of
approximately 50% of all ordinary income dividends earned in 2000 and 2001 as a
return of capital which will not be subject to federal, state and local income
tax. Shareholders will be required to reduce their original cost basis by the
amount of return of capital distributions received for purposes of determining
capital gain or loss on any future sale of shares. Final tax information for
2000 will be sent to shareholders in January 2001.
We will continue to manage the Trust to seek to benefit from the
opportunities available to investors in the fixed income markets as well as to
maintain the Trust's ability to meet its investment objectives. We thank you
for your investment in the BlackRock North American Government Income Trust
Inc. Please feel free to contact our marketing center at (800) 227-7BFM (7236)
if you have specific questions which were not addressed in this report.
Sincerely,
/s/ Robert S. Kapito /s/ Michael P. Lustig
-------------------- ---------------------
Robert S. Kapito Michael P. Lustig
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Advisors, Inc. BlackRock Advisors, Inc.
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
--------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BNA
--------------------------------------------------------------------------------
Initial Offering Date: December 20, 1991
--------------------------------------------------------------------------------
Closing Stock Price as of 10/31/00: $ 9.75
--------------------------------------------------------------------------------
Net Asset Value as of 10/31/00: $ 11.03
--------------------------------------------------------------------------------
Yield on Closing Stock Price as of 10/31/00 ($9.75)(1): 8.62%
--------------------------------------------------------------------------------
Current Monthly Distribution per Share(2): $ 0.07
--------------------------------------------------------------------------------
Current Annualized Distribution per Share(2): $ 0.84
--------------------------------------------------------------------------------
(1) Yield on Closing Stock Price is calculated by dividing the current
annualized distribution per share by the closing stock price per share.
(2) Distribution is not constant and is subject to change.
4
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT
(UNAUDITED) (000) DESCRIPTION VALUE
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS--140.2%
UNITED STATES SECURITES--64.5%
MORTGAGE PASS-THROUGHS--12.9%
$ 775@ Federal Home Loan Mortgage Corp.,
6.50%, 2/01/28-11/01/28 ............... $ 746,450
Federal Housing Administration,
GMAC,
1,973 Series 37, 7.43%, 5/01/22 ............ 1,927,860
919 Series 44, 7.43%, 8/01/22 ............ 896,779
1,587 Series 59, 7.43%, 7/01/21 ............ 1,550,963
694 Series 65, 7.43%, 2/01/23 ............ 676,970
Merrill,
2,806 Series 29, 7.43%, 10/01/20 ........... 2,744,075
22,745 Series 42, 7.43%, 9/01/22 ............ 22,201,418
2,145 Reilly, Series B-11,
7.40%, 4/01/21 ....................... 2,097,682
2,196 Westmore Project 8240,
7.25%, 4/01/21 ....................... 2,147,773
Federal National Mortgage
Association,
10,008@ 5.50%, 12/01/13 - 2/01/14,
15 year .............................. 9,432,438
4,296@ 7.00%, 2/01/24 - 1/01/29 ............. 4,218,334
1,015 Government National Mortgage
Association,
8.00%, 4/15/24 - 11/15/25 ............ 1,031,637
-----------
49,672,379
-----------
AGENCY MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--5.2%
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
4,066@ Series 1104, Class 1104-L,
6/15/21 ............................. 4,207,292
55 Series 1388, Class 1388-I,
6/15/07 ............................. 1,505,619
1,751 Series 1577, Class 1577-SC,
9/15/23 ............................. 1,456,048
2,000@ Series 1601, Class 1601-SE,
10/15/08 ............................ 1,609,062
4,122 Series 1649, Class 1649-S,
12/15/08 ............................ 4,075,524
Federal National Mortgage
Association, REMIC
Pass-Through Certificates,
2,369@ Trust 1989-90, Class 90-E,
12/25/19 ............................ 2,489,688
430@ Trust 1993-210, Class 210-A,
1/25/23 ............................. 423,917
424 Trust 1993-224, Class 224-SD,
11/25/23 ............................ 392,808
1,680 Trust 1995-10, Class 10-Z,
3/25/24 ............................. 1,654,790
2,100@ Trust 1996-14, Class 14-M,
10/25/21 ............................ 1,863,078
8,543 Trust 1998-46B, Class 46B-SG,
6/18/25 ............................. 464,509
-----------
20,142,335
-----------
NON-AGENCY MULTIPLE CLASS
MORTGAGE PASS-THROUGHS--0.2%
AAA 898 Summit Mortgage Trust,
Series 2000-1, Class B1,
12/28/12** ........................... 864,118
-----------
ADJUSTABLE & INVERSE FLOATING RATE
MORTGAGES--12.4%
AAA 1,696 Countrywide Funding Corp., Series
1993-10, Class 10-A8, 1/25/24 ......... 1,473,095
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
3,500 Series 1518, Class 1518-G,
5/15/23 .............................. 2,110,937
2,500@ Series 1526, Class 1526-SA,
6/15/23 .............................. 1,810,450
1,575 Series 1560, Class 1560-SL,
8/15/23 .............................. 1,303,327
1,096 Series 1570, Class 1570-SA,
8/15/23 .............................. 981,226
502 Series 1587, Class 1587-SE,
5/15/08 .............................. 441,754
665 Series 1590, Class 1590-OA,
10/15/23 ............................. 698,834
1,225 Series 1590, Class 1590-T,
10/15/23 ............................. 587,951
250 Series 1608, Class 1608-S,
11/15/23 ............................. 207,129
136 Series 1609, Class 1609-LN,
11/15/23 ............................. 112,032
4,785 Series 1625, Class 1625-SC,
12/15/08 ............................. 3,884,935
1,653 Series 1666, Class 1666-S,
1/15/24 .............................. 1,376,031
570 Series 1669, Class 1669-MD,
2/15/24 .............................. 511,651
2,250 Series 1688, Class 1688-S,
12/15/13 ............................. 2,137,500
3,092 Series 1699, Class 1699-ST,
3/15/24 .............................. 2,231,737
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT
(UNAUDITED) (000) DESCRIPTION VALUE
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
ADJUSTABLE & INVERSE FLOATING RATE
MORTGAGES (CONT'D)
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
$ 261 Series 1862, Class 1862-SF,
4/15/23 .............................. $ 246,426
426 Series 2063, Class 2063-SM,
5/15/27 .............................. 298,680
3,342@ Series 2190, Class 2190-S,
10/15/14 ............................. 3,088,940
Federal National Mortgage
Association, REMIC
Pass-Through Certificates,
463 Trust 1991-145, Class 145-S,
10/25/06 ............................. 479,917
543@ Trust 1991-87, Class 87-S,
8/25/21 .............................. 531,175
1,469 Trust 1993-97, Class 97-SB,
5/25/23 .............................. 797,036
809 Trust 1993-113, Class 113-SB,
7/25/23 .............................. 833,260
2,353 Trust 1993-147, Class 147-S,
8/25/23 .............................. 2,164,596
3,563@ Trust 1993-167, Class 167-SL,
1/25/22 .............................. 3,079,336
1,612 Trust 1993-170, Class 170-SC,
9/25/08 .............................. 1,555,887
1,581 Trust 1993-179, Class 179-SB,
10/25/23 ............................. 1,243,772
95 Trust 1993-183, Class 183-SM,
10/25/23 ............................. 93,553
