EX-99.77B ACCT LTTR

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
MFS placeStateCalifornia Insured Municipal Fund

In planning and  performing  our audit of the financial
statements of MFS  California  Insured  Municipal
Fund  (the  Fund)  as of and for the  year  ended
dateYear2008Day30Month11lstransNovember  30,  2008,  in
accordance  with the  standards of the Public  Company
Accounting  Oversight  Board (United  States),  we
considered the Funds internal  control over financial
reporting,
including  controls over  safeguarding
securities,  as a basis for designing our auditing
procedures for the purpose of expressing  our opinion
on the financial  statements and to comply with the
requirements  of Form N-SAR,  but not for the purpose
of expressing an opinion on the  effectiveness
of the Funds internal  control over financial  reporting.
Accordingly, we express no such opinion.

The management of the Fund is responsible for
establishing  and maintaining  effective
internal  control
over financial  reporting.  In fulfilling this
responsibility,
estimates and judgments by management are
required to assess the expected  benefits  and related
costs of controls.
A companys  internal  control
over financial  reporting is a process designed to
provide reasonable
assurance regarding the reliability
of financial  reporting and the  preparation of financial
statements for external  purposes in accordance
with generally  accepted  accounting  principles.
A companys  internal control over financial  reporting
includes  those  policies  and  procedures  that (1)
pertain  to the  maintenance  of  records  that,  in
reasonable  detail,  accurately and fairly reflect the
transactions and dispositions of the assets of the
company;  (2)  provide  reasonable  assurance  that
transactions  are  recorded  as  necessary  to permit
preparation of financial  statements in accordance
with generally  accepted  accounting  principles,  and
that receipts and  expenditures  of the company are being
made only in accordance with  authorizations  of
management and directors of the company;  and (3) provide
reasonable  assurance  regarding  prevention or
timely detection of unauthorized  acquisition,
use or disposition of a companys assets that could have a
material effect on the financial statements.

Because of its inherent  limitations,
internal control over financial reporting may not
prevent or detect
misstatements.Also,  projections of any evaluation of
effectiveness to future periods are subject to the
risk that  controls  may  become  inadequate  because  of
changes  in  conditions,  or that the degree of
compliance with the policies or procedures
may deteriorate.

A  deficiency  in internal  control  over  financial
reporting  exists when the design or  operation of a
control  does not allow  management  or  employees,
in the normal course of  performing  their  assigned
functions,  to prevent or detect misstatements
on a timely basis. A material weakness is a deficiency,
or a  combination  of  deficiencies,  in internal
control  over financial  reporting,  such that there is a
reasonable  possibility  that a  material
misstatement  of the companys  annual  or
interim  financial statements will not be prevented
or detected on a timely basis.



Our  consideration  of the Funds  internal  control
over financial  reporting was for the limited purpose
described in the first paragraph and would not
necessarily  disclose all  deficiencies in
internal control
that might be material weaknesses under standards
established by the Public Company Accounting  Oversight
Board  (country-regionplaceUnited  States).  However,
we noted no  deficiencies  in the  Funds  internal
control over  financial  reporting and its operation,
including  controls over  safeguarding  securities,
that    we     consider     to    be    a    material
weakness     as    defined     above    as    of
dateYear2008Day30Month11lstransNovember 30, 2008.

This report is intended  solely for the  information
and use of  management  and the Board of Trustees of
MFS California  Insured  Municipal Fund and the
Securities and Exchange  Commission and is not
intended to
be and should not be used by anyone other than
these specified parties.


  [GRAPHIC OMITTED]
placeCityBoston, StateMassachusetts
dateYear2009Day20Month1lstransJanuary 20, 2009

EX-99.77C VOTES

                                                     ITEM 77C

The shareholders of MFS StateplaceCalifornia Insured Municipal Fund
(the Trust), held an annual meeting of
shareholders on October 23, 2008.  Shareholders represented in
person or by proxy voted as follows:

Proposal 2:  To approve an Amended and Restated Declaration of Trust.

- ---------------------------- -------------------------- --------------------

Number of Shares Voted     % of Shares Voted          % of Outstanding Shares
- ---------------------------- -------------------------- ---------------------


For     1,541,870                  89.30%                     55.43%
- ---------------------------- -------------------------- ------------------

Against  123,639                    7.16%                      4.44%
- ---------------------------- -------------------------- --------------------

Abstain/Withheld 61,075                     3.54%                      2.20%
- ---------------------------- -------------------------- -------------------

Non-Vote  940,788                    35.27%                     N/A
- ---------------------------- -------------------------- ----------------

Proposal 3:  To amend or remove certain fundamental
investment policies of the Trust.

- ---------------------------- -------------------------- ------
 Number of Shares Voted     % of Shares Voted          % of Outstanding Shares
- ---------------------------- -------------------------- -------------
For   1,524,169                  88.28%                     54.79%
- ---------------------------- -------------------------- ---------------

Against 122,787                    7.11%                      4.41%
- ---------------------------- -------------------------- -----------------

Abstain/Withheld 79,628                     4.61%                      2.86%
- ---------------------------- -------------------------- --------------------

Non-Vote  940,788                    35.27%                     N/A
- ---------------------------- -------------------------- ---------------------

Preferred Shares

- ---------------------------- -------------------------- --------------------

Number of Shares Voted     % of Shares Voted          % of Outstanding Shares
- ---------------------------- -------------------------- ----------------------

For   371                        71.62%                     37.93%
- ---------------------------- -------------------------- ----------------

Against  94                         18.15%                     9.61%
- ---------------------------- -------------------------- -------------------

Abstain/Withheld 53                         10.23%                     5.42%

- ---------------------------- -------------------------- --------------------
Non-Vote 26                         4.78%                      N/A
- ---------------------------- -------------------------- ------------

Proposal 4:  To act upon, if properly presented at the Meeting,
a shareholder proposal that the Board of Trustees
take the steps necessary to merge the Trust into
MFS California Municipal Bond Fund, an open end fund, or
otherwise enable shareholders to realize net asset value for their shares.

- ---------------------------- -------------------------- ------------
Number of Shares Voted     % of Shares Voted          % of Outstanding Shares
- ---------------------------- -------------------------- -----------------
For   354,768                    20.55%                     12.75%
- ---------------------------- -------------------------- ------------
Against  1,272,406                  73.69%                     45.74%
- ---------------------------- -------------------------- -------------
Abstain/Withheld  99,410                     5.76%                      3.57%
- ---------------------------- -------------------------- -----------
Non-Vote 940,788                    35.27%                     N/A
- ---------------------------- -------------------------- -------------

EX-99.77Q1 OTHR EXHB

[PG NUMBER]

71
130376

As Amended
dateYear01Day8Month5lstrans5/8/01
 Article 2, Section 1.3 As
Amended
dateYear01Day13Month2lstrans2/13/01
 Article 2, Section 1.3 and
Article 7

As Amended
dateYear00Day13Month12lstrans12/13/00
Article 12, Section 12.10(1)(5) As Amended
 dateYear01Day20Month6lstrans6/20/01
Article 2, Section 1.3, Article 3, Section
1.17

As Amended  dateYear04Day9Month12lstrans12/9/04  Article 12, Part II
As
Amended

dateYear04Day11Month8lstrans8/11/04

Article
3,
Section
1.9;
Article
4.,
Section
1.16;
Article
4,
Section
1.19
As
Amended
2/7/07

Article
2.1
As
Amended
6/29/07

Article
4
and
Name
As
Amended
12/18/2007

Article
2


As
Amended
2/26/2008

Article
7
As
Amended
6/24/2008

Article
12

                     AMENDED AND RESTATED BYstocktickerLAWS

                                       OF

                         MFS HIGH YIELD MUNICIPAL TRUST

                                                     Article 1.
             Agreement and Declaration of Trust and Principal Office

1.1.  Agreement and Declaration of Trust.  These ByLaws shall be subject to the
Agreement  and  Declaration  of  Trust,  as from  time to  time in  effect  (the
Declaration  of Trust),  of MFS High Yield  Municipal  Trust, a  Massachusetts
business Trust established by the Declaration of Trust (the Trust.)

1.2.  Principal  Office of the Trust. The principal office of the Trust shall be
located in CityplaceBoston, StateMassachusetts.


                                                     Article 2.
                                  Shareholders

       2.1  Shareholder  Meetings.  Except  as  provided  in the next  sentence,
regular  meetings of the  shareholders  for the  election  of  Trustees  and the
transaction of such other business as may properly come before the meeting shall
be held,  so long as  Shares  are  listed  for  trading  on the New  York  Stock
Exchange, on at least an annual basis, on such day and at such place as shall be
designated  by a majority of the  Trustees.  In the event that such a meeting is
not held in any  annual  period  if so  required,  whether  the  omission  be by
oversight or otherwise, a subsequent special meeting may be called by a majority
of the Trustees and held in lieu of such meeting with the same effect as if held
within such annual period.  A Special  meeting of the  shareholders of the Trust
may be called at any time by a majority of the Trustees, by the president or, if
a majority of the Trustees and the  president  shall fail to call any meeting of
shareholders  for a period of 30 days after written  application  of one or more
shareholders who hold at least 10% of all outstanding  shares of the Trust, then
such shareholders may call such meeting.  Each call of a meeting shall state the
place, date, hour and purposes of the meeting.

2.2 Advance  Notice of Shareholder  Nominees for Trustees and Other  Shareholder
Proposals.


         (a) As used in this Section 2.2,  the term annual  meeting  refers to
any annual meeting of  shareholders  as well as any special meeting held in lieu
of an annual  meeting as described in the first two  sentences of Section 2.1 of
these  Bylaws,  and  the  term  special  meeting  refers  to all  meetings  of
shareholders  other than an annual  meeting  or a special  meeting in lieu of an
annual meeting.

         (b) The matters  proposed by  shareholders to be considered and brought
before any annual or special  meeting of  shareholders  shall be limited to only
such matters,  including the  nomination  and election of Trustees,  as shall be
brought properly before such meeting in compliance with the procedures set forth
in this Section  2.2.  Only persons who are  nominated  in  accordance  with the
procedures  set forth in this  Section  2.2 shall be  eligible  for  election as
Trustees,  and no proposal to fix the number of Trustees shall be brought before
an annual or special meeting of shareholders or otherwise  considered  unless in
accordance  with the procedures set forth in this Section 2.2,  except as may be
otherwise  provided  in these  Bylaws  with  respect  to the right of holders of
preferred  shares of beneficial  interest,  if any, of the Trust to nominate and
elect a specified number of Trustees in certain circumstances.

         (c) For any matter to be properly before any annual meeting, the matter
must be (i) specified in the notice of meeting given by or at the direction of a
majority  of the  Trustees  pursuant  to Section  2.4 of these  Bylaws,  or (ii)
brought  before the meeting in the manner  specified in this Section 2.2(c) by a
shareholder  of record  entitled to vote at the meeting or by a  shareholder  (a
Beneficial  Owner) that holds Shares entitled to vote at the meeting through a
nominee or street name holder of record and that can  demonstrate to the Trust
such indirect  ownership and such  Beneficial  Owners  entitlement to vote such
Shares,  provided  that the  shareholder  was the  shareholder  of record or the
Beneficial  Owner held such Shares at the time the notice  provided  for in this
Section 2.2(c) is delivered to the secretary.

         In  addition to any other  requirements  under  applicable  law and the
Declaration of Trust and these Bylaws,  persons  nominated by  shareholders  for
election as Trustees  and any other  proposals by  shareholders  may be properly
brought   before  an  annual   meeting  only  pursuant  to  timely  notice  (the
Shareholder Notice) in writing to the secretary. To be timely, the Shareholder
Notice must be delivered to or mailed and  received at the  principal  executive
offices of the Trust not less than fortyfive (45) nor more than sixty (60) days
prior to the first  anniversary  date of the date on which the Trust  first sent
its proxy materials for the prior years annual meeting; provided, however, with
respect to the annual  meetings to be held in the calendar  years 2008 and 2009,
the  Shareholder  Notice  must be so  delivered  or mailed and so received on or
before March 18, 2008, and May 1, 2009, respectively; provided further, however,
if and only if the annual  meeting is not  scheduled  to be held within a period
that commences thirty (30) days before the first  anniversary date of the annual
meeting for the preceding year and ends thirty (30) days after such  anniversary
date (an annual  meeting date outside such period being referred to herein as an
Other  Annual  Meeting  Date),  such  Shareholder  Notice must be given in the
manner  provided  herein by the later of the close of  business  on (i) the date
fortyfive  (45) days prior to such Other Annual  Meeting Date or (ii) the tenth
(10th)  business day following the date such Other Annual  Meeting Date is first
publicly announced or disclosed.

         Any shareholder desiring to nominate any person or persons (as the case
may be) for  election as a Trustee or Trustees  of the Trust shall  deliver,  as
part of such  Shareholder  Notice:  (i) a statement in writing setting forth (A)
the  name,  age,  date  of  birth,  business  address,   residence  address  and
nationality  of the person or persons to be  nominated;  (B) the class or series
and number of all Shares of the Trust  owned of record or  beneficially  by each
such person or persons, as reported to such shareholder by such nominee(s);  (C)
any other  information  regarding each such person  required by paragraphs  (a),
(d), (e) and (f) of Item 401 of  Regulation  SK or paragraph  (b) of Item 22 of
Rule  14a101  (Schedule  14A) under the  Securities  Exchange  Act of 1934,  as
amended (the Exchange Act),  adopted by the Securities and Exchange Commission
(or the corresponding  provisions of any regulation or rule subsequently adopted
by the Securities and Exchange  Commission or any successor agency applicable to
the  Trust);  (D) any other  information  regarding  the person or persons to be
nominated  that would be required to be disclosed in a proxy  statement or other
filings  required  to be made in  connection  with  solicitation  of proxies for
election of Trustees or directors pursuant to Section 14 of the Exchange Act and
the  rules  and  regulations  promulgated  thereunder;   and  (E)  whether  such
shareholder  believes  any nominee is or will be an  interested  person of the
Trust (as defined in the Investment Company Act of 1940, as amended) and, if not
an  interested  person,  information  regarding  each  nominee  that  will  be
sufficient  for the Trust to make such  determination;  and (ii) the written and
signed  consent of the person or persons to be nominated to be named as nominees
and to serve as Trustees if elected. In addition, a majority of the Trustees may
require  any  proposed  nominee to furnish  such other  information  as they may
reasonably  require or deem  necessary  to  determine  the  eligibility  of such
proposed nominee to serve as a Trustee.  Any Shareholder Notice required by this
Section 2.2(c) in respect of a proposal to fix the number of Trustees shall also
set forth a description of and the text of the proposal,  which  description and
text  shall  state a fixed  number of  Trustees  that  otherwise  complies  with
applicable law, these Bylaws and the Declaration of Trust.

         Without limiting the foregoing, any shareholder who gives a Shareholder
Notice  of any  matter  proposed  to be  brought  before a  shareholder  meeting
(whether or not involving nominees for Trustees) shall deliver,  as part of such
Shareholder  Notice:  (i) the  description  of and  text of the  proposal  to be
presented;  (ii) a brief written  statement of the reasons why such  shareholder
favors the proposal; (iii) such shareholders name and address as they appear on
the Trusts books; (iv) any other  information  relating to the shareholder that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection  with the  solicitation  of proxies with respect to the
matter(s)  proposed pursuant to Section 14 of the Exchange Act and the rules and
regulations  promulgated  thereunder;  (v) the class or series and number of all
Shares of the Trust owned  beneficially and of record by such shareholder;  (vi)
any material  interest of such shareholder in the matter proposed (other than as
a shareholder); (vii) a representation that the shareholder intends to appear in
person or by proxy at the shareholder  meeting to act on the matter(s) proposed;
(viii) if the proposal  involves  nominee(s) for Trustees,  a description of all
arrangements or understandings between the shareholder and each proposed nominee
and any other person or persons  (including  their names)  pursuant to which the
nomination(s)  are to be  made by the  shareholder;  and  (ix) in the  case of a
Beneficial  Owner,   evidence  establishing  such  Beneficial  Owners  indirect
ownership of, and entitlement to vote, Shares at the meeting of shareholders. As
used in this  Section  2.2,  Shares  beneficially  owned shall mean all Shares
which such  person is deemed to  beneficially  own  pursuant  to Rules 13d3 and
13d5 under the Exchange Act.