738 Trust 1993-208, Class 208-SE,
11/25/23 ............................. 548,000
3,004@ Trust 1993-214, Class 214-S,
12/25/08 ............................. 2,743,022
1,072 Trust 1993-256, Class 256-F,
11/25/23 ............................. 875,415
1,808 Trust 1994-23, Class 23-PS,
4/25/23 .............................. 1,790,066
1,414 Trust 1999-1, Class 1-S,
7/25/23 .............................. 1,416,056
3,437 Trust 2000-9, Class 9-SX,
3/25/30 .............................. 3,084,285
AAA 3,577 G.E. Capital Mortgage Services, Inc.,
Series 1994-16, Class 16-A13,
8/25/24 .............................. 2,195,384
Aaa 895 Prudential Home Mortgage
Securities Co., Mortgage
Pass-Through Certificates,
Series 1993-54, Class 54-A28,
1/25/24 .............................. 743,750
-----------
47,677,145
-----------
INTEREST ONLY MORTGAGE-BACKED
SECURITIES--17.9%
BA Mortgage Securities Inc.,
AAA 825 Series 1997-1, Class 1-X,
7/25/26 .............................. 160,950
BA Mortgage Securities Inc.,
AAA 1,723 Series 1998-1, Class 1-2X,
5/28/13 .............................. 341,225
AAA 16,714 Bank of America Mortgage
Securities,
Series 1999-1, Class 1-A7,
3/25/29 .............................. 710,338
Countrywide Home Loans, Inc.,
AAA 19,939 Series 1997-8, Class 8-A5,
1/25/28 .............................. 190,043
AAA 132,802 Series 1998-6, Class 6-X,
6/25/13 .............................. 1,685,652
AAA 8,544 Credit Suisse First Boston Mortgage
Corp., Series 1997-C1, Class
C1-AX, 4/20/22 ** ..................... 664,035
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
3,465 Series 1223, Class 1223-H,
3/15/22 .............................. 916,721
2,544 Series 1254, Class 1254-Z,
4/15/22 .............................. 568,756
4,874 Series 1353, Class 1353-S,
8/15/07 .............................. 346,742
189 Series 1379, Class 1379-P,
8/15/18 .............................. 1,085
1,744 Series 1397, Class 1397-IO,
10/15/22 ............................. 451,437
1,000 Series 1611, Class 1611-JC,
8/15/23 .............................. 885,625
23,566 Series 1644, Class 1644-DA,
12/15/23 ............................. 386,632
49,672 Series 1671, Class 1671-JB,
1/15/24 .............................. 2,048,976
19,002 Series 1809, Class 1809-SC,
12/15/23 ............................. 1,833,732
4,053 Series 1900, Class 1900-SV,
8/15/08 .............................. 263,516
7,000 Series 2002, Class 2002-HJ,
10/15/08 ............................. 654,510
3,402 Series 2039, Class 2039-PI,
2/15/12 .............................. 498,025
4,329 Series 2044, Class 2044-PF,
6/15/20 .............................. 460,907
2,430 Series 2066, Class 2066-PJ,
12/15/26 ............................. 518,934
18,558 Series 2078, Class 2078-SK,
7/15/23 .............................. 956,915
6,482 Series 2080, Class 2080-PL,
1/15/27 .............................. 1,566,357
6,025 Series 2103, Class 2103-PI,
5/15/12 .............................. 1,020,502
10,173 Series 2130, Class 2130-SC,
3/15/29 .............................. 772,482
1,297 Series 2137, Class 2137-CI,
10/15/26 ............................. 275,817
5,108 Series 2140, Class 2140-UK,
9/15/11 .............................. 734,309
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT
(UNAUDITED) (000) DESCRIPTION VALUE
--------------------------------------------------------------------------------
INTEREST ONLY MORTGAGE-BACKED
SECURITIES (CONT'D)
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
$ 4,342 Series 2190, Class 2190-SC,
10/15/14 ...................... $ 724,643
Federal National Mortgage
Association, REMIC
Pass-Through Certificates,
24 Trust G46, Class G46-H,
12/25/09 ...................... 690,235
736@ Trust G1992-5, Class 5-H,
1/25/22 ....................... 190,144
30,271@ Trust 299, Class 299-2,
5/01/28 ....................... 9,004,507
26,576@ Trust 301, Class 301-2,
4/01/29 ....................... 8,147,197
15,717@ Trust 302, Class 302-2,
6/01/29 ....................... 4,857,543
1,866 Trust 1993-46, Class 46-S,
5/25/22 ....................... 66,695
1,700@ Trust 1993-196, Class 196-SC,
10/25/08 ...................... 1,628,311
6,424 Trust 1993-199, Class 199-SB,
10/25/23 ...................... 200,817
1,409 Trust 1993-202, Class 202-QA,
6/25/19 ....................... 86,339
6,697 Trust 1995-26, Class 26-SW,
2/25/24 ....................... 744,436
10,988@ Trust 1997-16, Class 16-SM,
2/25/23 ....................... 1,723,689
4,652 Trust 1997-50, Class 50-SI,
4/25/23 ....................... 130,836
10,224 Trust 1997-65, Class 65-SG,
6/25/23 ....................... 938,047
35,101 Trust 1997-68, Class 68-S,
10/18/27 ...................... 493,606
4,500 Trust 1998-25, Class 25-PG,
3/18/22 ....................... 564,300
10,867 Trust 1999-12, Class 12-SJ,
12/25/23 ...................... 655,425
G.E. Capital Mortgage Services,
Inc.,
Aaa 1,808@ Trust 1993-13, Class 13-A2,
10/25/08 ...................... 35,519
AAA 41,357 Trust 1999-11, Class 11-A5,
7/25/29 ....................... 1,434,570
GMAC Commercial Mortgage
Securities Inc., Mortgage
Certificates,
Aaa 17,545 Trust 1997-C1, Class C1-X,
7/15/27 ....................... 1,264,010
AAA 67,424 Trust 1998-C2, Class C2-X,
8/15/23 ....................... 2,487,901
AAA 26,106 Goldman Sachs Mortgage
Securities Corp., Mortgage
Participation Certifcates,
Series 1998-5, Class 5-IO,
6/19/27** ..................... 640,403
Government National Mortgage
Association,
1,453 Trust 1995-3, Class 3-E,
6/16/25 ....................... 398,326
2,600@ Trust 1998-14, Class 14-PK,
11/20/26 ...................... 460,464
4,822 Trust 1999-3, Class 3-S,
2/16/29 ....................... 207,934
34,973 Trust 1999-5, Class 5-S,
2/16/29 ....................... 961,765
19,578 Trust 1999-8, Class 8-S,
3/16/29 ....................... 520,028
AAA 16,990 Hanover Grantor Trust,
Series 1999-A, Class A1-IO,
8/28/27** ..................... 552,163
Headlands Mortgage Securities Inc.,
Aaa 17,406 Series 1997-1, Class X1,
3/25/27 ....................... 318,210
Aaa 35,296 Series 1997-4, Class X,
11/25/27 ...................... 898,943
AAA 53,136 Merrill Lynch Mortgage Investors, Inc.,
Series 1997-C2, Class C2-IO,
12/10/29 ...................... 3,294,586
AAA 5,521 Morgan Stanley Capital 1 Inc.,
Trust 1997-HF1, Class HF1-X,
6/15/17** ..................... 347,983
Aaa 111,975 Norwest Asset Securities Corp.,
Series 1997-12, Class A11,
9/25/27 ....................... 244,946
AAA 58,429 Prudential Home Mortgage
Securities Co., Mortgage
Pass-Through Certificates,
Series 1994-5, Class A-9,
2/25/24 ....................... 529,516
AAA 92,256 Residential Accredit Loans Inc.,
Series 2000-QS9, Class HJ,
8/25/30 ....................... 461,280
Residential Asset Securitization
Trust,
AAA 38,726 Series 1999-A3, Class X,
5/25/29 ....................... 439,891
AAA 55,938 Series 2000-A5, Class A2,
9/25/30 ....................... 1,377,582
AAA 820 Residential Funding Mortgage
Securities I Inc.,
Series 1998-S30, Class A7,
12/25/28 ...................... 364,812
AAA 73,499 Salomon Brothers Mortgage
Securities VII Inc., Mortgage
Pass-Through Certificates,
Series 2000-1, Class IO,
3/25/22 ....................... 712,018
AAA 64,551 Vendee Mortgage Trust,
Series 1997-1, Class IO,
2/15/27 ....................... 847,233
-----------
68,561,076
-----------
See Notes to Financial Statements.