         (d) For any matter to be  properly  before  any  special  meeting,  the
matter must be specified in the notice of meeting  given by or at the  direction
of a majority of the Trustees  pursuant to Section 2.4 of these  Bylaws.  In the
event the Trust calls a special  meeting for the purpose of electing one or more
Trustees,  any shareholder may nominate a person or persons (as the case may be)
for election to such  position(s)  as specified in the Trusts notice of meeting
if and only if the  shareholder  provides a notice  containing  the  information
required in the  Shareholder  Notice to the  secretary  required with respect to
annual  meetings by Section  2.2(c)  hereof,  and such notice is delivered to or
mailed and  received at the  principal  executive  office of the Trust not later
than the close of business on the tenth  (10th) day  following  the day on which
the date of the special  meeting and of the  nominees  proposed by a majority of
the Trustees to be elected at such meeting are publicly announced or disclosed.

         (e) For  purposes of this Section 2.2, a matter shall be deemed to have
been  publicly  announced or  disclosed if such matter is disclosed in a press
release  reported by the Dow Jones News Service,  Associated Press or comparable
national  news  service,  in a  document  publicly  filed by the Trust  with the
Securities and Exchange  Commission,  or in a Web site  accessible to the public
maintained  by the Trust or by its  investment  adviser or an  affiliate of such
investment adviser with respect to the Trust.

         (f) In no  event  shall an  adjournment  or  postponement  (or a public
announcement  thereof) of a meeting of  shareholders  commence a new time period
(or extend any time period) for the giving of notice as provided in this Section
2.2.

         (g) The person presiding at any meeting of shareholders, in addition to
making any other  determinations  that may be  appropriate to the conduct of the
meeting,  shall have the power and duty to (i) determine whether a nomination or
proposal of other matters to be brought before a meeting and notice thereof have
been  duly  made and  given  in the  manner  provided  in this  Section  2.2 and
elsewhere in these Bylaws and the  Declaration  of Trust and (ii) if not so made
or given, to direct and declare at the meeting that such nomination  and/or such
other  matters  shall  be  disregarded   and  shall  not  be   considered.   Any
determination  by the person  presiding  shall be binding on all parties  absent
manifest error.

         (h)  Notwithstanding  anything to the  contrary in this  Section 2.2 or
otherwise in these  Bylaws,  unless  required by federal law, no matter shall be
considered at or brought before any annual or special meeting unless such matter
has been  approved  for these  purposes  by a majority of the  Trustees  and, in
particular, no Beneficial Owner shall have any rights as a shareholder except as
may be required by federal law.  Furthermore,  nothing in this Section 2.2 shall
be construed as creating any  implication or presumption as to the  requirements
of federal law.

        2.3 Place of Meetings. All meetings of the shareholders shall be held at
the  principal  office  of  the  Trust,  or,  to  the  extent  permitted  by the
Declaration of Trust,  at such other place within the  countryregionplaceUnited
States as shall be designated by the Trustees or the president of the Trust.

       2.4 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least  seven days  before the  meeting to each  shareholder  entitled to vote
thereat by leaving  such notice with him or at his  residence  or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his  address as it appears in the  records of the Trust.  Such  notice  shall be
given by the secretary or an assistant  secretary or by an officer designated by
the  Trustees.  No  notice of any  meeting  of  shareholders  need be given to a
shareholder if a written waiver of notice,  executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.

2.5 Ballots.  No ballot shall be required for any election unless requested by a
shareholder  present or  represented  at the meeting and entitled to vote in the
election.

       2.6 Proxies.  Shareholders  entitled to vote may vote either in person or
by proxy in writing  dated not more than six months  before  the  meeting  named
therein,  which  proxies  shall be  filed  with the  secretary  or other  person
responsible to record the proceedings of the meeting before being voted.  Unless
otherwise  specifically  limited by their terms,  such proxies shall entitle the
holders  thereof to vote at any  adjournment  of such  meeting  but shall not be
valid  after  the  final   adjournment  of  such  meeting.   The  placing  of  a
shareholders   name  on  a  proxy  pursuant  to  telephonic  or  electronically
transmitted  instructions obtained pursuant to procedures reasonably designed to
verify that such  instructions  have been authorized by such  shareholder  shall
constitute execution of such proxy by or on behalf of such shareholder.

                                    Article 3

                                    Trustees

         3.1 Committees and Advisory Board.  The Trustees may appoint from their
number an executive  committee and other committees.  Except as the Trustees may
otherwise  determine,  any such  committee  may make  rules for  conduct  of its
business. The Trustees may appoint an advisory board to consist of not less than
two nor more than five  members.  The  members of the  advisory  board  shall be
compensated  in such manner as the Trustees may  determine and shall confer with
and advise the  Trustees  regarding  the  investments  and other  affairs of the
Trust.  Each member of the  advisory  board  shall hold  office  until the first
meeting of the Trustees following the next meeting of the shareholders and until
his successor is elected and  qualified,  or until he sooner dies,  resigns,  is
removed,  or  becomes  disqualified,  or until  the  advisory  board  is  sooner
abolished by the Trustees.

         In addition,  the Trustees may appoint a Dividend Committee of not less
than three  persons,  which  shall be  comprised  of at least one Trustee of the
Trust.

         No special  compensation  shall be  payable to members of the  Dividend
Committee.  Each member of the  Dividend  Committee  will hold office  until the
successors  are elected and  qualified  or until the member  dies,  resigns,  is
removed,  becomes  disqualified  or until  the  Committee  is  abolished  by the
Trustees.

         3.2 Regular  Meetings.  Regular  meetings of the  Trustees  may be held
without call or notice at such places and at such times as the Trustees may from
time to time  determine,  provided  that  notice  of the first  regular  meeting
following any such determination shall be given to absent Trustees.

         3.3 Special  Meetings.  Special  meeting of the Trustees may be held at
any time at any place designated in the call of the meeting,  when called by the
board  chair,  the  president  or the  treasurer  or by two  or  more  Trustees,
sufficient  notice  thereof  being given to each Trustee by the  secretary or an
assistant  secretary or by the board  chair,  the officer or one of the Trustees
calling the meeting.

         3.4 Notice.  It shall be sufficient  notice to a Trustee to send notice
by mail at least  fortyeight  hours or by telegram at least  twentyfour  hours
before the  meeting  addressed  to the Trustee at his or her usual or last known
business  or  residence  address or to give notice to him or her in person or by
telephone at least  twentyfour  hours  before the meeting.  Notice of a meeting
need not be given to any Trustee if a written waiver of notice,  executed by him
or her before or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting  without  protesting  prior thereto or at
its  commencement  the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.

         3.5 Quorum.  At any meeting of the  Trustees  onethird of the Trustees
then in office shall constitute a quorum; provided,  however, a quorum shall not
be less than two. Any meeting may be  adjourned  from time to time by a majority
of the votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.

                                                     Article 4.
                               Officers and Agents

4.1 Enumeration;  Qualification. The officers of the Trust shall be a president,
a treasurer and a secretary  who shall be elected by the Trustees.  In addition,
there shall be an Independent Chief Compliance Officer,  who shall be elected or
appointed  by a majority of the  Trustees,  including a majority of the Trustees
who are not  interested  persons  of the Trust as defined  under the  Investment
Company Act of 1940 (the 1940 Act) (the Independent Trustees),  and otherwise
in accordance with rule 38a1 (or any successor rule)  thereunder,  as such rule
may be amended from time to time (Rule 38a1).  The Trustees from time to time
may in their  discretion  elect or appoint such other  officers,  if any, as the
business of the Trust may require pursuant to section 4.3 of these ByLaws.  The
Trust may also have such agents,  if any, as the Trustees  from time to time may
in their  discretion  appoint.  Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.

4.2 Powers. Subject to the other provisions of these ByLaws, each officer shall
have,  in addition  to the duties and powers  herein and in the  Declaration  of
Trust set forth,  such duties and powers as are commonly  incident to his or her
office as if the Trust were organized as a  Massachusetts  business  corporation
and  such  other  duties  and  powers  as the  Trustees  may  from  time to time
designate, including without limitation the power to make purchases and sales of
portfolio  securities of the Trust  pursuant to  recommendations  of the Trusts
investment  adviser in accordance  with the policies and objectives of the Trust
set forth in its  prospectus and with such general or specific  instructions  as
the Trustees may from time to time have issued. The PersonNameIndependent  Chief
titleCompliance  Officer shall perform the duties and have the  responsibilities
of the chief compliance  officer of the Trust in accordance with Rule 38a1, and
shall  perform  such other duties and have such other  responsibilities  as from
time to time may be assigned to him by the Trustees.  The  PersonNameIndependent
Chief  titleCompliance  Officer  shall  report  directly  to the  Trustees  or a
Committee of the Trustees in carrying out his functions.

4.3 Election.  The president,  the treasurer and the secretary  shall be elected
annually by the Trustees at their first meeting  following the annual meeting of
the shareholders.  The PersonNameIndependent Chief titleCompliance Officer shall
be elected pursuant to Section 4.1 of these ByLaws.  Other elected officers, if
any, may be elected or appointed by the Trustees at said meeting or at any other
time. Assistant officers may be appointed by the elected officers.

4.4 Tenure.  The  president,  the treasurer,  the secretary and the  Independent
Chief Compliance Officer shall hold office until their respective successors are
chosen and qualified,  or in each case until he or she sooner dies,  resigns, is
removed or becomes  disqualified,  provided that any removal of the  Independent
Chief Compliance Officer shall also require the vote or consent of a majority of
the  Independent  Trustees and otherwise be in accordance with the provisions of
Rule  38a1.  Each  other  officer  shall  hold  office at the  pleasure  of the
Trustees.  Each agent shall  retain his or her  authority at the pleasure of the
Trustees.

4.5 President and Vice  Presidents.  The president  shall be the chief executive
officer  of the Trust.  The  president  shall  preside  at all  meetings  of the
shareholders  at which he or she is present,  except as  otherwise  voted by the
Trustees.  Any vice  president  shall  have such  duties  and powers as shall be
designated from time to time by the Trustees.

4.6 Treasurer,  Controller and Chief Accounting Officer.  The treasurer shall be
the chief financial officer of the Trust and, subject to any arrangement made by
the Trustees with a bank or trust company or other  organization as custodian or
transfer  or  shareholder  services  agent,  shall be in charge of its  valuable
papers and shall have such duties and powers as shall be designated from time to
time by the Trustees or by the  president.  Any assistant  treasurer  shall have
such duties and powers as shall be designated from time to time by the Trustees.

         The controller shall be the officer of the Trust primarily  responsible
for ensuring all expenditures of the Trust are reasonable and  appropriate.  The
controller  shall be responsible  for oversight and maintenance of liquidity and
leverage facilities  available to the Trust and shall have such other duties and
powers as may be designated from time to time by the Trustees or the President.

         The chief  accounting  officer  of the Trust  shall be in charge of its
books and accounting records.  The chief accounting officer shall be responsible
for  preparation of financial  statements of the Trust and shall have such other
duties and powers as may be designated  from time to time by the Trustees or the
President.

4.7  Secretary  and  Assistant  Secretaries.  The  secretary  shall  record  all
proceedings of the  shareholders  and the Trustees in books to be kept therefor,
which books shall be kept at the principal  office of the Trust.  In the absence
of the  secretary  from any meeting of  shareholders  or Trustees,  an assistant
secretary,  or if there be none or he or she is absent, a temporary clerk chosen
at the meeting shall record the proceedings thereof in the aforesaid books.

         4.9 Board Chair.  The Trustees shall annually elect one of their number
to serve as their chair.  The board chair shall hold such position  until his or
her successor is chosen and qualified,  or until he or she sooner dies, resigns,
is removed or becomes disqualified.  The board chair shall hold such position at
the pleasure of the  Trustees.  The board chair shall preside at all meetings of
the  Trustees at which he or she is present and shall  perform any other  duties
and  responsibilities  prescribed  from  time to time  by the  Trustees.  In the
absence of the board chair,  or in the event that such  position is vacant,  the
Trustees  present at any meeting shall  designate one of their number to preside
at such  meeting.  The board  chair  shall not be  considered  an officer of the
Trust.

                                   Article 5.

                            Resignations and Removals

         Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the president,  the treasurer or
the  secretary  or to a meeting of the  Trustees.  The  Trustees  may remove any
officer  elected  by them  with or  without  cause by the vote or  consent  of a
majority  of the  Trustees  then in  office  provided  that any  removal  of the
PersonNameIndependent  Chief titleCompliance Officer shall also require the vote
or  consent  of a majority  of the  Independent  Trustees  and  otherwise  be in
accordance with Rule 38a1. Except to the extent expressly provided in a written
agreement  with the  Trust,  no  Trustee,  officer,  or  advisory  board  member
resigning,  and no officer or advisory board member removed shall have any right
to any  compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.

                                   Article 6.

                                    Vacancies

         A vacancy in any office may be filled at any time. Each successor shall
hold  office  for the  unexpired  term,  and in the case of the  president,  the
treasurer and the secretary, until his or her successor is chosen and qualified,
or in each case  until he or she  sooner  dies,  resigns,  is removed or becomes
disqualified.  A  vacancy  in  the  office  of the  PersonNameIndependent  Chief
titleCompliance  Officer shall be filled in accordance with Section 4.1 of these
ByLaws.

                                                     Article 7.
                          Shares of Beneficial Interest

         7.1 Share Certificates.  Except as provided in Section 12.1, in lieu of
issuing  certificates for shares,  the Trustees or the transfer agent shall keep
accounts upon the books of the Trust for the record holders of such shares.

         7.2  Discontinuance of Issuance of Certificates.  Except as provided in
Section 12.1, the Trustees have discontinued the issuance of share  certificates
and may, by written notice to each  shareholder,  require the surrender of share
certificates  of the Trust for  cancellation.  Such  surrender and  cancellation
shall not affect the ownership of shares in the Trust.

                                                     Article 8.
                     Record Date and Closing Transfer Books

         The Trustees may fix in advance a time, which shall not be more than 90
days before the date of any meeting of  shareholders or the date for the payment
of any  dividend or making of any other  distribution  to  shareholders,  as the
record date for determining the  shareholders  having the right to notice and to
vote at such  meeting and any  adjournment  thereof or the right to receive such
dividend or  distribution,  and in such case only  shareholder of record on such
record date shall have such right, notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes  close the transfer books for all or any part
of such period.

                                                     Article 9.
                                      Seal

         The seal of the Trust shall,  subject to  alteration  by the  Trustees,
consist of a flatfaced circular die with the word Massachusetts together with
the name of the Trust and the year of its organization, cut or engraved thereon;
but, unless otherwise required by the Trustees,  the seal shall not be necessary
to be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.

                                                     Article 10.
                               Execution of Papers

         Except as the Trustees may generally or in particular  cases  authorize
the  execution  thereof in some other  manner,  all  deeds,  leases,  transfers,
contracts,  bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the Trust shall be signed, and all transfers of securities  standing
in the name of the Trust shall be  executed,  by the  president or by one of the
vice  presidents or by the  treasurer or by whomsoever  else shall be designated
for that  purpose by the vote of the  Trustees and need not bear the seal of the
Trust.

                                   Article 11.

                                   Fiscal Year

         Except as from time to time  otherwise  provided by the  Trustees,  the
fiscal year of the Trust shall end on November 30.

                                                     Article 12.
                                            Shares of Beneficial Interest

         The Trust has an unlimited number of common shares,  without par value,
which may be issued from time to time by the  Trustees  of the Trust.  The Trust
also has a class of 3,600  preferred  shares,  without  par value,  which may be
issued by the  Trustees  from time to time in one or more  series  and with such
designations,  preferences  and other rights,  qualifications,  limitations  and
restrictions  as are  determined  by the Board of Trustees or a duly  authorized
committee thereof and set forth in this Article 12.

12.1  Statement  Creating  One  Series  of  Municipal  Auction  Rate  Cumulative
Preferred Shares.


 There is one series of Municipal Auction Rate Cumulative Preferred Shares.


                                     PART I

                                   DESIGNATION

         SERIES  F: A series  of 3,600  preferred  shares,  without  par  value,
liquidation  preference $25,000 per share plus accumulated but unpaid dividends,
if any,  thereon  (whether  or not  earned or  declared),  is hereby  designated
Municipal Auction Rate Cumulative  Preferred Shares,  Series F and is referred
to below as Series F  Municipal  Preferred.  Each share of Series F  Municipal
Preferred shall be issued on  datelstransMonth7Day20Year1999July  20, 1999; have
an Applicable Rate for its Initial Rate Period equal to 3.30% per annum; have an
initial Dividend Payment Date of Monday,  datelstransMonth7Day26Year1999July 26,
1999; and have such other preferences, limitations and relative voting and other
rights,  in addition to those  required  by  applicable  law or set forth in the
Trusts  Declaration  of  Trust,  as are set forth in Part I and Part II of this
Section 12.1. Series F Municipal Preferred shall constitute a separate series of
Municipal  Preferred  of the Trust.  The Board of  Trustees of the Trust may, in
their  discretion,   increase  the  number  of  shares  of  Municipal  Preferred
authorized  under these Bylaws to authorize  the issuance of another  series of
Municipal Preferred so long as such issuance is permitted by paragraph 5 of this
Part I of this Section 12.1.

1.Definitions.  Unless the context or use indicates another or different
meaning or intent, in Part I and Part II of this

Section 12.1 the following terms have the following meanings,
whether used in the singular or plural:

         AA Composite Commercial Paper Rate, on any date for any Rate Period
of shares of a series of Municipal Preferred,  shall mean (i) (A) in the case of
any Minimum  Rate Period or any Special Rate Period of fewer than 49 Rate Period
Days, the interest  equivalent of the 30day rate;  provided,  however,  that if
such Rate  Period is a Minimum  Rate  Period and the AA  Composite  Commercial
Paper Rate is being used to  determine  the  Applicable  Rate for shares of such
series  when  all of the  Outstanding  shares  of such  series  are  subject  to
Submitted Hold Orders,  then the interest  equivalent of the sevenday rate, and
(B) in the case of any  Special  Rate Period of (1) 49 or more but fewer than 70
Rate Period Days, the interest equivalent of the 60day rate; (2) 70 or more but
fewer  than  85  Rate  Period  Days,  the  arithmetic  average  of the  interest
equivalent of the 60day and 90day rates; (3) 85 or more but fewer than 99 Rate
Period Days,  the  interest  equivalent  of the 90day rate;  (4) 99 or more but
fewer  than 120  Rate  Period  Days,  the  arithmetic  average  of the  interest
equivalent of the 90day and 120day  rates;  (5) 120 or more but fewer than 141
Rate Period Days,  the interest  equivalent of the 120day rate; (6) 141 or more
but fewer than 162 Rate Period Days, the  arithmetic  average of the 120day and
180day  rates;  and (7) 162 or more but fewer than 183 Rate  Period  Days,  the
interest equivalent of the 180day rate, in each case on commercial paper placed
on  behalf  of  issuers  whose  corporate  bonds  are  rate  AA  by S&P or the
equivalent of such rating by S&P or another rating agency,  as made available on
a discount  basis or otherwise  by the Federal  Reserve Bank of New York for the
Business  Day next  preceding  such date;  or (ii) in the event that the Federal
Reserve  Bank of New York  does  not make  available  any  such  rate,  then the
arithmetic average of such rates, as quoted on a discount basis or otherwise, by
the  Commercial  Paper Dealers to the Auction Agent for the close of business on
the Business Day next preceding  such date. If any Commercial  Paper Dealer does
not quote a rate required to determine the AA Composite Commercial Paper Rate,
the AA Composite Commercial Paper Rate shall be determined on the basis of the
quotation or quotations  furnished by the remaining  Commercial  Paper Dealer or
Commercial  Paper  Dealers  and  any  Substitute   Commercial  Paper  Dealer  or
Substitute  Commercial  Paper Dealers selected by the Trust to provide such rate
or rates not being supplied by any Commercial  Paper Dealer or Commercial  Paper
Dealers,  as the  case  may be,  or,  if the  Trust  does  not  select  any such
Substitute  Commercial Paper Dealer or Substitute  Commercial Paper Dealers,  by
the remaining  Commercial Paper Dealer or Commercial Paper Dealers. For purposes
of this  definition,  the interest  equivalent  of a rate stated on a discount
basis (a discount  rate) for commercial  paper of a given days maturity shall
be equal to the  quotient  (rounded  upwards to the next  higher  onethousandth
(.001) of 1% of (A) the discount rate divided by (B) the difference  between (x)
1.00 and (y) a  fraction  the  numerator  of which  shall be the  product of the
discount  rate times the number of days in which such  commercial  paper matures
and the denominator of which shall be 360.

         Accountants   Confirmation  shall  have  the  meaning  specified  in
paragraph 7(c) of this Part I of Section 12.1.

         Affiliate   shall   mean,   for   purposes  of  the   definition   of
Outstanding,  any Person known to the Auction  Agent to be  controlled  by, in
control of or under common control with the Trust;  provided,  however,  that no
BrokerDealer  controlled  by, in control of or under  common  control  with the
Trust shall be deemed to be an Affiliate nor shall any corporation or any Person
controlled by, in control of or under common control with such corporation,  one
of the  trustees,  directors or executive  officers of which is a trustee of the
Trust be deemed to be an  Affiliate  solely  because such  trustee,  director or
executive officer is also a trustee of the Trust.

         Agent  Member shall mean a member of or participant in the Securities
Depository that will act on behalf of a Bidder.

         Anticipation Notes shall mean Tax Anticipation Notes (TANs),  Revenue
Anticipation Notes (RANs), Tax and Revenue  Anticipation Notes (SnTRANs),  Grant
Anticipation  Notes  (GANs)  that are rated by S&P and Bond  Anticipation  Notes
(BANs).

         Applicable Rate shall have the meaning specified in paragraph 2(e)(i)
of this Part I of this Section 12.1.

         Auction  shall  mean  each  periodic  implementation  of the  Auction
Procedures.

         Auction Agency  Agreement shall mean the agreement  between the Trust
and the Auction Agent which provides, among other things, that the Auction Agent
will follow the Auction  Procedures for purposes of  determining  the Applicable
Rate for shares of a series of  Municipal  Preferred  so long as the  Applicable
Rate for shares of such series is to be based on the results of an Auction.

         Auction Agent shall mean the entity appointed as such by a resolution
of the Board of  Trustees  in  accordance  with  paragraph  6 of Part II of this
Section 12.1.

         Auction  Date,  with  respect  to any  Rate  Period,  shall  mean the
Business Day next preceding the first day of such Rate Period.

         Auction  Procedures shall mean the procedures for conducting Auctions
set forth in Part II of this Section 12.1.

         Available  Municipal  Preferred  shall have the meaning  specified in
paragraph 3(a) of Part II of this Section 12.1.

         Benchmark Rate shall have the meaning  specified in paragraph 3(c) of
Part II of this Section 12.1.

         Beneficial  Owner  with  respect  to shares of a series of  Municipal
Preferred,  means a customer of a BrokerDealer  who is listed on the records of
that BrokerDealer (or, if applicable,  the Auction Agent) as a holder of shares
of such series.

         Bid and  Bids  shall  have the  respective  meanings  specified  in
paragraph 1(a) of Part II of this Section 12.1.

         Bidder and Bidders shall have the respective  meanings specified in
paragraph 1(a) of Part II of this Section 12.1; provided,  however, that neither
the Trust nor any  affiliate  thereof  shall be  permitted  to be a Bidder in an
Auction,  except that any BrokerDealer that is an affiliate of the Trust may be
a Bidder in an Auction,  but only if the Orders placed by such BrokerDealer are
not for its own account.

         Board of  Trustees  shall mean the Board of  Trustees of the Trust or
any duly authorized committee thereof.

         BrokerDealer shall mean any brokerdealer,  commercial bank or other
entity permitted by law to perform the functions  required of a BrokerDealer in
Part II of this  Section  12.1,  that is a member of, or a  participant  in, the
Securities Depository or is an affiliate of such member or participant, has been
selected  by the Trust  and has  entered  into a  BrokerDealer  Agreement  that
remains effective.

         BrokerDealer  Agreement shall mean an agreement among the Trust, the
Auction Agent and a BrokerDealer pursuant to which such BrokerDealer agrees to
follow the procedures specified in Part II of this Section 12.1.

         Business Day shall mean a day on which the New York Stock Exchange is
open for trading,  and which is neither a Saturday,  Sunday nor any other day on
which banks in The City of New York, New York are authorized by law to close.

         Bylaws means these Amended and Restated Bylaws of the Trust.

         Code means the Internal Revenue Code of 1986, as amended from time to
time.

         Commercial Paper Dealers means Lehman Commercial Paper  Incorporated,
Goldman,  Sachs & Co. and Merrill Lynch,  Pierce,  Fenner & Smith and such other
commercial  paper dealer or dealers as the Trust may from time to time  appoint,
or, in lieu of any thereof, their respective affiliates or successors.

         Common Shares means the common shares of beneficial interest, without
par value, of the Trust.

         Cure Date shall have the meaning  specified in of paragraph  11(b) of
this Part I of this Section 12.1.

         Date of  Original  Issue  with  respect  to  shares  of a  series  of
Municipal  Preferred,  shall mean the date on which the Trust originally  issued
such shares.

         Declaration  shall mean the Agreement and  Declaration of Trust dated
datelstransMonth1Day22Year1987January  22,  1987 of the  Trust,  as  amended  by
Amendment  No.  1  dated  datelstransMonth8Day4Year1989August  4,  1989  to  the
Agreement and Declaration of Trust of the Trust, both on file with the Secretary
of State of The  Commonwealth  of  Massachusetts  and as  hereafter  restated or
amended from time to time.

         Deposit Securities shall mean cash and Municipal Obligations rated at
least A1+ or SP1+ by S&P, except that, for purposes of subparagraph  (a)(v) of
paragraph 11 of Part I of this Section 12.1, such Municipal Obligations shall be
considered   Deposit   Securities   only  if  they   are   also   rated   P1,
stocktickerMIG1 or VMIG1 by Moodys.

         Discounted  Value, as of any  Valuation  Date,  shall mean,  (i) with
respect to an S&P  Eligible  Asset,  the  quotient of the Market  Value  thereof
divided by the  applicable S&P Discount  Factor;  and (ii) (a) with respect to a
Moodys Eligible Asset that is not currently  callable as of such Valuation Date
at the option of the  issuer  thereof,  the  quotient  of (1) the  Market  Value
thereof divided by (2) the product of (A) the applicable Moodys Discount Factor
multiplied by (B) the sum of 1 plus the Moodys  Liquidity  Factor;  or (b) with
respect  to a Moodys  Eligible  Asset  that is  currently  callable  as of such
Valuation  Date at the option of the issuer  thereof,  the  quotient  of (1) the
lesser of the Market Value or call price  thereof,  including  any call premium,
divided  by (2)  the  product  of (A) the  applicable  Moodys  Discount  Factor
multiplied by (B) the sum of 1 plus the Moodys Liquidity Factor.

         Dividend  Payment  Date,  with  respect  to  shares  of a  series  of
Municipal  Preferred,  shall  mean any date on which  dividends  are  payable on
shares of such series  pursuant to the provisions of paragraph 2(d) of Part I of
this Section 12.1.

         Dividend  Period,  with  respect  to shares of a series of  Municipal
Preferred,  shall mean the period from and including the Date of Original  Issue
of shares of such series to but excluding the initial  Dividend Payment Date for
shares of such series and any period  thereafter from and including one Dividend
Payment  Date for shares of such  series to but  excluding  the next  succeeding
Dividend Payment Date for shares of such series.

         Escrowed  Bonds  means  Municipal  Obligations  that  (i)  have  been
determined  to be legally  defeased in  accordance  with S&Ps legal  defeasance
criteria,  (ii) have been determined to be  economically  defeased in accordance
with S&Ps economic  defeasance criteria and assigned a rating of stocktickerAAA
by S&P,  (iii)  are not  rated by S&P but have  been  determined  to be  legally
defeased by Moodys, or (iv) have been determined to be economically defeased by
Moodys  and  assigned  a  rating  no  lower  than the  rating  that is  Moodys
equivalent of S&Ps stocktickerAAA rating.

         Existing  Holder,  with  respect  to shares of a series of  Municipal
Preferred,  shall  mean a  BrokerDealer  (or any such  other  Person  as may be
permitted by the Trust) that is listed on the records of the Auction  Agent as a
holder of shares of such series.

         Failure to  Deposit,  with respect to shares of a series of Municipal
Preferred,  shall mean a failure by the Trust to pay to the Auction  Agent,  not
later  than  12:00  noon,  New York  City  time,  (A) on the  Business  Day next
preceding  any  Dividend  Payment  Date  for  shares  of such  series,  in funds
available on such Dividend  Payment Date in The City of New York,  New York, the
full amount of any  dividend  (whether or not earned or  declared) to be paid on
such  Dividend  Payment  Date on any share of such series or (B) on the Business
Day next preceding any  redemption  date in funds  available on such  redemption
date for shares of such series in The City of New York, New York, the Redemption
Price to be paid on such  redemption  date for any shares of such  series  after
notice of  redemption  is mailed  pursuant to paragraph  11(c) of Part I of this
Section 12.1; provided,  however,  that the foregoing clause (B) shall not apply
to the  Trusts  failure  to pay the  Redemption  Price in  respect of shares of
Municipal  Preferred  when  the  related  Notice  of  Redemption  provides  that
redemption of such shares is subject to one or more conditions precedent and any
such condition  precedent shall not have been satisfied at the time or times and
in the manner specified in such Notice of Redemption.

         Federal  Tax Rate  Increase  shall have the meaning  specified in the
definition of Moodys Volatility Factor.

         Grossup Payment in respect of any dividend means payment to a Holder
of shares of a series of Municipal  Preferred of an amount which,  giving effect
to the Taxable Allocations made with respect to such dividend,  would cause such
Holders aftertax returns (taking into account both the Taxable Allocations and
the Grossup  Payment) to be equal to the aftertax return the Holder would have
received if no such Taxable  Allocations  had occurred.  Such  Grossup  Payment
shall be calculated:  (i) without consideration being given to the time value of
money; (ii) assuming that no Holder of shares of Municipal  Preferred is subject
to the Federal  alternative  minimum tax with respect to dividends received from
the Trust; and (iii) assuming that each Holder of shares of Municipal  Preferred
is taxable at the maximum  marginal regular Federal  individual  income tax rate
applicable to ordinary income or net capital gain, as applicable, or the maximum
marginal regular Federal corporate income tax rate applicable to ordinary income
or net capital gain, as applicable,  whichever is greater, in effect at the time
such Grossup Payment is made.

         Holder,  with respect to shares of a series of  Municipal  Preferred,
shall  mean the  Registered  Holder of such  shares as the same  appears  on the
record books of the Trust.

         Hold  Order  and Hold  Orders  shall have the  respective  meanings
specified in paragraph 1(a) of Part II of this Section 12.1.

         Independent Accountant shall mean a nationally recognized accountant,
or firm of  accountants,  that is,  with  respect to the Trust,  an  independent
public accountant or firm of independent public accountants under the Securities
Act of 1933, as amended from time to time.

         Initial Margin means the amount of cash or securities  deposited with
a  broker  as a margin  payment  at the time of  purchase  or sale of a  futures
contract.

         Initial  Rate Period, with respect to shares of a series of Municipal
Preferred,  shall mean the period from and including the Date of Original  Issue
for such series to but  excluding  the initial  Dividend  Payment  Date for such
series.

         Interest  Equivalent  shall  mean a yield  on a  360day  basis  of a
discount   basis  security  which  is  equal  to  the  yield  on  an  equivalent
interestbearing security.

         Inverse  Floater shall mean trust  certificates or other  instruments
evidencing  interests in one or more  municipal  securities  that qualify as S&P
Eligible Assets (and satisfy the issuer and size  requirements of the definition
of S&P Eligible  Assets) the interest  rates on which are adjusted at shortterm
intervals  on a basis that is inverse to the  simultaneous  readjustment  of the
interest  rates on  corresponding  floating  rate  trust  certificates  or other
instruments issued by the same issuer,  provided that the ratio of the aggregate
dollar amount of floating rate  instruments to inverse floating rate instruments
issued by the same issuer does not exceed three to one at their time of original
issuance  unless the floating rate instrument has only one reset remaining until
maturity.