7
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT
(UNAUDITED) (000) DESCRIPTION VALUE
--------------------------------------------------------------------------------
PRINCIPAL ONLY MORTGAGE-BACKED
SECURITIES--6.8%
Federal Home Loan Mortgage
Corp., Multiclass Mortgage
Participation Certificates,
$ 1,065 Series G-50, Class G50-AM,
4/25/24 ....................... $ 671,760
9,338@ Series 1570, Class 1570-C,
8/15/23 ....................... 6,723,523
5,658 Series 1686, Class 1686-B,
2/15/24 ....................... 3,412,709
1,055 Series 1691, Class 1691-G,
3/15/24 ....................... 820,617
1,286 Series 1739, Class 1739-B,
2/15/24 ....................... 972,259
340 Series 1857, Class 1857-PB,
12/15/08 ...................... 294,007
6,297 Series 2009, Class 2009-HJ,
10/15/22 ...................... 3,986,733
2,396 Series 2073, Class 2073-PO,
7/15/28 ....................... 1,030,786
4,000@ Series 2082, Class 2082-PN,
1/15/24 ....................... 1,893,599
408 Series 2087, Class 2087-PO,
9/15/25 ....................... 246,604
1,094 Series 2217, Class 2217-PO,
2/15/30 ....................... 778,743
Federal National Mortgage
Association, REMIC
Pass-Through Certificates,
817 Trust 279, Class 279-1,
7/01/26 ....................... 652,124
1,050 Trust 1996-38, Class 38-E,
8/25/23 ....................... 325,560
190 Trust 1997-85, Class 85-LE,
10/25/23 ...................... 160,863
3,301 Trust 1998-26, Class 26-L,
3/25/23 ....................... 2,244,282
564 Trust 1998-48, Class 48-P,
8/18/28 ....................... 355,458
AAA 6,055 Fund America Investment Corp.,
Series 1993-C, Class B,
4/29/30 ....................... 981,170
781 Government National Mortgage
Association, REMIC
Pass-Through Certificates,
Trust 1999-40, Class 40-N,
6/20/27 ....................... 508,363
-----------
26,059,160
-----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES--0.4%
AAA 1,550 LB Commercial Conduit Mortgage
Trust, Series 1999-C1, Class A2,
6.78%, 4/15/09 ................ 1,516,389
-----------
U.S. GOVERNMENT AND
AGENCY SECURITIES--8.7%
Overseas Private Investment
Corp.,
290 5.46%, 5/29/12 ................ 267,392
264 5.79%, 5/29/12 ................ 240,314
341 5.88%, 5/29/12 ................ 319,285
220 6.27%, 5/29/12 ................ 211,898
386 6.81%, 5/29/12 ................ 370,173
440 6.84%, 5/29/12 ................ 432,965
3,240 6.89%, 5/29/12 ................ 3,125,838
1,012 6.91%, 5/29/12 ................ 978,055
275 7.35%, 5/29/12 ................ 275,868
3,034 Small Business Administration,
Series 1996-20K,
6.95%, 11/01/16 ............... 2,978,121
10,505@ U.S. Treasury Bonds,
3.875%, 4/15/29, TIPS ......... 10,544,494
U.S. Treasury Notes,
6,645@ 6.00%, 8/15/09 ................ 6,711,450
6,500@ 6.75%, 5/15/05 ................ 6,738,680
-----------
33,194,533
-----------
Total United States Securities
(cost $253,910,865)........... 247,687,135
-----------
CANADIAN SECURITIES--75.7%
CANADIAN CORPORATE BONDS--19.9%
A C$ 14,000 407 International Inc.,
6.47%, 7/27/29 ................ 8,411,915
A2 3,500 Bell Canada,
11.45%, 4/15/10 ............... 2,962,226
AA- 4,500 Canadian Imperial Bank of
Commerce,
8.50% 2/05/07 ................. 3,021,201
Aa3 10,000 Canadian Imperial Bank, Toronto,
8.15%, 4/25/11 ................ 7,030,638
A+ 12,000 Daimler Benz AG,
9.50%, 10/30/01 ............... 8,082,006
European Investment Bank,
AAA 22,800 8.50%, 8/30/05 ................ 16,249,509
AAA 6,500 9.125%, 9/20/04 ............... 4,660,791
A 10,000 Ford Credit Canada Ltd.,
5.66%, 11/19/01 ............... 6,492,383
A2 6,000 General Motors Acceptance Corp.,
6.40%, 9/05/03 ................ 3,916,989
A2 5,000 Greater Toronto Airport Authority,
6.45%, 12/03/27 ............... 2,991,003
AA- 5,000 Hydro One Inc.,
7.15%, 6/03/10 ................ 3,393,453
BBB- 10,500 Lindsey Morden Group Inc.,
7.00%, 6/16/08** .............. 5,733,516
NR 5,100 Ontario School Board Financing Corp.,
6.30%, 9/22/10 ................ 3,303,531
-----------
76,249,161
-----------
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT
(UNAUDITED) (000) DESCRIPTION VALUE
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CANADIAN GOVERNMENT
SECURITIES--34.1%
Canadian Government Bonds,
C$ 20,932 4.00%, 12/01/31, RRB ................... $ 14,954,327
3,651@ 4.25%, 12/01/26, RRB ................... 2,681,089
25,000@ 5.00%, 9/01/04 ......................... 15,865,466
37,500@ 5.25%, 9/01/03 ......................... 24,141,161
32,650@ 5.50%, 6/01/09 ......................... 20,862,655
250 7.25%, 6/01/07 ......................... 175,455
21,440@ 8.00%, 6/01/23-6/01/27 ................. 17,977,831
15,100@ 9.00%, 12/01/04 ........................ 10,973,227
25,500@ 10.25%, 3/15/14 ........................ 23,207,921
------------
130,839,132
------------
CANADIAN PROVINCIAL
SECURITIES--21.7%
NEW BRUNSWICK--3.2%
A1 14,600 New Brunswick Province,
10.125%, 10/31/11 ...................... 12,320,010
------------
NEWFOUNDLAND--2.1%
Baa1 10,000 Newfoundland Province,
8.45%, 2/05/26 ......................... 7,956,727
------------
NOVA SCOTIA--6.8%
Nova Scotia Province,
A- 20,000 6.40%, 9/01/10 ......................... 13,074,715
NR 15,000 9.60%, 1/30/22 ......................... 13,042,979
------------
26,117,694
------------
ONTARIO--6.0%
Aa3 10,000 Hamilton Wentworth Regional
Municipality,
7.00%, 6/06/01 ......................... 6,584,196
Ontario Province,
AA- 8,500 5.70%, 12/01/08 ........................ 5,399,416
AA- 11,500 6.15%, 4/01/09 ......................... 7,392,373
AA+ 5,000 Toronto Metropolitan Municipality,
7.75%, 12/01/05 ........................ 3,489,231
------------
22,865,216
------------
PRINCE EDWARD ISLAND--2.6%
A3 13,000 Prince Edward Island Province,
8.50%, 10/27/15 ........................ 10,046,043
------------
QUEBEC--0.3%
A+ 2,000 Quebec Province,
7.50%, 12/01/03 ........................ 1,360,524
------------
SASKATCHEWAN-0.7%
A+ 4,000 Saskatchewan Province,
6.00%, 6/01/06 ......................... 2,597,447
------------
Total Canadian Provincial
Securities .............................. 83,263,661
------------
Total Canadian Securities
(cost $303,010,458)...................... 290,351,954
------------
Total Long-Term Investments (cost
$556,921,323)............................ 538,039,089
------------
SHORT-TERM INVESTMENTS--7.9%
REPURCHASE AGREEMENT--7.7%
45,200 Royal Bank of Canada, 5.75%,
dated 10/31/00, due 11/01/00 in
the amount of $29,595,561
(cost $29,590,835; collateralized
by C$42,497,000 Canadian
Government Bond, 9.75%,
6/01/01; value including accrued
interest $30,794,108) ................... 29,590,835
DISCOUNT NOTE--0.2%
$ 700 Federal Home Loan Bank,
6.40%, 11/01/00 ........................ 700,000
------------
Total Short-Term Investments
(cost $30,290,835)...................... 30,290,835
------------
Total investments before
investments sold short
(cost $587,212,158)...................... 568,329,924
------------
INVESTMENTS SOLD
SHORT--(6.2%)
(6,000) United States Treasury Bond,
6.125%, 8/15/29 ........................ (6,213,720)
United States Treasury Notes,
(7,500) 4.75%, 11/15/08 ........................ (6,979,650)
(10,160) 6.50%, 2/15/10 ......................... (10,634,675)
------------
(proceeds $23,152,450).................. (23,828,045)
------------
Total investments, net of
investments sold short--141.9% .......... 544,501,879
Other liabilities in excess of other
assets--(41.9)% ......................... (160,850,996)
------------
NET ASSETS--100% ......................... $383,650,883
============
</TABLE>
---------------------
* Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration to qualified institutional buyers.
@ Entire or partial principal amount pledged as collateral for reverse
repurchase agreements or financial future contracts.
----------------------------------------------------------
KEY TO ABBREVIATIONS:
REMIC - Real Estate Mortgage Investment Conduit.
RRB - Real Return Bond.
TIPS - Treasury Inflation Protection Securities.
----------------------------------------------------------
See Notes to Financial Statements.
9
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
--------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $587,212,158) (Note 1) ......... $568,329,924
Canadian dollars, at value (cost $795,758).................. 795,758
Cash ....................................................... 110,778
Deposits with brokers as collateral for securities
sold short (Note 1) ...................................... 24,425,575
Interest receivable ........................................ 7,630,464
Due from broker-variation margin (Notes 1 & 3) ............. 481,250
Interest rate caps, at value
(amortized cost $209,667) (Notes 1 & 3)................... 221,996
Other assets ............................................... 22,407
-------------
602,018,152
-------------
LIABILITIES
Reverse repurchase agreements (Note 4) ..................... 178,033,201
Payable for investments purchased .......................... 13,327,572
Investments sold short, at value
(proceeds received $23,152,450) (Note 1).................. 23,828,045
Forward currency contracts-amount payable
to counterparties ........................................ 2,050,843
Interest payable ........................................... 723,977
Investment advisory fee payable (Note 2) ................... 199,526
Administration fee payable (Note 2) ........................ 33,254
Deferred directors fees (Note 1) ........................... 15,070
Other accrued expenses ..................................... 155,781
-------------
218,367,269
-------------
NET ASSETS ................................................. $383,650,883
=============
Net assets were comprised of:
Common stock, at par (Note 5) ............................ $ 347,740
Paid-in capital in excess of par .......................... 428,426,192
Cost of 1,433,100 shares held in treasury ................. (14,109,740)
-------------
414,664,192
Accumulated net realized loss on investments .............. (1,907,273)
Net unrealized depreciation on investments ................ (3,519,391)
Accumulated net realized and unrealized
foreign currency loss ................................... (25,586,645)
-------------
Net assets, October 31, 2000 ............................... $383,650,883
=============
Net asset value per share:
($383,650,883 / 34,773,993 shares of
common stock issued and outstanding) ..................... $11.03
=======
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest earned (net of premium amortization of
$8,075,120 and interest expense of
$11,427,612)................................... $27,784,007
-----------
Operating expenses
Investment advisory ........................... 2,390,043
Administration ................................ 398,340
Custodian ..................................... 250,000
Independent accountants ....................... 105,000
Directors ..................................... 72,000
Reports to shareholders ....................... 65,000
Transfer agent ................................ 36,000
Registration .................................. 32,000
Legal ......................................... 20,000
Miscellaneous ................................. 101,616
-----------
Total operating expenses ...................... 3,469,999
-----------
Net investment income ........................... 24,314,008
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on:
Investments ................................... 2,813,409
Short sales ................................... 134,782
Foreign currency .............................. (304,642)
Futures ....................................... (4,061,436)
-----------
(1,417,887)
-----------
Net change in unrealized appreciation
(depreciation) on:
Investments ................................... 4,593,746
Interest rate caps ............................ 88,473
Short sales ................................... (797,767)
Futures ....................................... (1,694,520)
Foreign currency .............................. (11,355,126)
-----------
(9,165,194)
-----------
Net loss on investments and foreign currency
transactions .................................. (10,583,081)
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $13,730,927
===========
See Notes to Financial Statements.