         GivenNamePersonNameKenny  SnIndex  shall have the  meaning  set forth
under the  definition of Taxable  Equivalent of the  ShortTerm  Municipal Bond
Rate.

         Late Charge shall have the meaning specified in paragraph  2(e)(i)(B)
of Part I of this Section 12.1.

         Liquidation  Preference,  with respect to a given number of shares of
Municipal Preferred, means $25,000 times that number.

         Market Value of any asset of the Trust means the market value thereof
determined by the pricing  service  designated from time to time by the Board of
Trustees.  Market Value of any asset shall include any interest accrued thereon.
The pricing  service  will use current  industry  standards  to value  portfolio
securities. The pricing service may employ electronic data processing techniques
or a matrix  system,  or both,  to determine  valuations.  Securities  for which
quotations are not readily available shall be valued at fair value as determined
by the pricing service using methods which include  consideration  of: yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating; indications as to value from dealers; and general market conditions.
In the event the  pricing  service is unable to value a security,  the  security
shall be valued at the  lower of two  dealer  bids  obtained  by the Trust  from
dealers who are  nationally  recognized  members of the National  Association of
Securities  Dealers,  Inc. who are independent of the investment  advisor to the
Trust  and make a market  in the  security,  at least  one of which  shall be in
writing.  Futures  contracts  and options are valued at closing  prices for such
instruments  established  by the  exchange  or board of trade on which  they are
traded,  or if market quotations are not readily  available,  are valued at fair
value on a  consistent  basis  using  methods  determined  in good  faith by the
Trustees.

         Maximum  Potential  Grossup  Payment  Liability, as of any Valuation
Date, shall mean the aggregate amount of Grossup  Payments that would be due if
the Trust were to make Taxable  Allocations,  with respect to any taxable  year,
estimated based upon dividends paid and the amount of undistributed realized net
capital gains and other taxable income earned by the Trust, as of the end of the
calendar month  immediately  preceding  such  Valuation  Date, and assuming such
Grossup Payments are fully taxable.

         Maximum  Rate, for shares of a series of  Municipal  Preferred on any
Auction Date for shares of such series, shall mean:

                  (i) in the case of any  Auction  Date which is not the Auction
         Date  immediately  prior to the first day of any proposed  Special Rate
         Period  designated  by the Trust  pursuant to  paragraph 4 of Part I of
         this  Section  12.1,  the  product  of (A) the  Reference  Rate on such
         Auction  Date for the next Rate Period of shares of such series and (B)
         the Rate  Multiple on such Auction  Date,  unless shares of such series
         have or had a Special Rate Period  (other than a Special Rate Period of
         28 Rate  Period  Days or  fewer)  and an  Auction  at which  Sufficient
         Clearing Bids existed has not yet occurred for a Minimum Rate Period of
         shares of such series after such Special Rate Period, in which case the
         higher of:

(A)  the dividend rate on shares of such series for the thenending Rate
Period; and

                           (B)  the  product  of  (1)  the  higher  of  (x)  the
                  Reference Rate on such Auction Date for a Rate Period equal in
                  length  to the  thenending  Rate  Period  of  shares  of such
                  series,  if such  thenending  Rate Period was 364 Rate Period
                  Days or fewer,  or the Treasury Note Rate on such Auction Date
                  for a Rate  Period  equal in  length to the  thenending  Rate
                  Period of  shares of such  series,  if such  thenending  Rate
                  Period  was  more  than  364  Rate  Period  Days,  and (y) the
                  Reference Rate on such Auction Date for a Rate Period equal in
                  length to such  Special  Rate Period of shares of such series,
                  if such Special Rate Period was 364 Rate Period Days or fewer,
                  or the  Treasury  Note  Rate on such  Auction  Date for a Rate
                  Period equal in length to such  Special  Rate Period,  if such
                  Special Rate Period was more than 364 Rate Period Days and (2)
                  the Rate Multiple on such Auction Date; or

                  (ii) in the case of any Auction Date which is the Auction Date
         immediately  prior to the first day of any proposed Special Rate Period
         designated  by the  Trust  pursuant  to  paragraph  4 of Part I of this
         Section 12.1,  the product of (A) the highest of (1) the Reference Rate
         on  such  Auction  Date  for a  Rate  Period  equal  in  length  to the
         thenending  Rate Period of shares of such series,  if such thenending
         Rate Period was 364 Rate Period Dates or fewer,  or the  Treasury  Note
         Rate on such  Auction  Date for a Rate  Period  equal in  length to the
         thenending  Rate Period of shares of such series,  if such thenending
         Rate Period was more than 364 Rate Period Days,  (2) the Reference Rate
         on such  Auction Date for the Special Rate Period for which the Auction
         is being held if such  Special  Rate  Period is 364 Rate Period Days or
         fewer or the  Treasury  Note Rate on such  Auction Date for the Special
         Rate  Period for which the Auction is being held if such  Special  Rate
         Period is more than 364 Rate Period Days, and (3) the Reference Rate on
         such Auction Date for Minimum Rate Periods and (B) the Rate Multiple on
         such Auction Date.

         Minimum Rate Period  shall mean any Rate Period  consisting of 7 Rate
Period Days.

Moodys shall mean Moodys Investors Service, Inc., a
Delaware corporation, and its successors.

         Moodys  Discount  Factor shall mean, for purposes of determining the
Discounted  Value of any Moodys  Eligible Asset,  the percentage  determined by
reference to the rating on such asset and the shortest Exposure Period set forth
opposite  such  rating  that is the same length as or is longer than the Moodys
Exposure Period, in accordance with the table set forth below:

                                                                Rating Category



Exposure Period         Aaa*     Aa*      A*       Baa*      Other**
(V)stocktickerMSP1+****    Unrated*****

         *        SnMoodys rating.
         ** Municipal Obligations not rated by Moodys but rated BBB by S&P.

         ***      Municipal Obligations rated  stocktickerMIG1 or VMIG1, which
                  do not mature or have a demand  feature at par  exercisable in
                  30 days and which do not have a longterm rating.

         ****     Municipal  Obligations not rated by Moodys but rated SP1+ by
                  S&P,  which  do not  mature  or have a demand  feature  at par
                  exercisable  in 30 days  and  which  do not  have a  longterm
                  rating.

         *****  Municipal  Obligations  rated  less than Baa3 by Moodys or less
than BBB by S&P or not rated by Moodys or S&P.

         Notwithstanding  the  foregoing,  (i) the Moodys  Discount  Factor for
shortterm  Municipal  Obligations  will be  115%,  so  long  as such  Municipal
Obligations  are rated at least  stocktickerMIG1,  VMIG1 or P1 by Moodys and
mature or have a demand feature at par exercisable in 30 days or less or 125% so
long as such Municipal Obligations are rated at least A1+/AA or SP1+/AA by S&P
and mature or have a demand  feature at par  exercisable  in 30 days or less and
(ii) no Moodys  Discount  Factor will be applied to cash or to Receivables  for
Municipal  Obligations Sold or futures,  options and similar instruments (to the
extent such securities are Moodys Eligible Assets); provided, however, that for
purposes of determining the Moodys  Discount  Factor  applicable to a Municipal
Obligation,   any  Municipal  Obligation  (excluding  any  shortterm  Municipal
Obligation)  not  rated by  Moodys  but  rated by S&P shall be deemed to have a
Moodys rating which is one full rating category lower than its S&P rating.

         Moodys  Eligible  Asset shall mean cash,  Receivables  for Municipal
Obligations Sold,  futures,  options and similar instruments (other than Inverse
Floaters and index warrants) or a Municipal Obligation that (i) pays interest in
cash,  (ii)  does not have its  Moodys  rating,  if  applicable,  suspended  by
Moodys,  (iii)  is  part of an  issue  of  Municipal  Obligations  of at  least
$10,000,000,  and (iv) is not subject to a covered  call or a covered put option
written by the  Trust.  Municipal  Obligations  issued by any one issuer and not
rated by  Moodys or rated  lower  than Baa3 by Moodys  and not rated by S&P or
rated  lower  than BBB by S&P  (Unrated  Moodys  Municipal  Obligations)  may
comprise no more than 4% of total Moodys Eligible Assets;  such Unrated Moodys
Municipal Obligations, if any, together with any Municipal Obligations issued by
the same  issuer  and  rated  BBB by S&P may  comprise  no more than 4% of total
Moodys  Eligible  Assets;  such  BBBrated  Municipal  Obligations  and Unrated
Moodys Municipal  Obligations,  if any, together with any Municipal Obligations
issued by the same  issuer and rated Baa by Moodys or A by S&P may  comprise no
more  than 6% of total  Moodys  Eligible  Assets;  such  BBB,  Baa and  Arated
Municipal  Obligations  and  Unrated  Moodys  Municipal  Obligations,  if  any,
together with any Municipal Obligations issued by the same issuer and rated A by
Moodys or AA by S&P,  may comprise no more than 10% of total  Moodys  Eligible
Assets;  and such BBB,  Baa, A and AArated  Municipal  Obligations  and Unrated
Moodys Municipal  Obligations,  if any, together with any Municipal Obligations
issued by the same issuer and rated Aa by Moodys or  stocktickerAAA by S&P, may
comprise no more than 20% of total Moodys Eligible Assets.  For purposes of the
foregoing sentence,  any Municipal Obligation backed by the guaranty,  letter of
credit or insurance issued by a third party shall be deemed to be issued by such
third party if the issuance of such  thirdparty  credit is the sole determinant
of the rating on such Municipal  Obligations.  Municipal  Obligations  issued by
issuers  located  within a single state or territory and not rated by Moodys or
rated lower than Baa3 by Moodys and not rated by S&P or rated lower than BBB by
S&P may comprise no more than 12% of total Moodys Eligible Assets; such Unrated
Moodys Municipal  Obligations,  if any, together with any Municipal Obligations
issued by issuers  located  within the same state or territory  and rated BBB by
S&P may  comprise  no more  than  12% of total  Moodys  Eligible  Assets;  such
BBBrated Municipal  Obligations and Unrated Moodys Municipal  Obligations,  if
any,  together with any Municipal  Obligations  issued by issuers located within
the same state or  territory  and rated Baa by Moodys or A by S&P, may comprise
no more than 20% of total  Moodys  Eligible  Assets;  such BBB, Baa and Arated
Municipal  Obligations  and  Unrated  Moodys  Municipal  Obligations,  if  any,
together with any Municipal  Obligations  issued by issuers  located  within the
same state or  territory  and rated A by Moodys or AA by S&P,  may  comprise no
more  than 40% of total  Moodys  Eligible  Assets;  and such  BBB,  Baa,  A and
AArated  Municipal  Obligations and Unrated Moodys Municipal  Obligations,  if
any,  together with any Municipal  Obligations  issued by issuers located within
the same state or territory  and rated Aa by Moodys or  stocktickerAAA  by S&P,
may  comprise  no more  than 60% of total  Moodys  Eligible  Assets.  Municipal
Obligations  which are not rated by Moodys or S&P may comprise no more than 40%
of the aggregate  Market Value of Moodys Eligible  Assets;  provided,  however,
that if the  Market  Value  of such  Municipal  Obligations  exceeds  40% of the
aggregate  Market Value of Moodys  Eligible Assets, a portion of such Municipal
Obligations  (selected by the Trust) shall not be  considered  Moodys  Eligible
Assets, so that the Market Value of such Municipal  Obligations  (excluding such
portion) does not exceed 40% of the aggregate  Market Value of Moodys  Eligible
Assets;  provided,  however,  that no such unrated Municipal Obligation shall be
considered a Moodys  Eligible  Asset if such Municipal  Obligation  shall be in
default, which term shall mean for purposes of this definition, either (a) the
nonpayment  by the  issuer  of  interest  or  principal  when  due  or  (b)  the
notification of the Trust by the trustee under the underlying indenture or other
governing  instrument for such Municipal Obligation that the issuer will fail to
pay when due principal or interest on such Municipal Obligation. For purposes of
applying the foregoing  requirements,  a Municipal Obligation shall be deemed to
be rated BBB by S&P if rated BBB, BBB or BBB+ by S&P,  Moodys  Eligible Assets
shall be calculated  without  including  cash, and Municipal  Obligations  rated
stocktickerMIG1,  VMIG1 or P1 or, if not rated by Moodys,  rated  A1+/Aa or
SP1+/AA by S&P,  shall be considered to have a longterm  rating of A. When the
Trust sells a  Municipal  Obligation  and agrees to  repurchase  such  Municipal
Obligation at a future day,  such  Municipal  Obligation  shall be valued at its
Discounted Value for purposes of determining  Moodys  Eligible Assets,  and the
amount of the repurchase price of such Municipal Obligation shall be included as
a  liability  for  purposes  of  calculating   the  Municipal   Preferred  Basic
Maintenance Amount. When the Trust purchases a Moodys Eligible Asset and agrees
to sell it at a future date,  such Eligible  Asset shall be valued at the amount
of cash to be  received by the Trust upon such future  date,  provided  that the
counterparty to the transaction has a longterm debt rating of at least A2 and a
shortterm  debt rating of at least P1 from  Moodys and the  transaction  has a
term of no more than 30 days;  otherwise  such Eligible Asset shall be valued at
the Discounted  Value of such Eligible  Asset.  For purposes of determining  the
aggregate  Discounted Value of Moodys  Eligible  Assets,  such aggregate amount
shall be reduced with respect to any futures contracts as set forth in paragraph
10(a) of this Part I.

         Notwithstanding  the  foregoing,  an  asset  will not be  considered  a
Moodys  Eligible  Asset to the extent it is (i) subject to any  material  lien,
mortgage,   pledge,   security  interest  or  security  agreement  of  any  kind
(collectively,  Liens), except for (a) Liens which are being contested in good
faith by  appropriate  proceedings  and which Moodys has indicated to the Trust
will not affect the status of such asset as a Moodys  Eligible Asset, (b) Liens
for  taxes  that  are not then due and  payable  or that can be paid  thereafter
without  penalty,  (c) Liens to secure  payment  for  services  rendered or cash
advanced to the Trust by Massachusetts  Financial  Services  Company,  Inc., The
Chase Manhattan Bank or the Auction Agent, (d) Liens by virtue of any repurchase
agreement  or futures  contract  and (e) Liens by virtue of the transfer of such
asset that is a Municipal  Obligation by the Trust to a special  purpose  issuer
that, in turn, issues floating rate trust  certificates or other instruments and
corresponding  Inverse  Floaters that  collectively  evidence  interests in such
asset, provided that, for purposes of calculating the total market value of such
asset,  the accrued  interest  of such asset  shall be derived  from the accrued
interest  of the  Inverse  Floaters  representing  interests  therein;  or  (ii)
deposited  irrevocably  for the  payment  of any  liabilities  for  purposes  of
determine the Municipal Preferred Basic Maintenance Amount.

         Moodys  Exposure Period shall mean the period  commencing on a given
Valuation Date and ending 49 days thereafter.

         Moodys  Liquidity  Factor  shall equal the  product,  expressed as a
percentage, of (i) the quotient, expressed as a percentage, of (A) the aggregate
value of the Municipal  Obligations that are transferred by the Trust to special
purpose issuers that, in turn,  issue floating rate trust  certificates or other
instruments  and  corresponding  Inverse  Floaters  that  collectively  evidence
interests in such Municipal  Obligations divided by (B) the total asset value of
the Trust;  multiplied by (ii) the quotient,  measured at their time of original
issuance,  expressed as a  percentage,  of (A) the  aggregate  dollar  amount of
floating rate trust  certificates or other instruments issued by the same issuer
that issued,  and  corresponding  to, the Inverse Floaters issued by the special
purpose issuers  referred to in clause (i)(A) of this definition  divided by (B)
the aggregate value calculated in clause (i)(A) of this  definition;  multiplied
by (iii) 15%.