10
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN
NET ASSETS RESULTING FROM OPERATIONS
TO NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES
Net increase in net assets resulting from operations ......... $13,730,927
-----------
Increase in investments ...................................... (74,782,574)
Net realized loss ............................................ 1,417,887
Decrease in unrealized appreciation .......................... 9,165,194
Decrease in interest rate cap ................................ 73,079
Decrease in receivable for investments sold .................. 52,940,687
Decrease in receivable for forward contracts ................. 351,981
Decrease in interest receivable .............................. 577,400
Increase in due from broker-variation margin ................. (1,037,375)
Increase in payable for investments purchased ................ 3,813,548
Increase in payable for forward currency contracts ........... 2,050,843
Increase in interest payable ................................. 89,810
Decrease in accrued expenses and other liabilities ........... (206,577)
Increase in deposits with brokers ............................ (9,965,675)
Increase in payable for investments sold short ............... 9,674,754
-----------
Total adjustments ........................................... (5,837,018)
-----------
Net cash flows provided by operating activities .............. $ 7,893,909
===========
INCREASE (DECREASE) IN CASH
AND FOREIGN CURRENCY
Net cash flows provided by operating activities .............. $ 7,893,909
-----------
Cash flows used for financing activities:
Increase in reverse repurchase agreements .................. 28,686,893
Cash dividends paid ......................................... (29,364,830)
Cost of Trust shares reacquired ............................. (6,893,440)
-----------
Net cash flows used for financing activities ................. (7,571,377)
-----------
Effect of changes in exchange rate ........................... (1,634,150)
-----------
Net decrease in cash and foreign currency ................... (1,311,618)
Cash and foreign currency at beginning of year .............. 2,218,154
-----------
Cash and foreign currency at end of year .................... $ 906,536
===========
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
STATEMENTS OF CHANGES
IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
2000 1999
---------------- ----------------
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment income ................ $ 24,314,008 $ 30,452,154
Net realized loss .................... (1,417,887) (946,600)
Net change in unrealized
depreciation ........................ (9,165,194) (15,851,619)
------------ ------------
Net increase in net
assets resulting from
operations .......................... 13,730,927 13,653,935
Dividends and distributions:
Dividends from net investment
income .............................. (13,564,893) (30,366,425)
Distributions from net realized
gains ............................. (1,511,083) --
Tax return of capital
distributions ..................... (14,288,854) --
------------ ------------
Total dividends and distributions..... (29,364,830) (30,366,425)
------------ ------------
Cost of Trust shares reacquired ...... (6,893,440) (7,216,300)
------------ ------------
Total decrease ....................... (22,527,343) (23,928,790)
NET ASSETS
Beginning of year .................... 406,178,226 430,107,016
------------ ------------
End of year (including
undistributed net investment
income of $0 and $355,321,
respectively) ..................... $383,650,883 $406,178,226
============ ============
See Notes to Financial Statements.
11
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year ....................... $ 11.45 $ 11.88 $ 12.47 $ 12.33 $ 11.36
------- ------- ------- -------- --------
Net investment income (net of interest expense of $0.32,
$0.28, $0.26, $0.22, and $0.41, respectively)............ .70 .84 .78 .89 .93
Net realized and unrealized gain (loss) on investments... (.31) (.46) (.53) .09 .92
------- ------- ------- -------- --------
Net increase from investment operations .................. .39 .38 .25 .98 1.85
------- ------- ------- -------- --------
Dividends and distributions:
Dividends from net investment income .................... (.39) (.84) (.81) (.84) (.29)
Distributions in excess of net investment income ........ - -- (.03) -- --
Distributions from net realized gains ................... (.04) -- -- -- --
Tax return of capital distributions ..................... (.41) -- -- -- (.59)
------- ------- ------- -------- --------
Total dividends and distributions ........................ (.84) (.84) (.84) (.84) (.88)
------- ------- ------- -------- --------
Increase resulting from Trust shares repurchased ......... .03 .03 -- -- --
------- ------- ------- -------- --------
Net asset value, end of year* ............................ $ 11.03 $ 11.45 $ 11.88 $ 12.47 $ 12.33
======= ======= ======= ======== ========
Per share market value, end of year* ..................... $ 9.75 $ 9.69 $ 9.88 $ 10.56 $ 10.13
======= ======= ======= ======== ========
TOTAL INVESTMENT RETURN+ ................................. 9.82% 6.70% 1.34% 13.23% 9.48%
======= ======= ======= ======== ========
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ....................................... 0.88% 0.85% 0.88% 0.93% 0.97%
Operating expenses and interest expense .................. 3.76% 3.18% 3.01% 2.74% 4.63%
Net investment income .................................... 6.14% 7.14% 6.39% 7.30% 8.24%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ........................ $396,157 $426,283 $444,051 $440,465 $409,644
Portfolio turnover ....................................... 82% 186% 153% 146% 151%
Net assets, end of year (in thousands) ................... $383,651 $406,178 $430,107 $451,419 $446,394
Reverse repurchase agreements outstanding,
end of year (in thousands) .............................. $178,033 $149,346 $173,520 $206,126 $217,135
Asset coverage++ ......................................... $ 3,155 $ 3,720 $ 3,479 $ 3,190 $ 3,056
</TABLE>
----------
* Net asset value and market value published in BARRON'S on Saturday and THE
WALL STREET JOURNAL on Monday.
+ Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each year reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions.
++ Per $1,000 of reverse repurchase agreement outstanding.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data, for the years indicated. This
information has been determined based upon financial information provided in
the financial statements and market value data for the Trust's shares.
See Notes to Financial Statements.
12
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION The BlackRock North American Government & Income
ACCOUNTING Trust Inc., (the "Trust"), a Maryland corporation,
POLICIES is a non-diversified, closed-end management
investment company. The investment objective of the
Trust is to achieve high monthly income consistent with preservation of capital.
The ability of issuers of debt securities held by the Trust to meet their
obligations may be affected by economic developments in a specific country,
industry or region. No assurance can be given that the Trust's investment
objective will be achieved.
The following is a summary of significant accounting policies followed by
the Trust.
BASIS OF PRESENTATION: The financial statements of the Trust are prepared in
accordance with accounting principles generally accepted in the United States
of America using the United States dollar as both the functional and reporting
currency.
SECURITIES VALUATION: In valuing the Trust's assets, quotations of foreign
securities in a foreign currency are converted to U.S. dollar equivalents at
the then current currency value. The Trust values mortgage-backed, asset-backed
and other debt securities, interest rate swaps, caps, floors, and non-exchange
traded options on the basis of current market quotations provided by dealers or
pricing services approved by the Trust's Board of Directors. In determining the
value of a particular security, pricing services may use certain information
with respect to transactions in such securities, quotations from dealers,
market transactions in comparable securities, various relationships observed in
the market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange-traded
options are valued at their last sales price as of the close of options trading
on the applicable exchanges. In the absence of a last sale, options are valued
at the average of the quoted bid and asked prices as of the close of business.
A futures contract is valued at the last sale price as of the close of the
commodities exchange on which it trades. Short-term securities are valued at
amortized cost. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision
and responsibility of the Trust's Board of Directors.
REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, the Trust's custodian takes possession of the underlying collateral
securities, the value of which at least equals the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Trust may be delayed or limited.
OPTION SELLING/PURCHASING: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized
gain or loss. If an option is exercised, the premium paid or received is added
to the proceeds from the sale or cost of the purchase in determining whether
the Trust has realized a gain or a loss on investment transactions. The Trust,
as writer of an option, may have no control over whether the underlying
securities may be sold (call) or purchased (put) and as a result bears the
market risk of an unfavorable change in the price of the security underlying
the written option.
Options, when used by the Trust, help in maintaining a targeted duration.
Duration is a measure of the price sensitivity of a security or a portfolio to
relative changes in interest rates. For instance, a duration of "one" means
that a portfolio's or a security's price would be expected to change by
approximately one percent with a one percent change in interest rates, while a
duration of five would imply that the price would move approximately five
percent in relation to a one percent change in interest rates.
Option selling and purchasing is used by the Trust to effectively "hedge"
positions, or collections of positions, so that changes in interest rates do
not change the duration of the portfolio unexpectedly. In general, the Trust
uses options to hedge a long or short position or an overall portfolio that is
longer or shorter than the benchmark security. A call optiongives the purchaser
of the option the right (but not obligation) to buy, and obligates the seller
to sell (when the option is exercised), the underlying position at the exercise
price at any time or at a specified time during the option period. A put option
gives the holder the right to sell and obligates the writer to buy the
underlying position at the exercise price at any time or at a specified time
during the option period. Put options can be purchased to effectively hedge a
position or a portfolio against price declines if a portfolio is long. In the
13
<PAGE>
same sense, call options can be purchased to hedge a portfolio that is shorter
than its benchmark against price changes. The Trust can also sell (or write)
covered call options and put options to hedge portfolio positions.