         Moodys  Volatility  Factor shall mean, as of any Valuation Date, (i)
in the case of any  Minimum  Rate  Period,  any  Special  Rate period of 28 Rate
Period Days or fewer, or any Special Rate Period of 57 Rate Period Days or more,
a multiplicative  factor equal to 275%, except as otherwise provided in the last
sentence of this definition; (ii) in the case of any Special Rate Period of more
than 28 but fewer than 36 Rate Period  Days,  a  multiplicative  factor equal to
203%;  (iii) in the case of any  Special  Rate  Period of more than 35 but fewer
than 43 Rate Period Days,  a  multiplicative  factor equal to 217%;  (iv) in the
case of any  Special  Rate  Period of more than 42 but fewer than 50 Rate Period
Days, a multiplicative  factor equal to 226%; and (v) in the case of any Special
Rate Period of more than 49 but fewer than 57 Rate Period Days, a multiplicative
factor equal to 235%.  If, as a result of the  enactment of changes to the Code,
the  greater  of  the  maximum  marginal  Federal  individual  income  tax  rate
applicable to ordinary income and the maximum marginal Federal  corporate income
tax rate  applicable  to ordinary  income will  increase,  such  increase  being
rounded up to the next five percentage points (the Federal Tax Rate Increase),
until the effective date of such increase,  the Moodys Volatility Factor in the
case of any Rate Period described in (i) above in this definition  instead shall
be determined by reference to the following table:


                                            Federal                  Volatility

                                       Tax Rate Increase               Factor

                                              5%                        295%
                                              10%                       317%
                                              15%                       341%
                                              20%                       369%
                                              25%                       400%
                                              30%                       436%
                                              35%                       477%
                                              40%                       525%




         Municipal  Obligations shall mean Municipal  Obligations as defined
in the Trusts  registration  statement on Form N2 as filed with the Securities
and Exchange Commission on July 16, 1999 (the Registration Statement).

         Municipal  Preferred  shall mean  Municipal  Auction Rate  Cumulative
Preferred Shares,  without par value,  liquidation preference $25,000 per share,
of the Trust.

         Municipal  Preferred  Basic  Maintenance  Amount, as of any Valuation
Date,  shall mean the dollar  amount  equal to the sum of (i) (A) the product of
the number of shares of Municipal Preferred  outstanding on such date multiplied
by $25,000  (plus the  product  of the  number of shares of any other  series of
Preferred  Shares  outstanding  on  such  date  multiplied  by  the  liquidation
preference of such shares),  plus any redemption premium applicable to shares of
Municipal Preferred (or other Preferred Shares) then subject to redemption;  (B)
the aggregate  amount of dividends that will have  accumulated at the respective
Applicable  Rates (whether or not earned or declared) to (but not including) the
first  respective  Dividend  Payment  Dates for  shares of  Municipal  Preferred
outstanding  that  follow  such  Valuation  Date (plus the  aggregate  amount of
dividends,  whether or not earned or  declared,  that will have  accumulated  in
respect of other outstanding  Preferred Shares to, but not including,  the first
respective  dividend  payment  dates for such  other  shares  that  follow  such
Valuation  Date); (C) the aggregate amount of dividends that would accumulate on
shares of each  series  of  Municipal  Preferred  outstanding  from  such  first
respective  Dividend  Payment  Date  therefor  through  the 49th day after  such
Valuation  Date, at the Maximum Rate  (calculated as if such Valuation Date were
the Auction Date for the Rate Period  commencing on such Dividend  Payment Date)
for a Minimum Rate Period of shares of such series to commence on such  Dividend
Payment Date,  assuming,  solely for purposes of the foregoing,  that if on such
Valuation Date the Trust shall have delivered a Notice of Special Rate Period to
the Auction Agent  pursuant to paragraph  4(d)(i) of this Part I with respect to
shares of such series,  such Maximum Rate shall be the higher of (a) the Maximum
Rate for the  Special  Rate  Period of shares of such series to commence on such
Dividend  Payment  Date and (b) the  Maximum  Rate for a Minimum  Rate Period of
shares of such series to commence on such Dividend  Payment Date,  multiplied by
the Volatility Factor applicable to a Minimum Rate Period,  or, in the event the
Trust shall have  delivered a Notice of Special Rate Period to the Auction Agent
pursuant  to  paragraph  4(d)(i)  of this Part I with  respect to shares of such
series  designating  a Special Rate Period  consisting of 49 Rate Period Days or
more, the Volatility  Factor  applicable to a Special Rate Period of that length
(plus the  aggregate  amount of dividends  that would  accumulate at the maximum
dividend  rate or rates on any  other  Preferred  Shares  outstanding  from such
respective dividend payment dates through 49th day after such Valuation Date, as
established by or pursuant to the respective statements  establishing and fixing
the rights and preferences of such other  Preferred  Shares) (except that (1) if
such  Valuation Date occurs at a time when a Failure to Deposit (or, in the case
of  Preferred  Shares other than  Municipal  Preferred,  a failure  similar to a
Failure to Deposit)  has  occurred  that has not been cured,  the  dividend  for
purposes of  calculation  would  accumulate  at the current  dividend  rate then
applicable  to the shares in respect of which such  failure has occurred and (2)
for those days during the period  described in this  subparagraph (C) in respect
of which  the  Applicable  Rate in  effect  immediately  prior to such  Dividend
Payment  Date will  remain in effect (or,  in the case of the  Preferred  Shares
other than Municipal  Preferred,  in respect of which the dividend rate or rates
in effect  immediately  prior to such  respective  dividend  payment  dates will
remain in effect),  the dividend for purposes of calculation would accumulate at
such  Applicable Rate (or other rate or rates, as the case may be) in respect of
those days); (D) the amount of anticipated expenses of the Trust for the 90 days
subsequent  to such  Valuation  Date;  (E) the  amount  of the  Trusts  Maximum
Potential Grossup Payment Liability in respect of shares of Municipal Preferred
(and similar amounts  payable in respect of other  Preferred  Shares pursuant to
provisions  similar to those  contained in paragraph 3 of Part I of this Section
12.1) as of such Valuation  Date;  (F) only for purposes of Section  7(1)(ii) of
Part I of this Article 12, the total  market  value of the  floating  rate trust
certificates or other instruments  corresponding to the Inverse Floaters held by
the Trust as of such  Valuation  Date and issued by the same  issuer that issued
such  Inverse  Floaters,  provided  that the  total  market  value of each  such
floating rate trust  certificate or other instrument is calculated as the sum of
(i) its principal  amount and (ii) the difference of (a) the accrued interest of
the  municipal  security  or  securities  underlying  such  floating  rate trust
certificate or other instrument and the  corresponding  Inverse Floater less (b)
the accrued interest of the corresponding  Inverse Floater;  and (G) any current
liabilities  as of such  Valuation  Date to the extent not  reflected  in any of
(i)(A) through (i)(F) (including, without limitation, any payables for Municipal
Obligations purchased as of such Valuation Date and any liabilities incurred for
the purpose of clearing securities  transactions) less (ii) the value (i.e., for
purposes  of current  Moodys  guidelines,  the face  value of cash,  shortterm
Municipal  Obligations  rated  stocktickerMIG1,  VMIG1 or P1, and  shortterm
securities that are the direct  obligation of the U.S.  government,  provided in
each case that such securities  mature on or prior to the date upon which any of
(i)(A) through (i)(G) become payable,  otherwise the Moodys Discounted Value or
for purposes of current S&P guides, the face value of cash, shortterm municipal
securities  rated  A1+  or  SP1+  and  mature  or  have a  demand  feature
exercisable in 30 days or less, and  shortterm  securities  that are the direct
obligation of the U.S.  government,  provided in each case that such  securities
mature on or prior to the date upon which any of (i)(A)  through  (i)(G)  become
payable,  otherwise  S&Ps  Discounted  Value)  of  any of  the  Trusts  assets
irrevocably  deposited  by the Trust for the  payment  of any of (i)(A)  through
(i)(G).

         Municipal  Preferred Basic Maintenance Cure Date, with respect to the
failure by the Trust to satisfy the Municipal Preferred Basic Maintenance Amount
(as  required  by  paragraph  7(a) of Part I of this  Section  12.1)  as a given
Valuation  Date,  shall mean the second  Business Day following  such  Valuation
Date.

         Municipal  Preferred  Basic  Maintenance  Report  shall mean a report
signed by the  President,  Treasurer,  Controller,  Secretary or any Senior Vice
President  or Vice  President  of the Trust which sets forth,  as of the related
Valuation  Date,  the assets of the Trust,  the Market Value and the  Discounted
Value thereof  (seriatim and in aggregate),  and the Municipal  Preferred  Basic
Maintenance Amount.

         1940 Act shall mean the  Investment  Company Act of 1940,  as amended
from time to time.

         1940 Act Cure  Date,  with  respect  to the  failure  by the Trust to
maintain  the 1940 Act  Municipal  Preferred  Asset  Coverage  (as  required  by
paragraph 7 of this Part I of Section  12.1) as of the last Business Day of each
month, shall mean the last Business Day of the following month.

         1940  Act  Municipal   Preferred  Asset  Coverage  shall  mean  asset
coverage,  as defined in  Section  18(h) of the 1940 Act,  of at least 200% with
respect to all  outstanding  senior  securities of the Trust which are shares of
beneficial interest, including all outstanding shares of Municipal Preferred (or
such other asset coverage as may in the future be specified in or under the 1940
Act as the minimum  asset  coverage  for senior  securities  which are shares or
stock of a closedend  investment company as a condition of declaring  dividends
on its common shares or stock).

         Notice  of  Redemption  shall  mean any  notice  with  respect to the
redemption of shares of Municipal  Preferred pursuant to paragraph 11(c) of this
Part I of Section 12.1.

         Notice of Special Rate Period shall mean any notice with respect to a
Special  Rate Period of shares of  Municipal  Preferred  pursuant  to  paragraph
4(d)(i) of this Part I of Section 12.1.

         Order and Orders  shall have the respective  meanings  specified in
paragraph 1(a) of Part II of this Section 12.1.

         Outstanding shall mean, as of any Auction Date with respect to shares
of any  series of  Municipal  Preferred,  the  number  of shares of such  series
theretofore issued by the Trust except,  without duplication,  (i) any shares of
such  series  theretofore  canceled  or  delivered  to  the  Auction  Agent  for
cancellation  or  redeemed  by the Trust,  (ii) any shares of such  series as to
which the Trust or any Affiliate  thereof shall be an Existing  Holder and (iii)
any shares of such series  represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Trust.

         Persons  shall  mean and  include an  individual,  a  partnership,  a
corporation,  a trust, an unincorporated  association,  a joint venture or other
entity or a government or any agency or political subdivision thereof.

         Potential  Beneficial  Owner,  with  respect to shares of a series of
Municipal  Preferred,  shall mean a customer  of a  BrokerDealer  that is not a
Beneficial  Owner of shares of such series but that wishes to purchase shares of
such series,  or that is a Beneficial Owner of shares of such series that wishes
to purchase additional shares of such series.

         Potential  Holder,  with  respect to shares of a series of  Municipal
Preferred,  shall  mean a  BrokerDealer  (or any such  other  person  as may be
permitted by the Trust) that is not an Existing  Holder of shares of such series
or that is an Existing Holder of shares of such series that wishes to become the
Existing Holder of additional shares of such series.

         Preferred Shares shall mean the preferred shares,  without par value,
of the Trust, and includes the shares of Municipal Preferred.

         Rate  Multiple, for shares of a series of Municipal  Preferred on any
Auction Date for shares of such series, shall mean the percentage, determined as
set forth  below,  based on the  prevailing  rating of shares of such  series in
effect at the close of business on the Business Day next  preceding such Auction
Date:

         Prevailing Rating                                           Percentage

         aa3/AA or higher      110%
         a3/A     125%
         baa3/BBB      150%
         ba3/BB      200%
         Below ba3/BB      250%

provided, however, that in the event the Trust has notified the Auction Agent of
its intent to allocate  income taxable for Federal income tax purposes to shares
of such series prior to the Auction  establishing the Applicable Rate for shares
of such  series,  the  applicable  percentage  in the  foregoing  table shall be
divided by the quantity 1 minus the maximum marginal regular Federal  individual
income tax rate  applicable to ordinary income or the maximum  marginal  regular
Federal  corporate income tax rate applicable to ordinary  income,  whichever is
greater.

         For purposes of this definition, the prevailing rating of shares of a
series of Municipal  Preferred  shall be (i)  aa3/AA or higher if such shares
have a rating  of aa3 or  better  by  Moodys  and AA or better by S&P or the
equivalent  of such ratings by such  agencies or a substitute  rating  agency or
substitute  rating agencies selected as provided below, (ii) if not aa3/AA or
higher,  then  a3/A if such shares have a rating of a3 or better by Moodys
and A or better by S&P or the  equivalent of such ratings by such agencies or a
substitute  rating agency or  substitute  rating  agencies  selected as provided
below,  (iii) if not aa3/AA or higher or a3/A,  then  baa3/BBB  if such
shares have a rating of baa3 or better by Moodys and BBB or better by S&P or
the equivalent of such ratings by such agencies or a substitute rating agency or
substitute  rating agencies selected as provided below, (iv) if not aa3/AA or
higher,  a3/A or baa3/BBB,  then ba3/BB if such shares have a rating of
ba3 or better by Moodys  and BB or better by S&P or the  equivalent  of such
ratings by such  agencies or a substitute  rating  agency or  substitute  rating
agencies  selected  as  provided  below,  and (v) if not  aa3/AA  or  higher,
a3/A,  baa3/BBB,  or ba3/BB, then Below ba3/BB;  provided,  however,
that if such shares are rated by only one rating agency,  the prevailing  rating
will be determined  without  reference to the rating of any other rating agency.
The Trust shall take all  reasonable  action  necessary to enable  either S&P or
Moodys to provide a rating for shares of  Municipal  Preferred.  If neither S&P
nor Moodys shall make such a rating  available,  Salomon Smith Barney,  Inc. or
its successor shall select at least one nationally recognized statistical rating
organization  (as  that  term  is  used  in the  rules  and  regulations  of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended  from time to time) to act as a substitute  rating  agency in respect of
shares of such  series of  Municipal  Preferred,  and the Trust  shall  take all
reasonable  action to enable  such  rating  agency to  provide a rating for such
shares.

         Rate  Period,  with  respect  to  shares  of a  series  of  Municipal
Preferred,  shall mean the Initial  Rate Period of shares of such series and any
Subsequent  Rate Period,  including  any Special Rate Period,  of shares of such
series.

         Rate Period Days, for any Rate Period or Dividend  Period,  means the
number of days that would constitute such Rate Period or Dividend Period but for
the  application  of paragraph  2(d) of Part I of this Section 12.1 or paragraph
4(b) of Part I of this Section 12.1.

         Receivables  for  Municipal  Obligations  Sold  shall  mean  (A)  for
purposes of calculating  Moodys  Eligible  Assets as of any Valuation  Date, no
more than the aggregate of the following:  (i) the book value of receivables for
Municipal  Obligations  sold  as of or  prior  to  such  Valuation  Date if such
receivables are due within five business days of such Valuation Date, and if the
trades which generated such  receivables are (x) settled through  clearing house
firms with respect to which the Trust has received  prior written  authorization
from Moodys or (y) with  counterparties  having a Moodys longterm debt rating
of at least Baa3; and (ii) the Moodys Discounted Value of Municipal Obligations
sold as of or prior to such Valuation Date which generated receivables,  if such
receivables  are due within five business days of such Valuation Date but do not
comply  with  either  of the  conditions  specified  in (i)  above,  and (B) for
purposes of calculating  S&P Eligible  Assets as of any Valuation Date, the book
value  of  receivables  for  Municipal  Obligations  sold as of or prior to such
Valuation  Date if such  receivables  are due within five  business days of such
Valuation Date.

         Redemption Price shall mean the applicable redemption price specified
in paragraph 11(a) or (b) of Part I of this Section 12.1.

         Reference Rate shall mean (i) the higher of the Taxable Equivalent of
the ShortTerm  Municipal Bond Rate and the AA Composite Commercial Paper Rate
in the case of Minimum  Rate  Periods and Special Rate Periods of 28 Rate Period
Days or fewer;  (ii) the AA  Composite  Commercial  Paper  Rate in the case of
Special  Rate  Periods of more than 28 Rate  Period Days but fewer than 183 Rate
Period  Days;  and (iii) the  Treasury  Bill  Rate in the case of  Special  Rate
Periods of more than 182 Rate Period Days but fewer than 365 Rate Period Days.

         Registration Statement has the meaning specified in the definition of
Municipal Obligations.