The main risk that is associated with purchasing options is that the
option expires without being exercised. In this case, the option expires
worthless and the premium paid for the option is considered the loss. The risk
associated with writing call options is that the Trust may forego the
opportunity for a profit if the market value of the underlying position
increases and the option is exercised. The risk in writing put options is that
the Trust may incur a loss if the market value of the underlying position
decreases and the option is exercised. In addition, as with futures contracts,
the Trust risks not being able to enter into a closing transaction for the
written option as the result of an illiquid market.
INTEREST RATE SWAPS: In an interest rate swap, one investor pays a floating
rate of interest on a notional principal amount and receives a fixed rate of
interest on the same notional principal amount for a specified period of time.
Alternatively, an investor may pay a fixed rate and receive a floating rate.
Interest rate swaps are efficient as asset/liability management tools. In more
complex swaps, the notional principal amount may decline (or amortize) over
time.
During the term of the swap, changes in the value of the swap are
recognized as unrealized gains or losses by "marking-to-market" to reflect the
market value of the swap. When the swap is terminated, the Trust will record a
realized gain or loss equal to the difference between the proceeds from (or
cost of) the closing transaction and the Trust's basis in the contract, if any.
The Trust is exposed to credit loss in the event of non-performance by
the other party to the swap. However, the Trust closely monitors swaps and does
not anticipate non-performance by any counterparty.
SWAP OPTIONS: Swap options are similar to options on securities except that
instead of selling or purchasing the right to buy or sell a security, the
writer or purchaser of the swap option is granting or buying the right to enter
into a previously agreed upon interest rate swap agreement at any time before
the expiration of the option. Premiums received or paid from writing or
purchasing options are recorded as liabilities or assets and are subsequently
adjusted to the current market value of the option written or purchased.
Premiums received or paid from writing or purchasing options which expire
unexercised are treated by the Trust on the expiration date as realized gains
or losses. The difference between the premium and the amount paid or received
on effecting a closing purchase or sale transaction, including brokerage
commission, is also treated as a realized gain or loss. If an option is
exercised, the premium paid or received is added to the proceeds from the sale
or cost of the purchase in determining whether the Trust has realized a gain or
loss on investment transactions.
The main risk that is associated with purchasing swap options is that the
swap option expires without being exercised. In this case, the option expires
worthless and the premium paid for the swap option is considered the loss. The
main risk that is associated with the writing of a swap option is the market
risk of an unfavorable change in the value of the interest rate swap underlying
the written swap option.
Swap options may be used by the Trust to manage the duration of the
Trust's portfolio in a manner similar to more generic options described above.
FINANCIAL FUTURES CONTRACTS: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future
date. Initial margin deposits are made upon entering into futures contracts and
can be either cash or securities. During the period the futures contract is
open, changes in the value of the contract are unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the
contract at the end of each day's trading. Variation margin payments are made
or received, depending upon whether unrealized gains or losses are incurred.
When the contract is closed, the Trust records a realized gain or loss equal to
the difference between the proceeds from (or cost of) the closing transaction
and the Trust's basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining
a targeted duration. Futures contracts can be sold to effectively shorten an
otherwise longer duration portfolio. In the same sense, futures contracts can
be purchased to lengthen a portfolio that is shorter than its duration target.
Thus, by buying or selling futures contracts, the Trust can effectively "hedge"
positions so that changes in interest rates do not change the duration of the
portfolio unexpectedly.
The Trust may invest in financial futures contracts primarily for the
purpose of hedging its existing portfolio securities or securities the Trust
intends to purchase against fluctuations in value caused by changes in
prevailing market interest rates. Should interest rates move unexpectedly, the
Trust may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. The use of futures transactions involves the
risk of imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets. The Trust is also at risk of
not being able to enter into a closing transaction for the futures contract
because of an illiquid secondary market. In addition, since futures are used to
shorten or lengthen a portfolio's duration, there is a risk that the portfolio
may have temporarily performed better without the hedge or that the Trust
14
<PAGE>
may lose the opportunity to realize appreciation in the market price of the
underlying positions.
FORWARD CURRENCY CONTRACTS: The Trust enters into forward currency contracts
primarily to facilitate settlement of purchases and sales of foreign
securities. A forward contract is a commitment to purchase or sell a foreign
currency at a future date (usually the security transaction settlement date) at
a negotiated forward rate. In the event that a security fails to settle within
the normal settlement period, the forward currency contract is renegotiated at
a new rate. The gain or loss arising from the difference between the settlement
value of the original and renegotiated forward contracts is isolated and is
included in net realized losses from foreign currency transactions. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contract.
Forward currency contracts, when used by the Trust, help to manage the
overall exposure to the foreign currency backing many of the investments held
by the Trust (the Canadian dollar). Forward currency contracts are not meant to
be used to eliminate all of the exposure to the Canadian dollar, rather they
allow the Trust to limit its exposure to foreign currency within a narrow band
to the objectives of the Trust.
FOREIGN CURRENCY TRANSLATION: Canadian dollar ("C$") amounts are translated
into United States dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities-at the New York City noon rates of exchange.
(ii) purchases and sales of investment securities, income and
expenses-at the rates of exchange prevailing on the respective dates of
such transactions.
The Trust isolates that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities held at year end. Similarly,
the Trust isolates the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of portfolio securities
sold during the year.
Net realized and unrealized foreign exchange losses of $11,659,768
include realized foreign exchange gains and losses from sales and maturities of
foreign portfolio securities, maturities of foreign reverse repurchase
agreements, sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions, the
difference between the amounts of interest and discount recorded on the Trust's
books and the US dollar equivalent amounts actually received or paid and
changes in unrealized foreign exchange gains and losses in the value of
portfolio securities and other assets and liabilities arising as a result of
changes in the exchange rate.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic
origin, including unanticipated movements in the value of the Canadian dollar
relative to the U.S. dollar.
The exchange rate for the Canadian dollar at October 31, 2000 was
US$0.6563 to C$1.00.
SHORT SALES: The Trust may make short sales of securities as a method of
hedging potential price declines in similar securities owned. When the Trust
makes a short sale, it may borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any payments received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as
to dollar amount, will be recognized upon the termination of a short sale if
the market price is greater or less than the proceeds originally received.
SECURITY LENDING: The Trust may lend its portfolio securities to qualified
institutions. The loans are secured by collateral at least equal, at all times,
to the market value of the securities loaned. The Trust may bear the risk of
delay in recovery of, or even loss of rights in, the securities loaned should
the borrower of the securities fail financially. The Trust receives
compensation for lending its securities in the form of interest on the loan.
The Trust also continues to receive interest on the securities loaned, and any
gain or loss in the market price of the securities loaned that may occur during
the term of the loan will be for the account of the Trust.
INTEREST RATE CAPS: Interest rate caps are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
excess, if any, of a floating rate over a specified fixed or floating rate.
Interest rate caps are intended to both manage the duration of the
Trust's portfolio and its exposure to changes in short term rates. Owning
interest rate caps reduces the portfolio's duration, making it less sensitive
to changes in interest rates from a market value perspective. The effect on
income involves protection from rising short term rates, which the Trust
experiences primarily in the form of leverage.
The Trust is exposed to credit loss in the event of non-performance by
the other party to the interest rate cap. However, the Trust does not
anticipate non-performance by any counterparty.
Transactions fees paid or received by the Trust are recognized as assets
or liabilities and amortized or accreted into interest expense or income over
the life of the interest rate cap. The asset or liability is subsequently
adjusted to the current market value of the interest rate cap purchased or
sold.
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<PAGE>
Changes in the value of the interest rate cap are recognized as unrealized
gains and losses.
INTEREST RATE FLOORS: Interest rate floors are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
deficiency, if any, of a floating rate under a specified fixed or floating
rate.
Interest rate floors are used by the Trust to both manage the duration of
the portfolio and its exposure to changes in short-term interest rates. Selling
interest rate floors reduces the portfolio's duration, making it less sensitive
to changes in interest rates from a market value perspective. The Trust's
leverage provides extra income in a period of falling rates. Selling floors
reduces some of that advantage by partially monetizing it as an up front
payment which the Trust receives.
The Trust is exposed to credit loss in the event of non-performance by
the other party to the interest rate floor. However, the Trust does not
anticipate non-performance by any counterparty.
Transactions fees paid or received by the Trust are recognized as assets
or liabilities and amortized or accreted into interest expense or income over
the life of the interest rate floor. The asset or liability is subsequently
adjusted to the current market value of the interest rate floor purchased or
sold. Changes in the value of the interest rate floor are recognized as
unrealized gains and losses.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis, and the Trust accretes discount or amortizes premium on
securities purchased using the interest method.
FEDERAL INCOME TAXES: For Federal income tax purposes, substantially all of the
Trust's Canadian transactions are accounted for using the Canadian dollar as
the functional currency. Accordingly, only realized currency gains and losses
resulting from the repatriation of Canadian dollars into United States dollars
are recognized for tax purposes.
No provision has been made for U.S. income or excise taxes because it is
the Trust's policy to continue to meet the requirements of the United States
Internal Revenue Code applicable to regulated investment companies and to
distribute sufficient amounts of its taxable income to shareholders.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions monthly first from net investment income, then from realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards may be distributed annually.
Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from accounting
principles generally accepted in the United States of America.
ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
DEFERRED COMPENSATION PLAN: Under a deferred compensation plan approved by the
Board of Directors on February 24, 2000, non-interested Directors may elect to
defer receipt of all or a portion of their annual compensation.
Deferred amounts earn a return as though equivalent dollar amounts had
been invested in common shares of other BlackRock funds selected by the
Directors. This has the same economic effect as if the Directors had invested
the deferred amounts in such other BlackRock funds.
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the Trust. The
Trust may, however, elect to invest in common shares of those funds selected by
the Directors in order to match its deferred compensation obligations.
RECLASSIFICATION OF CAPITAL ACCOUNTS: The Trust accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies. For the year ended
October 31, 2000 the Trust decreased undistributed net investment income by
$11,104,436, increased accumulated net realized losses on investments by
$4,970, and decreased accumulated net realized and unrealized foreign currency
loss by $11,109,406 for realized foreign currency losses incurred. Net
investment income, net realized gains and net assets were not affected by this
change.
NOTE 2. AGREEMENTS The Trust has an Investment Advisory Agreement
with BlackRock Advisors, Inc. (the "Advisor"),
which is a wholly-owned subsidiary of BlackRock, Inc. which in turn is an
indirect majority-owned subsidiary of PNC Financial Services Group, Inc. The
Trust has an Administration Agreement with Prudential Investments Fund
Management LLC ("PIFM"), a wholly-owned subsidiary of The Prudential Insurance
Co. of America.
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<PAGE>
The investment advisory fee paid to the Advisor is computed weekly and
payable monthly at an annual rate of 0.60% of the Trust's average weekly net
assets. The administration fee paid to PIFM is also computed weekly and payable
monthly at an annual rate of 0.10% of the Trust's average weekly net assets.
Pursuant to the agreements, the Advisor provides continuous supervision
of the investment portfolio and pays the compensation of officers of the Trust.
PIFM pays for occupancy and provides certain clerical and accounting services
to the Trust. The Trust bears all other costs and expenses.
NOTE 3. PORTFOLIO Purchases and sales of investment securities,
SECURITIES AND other than short-term investments and dollar
OTHER INVESTMENTS rolls, for the year ended October 31, 2000
aggregated $489,459,981 and $430,099,282,
respectively.
The Trust may invest in securities which are not readily marketable,
including those which are restricted as to disposition under securities law
("restricted securities"). At October 31, 2000, the Trust held 1.55% of its
portfolio assets in securities restricted as to sale.
The Trust may from time to time purchase in the secondary market certain
mortgage pass-through securities packaged or master serviced by PNC Mortgage
Securities Corp. (or Sears Mortgage if PNC Mortgage Securities Corp. succeeded
to rights and duties of Sears) or mortgage related securities containing loans
or mortgages originated by PNC Bank or its affiliates, including Midland Loan
Services, Inc. It is possible under certain circumstances, that PNC Mortgage
Securities Corp. or its affiliates, including Midland Loan Services, Inc. could
have interests that are in conflict with the holders of these mortgage backed
securities, and such holders could have rights against PNC Mortgage Securities
Corp. or its affiliates, including Midland Loan Services, Inc.
The federal income tax basis of the Trust's investments at October 31,
2000 was $570,008,759, and accordingly, net unrealized depreciation for federal
income tax purposes was $1,678,835 (gross unrealized appreciation $17,779,459;
gross unrealized depreciation $19,458,294).
For federal income tax purposes, the Trust had a capital loss
carryforward at October 31, 2000 of approximately $3,084,565 which will expire
in 2008. Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amounts.
Details of open financial futures contracts at October 31, 2000 are as
follows:
<TABLE>
<CAPTION>
VALUE AT VALUE AT UNREALIZED
NUMBER OF EXPIRATION TRADE OCTOBER 31, APPRECIATION/
CONTRACTS TYPE DATE DATE 2000 (DEPRECIATION)
----------- -------------------- ------------ -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Short Positions:
10 Eurodollar Dec. '00 $ 2,332,585 $ 2,332,250 $ 335
10 Eurodollar Mar. '01 2,336,085 2,337,125 (1,040)
90 Eurodollar June '01 20,815,640 21,054,375 (238,735)
90 Eurodollar Sep. '01 20,813,765 21,062,250 (248,485)
90 Eurodollar Dec. '01 20,803,390 21,040,875 (237,485)
90 Eurodollar Mar. '02 20,817,515 21,052,125 (234,610)
10 Eurodollar June '02 2,334,335 2,337,750 (3,415)
10 Eurodollar Sep. '02 2,333,710 2,336,875 (3,165)
1,031 30 Yr. U.S. T-Bond Dec. '00 102,612,589 102,938,906 (326,317)
-----------
$(1,292,917)
===========
</TABLE>
Details of open forward currency contracts at October 31, 2000 are as
follows:
VALUE AT VALUE AT
SETTLEMENT CONTRACT SETTLEMENT OCTOBER 31, UNREALIZED
DATE TO RECEIVE DATE 2000 DEPRECIATION
------------ ---------------- -------------- ------------- ---------------
Purchases:
11/10/00 $ 94,890,000 $63,386,773 $62,134,604 $ (1,252,169)
11/20/00 110,000,000 72,760,947 72,044,379 (716,568)
11/28/00 41,731,342 27,418,753 27,336,647 (82,106)
------------
$ (2,050,843)
============
The Trust holds one interest rate cap. Under the agreement the Trust
receives the excess, if any, of a floating rate over a fixed rate. The Trust
paid a transaction fee for the agreement. Details of the cap at October 31,
2000 are as follows:
<TABLE>
<CAPTION>
NOTIONAL VALUE AT
AMOUNT FIXED TERMINATION AMORTIZED OCTOBER 31, UNREALIZED
(000) RATE FLOATING RATE DATE COST 2000 APPRECIATION
---------- ---------- --------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000 6.00% 3 mth. LIBOR 2/19/02 $209,667 $221,996 $12,329
=======
</TABLE>
NOTE 4. BORROWINGS REVERSE REPURCHASE AGREEMENTS: The Trust enters
into reverse repurchase agreements with qualified,
third party broker-dealers as determined by and under the direction of the
Trust's Board of Directors. Interest on the value of reverse repurchase
agreements issued and outstanding is based upon competitive market rates at the
time of issuance. At the time the Trust enters into a reverse repurchase
agreement, it establishes and maintains a segregated account with the lender
containing liquid high grade securities having a value not less than the
repurchase price, including accrued interest, of the reverse repurchase
agreement.
The average daily balance of United States reverse repurchase agreements
outstanding during the year ended October 31, 2000 was approximately
$150,190,853 at a weighted average interest rate of approximately 6.26%. The
average daily balance of Canadian reverse repurchase agreements outstanding
during the year ended October 31,
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<PAGE>
2000 was approximately C$14,127,890 at a weighted average interest rate of
5.31%. The maximum amount of total reverse repurchase agreements outstanding at
any month-end during the period was $214,503,581 as of June 30, 2000, which was
33% of total assets.
DOLLAR ROLLS: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date.
The Trust did not enter into any dollar roll transactions during the year
ended October 31, 2000.
NOTE 5. CAPITAL There are 200 million shares of $.01 par value
common stock authorized. Of the 34,773,993 shares
outstanding at October 31, 2000, the Advisor owned 7,093 shares.
During the year ended October 31, 2000, the Trust repurchased a total of
708,900 shares of its outstanding common stock at a cost of $6,893,440, at an
average discount of approximately 15.9% from its net asset value. These shares
are being held in treasury.
NOTE 6. DIVIDENDS Subsequent to October 31, 2000, the Board of
Directors of the Trust declared dividends from
undistributed earnings of $0.07 per share payable November 30, 2000 to
shareholders of record on November 15, 2000.
18
<PAGE>
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THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The BlackRock North American Government Income Trust Inc.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The BlackRock North American
Government Income Trust Inc. (the "Trust") as of October 31, 2000 and the
related statements of operations and of cash flows for the year then ended, and
of changes in net assets for the two years then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at October 31, 2000 by correspondence
with the custodian and brokers; where replies were not received, we performed
other auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock North
American Government Income Trust Inc. at October 31, 2000 and the results of
its operations, its cash flows, the changes in its net assets and the financial
highlights for the respective stated periods in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
-------------------------
New York, New York
December 8, 2000
19
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--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN GOVERNMENT TRUST INC.
TAX INFORMATION
--------------------------------------------------------------------------------
We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during its fiscal year ended October 31, 2000.
During the fiscal year ended October 31, 2000, the Trust paid dividends
and distributions of $0.8396 per share of which $0.4311 per share represents
ordinary income and $0.4085 per share is a non-taxable return of capital. For
federal income tax purposes, the aggregate of any dividends and short-term
capital gains distributions you received are reportable in your 2000 federal
income tax return as ordinary income. Further, we wish to advise you that your
income dividends do not qualify for the dividends received deduction.
For the purpose of preparing your 2000 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form
1099 DIV which will be mailed to you in January 2001.
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders may elect to have all distributions of dividends and capital gains
reinvested by State Street Bank and Trust Company (the "Plan Agent") in Trust
shares pursuant to the Plan. Shareholders who do not participate in the Plan
will receive all distributions in cash paid by check in United States dollars
mailed directly to the shareholders of record (or if the shares are held in
street or other nominee name, then to the nominee) by the transfer agent, as
dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends
and distributions will be paid by the Trust. However, each participant will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income taxes that
may be payable on such dividends or distributions.