         S&P means Standard & Poors Ratings Services, a division of
The McGrawHill Companies, Inc., and its successors.

         S&P  Discount  Factor  shall mean,  for purposes of  determining  the
Discounted  Value  of any S&P  Eligible  Asset,  the  percentage  determined  by
reference to the rating on such asset and the  shortest S&P Exposure  Period set
forth  opposite such rating that is the same length as or is longer than the S&P
Exposure Period, in accordance with the table set forth below:

                              Rating Category

Exposure Period        stocktickerAAA*    AA*    A*      BBB*    Unrated**

45 Business Days    190%     195%    210%     250%     220%
25 Business Days    170      175     190      230      220
10 Business Days    155      160     175      215      220
  7 Business Days   150      155     170      210      220
  3 Business Days    130      135     150      190      220

*      S&P rating.

**     S&P  Eligible  Assets  not rated by S&P or rated less than BBB by S&P and
       not rated at least the equivalent of an A rating by another  nationally
       recognized credit rating agency.

         Notwithstanding  the  foregoing,   (i)  the  S&P  Discount  Factor  for
shortterm  Municipal  Obligations  will be  115%,  so  long  as such  Municipal
Obligations  are rated A1+ or SP1+ by S&P and mature or have a demand  feature
exercisable within 30 days or less, 120% if such Municipal Obligations are rated
A1 or SP1 by S&P and mature or have a demand  feature  exercisable  within 30
days or less, or 125% if such Municipal Obligations are not rated by S&P but are
rated VMIG1, P1 or stocktickerMIG1 by Moodys;  provided,  however,  that any
such Moodysrated  shortterm Municipal  Obligations which have demand features
exercisable  within  30 days or less  must be  backed  by a  letter  of  credit,
liquidity facility or guarantee from a bank or other financial  institution with
a shortterm  rating of at least A1+ from S&P; and further  provided  that such
Moodysrated  shortterm Municipal Obligations may comprise no more than 50% of
shortterm  Municipal  Obligations that qualify as S&P Eligible Assets;  (ii) no
S&P  Discount  Factor  will be applied to cash,  futures,  options  and  similar
instruments  or to Receivables  for Municipal  Obligations  Sold;  (iii) the S&P
Discount  Factor for Inverse  Floaters  shall be equal to the product of (A) the
discount factor determined by reference to the table above and (B) the ratio, at
their time of original issuance,  expressed as a fraction,  of (1) the aggregate
dollar  amount  of  floating  rate  trust   certificates  or  other  instruments
corresponding  to and issued by the same issuer as issued such Inverse  Floaters
to (2) the aggregate dollar amount of such Inverse Floaters;  and (iv) except as
set forth in clause (i) above,  in the case of any Municipal  Obligation that is
not rated by S&P but qualifies as an S&P Eligible Asset pursuant to clause (iii)
of that  definition,  such  Municipal  Obligation  will be deemed to have an S&P
rating one full rating  category lower than the S&P rating  category that is the
equivalent of the rating  category in which such Municipal  Obligation is placed
by such other nationally  recognized  credit rating agency.  For purposes of the
foregoing,  Anticipation  Notes  rated  SP1+  or,  if not  rated by S&P,  rated
stocktickerMIG1  or VMIG1  by  Moodys,  which do not  mature or have a demand
feature at par exercisable in 30 days and which do not have a longterm  rating,
shall be considered to be shortterm Municipal Obligations.

         S&P Eligible  Asset shall mean cash  (excluding any cash  irrevocably
deposited by the Trust for the payment of any liabilities  within the meaning of
Municipal  Preferred  Basic  Maintenance  Amount),   Receivables  for  Municipal
Obligations Sold, futures,  options, Inverse Floaters and similar instruments or
a Municipal  Obligation owned by the Trust that (i) is interest bearing and pays
interest at least  semiannually;  (ii) is payable with respect to principal and
interest  in U.S.  Dollars;  (iii) is  publicly  rated  BBB or higher by S&P or,
except in the case of Anticipation  Notes that are Grant  Anticipation  Notes or
Bond  Anticipation  Notes  which  must be  rated  by S&P to be  included  in S&P
Eligible Assets, if not rated by S&P but rated by another nationally  recognized
credit rating agency, is rated at least A by such agency;  (iv) is not part of a
confidentialinformationexposureTagType5private     placement     of    Municipal
Obligations (except in the case of Inverse Floaters); (v) is part of an issue of
Municipal Obligations with an original issue size of at least $20 million or, if
of an issue with an original issue size below $20 million (but in no event below
$10  million),  is issued by an issuer  with a total of at least $50  million of
securities outstanding; and (vi) is not subject to a covered call or covered put
option written by the Trust.  Solely for purposes of this  definition,  the term
Municipal Obligation means any obligation the interest on which is exempt from
regular  Federal income  taxation and which is issued by any of the fifty United
States, the District of Columbia or any of the territories of the United States,
their subdivisions,  counties,  cities,  towns,  villages,  school districts and
agencies  (including  authorities and special  districts created by the states),
and  federally   sponsored   agencies   such  as  local   housing   authorities.
Notwithstanding the foregoing limitations:

                  (1) Municipal  Obligations  (excluding  Escrowed Bonds) of any
         one issuer or guarantor  (excluding  bond insurers) shall be considered
         S&P  Eligible  Assets  only to the  extent  the  Market  Value  of such
         Municipal Obligations does not exceed 10% of the aggregate Market Value
         of S&P Eligible Assets, provided that 2% is added to the applicable S&P
         Discount  Factor  for  every  1% by  which  the  Market  Value  of such
         Municipal  Obligations  exceeds 5% of the aggregate Market Value of S&P
         Eligible  Assets,  and provided that Municipal  Obligations  (excluding
         Escrowed  Bonds) not rated by S&P or rated less than BBB by S&P and not
         rated at least A by another nationally  recognized credit rating agency
         of  any  one  issuer  or  guarantor  (excluding  bond  insurers)  shall
         constitute  S&P Eligible  Assets only to the extent the Market Value of
         such Municipal  Obligations  does not exceed 5% of the aggregate Market
         Value of S&P Eligible Assets;

                  (2) Municipal  Obligations not rated at least BBB or not rated
         by S&P or not rated at least A by another nationally  recognized credit
         rating  agency  shall be  considered  S&P  Eligible  Assets only to the
         extent the Market Value of such Municipal  Obligations  does not exceed
         50% of the  aggregate  Market Value of S&P Eligible  Assets;  provided,
         however, that if the Market Value of such Municipal Obligations exceeds
         50% of the aggregate  Market Value of S&P Eligible Assets, a portion of
         such  Municipal  Obligations  (selected  by  the  Trust)  shall  not be
         considered  S&P  Eligible  Assets,  so that  the  Market  Value of such
         Municipal  Obligations  (excluding such portion) does not exceed 50% of
         the aggregate Market Value of S&P Eligible Assets;

                  (3) Longterm Municipal Obligations (excluding Escrowed Bonds)
         issued by issuers in any one state or territory shall be considered S&P
         Eligible  Assets  only to the  extent  that  the  Market  Value of such
         Municipal Obligations does not exceed 25% of the aggregate Market Value
         of S&P Eligible Assets;

                  (4) Municipal Obligations which are not interest bearing or do
         not pay  interest  at  least  semiannually  shall  be  considered  S&P
         Eligible Assets if rated stocktickerAAA by S&P and

                  (5) A Municipal Obligation that is transferred by the Trust to
         a special  purpose  issuer that,  in turn,  issues  floating rate trust
         certificates or other  instruments and  corresponding  Inverse Floaters
         that collectively evidence interests in such Municipal Obligation shall
         not be considered a S&P Eligible Asset.

         For purposes of  determining  the aggregate  Discounted  Value of S&Ps
Eligible  Assets,  such  aggregate  amount  shall be reduced with respect to any
futures contracts as set forth in paragraph 10(a) of this Part I.

         S&P  Exposure  Period  shall  mean the period  commencing  on a given
Valuation Date and ending three business days thereafter.

         S&P  Volatility  Factor  shall  mean,  as of any  Valuation  Date,  a
multiplicative  factor  equal to (i) 305% in the case of any Minimum Rate Period
or any Special  Rate  Period of 28 Rate  Period Days or fewer;  (ii) 268% in the
case of any Special  Rate Period of more than 28 Rate Period Days but fewer than
183 Rate Period  Days;  and (iii) 204% in the case of any Special Rate Period of
more than 182 Rate Period Days.

         Securities Depository shall mean The Depository Trust Company and its
successors and assigns or any other securities  depository selected by the Trust
which agrees to follow the procedures required to be followed by such securities
depository in connection with shares of Municipal Preferred.

         Sell  Order  and Sell  Orders  shall have the  respective  meanings
specified in paragraph 1(a) of Part II of this Section 12.1.

         Special  Rate Period, with respect to shares of a series of Municipal
Preferred,  shall have the meaning specified in paragraph 4(a) of Part I of this
Section 12.1.

         Special  Redemption  Provisions  shall have the meaning  specified in
paragraph 11(a)(i) of Part I of this Section 12.1.

         Submission  Deadline  shall  mean 1:30 P.M.,  CityplaceNew  York City
time,  on any  Auction  Date or such  other  time on any  Auction  Date by which
BrokerDealers  are required to submit  Orders to the Auction Agent as specified
by the Auction Agent from time to time.

         Submitted Bid and Submitted Bids shall have the respective meanings
specified in paragraph 3(a) of Part II of this Section 12.1.

         Submitted  Hold  Order and  Submitted  Hold  Orders  shall have the
respective meanings specified in paragraph 3(a) of Part II of this Section 12.1.

         Submitted  Order and  Submitted  Orders  shall have the  respective
meanings specified in paragraph 3(a) of Part II of this Section 12.1.

         Submitted  Sell  Order and  Submitted  Sell  Orders  shall have the
respective meanings specified in paragraph 3(a) of Part II of this Section 12.1.

         Subsequent  Rate  Period,  with  respect  to  shares  of a series  of
Municipal  Preferred,  shall mean the period  from and  including  the first day
following  the Initial Rate Period of shares of such series to but excluding the
next Dividend  Payment Date for shares of such series and any period  thereafter
from and  including  one Dividend  Payment Date for shares of such series to but
excluding the next succeeding  Dividend  Payment Date for shares of such series;
provided,  however,  that if any  Subsequent  Rate Period is also a Special Rate
Period,  such term  shall mean the  period  commencing  on the first day of such
Special  Rate  Period  and  ending on the last day of the last  Dividend  Period
thereof.

         Substitute  Commercial  Paper  Dealer  shall mean CS First  Boston or
Morgan Stanley & Co. Incorporated or their respective  affiliates or successors,
if such entity is a commercial  paper dealer;  provided,  however,  that none of
such entities shall be a Commercial Paper Dealer.

         Substitute  U.S.  Government  Securities  Dealer  shall mean CS First
Boston  and  Merrill  Lynch,  Pierce,  Fenner  &  Smith  Incorporated  or  their
respective  affiliates  or  successors,  if  such  entity  is a U.S.  Government
securities dealer; provided, however, that none of such entities shall be a U.S.
Government Securities Dealer.

         Sufficient   Clearing  Bids  shall  have  the  meaning  specified  in
paragraph 3(a) of Part II of this Section 12.1.

         Taxable Allocation shall have the meaning specified in paragraph 3 of
Part I of this Section 12.1.

         Taxable Equivalent of the ShortTerm Municipal Bond Rate, on any date
for any  Minimum  Rate  Period or Special  Rate Period of 28 Rate Period Days or
fewer,  shall mean 90% of the quotient of (A) the per annum rate expressed on an
interest  equivalent basis equal to the S&P Kenny 30 day High Grade Index or any
successor index (the Kenny Index) (provided,  however, that any such successor
index must be  approved  by  Moodys  (if  Moodys is then  rating the shares of
Municipal  Preferred)  and S&P (if S&P is then  rating the  shares of  Municipal
Preferred)), made available for the Business Day immediately preceding such date
but in any event not later than 8:30 A.M.,  New York City time,  on such date by
S&P J.J. Kenny Evaluation  Services or any successor thereto,  based upon 30day
yield evaluations at par of shortterm bonds the interest on which is excludable
for  regular  Federal  Income  tax  purposes  under  the Code,  of high  grade
component  issuers  selected by S&P J.J. Kenny  Evaluation  Services or any such
successor from time to time in its  discretion,  which  component  issuers shall
include,  without  limitation,  issuers of general  obligation  bonds, but shall
exclude any bonds the interest on which  constitutes  an item of tax  preference
under Section 57(a)(5) of the Code, or successor provisions, for purposes of the
alternative  minimum  tax,  divided  by (B) 1.00  minus the  maximum  marginal
regular Federal  individual income tax rate applicable to ordinary income or the
maximum  marginal  regular  Federal  corporate  income  tax rate  applicable  to
ordinary  income (in each case  expressed  as a decimal),  whichever is greater;
provided,  however,  that if the Kenny  Index is not made so  available  by 8:30
A.M., New York City time, on such date by S&P J.J. Kenny Evaluation  Services or
any  successor,  the Taxable  Equivalent of the  ShortTerm  Municipal Bond Rate
shall mean the  quotient  of (A) the per annum  rate  expressed  on an  interest
equivalent  basis equal to the most recent Kenny Index so made available for any
preceding  Business Day,  divided by (B) 1.00 minus the maximum marginal regular
Federal  individual income tax rate applicable to ordinary income or the maximum
marginal regular Federal corporate income tax rate applicable to ordinary income
(in each case expressed as a decimal), whichever is greater.

         Taxable Income shall have the meaning  specified in paragraph 3(c) of
Part II of this Section 12.1.

         Treasury Bill shall mean a direct  obligation of the U.S.  Government
having a maturity at the time of issuance of 364 days or less.

         Treasury  Bill Rate, on any date for any Rate Period,  shall mean (i)
the bond equivalent  yield,  calculated in accordance  with prevailing  industry
convention,  of the rate on the most  recently  auctioned  Treasury  Bill with a
remaining  maturity closest to the length of such Rate Period,  as quoted in The
Wall Street  Journal on such date for the Business Day next preceding such date;
or (ii) in the event  that any such  rate is not  published  in The Wall  Street
Journal,  then  the  bond  equivalent  yield,   calculated  in  accordance  with
prevailing  industry  convention,  as calculated by reference to the  arithmetic
average of the bid price quotations of the most recently auctioned Treasury Bill
with a  remaining  maturity  closest  to the  length  of such  Rate  Period,  as
determined  by bid price  quotations as of the close of business on the Business
Day immediately preceding such date obtained from the U.S. Government Securities
Dealers to the Auction Agent.

         Treasury Note shall mean a direct  obligation of the U.S.  Government
having a maturity  at the time of  issuance  of five years or less but more than
364 days.

         Treasury  Note Rate, on any date for any Rate Period,  shall mean (i)
the yield on the most recently auctioned Treasury Note with a remaining maturity
closest to the length of such Rate Period,  as quoted in The Wall Street Journal
on such date for the Business Day next preceding such date; or (ii) in the event
that any such rate is not published in The Wall Street  Journal,  then the yield
as calculated by reference to the arithmetic average of the bid price quotations
of the most recently  auctioned  Treasury Note with a remaining maturity closest
to the length of such Rate Period,  as determined by bid price  quotations as of
the close of  business  on the  Business  Day  immediately  preceding  such date
obtained from the U.S.  Government  Securities  Dealers to the Auction Agent. If
any  U.S.  Government  Securities  Dealer  does  not  quote a rate  required  to
determine the Treasury  Bill Rate of the Treasury  Note Rate,  the Treasury Bill
Rate or the Treasury Note Rate shall be determined on the basis of the quotation
or quotations  furnished by the remaining U.S.  Government  Securities Dealer or
U.S. Government Securities Dealers and any Substitute U.S. Government Securities
Dealers  selected by the Trust to provide such rate or rates not being  supplied
by any U.S. Government  Securities Dealer or U.S. Government Securities Dealers,
as the case may be, or, if the Trust does not  select any such  Substitute  U.S.
Government  Securities Dealer or Substitute U.S. Government  Securities Dealers,
by the remaining U.S. Government Securities Dealer or U.S. Government Securities
Dealers.