The Trust reserves the right to amend or terminate the Plan as applied to
any dividend or distribution paid subsequent to written notice of the change
sent to all shareholders of the Trust at least 90 days before the record date
for the dividend or distribution. The Plan also may be amended or terminated by
the Plan Agent upon at least 90 days' written notice to all shareholders of the
Trust. All correspondence concerning the Plan should be directed to the Plan
Agent at (800) 699-1BFM. The addresses are on the front of this report.
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives
or policies that have not been approved by the shareholders or to its charter
or by-laws or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
20
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
INVESTMENT SUMMARY
--------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock North American Government Income Trust's investment objective is
to manage a portfolio of investment grade securities to achieve high monthly
income consistent with preservation of capital. The Trust will seek to achieve
its objective by investing in Canadian and U.S. dollar-denominated securities.
WHO MANAGES THE TRUST?
BlackRock Advisors, Inc. ("BlackRock") is an SEC-registered investment advisor.
As of September 30, 2000, the Advisor and its affiliates (together,
"BlackRock") managed $191 billion on behalf of taxable and tax-exempt clients
worldwide. Strategies include fixed income, equity and cash and may incorporate
both domestic and international securities. Domestic fixed income strategies
utilize the government, mortgage, corporate and municipal bond sectors.
BlackRock manages twenty-two closed-end funds that are traded on either the New
York or American stock exchanges, and a $28 billion family of open-end funds.
BlackRock managed 670 accounts, domiciled in the United States and overseas.
WHAT CAN THE TRUST INVEST IN?
The Trust will invest primarily in securities issued or guaranteed by the
federal governments of Canada and the United States, their political
subdivisions (which include the Canadian provinces) and their agencies and
instrumentalities. The Trust's investments will be either government securities
or securities rated "BBB" or higher at the time of investment by Standard &
Poor's or "Baa" by Moody's, or securities which BlackRock deems of comparable
quality. Examples of types of securities in which the Trust may invest include
Canadian and U.S. government or government agency residential mortgage-backed
securities, privately issued mortgage-backed securities, Canadian provincial
debt securities, U.S. Government securities, commercial mortgage-backed
securities, asset-backed securities and debt securities issued by Canadian and
U.S. corporations and other entities. Under current market conditions,
BlackRock expects that the primary investments of the Trust to be Canadian
mortgage-backed securities, Canadian provincial debt securities, Canadian
Corporate bonds, U.S. government securities, securities backed by U.S.
government agencies (such as mortgage-backed securities), privately issued
mortgage-backed securities and commercial mortgage-backed securities.
WHAT IS THE ADVISOR'S INVESTMENT STRATEGY?
The Advisor will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to provide high monthly income consistent with the
preservation of capital. The Trust will seek to provide monthly income that is
greater than that which could be obtained by investing in U.S. Treasury
securities with an average life similar to that of the Trust's assets. In
seeking the investment objective, BlackRock actively manages the Trust's assets
in relation to market conditions and changes in general economic conditions in
Canada and the U.S., including its expectations regarding interest rate changes
and changes in currency exchange rates between the U.S. dollar and the Canadian
dollar, to attempt to take advantage of favorable investment opportunities in
each country. As such, the allocation between Canadian and U.S. securities will
change from time to time. Under current market conditions, the average life of
the Trust's assets is expected to be in the range of seven to ten years. Under
other market conditions, the Trust's average life may vary and may not be
predictable using any formula.
While the Advisor has the opportunity to hedge against currency risks
associated with Canadian securities, the Trust is intended to provide exposure
to the Canadian marketplace. As a result, historically, currency hedging has
not been widely practiced by the Trust. However, BlackRock will attempt to
limit interest rate risk by constantly monitoring the duration (or price
sensitivity with respect to changes in interest rates) of the Trust's assets so
that it is within the range of U.S. Treasury securities with average lives of
seven to ten years. In doing so, the Advisor will attempt to locate securities
with better predictability of cash flows such as U.S. commercial
mortgage-backed securities. In addition, the Canadian mortgage-backed
securities in which the Trust invests are not prepayable, contributing to the
predictability of the Trust's cash flows. Traditional residential U.S. mortgage
pass-through securities make interest and principal payments on a monthly basis
and can be a source of attractive levels of income to the Trust. While the U.S.
mortgage-backed securities in the Trust are of high credit quality, they
typically offer a yield spread over Treasuries due to the uncertainty of the
timing of their cash flows as they are subject to prepayment
21
<PAGE>
exposure when interest rates change and mortgage holders refinance their
mortgages or move. While U.S. mortgage-backed securities do offer the
opportunity for attractive yields, they subject a portfolio to interest rate
risk and prepayment exposure which result in reinvestment risk when prepaid
principal must be reinvested.
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The
Trust pays monthly dividends which are typically paid on the last business day
of the month. For shares held in the shareholder's name, dividends may be
reinvested in additional shares of the Trust through the Trust's transfer
agent, State Street Bank & Trust Company. Investors who wish to hold shares in
a brokerage account should check with their financial advisor to determine
whether their brokerage firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN THE TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. Leverage permits the Trust to borrow
money at short-term rates and reinvest that money in longer-term assets which
typically offer higher interest rates. The difference between the cost of the
borrowed funds and the income earned on the proceeds that are invested in
longer term assets is the benefit to the Trust from leverage. In general, the
portfolio is typically leveraged at approximately 331|M/3% of total assets.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the Trust in a declining rate
environment, but can cause net assets to decline faster than the market in a
rapidly rising rate environment. BlackRock's portfolio managers continuously
monitor and regularly review the Trust's use of leverage and the Trust may
reduce, or unwind, the amount of leverage employed should the Advisor consider
that reduction to be in the best interest of shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO THE TRUST
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
INVESTMENT OBJECTIVE. Although the objective of the Trust is to provide high
monthly income consistent with preservation of capital, there can be no
assurance that this objective will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to vary over time as fixed income market conditions change. Future dividends
may be higher or lower than the dividend the Trust is currently paying.
CURRENCY EXCHANGE RATE CONSIDERATIONS. Because the Trust's net asset value is
expressed in U.S. dollars, and the Trust invests a substantial percentage of
its assets in Canadian dollar-denominated assets, any change in the exchange
rate between these two currencies will have an effect on the net asset value of
the Trust. As a result, if the U.S. dollar appreciates against the Canadian
dollar, the Trust's net asset value would decrease if not offset by other
gains.
INTEREST-ONLY SECURITIES (IO). The yield to maturity on an IO class is
extremely sensitive to the rate of principal payments (including prepayments)
on the related underlying Mortgage Assets, and a rapid rate of principal
payments may have a material adverse effect on such security's yield to
maturity. If the underlying Mortgage Assets experience greater than anticipated
prepayments of principal, the Trust may fail to recoup fully its initial
investment in these securities even if the securities are rated AAA by S&P or
Aaa by Moody's.
INVERSE FLOATING RATE MORTGAGE-BACKED SECURITIES. ARMs with interest rates that
adjust at periodic intervals in the opposite direction from the market rate of
interest to which they are indexed. An inverse floater may be considered to be
leveraged to the extent that its interest rate may vary by a magnitude that
exceeds the magnitude of the change in the index rate of interest.
LEVERAGE. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, which involves special risks. The Trust's net asset value and
market value may be more volatile due to its use of leverage.
MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange (NYSE symbol: BNA) and as such
are subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The cash flow and yield
characteristics of these securities differ from traditional debt securities.
The major differences typically include more frequent payments and the
possibility of prepayments on certain U.S. mortgage-backed securities which
will change the yield to maturity of the security.
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CORPORATE DEBT SECURITIES. The value of corporate debt securities generally
varies inversely with changes in prevailing market interest rates. The Trust
may be subject to certain reinvestment risks in environments of declining
interest rates.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
23
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THE BLACKROCK NORTH AMERICAN GOVERNMENT INCOME TRUST INC.
GLOSSARY
--------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE-BACKED Mortgage instruments with interest rates that
SECURITIES (ARMS): adjust at periodic intervals at a fixed amount
over the market levels of interest rates as
reflected in specified indexes. ARMS are
backed by mortgage loans secured by real
property.
ASSET-BACKED SECURITIES: Securities backed by various types of
receivables such as automobile and credit card
receivables.
CANADIAN MORTGAGE SECURITIES: Canadian Mortgage instruments which are
guaranteed by the Canadian Mortgage Housing
Corporation (CMHC), a federal agency backed by
the full faith and credit of the Canadian
Government.
CLOSED-END FUND: Investment vehicle which initially offers a
fixed number of shares and trades on a stock
exchange. The fund invests in a portfolio of
securities in accordance with its stated
investment objectives and policies.
COLLATERALIZED Mortgage-backed securities which separate
MORTGAGE OBLIGATIONS (CMOS): mortgage pools into short, medium, and
long-term securities with different priorities
for receipt of principal and interest. Each
class is paid a fixed or floating rate of
interest at regular intervals. Also known as
multiple-class mortgage pass-throughs.