U.S.  Government  Securities  Dealer  shall mean  Lehman  Government  Securities
Incorporated,  Goldman,  Sachs & Co.,  Salomon  Smith  Barney  Inc.  and  Morgan
Guaranty  Trust  Company of  StateNew  York or their  respective  affiliates  or
successors,  if such entity is a  countryregionplaceU.S.  government  securities
dealer.

         Valuation  Date shall mean, for purposes of  determining  whether the
Trust is maintaining the Municipal  Preferred  Basic  Maintenance  Amount,  each
Business Day.

         Variation  Margin means,  in connection  with an outstanding  futures
contract owned or sold by the Trust, the amount of cash or securities paid to or
received from a broker  (subsequent to the Initial Margin  payment) from time to
time as the price of such futures contract fluctuates.

         Volatility  Factor shall mean, as of any Valuation  Date, the greater
of the Moodys Volatility Factor and the S&P Volatility Factor.

         Voting  Period shall have the meaning  specified in paragraph 5(b) of
this Part I of Section 12.1.

         Winning Bid Rate shall have the meaning  specified in paragraph  3(a)
of Part II of this Section 12.1.

2.       Dividends.


(1)  Ranking.  The  shares of a series of  Municipal  Preferred  shall rank on a
parity with each other,  with shares of any other series of Municipal  Preferred
and with  shares of any other  series of  Preferred  Shares as to the payment of
dividends by the Trust.

(2) Cumulative Cash Dividends.  The Holders of shares of Municipal  Preferred of
any series shall be entitled to receive,  when,  as and if declared by the Board
of Trustees,  out of funds legally  available  therefor in  accordance  with the
Declaration,  these Bylaws and applicable law, cumulative cash dividends at the
Applicable  Rate  for  shares  of  such  series,  determined  as  set  forth  in
subparagraph  (e) of this  paragraph  2, and no more  (except  to the extent set
forth in paragraph 3 of this Part I), payable on the Dividend Payment Dates with
respect to shares of such series determined pursuant to subparagraph (d) of this
paragraph 2. Holders of shares of Municipal  Preferred  shall not be entitled to
any dividend,  whether  payable in cash,  property or shares,  in excess of full
cumulative dividends,  as herein provided, on shares of Municipal Preferred.  No
interest,  or sum of money in lieu of  interest,  shall be payable in respect of
any dividend  payment or payments on shares of Municipal  Preferred which may be
in arrears,  and, except to the extent set forth in subparagraph  (e)(i) of this
paragraph 2, no additional  sum of money shall be payable in respect of any such
arrearage.

(3)      Dividends Cumulative From Date of Original Issue.
Dividends on shares of Municipal Preferred of any series shall accumulate

at the Applicable Rate for shares of such series from the Date of
Original Issue thereof.

(4) Dividend Payment Dates and Adjustments  Thereof.  The Dividend Payment Dates
with  respect  to shares of a series of  Municipal  Preferred  shall be  Monday,
datelstransMonth7Day26Year1999July  26,  1999 and each  Monday  thereafter  with
respect to shares of Series F Municipal Preferred; provided, however, that

(1)      (A) if the Monday on which  dividends would otherwise be payable is not
         a Business Day, then such dividends  shall be payable on such shares on
         the first Business Day that falls after such Monday; and

(2)      notwithstanding  the foregoing  provisions of this paragraph  2(d), the
         Trust in its  discretion  may establish  the Dividend  Payment Dates in
         respect of any Special  Rate Period of shares of a series of  Municipal
         Preferred  consisting  of  more  than 28 Rate  Period  Days;  provided,
         however,  that such  dates  shall be set forth in the Notice of Special
         Rate Period  relating to such Special Rate Period,  as delivered to the
         Auction Agent,  which Notice of Special Rate Period shall be filed with
         the  Secretary  of the Trust;  and further  provided  that (1) any such
         Dividend Payment Date shall be a Business Day and (2) the last Dividend
         Payment  Date in  respect  of such  Special  Rate  Period  shall be the
         Business Day immediately  following the last day thereof,  as such last
         day is determined in accordance with subparagraph (b) of paragraph 4 of
         this Part I.

(5)      Dividend Rates and Calculation of Dividends.


(1)      Dividend Rates.  The dividend rate on shares of Municipal  Preferred of
         any series during the period from and after the Date of Original  Issue
         of shares of such series to and  including  the last day of the Initial
         Rate  Period of shares  of such  series  shall be equal to the rate per
         annum  set  forth  with   respect  to  shares  of  such  series   under
         Designation in this Part I. For each Subsequent Rate Period of shares
         of such series  thereafter,  the dividend rate on shares of such series
         shall be equal to the rate per annum that  results  from an Auction for
         shares  of  such  series  on  the  Auction  Date  next  preceding  such
         Subsequent Rate Period; provided, however, that if:

                           (A) an Auction for any such Subsequent Rate Period is
                  not held for any reason  other than as  described  below,  the
                  dividend  rate on shares of such  series  for such  Subsequent
                  Rate Period will be the Maximum Rate for shares of such series
                  on the Auction Date therefor;

                           (B) any Failure to Deposit  shall have  occurred with
                  respect  to  shares  of such  series  during  any Rate  Period
                  thereof (other than any Special Rate Period consisting of more
                  than 364 Rate Period Days or any Rate  Period  succeeding  any
                  Special  Rate Period  consisting  of more than 364 Rate Period
                  Days during which a Failure to Deposit  occurred  that has not
                  been cured),  but, prior to 12:00 Noon, New York City time, on
                  the third Business Day next  succeeding the date on which such
                  Failure to Deposit  occurred,  such  Failure to Deposit  shall
                  have been cured in accordance  with  subparagraph  (f) of this
                  paragraph 2 and the Trust shall have paid to the Auction Agent
                  a late charge (Late  Charge) equal to the sum of (1) if such
                  Failure to Deposit  consisted of the failure  timely to pay to
                  the Auction Agent the full amount of dividends with respect to
                  any Dividend  Period of the shares of such  series,  an amount
                  computed by multiplying (x) 200% of the Reference Rate for the
                  Rate Period during which such Failure to Deposit occurs on the
                  Dividend  Payment  Date  for  such  Dividend  Period  by (y) a
                  fraction,  the  numerator of which shall be the number of days
                  for  which  such  Failure  to  Deposit  has not been  cured in
                  accordance   with   subparagraph   (f)  of  this  paragraph  2
                  (including   the  day  such  Failure  to  Deposit  occurs  and
                  excluding  the day such  Failure  to Deposit is cured) and the
                  denominator  of which  shall  be 360,  and  applying  the rate
                  obtained against the aggregate  Liquidation  Preference of the
                  outstanding  shares of such series and (2) if such  Failure to
                  Deposit  consisted of the failure timely to pay to the Auction
                  Agent the  Redemption  Price of the  shares,  if any,  of such
                  series for which Notice of  Redemption  has been mailed by the
                  Trust  pursuant to  paragraph  11(c) of this Part I, an amount
                  computed by multiplying (x) 200% of the Reference Rate for the
                  Rate Period during which such Failure to Deposit occurs on the
                  redemption  date by (y) a  fraction,  the  numerator  of which
                  shall be the number of days for which such  Failure to Deposit
                  is not  cured  in  accordance  with  subparagraph  (f) of this
                  paragraph 2 (including  the day such Failure to Deposit occurs
                  and  excluding  the day such  Failure to Deposit is cured) and
                  the  denominator  of which shall be 360, and applying the rate
                  obtained against the aggregate  Liquidation  Preference of the
                  outstanding  shares of such series to be redeemed,  no Auction
                  will be held in  respect  of  shares  of such  series  for the
                  Subsequent  Rate  Period  thereof  and the  dividend  rate for
                  shares of such series for such  Subsequent Rate Period will be
                  the Maximum Rate for shares of such series on the Auction Date
                  for such Subsequent Rate Period;

                           (C) any Failure to Deposit  shall have  occurred with
                  respect  to  shares  of such  series  during  any Rate  Period
                  thereof (other than any Special Rate Period consisting of more
                  than 364 Rate Period Days or any Rate  Period  succeeding  any
                  Special  Rate Period  consisting  of more than 364 Rate Period
                  Days during which a Failure to Deposit  occurred  that has not
                  been cured),  and, prior to 12:00 Noon, New York City time, on
                  the third Business Day next  succeeding the date on which such
                  Failure to Deposit occurred, such Failure to Deposit shall not
                  have been cured in accordance  with  subparagraph  (f) of this
                  paragraph  2 or the Trust  shall not have paid the  applicable
                  Late Charge to the Auction  Agent,  no Auction will be held in
                  respect of shares of such series for the first Subsequent Rate
                  Period  thereof  thereafter  (or for any Rate  Period  thereof
                  thereafter  to and  including the Rate Period during which (1)
                  such   Failure  to  Deposit  is  cured  in   accordance   with
                  subparagraph  (f) of this  paragraph  2 and (2) the Trust pays
                  the applicable Late Charge to the Auction Agent (the condition
                  set  forth  in this  clause  (2) to  apply  only in the  event
                  Moodys is rating such shares at the time the Trust cures such
                  Failure to  Deposit),  in each case no later than 12:00  Noon,
                  New York City time,  on the fourth  Business  Day prior to the
                  end of such Rate Period),  and the dividend rate for shares of
                  such series for each such  Subsequent  Rate Period  shall be a
                  rate per annum  equal to the  Maximum  Rate for shares of such
                  series on the  Auction  Date for such  Subsequent  Rate Period
                  (but with the prevailing rating for shares of such series, for
                  purposes of determining  such Maximum Rate, being deemed to be
                  Below ba3/BB); or

                           (D) any Failure to Deposit  shall have  occurred with
                  respect to shares of such series  during a Special Rate Period
                  thereof  consisting  of more  than 364 Rate  Period  Days,  or
                  during any Rate Period  thereof  succeeding  any Special  Rate
                  Period  consisting  of more than 364 Rate  Period  Days during
                  which a Failure to Deposit  occurred  that has not been cured,
                  and,  prior to 12:00 Noon,  New York City time,  on the fourth
                  Business  Day  preceding  the Auction Date for the Rate Period
                  subsequent to such Rate Period,  such Failure to Deposit shall
                  not have been cured in  accordance  with  subparagraph  (f) of
                  this  paragraph 2 or, in the event Moodys is then rating such
                  shares,  the Trust  shall not have  paid the  applicable  Late
                  Charge to the Auction Agent (such Late Charge, for purposes of
                  this  subparagraph  (D),  to be  calculated  by using,  as the
                  Reference Rate, the Reference Rate applicable to a Rate Period
                  (x)  consisting  of more than 182 Rate  Period  Days but fewer
                  than 365 Rate  Period Days and (y)  commencing  on the date on
                  which the Rate Period during which  Failure to Deposit  occurs
                  commenced),  no  Auction  will be held in respect of shares of
                  such series for such  Subsequent  Rate Period (or for any Rate
                  Period  thereof  thereafter  to and  including the Rate Period
                  during   which  (1)  such  Failure  to  Deposit  is  cured  in
                  accordance with  subparagraph  (f) of this paragraph 2 and (2)
                  the Trust pays the applicable Late Charge to the Auction Agent
                  (the  condition  set forth in this clause (2) to apply only in
                  the event  Moodys is rating such shares at the time the Trust
                  cures  such  Failure to  Deposit),  in each case no later than
                  12:00 Noon,  New York City time,  on the fourth  Business  Day
                  prior to the end of such Rate  Period),  and the dividend rate
                  for shares of such series for each such Subsequent Rate Period
                  shall be a rate per annum equal to the Maximum Rate for shares
                  of such series on the Auction  Date for such  Subsequent  Rate
                  Period  (but with the  prevailing  rating  for  shares of such
                  series,  for purposes of determining  such Maximum Rate, being
                  deemed to be Below  ba3/BB)  (the rate per annum of which
                  dividends  are  payable  on shares  of a series  of  Municipal
                  Preferred for any Rate Period thereof being herein referred to
                  as the Applicable Rate for shares of such series).

(2)      Calculation of Dividends.  The amount of dividends per share payable on
         shares  of a  series  of  Municipal  Preferred  on any  date  on  which
         dividends  shall be payable on shares of such series  shall be computed
         by multiplying  the Applicable Rate for shares of such series in effect
         for such Dividend Period or Dividend  Periods or part thereof for which
         dividends  have not been paid by a  fraction,  the  numerator  of which
         shall be the number of days in such Dividend Period or Dividend Periods
         or part  thereof  and the  denominator  of  which  shall be 365 if such
         Dividend  Period  consists  of 7 Rate Period Days and 360 for all other
         Dividend Periods, and applying the rate obtained against $25,000.

(6) Curing a Failure to Deposit.  A Failure to Deposit with respect to shares of
a series of  Municipal  Preferred  shall  have been  cured (if such  Failure  to
Deposit  is not  solely  due to the  willful  failure  of the  Trust to make the
required  payments  to the  Auction  Agent)  with  respect to any Rate Period of
shares of such  series if,  within the  respective  time  periods  described  in
subparagraph  (e)(i)  of this  paragraph  2, the  Trust  shall  have paid to the
Auction Agent (A) all accumulated and unpaid  dividends on shares of such series
and (B) without  duplication,  the Redemption Price for shares,  if any, of such
series for which Notice of Redemption  has been mailed by the Trust  pursuant to
paragraph  11(c)  of  Part I of this  Section  12.1  of the  Bylaws;  provided,
however, that the foregoing clause (B) shall not apply to the Trusts failure to
pay the  Redemption  Price in respect of shares of Municipal  Preferred when the
related  Redemption Notice provides that redemption of such shares is subject to
one or more conditions precedent and any such condition precedent shall not have
been  satisfied at the time or times and in the manner  specified in such Notice
of Redemption.

(7)  Dividend  Payments  by Trust to Auction  Agent.  The Trust shall pay to the
Auction  Agent,  not later than 12:00 Noon,  New York City time, on the Business
Day next  preceding  each  Dividend  Payment  Date  for  shares  of a series  of
Municipal Preferred, an aggregate amount of funds available on the next Business
Day in The City of New York, New York,  equal to the dividends to be paid to all
Holders of shares of such series on such Dividend Payment Date.

(8) Auction Agent as Trustee of Dividend  Payments by Trust.  All moneys paid to
the Auction  Agent for the payment of dividends  (or for the payment of any Late
Charge) shall be held in trust for the payment of such  dividends  (and any such
Late  Charge) by the Auction  Agent for the benefit of the Holders  specified in
subparagraph  (i) of this  paragraph 2. Any moneys paid to the Auction  Agent in
accordance  with the  foregoing  but not  applied  by the  Auction  Agent to the
payment of dividends (and any such Late Charge) will, to the extent permitted by
law,  be repaid  to the Trust at the end of 90 days from the date on which  such
moneys were so to have been applied.

(9) Dividends  Paid to Holders.  Each dividend on shares of Municipal  Preferred
shall be paid on the Dividend  Payment Date  therefor to the Holders  thereof as
their names  appear on the record  books of the Trust on the  Business  Day next
preceding such Dividend Payment Date.

(10) Dividends Credited Against Earliest  Accumulated But Unpaid Dividends.  Any
dividend  payment made on shares of Municipal  Preferred shall first be credited
against the earliest  accumulated but unpaid  dividends due with respect to such
shares.  Dividends in arrears for any past  Dividend  Period may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to the
Holders as their names appear on the record books of the Trust on such date, not
exceeding 15 days  preceding  the payment date  thereof,  as may be fixed by the
Board of Trustees.

(11) Dividends Designated as ExemptInterest  Dividends.  Dividends on shares of
Municipal  Preferred shall be designated as exemptinterest  dividends up to the
amount of taxexempt  income of the Trust,  to the extent  permitted by, and for
purposes of, Section 852 of the Code.