COMMERCIAL MORTGAGE Mortgage-backed securities secured or backed
BACKED SECURITIES (CMBS): by mortgage loans on commercial properties.
DISCOUNT: When a fund's net asset value is greater than
its stock price the fund is said to be trading
at a discount.
DIVIDEND: Income generated by securities in a portfolio
and distributed to shareholders after the
deduction of expenses. This Trust declares and
pays dividends on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may elect to have all
distributions of dividends and capital gains
automatically reinvested into additional
shares of the Trust. FHA: Federal Housing
Administration, a government agency that
facilitates a secondary mortgage market by
providing an agency that guarantees timely
payment of interest and principal on
mortgages.
FHLMC: Federal Home Loan Mortgage Corporation, a
publicly owned, federally chartered
corporation that facilitates a secondary
mortgage market by purchasing mortgages from
lenders such as savings institutions and
reselling them to investors by means of
mortgage-backed securities. Obligations of
FHLMC are not guaranteed by the U.S.
government, however, they are backed by
FHLMC's authority to borrow from the U.S.
government. Also known as Freddie Mac.
FNMA: Federal National Mortgage Association, a
publicly owned, federally chartered
corporation that facilitates a secondary
mortgage market by purchasing mortgages from
lenders such as savings institutions and
reselling them to investors by means of
mortgage-backed securities. Obligations of
FNMA are not guaranteed by the U.S.
government, however, they are backed by FNMA's
authority to borrow from the U.S. government.
Also known as Fannie Mae.
GNMA: Government National Mortgage Association, a
government agency that facilitates a secondary
mortgage market by providing an agency that
guarantees timely payment of interest and
principal on mortgages. GNMA's obligations are
supported by the full faith and credit of the
U.S. Treasury. Also known as Ginnie Mae.
24
<PAGE>
GOVERNMENT SECURITIES: Securities issued or guaranteed by the U.S.
government, or one of its agencies or
instrumentalities, such as GNMA, FNMA and
FHLMC.
INTEREST-ONLY SECURITIES: Mortgage securities including CMBS that
receive only the interest cash flows from an
underlying pool of mortgage loans or
underlying pass-through securities. Also known
as a STRIP.
INVERSE-FLOATING RATE MORTGAGES: Mortgage instruments with coupons that adjust
at periodic intervals according to a formula
which sets inversely with a market level
interest rate index.
MARKET PRICE: Price per share of a security trading in the
secondary market. For a closed-end fund, this
is the price at which one share of the fund
trades on the stock exchange. If you were to
buy or sell shares, you would pay or receive
the market price.
MORTGAGE DOLLAR ROLLS: A mortgage dollar roll is a transaction in
which the Trust sells mortgage- backed
securities for delivery in the current month
and simultaneously contracts to repurchase
substantially similar (although not the same)
securities on a specified future date. During
the "roll" period, the Trust does not receive
principal and interest payments on the
securities, but is compensated for giving up
these payments by the difference in the
current sales price (for which the security is
sold) and lower price that the Trust pays for
the similar security at the end date as well
as the interest earned on the cash proceeds of
the initial sale.
MORTGAGE PASS-THROUGHS: Mortgage-backed securities issued by FNMA,
FHLMC, FHA or GNMA.
NET ASSET VALUE (NAV): Net asset value is the total market value of
all securities held by the Trust, plus income
accrued on its investments, minus any
liabilities including accrued expenses,
divided by the total number of outstanding
shares. It is the underlying value of a single
share on a given day. Net asset value for the
Trust is calculated weekly and published in
BARRON'S on Saturday and THE WALL STREET
JOURNAL on Monday.
PRINCIPAL-ONLY SECURITIES: Mortgage securities that receive only the
principal cash flows from an underlying pool
of mortgage loans or underlying pass-through
securities. Also known as a STRIP.
PROJECT LOANS: Mortgages for multi-family, low- to
middle-income housing.
PREMIUM: When a fund's stock price is greater than its
net asset value, the fund is said to be
trading at a premium.
REMIC: A real estate mortgage investment conduit is a
multiple-class security backed by
mortgage-backed securities or whole mortgage
loans and formed as a trust, corporation,
partnership, or segregated pool of assets that
elects to be treated as a REMIC for federal
tax purposes. Generally, FNMA REMICs are
formed as trusts and are backed by
mortgage-backed securities.
RESIDUALS: Securities issued in connection with
collateralized mortgage obligations that
generally represent the excess cash flow from
the mortgage assets underlying the CMO after
payment of principal and interest on the other
CMO securities and related administrative
expenses.
REVERSE REPURCHASE AGREEMENTS: In a reverse repurchase agreement, the Trust
sells securities and agrees to repurchase them
at a mutually agreed date and price. During
this time, the Trust continues to receive the
principal and interest payments from that
security. At the end of the term, the Trust
receives the same securities that were sold
for the same initial dollar amount plus
interest on the cash proceeds of the initial
sale.
STRIPPED MORTGAGE BACKED Arrangements in which a pool of assets is
SECURITIES separated into two classes that receive
different proportions of the interest and
principal distribution from underlying
mortgage-backed securities. IO's and PO's are
examples of STRIPs.
25
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
SUMMARY OF CLOSED-END FUNDS
--------------------------------------------------------------------------------
TAXABLE TRUSTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS ---------- ---------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
The BlackRock High Yield Trust BHY N/A
TERM TRUSTS
The BlackRock 2001 Term Trust Inc. BTM 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
</TABLE>
TAX-EXEMPT TRUSTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK MATURITY
SYMBOL DATE
PERPETUAL TRUSTS --------- ---------
<S> <C> <C>
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
The BlackRock Pennsylvania Strategic Municipal Trust BPS N/A
The BlackRock Strategic Municipal Trust BSD N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE DO NOT HESITATE TO CALL BLACKROCK
AT (800) 227-7BFM (7236) OR CONSULT WITH YOUR FINANCIAL ADVISOR.
26
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK ADVISORS, INC.
AN OVERVIEW
--------------------------------------------------------------------------------
BlackRock Advisors, Inc. (the "Advisor") is an SEC-registered investment
advisor. As of September 30, 2000, the Advisor and its affiliates (together,
"BlackRock") managed $191 billion on behalf of taxable and tax-exempt clients
worldwide. Strategies include fixed income, equity and cash and may incorporate
both domestic and international securities. BlackRock manages twenty-two
closed-end funds that are traded on either the New York or American stock
exchanges, and a $28 billion family of open-end funds. BlackRock managed 670
accounts, domiciled in the United States and overseas.
BlackRock's fixed income product was introduced in 1988 by a team of
highly seasoned fixed income professionals. These professionals had extensive
experience creating, analyzing and trading a variety of fixed income
instruments, including the most complex structured securities. In fact, several
individuals at BlackRock were responsible for developing many of the major
innovations in the mortgage-backed and asset-backed securities markets,
including the creation of the first CMO, the floating rate CMO, the
senior/subordinated pass-through and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
emphasis it places on the development of proprietary analytical capabilities.
Over one quarter of the firm's professionals are dedicated to the design,
maintenance and use of these systems, which are not otherwise available to
investors. BlackRock's proprietary analytical tools are used for evaluating,
and designing fixed income investment strategies for client portfolios.
Securities purchased include mortgages, corporate bonds, municipal bonds and a
variety of hedging instruments.
BlackRock has developed investment products that respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. In fact, BlackRock introduced the first closed-end mortgage fund, the
first taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
Currently, BlackRock's closed-end funds have dividend reinvestment plans, which
are designed to provide ongoing demand for the stock in the secondary market.
BlackRock manages a wide range of investment vehicles, each having specific
investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions.
The number is (800) 227-7BFM (7236). We encourage you to call us with any
questions that you may have about your BlackRock funds and we thank you for the
continued trust that you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM
27
<PAGE>
-------------
BLACKROCK
-------------
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Clayburn La Force, Jr.
Walter F. Mondale
Ralph L. Schlosstein
OFFICERS -------------
Ralph L. Schlosstein, PRESIDENT BLACKROCK
Scott Amero, VICE PRESIDENT THE -------------
Keith T. Anderson, VICE PRESIDENT NORTH AMERICAN
Michael C. Huebsch, VICE PRESIDENT GOVERNMENT
Robert S. Kapito, VICE PRESIDENT INCOME TRUST INC.
Richard M. Shea, VICE PRESIDENT/TAX ==========================
Henry Gabbay, TREASURER ANNUAL REPORT
James Kong, ASSISTANT TREASURER OCTOBER 31, 2000
Anne Ackerley, SECRETARY
INVESTMENT ADVISOR
BlackRock Advisors, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
(800) 227-7BFM
ADMINISTRATOR
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP [GRAPHIC OMITTED]
Four Times Square
New York, NY 10036
LEGAL COUNSEL - INDEPENDENT DIRECTORS
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
This report is for shareholder
information. This is not a prospectus
intended for use in the purchase or sale
of any securities.
Notice is hereby given in accordance
with Section 23(c) of the Investment Company
Act of 1940 that the fund may purchase,
from time to time, shares of its common
stock at market prices.
THE BLACKROCK NORTH AMERICAN
GOVERNMENT INCOME TRUST INC.
c/o Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM
[GRAPHIC OMITTED]
Printed on recycled paper 092475-10-2