3.       Grossup Payments.


         Holders of shares of Municipal  Preferred shall be entitled to receive,
when,  as and if  declared  by the  Board  of  Trustees,  out of  funds  legally
available  therefor  in  accordance  with the  Declaration,  these  Bylaws  and
applicable law,  dividends in an amount equal to the aggregate Grossup Payments
as follows:

(1) Minimum  Rate  Periods and  Special  Rate  Periods of 28 Rate Period Days or
Fewer.  If, in the case of any Minimum Rate Period or any Special Rate Period of
28 Rate Period Days or fewer,  the Trust allocates any net capital gain or other
income  taxable for Federal  income tax purposes to a dividend paid on shares of
Municipal  Preferred  without having given advance notice thereof to the Auction
Agent as provided in paragraph 5 of Part II of this Section of the Bylaws (such
allocation being referred to herein as a Taxable  Allocation) solely by reason
of the fact  that  such  allocation  is made  retroactively  as a result  of the
redemption of all or a portion of the outstanding shares of Municipal  Preferred
or the  liquidation  of the  Trust,  the  Trust  shall,  prior to the end of the
calendar year in which such  dividend was paid,  provide  notice  thereof to the
Auction  Agent and direct the  Trusts  dividend  disbursing  agent to send such
notice with a Grossup  Payment to each Holder of such shares that was  entitled
to such dividend  payment during such calendar year at such Holders  address as
the same appears or last appeared on the record books of the Trust.

(2) Special Rate  Periods of More Than 28 Rate Period  Days.  If, in the case of
any  Special  Rate Period of more than 28 Rate  Period  Days,  the Trust makes a
Taxable  Allocation  to a dividend  paid on shares of Municipal  Preferred,  the
Trust shall,  prior to the end of the calendar  year in which such  dividend was
paid,  provide  notice  thereof to the  Auction  Agent and  direct  the  Trusts
dividend  disbursing  agent to send such notice with a Grossup  Payment to each
Holder of shares that was entitled to such dividend payment during such calendar
year at such Holders address as the same appears or last appeared on the record
books of the Trust.

(3) No Grossup Payments In the Event of a Reallocation.  The Trust shall not be
required to make Grossup Payments with respect to any net capital gain or other
taxable income  determined by the Internal  Revenue Service to be allocable in a
manner different from that allocated by the Trust.

4.       Designation of Special Rate Periods.


(1) Length of and  Preconditions  for Special  Rate  Period.  The Trust,  at its
option,  may  designate  any  succeeding  Subsequent  Rate Period of shares of a
series of Municipal Preferred as a Special Rate Period consisting of a specified
number of Rate Period Days  evenly  divisible  by seven and not more than 1,820,
subject to adjustment  as provided in  subparagraph  (b) of this  paragraph 4. A
designation  of a Special  Rate  Period  shall be  effective  only if (A) notice
thereof shall have been given in accordance with subparagraphs (c) and (d)(i) of
this  paragraph 4, (B) an Auction for shares of such series shall have been held
on the Auction Date immediately preceding the first day of such proposed Special
Rate Period and  Sufficient  Clearing  Bids for shares of such series shall have
existed in such  Auction,  and (C) if any Notice of  Redemption  shall have been
mailed by the Trust  pursuant to paragraph  11(c) of this Part I with respect to
any shares of such  series,  the  Redemption  Price with  respect to such shares
shall have been deposited with the Auction Agent.  In the event the Trust wishes
to designate  any  succeeding  Subsequent  Rate Period for shares of a series of
Municipal  Preferred  as a Special Rate Period  consisting  of more than 28 Rate
Period Days,  the Trust shall notify S&P (if S&P is then rating such series) and
Moodys (if Moodys is then rating such  series) in advance of the  commencement
of such  Subsequent  Rate  Period  that  the  Trust  wishes  to  designate  such
Subsequent Rate Period as a Special Rate Period and shall provide S&P (if S&P is
then  rating such  series)  and Moodys (if Moodys is then rating such  series)
with such documents as either may request.

(2)  Adjustment of Length of Special Rate Period.  In the event the Trust wishes
to  designate a Subsequent  Rate Period as a Special  Rate  Period,  but the day
following  what would  otherwise  be the last day of such Special Rate Period is
not (a) a Monday  that is a  Business  Day in the case of a series of  Municipal
Preferred  designated as Series F Municipal Preferred in this Part I, then the
Trust shall  designate  such  Subsequent  Rate  Period as a Special  Rate Period
consisting  of the period  commencing  on the first day following the end of the
immediately  preceding  Rate  Period  and  ending  on the first  Sunday  that is
followed by a Monday that is a Business Day  preceding  what would  otherwise be
such last day, in the case of Series F Municipal Preferred.

(3) Notice of Proposed  Special Rate Period.  If the Trust proposes to designate
any  succeeding  Subsequent  Rate  Period of  shares  of a series  of  Municipal
Preferred  as a  Special  Rate  Period  pursuant  to  subparagraph  (a) of  this
paragraph 4, not less than 20 (or such lesser number of days as may be agreed to
from time to time by the Auction  Agent) nor more than 30 days prior to the date
the Trust  proposes to  designate  as the first day of such  Special Rate Period
(which shall be such day that would otherwise be the first day of a Minimum Rate
Period), notice shall be (i) published or caused to be published by the Trust in
a newspaper of general circulation to the financial community in The City of New
York, New York,  which carries  financial  news, and (ii) mailed by the Trust by
firstclass mail, postage prepaid, to the Holders of shares of such series. Each
such notice  shall state (A) that the Trust may exercise its option to designate
a succeeding  Subsequent  Rate Period of shares of such series as a Special Rate
Period,  specifying  the first day thereof and (B) that the Trust will, by 11:00
A.M.,  New York City time, on the second  Business Day next  preceding such date
(or by such  later  time or date,  or both,  as may be agreed to by the  Auction
Agent)  notify the  Auction  Agent of either (x) its  determination,  subject to
certain  conditions,  to  exercise  such  option,  in which case the Trust shall
specify the Special  Rate Period  designated,  or (y) its  determination  not to
exercise such option.

(4) Notice of Special Rate Period. No later than 11:00 A.M., New York City time,
on the second Business Day next preceding the first day of any proposed  Special
Rate Period of shares of a series of Municipal  Preferred as to which notice has
been given as set forth in  subparagraph  (c) of this paragraph 4 (or such later
time or date,  or both,  as may be agreed to by the  Auction  Agent),  the Trust
shall deliver to the Auction Agent either:

(1)      a notice  (Notice of Special Rate Period)  stating (A) that the Trust
         has determined to designate the next  succeeding  Rate Period of shares
         of such series as a Special  Rate Period,  specifying  the same and the
         first day thereof,  (B) the Auction Date immediately prior to the first
         day of such  Special  Rate  Period,  (C) that such  Special Rate Period
         shall not  commence if (1) an Auction  for shares of such series  shall
         not be held on such  Auction  Date for any reason or (2) an Auction for
         shares of such series shall be held on such Auction Date but Sufficient
         Clearing  Bids  for  shares  of such  series  shall  not  exist in such
         Auction,  (D) the scheduled  Dividend  Payment Dates for shares of such
         series  during such Special Rate Period and (E) the Special  Redemption
         Provisions,  if any,  applicable to shares of such series in respect of
         such Special Rate Period;  such notice to be accompanied by a Municipal
         Preferred  Basic  Maintenance  Report  showing  that,  as of the  third
         Business Day next preceding such proposed Special Rate Period,  Moodys
         Eligible  Assets  (if  Moodys  is then  rating  such  series)  and S&P
         Eligible  Assets  (if S&P is then  rating  such  series)  each  have an
         aggregate  Discounted  Value at least equal to the Municipal  Preferred
         Basic Maintenance Amount as of such Business Day (assuming for purposes
         of the foregoing  calculation  that (a) the Maximum Rate is the Maximum
         Rate on such Business Day as if such Business Day were the Auction Date
         for the  proposed  Special Rate  Period,  and (b) the Moodys  Discount
         Factors  applicable  to  Moodys  Eligible  Assets  are  determined  by
         reference to the first Exposure  Period longer than the Exposure Period
         then applicable to the Trust, as described in the definition of Moodys
         Discount Factor herein); or

(2)      a notice  stating  that the Trust has  determined  not to exercise  its
         option to  designate a Special Rate Period of shares of such series and
         that the next  succeeding Rate Period of shares of such series shall be
         a Minimum Rate Period.

(5)  Failure to Deliver  Notice of Special  Rate  Period.  If the Trust fails to
deliver either of the notices  described in  subparagraphs  (d)(i) or (d)(ii) of
this  paragraph  4 (and,  in the case of the notice  described  in  subparagraph
(d)(i) of this paragraph 4, a Municipal  Preferred Basic  Maintenance  Report to
the effect  set forth in such  subparagraph  (if  either  Moodys or S&P is then
rating the series in question))  with respect to any designation of any proposed
Special Rate Period to the Auction  Agent by 11:00 A.M.,  New York City time, on
the second  Business Day next  preceding the first day of such proposed  Special
Rate Period (or by such later time or date,  or both, as may be agreed to by the
Auction  Agent),  the Trust  shall be deemed to have  delivered  a notice to the
Auction  Agent with  respect to such Special Rate Period to the effect set forth
in subparagraph  (d)(ii) of this paragraph 4. In the event the Trust delivers to
the Auction Agent a notice described in subparagraph (d)(i) of this paragraph 4,
it shall file a copy of such notice  with the  Secretary  of the Trust,  and the
contents  of such notice  shall be binding on the Trust.  In the event the Trust
delivers to the Auction Agent a notice described in subparagraph (d)(ii) of this
paragraph  4, the Trust will  provide  Moodys  (if  Moodys is then  rating the
series in  question)  and S&P (if S&P is then  rating the series in  question) a
copy of such notice.

5.       Voting Rights.


(1) One Vote Per Share of Municipal  Preferred.  Except as otherwise provided in
the  Declaration,  this  paragraph 5 or as  otherwise  required by law, (i) each
Holder of shares of Municipal  Preferred  shall be entitled to one vote for each
share of Municipal  Preferred held by such Holder on each matter  submitted to a
vote of shareholders of the Trust, and (ii) the holders of outstanding Preferred
Shares,  including each share of Municipal Preferred, and of Common Shares shall
vote together as a single class; provided,  however, that, at any meeting of the
shareholders  of the Trust held for the  election  of  trustees,  the holders of
outstanding  Preferred Shares,  including  Municipal  Preferred,  represented in
person  or by  proxy at said  meeting,  shall be  entitled,  as a class,  to the
exclusion  of the  holders  of all other  securities  and  classes  of shares of
beneficial  interest  of the Trust,  to elect two  trustees  of the Trust,  each
Preferred  Share,  including  each share of Municipal  Preferred,  entitling the
holder thereof to one vote. Subject to subparagraph (b) of this paragraph 5, the
holders of outstanding Common Shares and Preferred Shares,  including  Municipal
Preferred,  voting  together as a single  class,  shall elect the balance of the
trustees.

(2)      Voting For Additional Trustees.


(1)      Voting  Period.  During  any  period  in  which  any one or more of the
         conditions  described in subparagraphs  (A) or (B) of this subparagraph
         (b)(i) shall exist (such  period being  referred to herein as a Voting
         Period),  the number of  trustees  constituting  the Board of Trustees
         shall be  automatically  increased  by the smallest  number that,  when
         added  to the  two  trustees  elected  exclusively  by the  holders  of
         Preferred  Shares,  including  shares  of  Municipal  Preferred,  would
         constitute  a majority of the Board of Trustees as so increased by such
         smallest  number;  and  the  holders  of  Preferred  Shares,  including
         Municipal  Preferred,  shall  be  entitled,  voting  as  a  class  on a
         onevotepershare  basis (to the exclusion of the holders of all other
         securities and classes of shares of beneficial  interest of the Trust),
         to elect such smallest number of additional trustees, together with the
         two trustees  that such holders are in any event  entitled to elect.  A
         Voting Period shall commence:

                           (A) if at  the  close  of  business  on any  dividend
                  payment date accumulated  dividends  (whether or not earned or
                  declared)  on  any  outstanding  Preferred  Share,   including
                  Municipal  Preferred,  equal  to  at  least  two  full  years
                  dividends  shall  be due and  unpaid  and  sufficient  cash or
                  specified  securities  shall not have been  deposited with the
                  Auction Agent for the payment of such  accumulated  dividends;
                  or

                           (B) if at any time  holders of  Preferred  Shares are
                  entitled  under  the  1940  Act to  elect  a  majority  of the
                  trustees of the Trust.

Upon the  termination  of a Voting Period,  the voting rights  described in this
subparagraph  (b)(i) shall cease,  subject always,  however, to the revesting of
such voting  rights in the Holders  upon the  further  occurrence  of any of the
events described in this subparagraph (b)(i).

(2)      Notice of Special Meeting.  As soon as practicable after the accrual of
         any  right of the  holders  of  Preferred  Shares  to elect  additional
         trustees as described in  subparagraph  (b)(i) of this paragraph 5, the
         Trust shall notify the Auction Agent and the Auction Agent shall call a
         special  meeting of such  holders,  by mailing a notice of such special
         meeting to such  holders,  such meeting to be held not less than 10 nor
         more than 20 days  after the date of  mailing  of such  notice.  If the
         Trust fails to send such notice to the Auction  Agent or if the Auction
         Agent  does not call  such a special  meeting,  it may be called by any
         such holder on like notice. The record date for determining the holders
         entitled to notice of and to vote at such special  meeting shall be the
         close of business on the fifth  Business Day preceding the day on which
         such notice is mailed.  At any such special meeting and at each meeting
         of holders of  Preferred  Shares held  during a Voting  Period at which
         trustees are to be elected,  such holders,  voting  together as a class
         (to the exclusion of the holders of all other securities and classes of
         shares of  beneficial  interest  of the  Trust),  shall be  entitled to
         elected the number of trustees  prescribed  in  subparagraph  (b)(i) of
         this paragraph 5 on a onevotepershare basis.

(3)      Terms of  Office  of  Existing  Trustees.  The  terms of  office of all
         persons who are trustees of the Trust at the time of a special  meeting
         of Holders  and  holders of other  Preferred  Shares to elect  trustees
         shall  continue,  notwithstanding  the  election at such meeting by the
         Holders and such other  holders of the number of trustees that they are
         entitled  to elect,  and the persons so elected by the Holders and such
         other holders,  together with the two incumbent trustees elected by the
         Holders and such other  holders of Preferred  Shares and the  remaining
         incumbent  trustees  elected by the  Holders  of the Common  Shares and
         Preferred  Shares,  shall  constitute the duly elected  trustees of the
         Trust.

(4)      Terms of Office of Certain  Trustees to Terminate  Upon  Termination of
         Voting Period.  Simultaneously with the termination of a Voting Period,
         the term of office of the  additional  trustees  elected by the Holders
         and holders of other Preferred  Shares pursuant to subparagraph  (b)(i)
         of this  paragraph 5 shall  terminate,  the  remaining  trustees  shall
         constitute  the  trustees  of the  Trust and the  voting  rights of the
         Holders and such other holders to elect additional trustees pursuant to
         subparagraph  (b)(i) of this  paragraph 5 shall  cease,  subject to the
         provisions  of  the  last  sentence  of  subparagraph  (b)(i)  of  this
         paragraph 5.

(3)      Holders of Municipal Preferred To Vote on Certain Other Matters.


(1)      Increases  in  Capitalization.  So  long  as any  shares  of  Municipal
         Preferred are outstanding, the Trust shall not, without the affirmative
         vote or consent of the  Holders of at least a majority of the shares of
         Municipal  Preferred  outstanding  at the time,  in person or by proxy,
         either in  writing or at a meeting,  voting as a  separate  class:  (a)
         authorize,  create or issue any class or series of shares ranking prior
         to or on a parity with shares of  Municipal  Preferred  with respect to
         the  payment  of   dividends  or  the   distribution   of  assets  upon
         dissolution,  liquidation or winding up of the affairs of the Trust, or
         authorize, create or issue additional shares of any series of Municipal
         Preferred (except that,  notwithstanding the foregoing,  but subject to
         the  provisions  of  paragraph  10(c)  of this  Part I,  the  Board  of
         Trustees,  without  the vote or  consent of the  Holders  of  Municipal
         Preferred,  may from time to time  authorize and create,  and the Trust
         may  from  time to time  issue,  additional  shares  of any  series  of
         Municipal Preferred or classes or series of Preferred Shares ranking on
         a parity with shares of Municipal Preferred with respect to the payment
         of  dividends  and  the   distribution  of  assets  upon   dissolution,
         liquidation  or  winding  up of the  affairs  of the  Trust;  provided,
         however,  that if  Moodys  or S&P is not then  rating  the  shares  of
         Municipal  Preferred,  the  aggregate  liquidation  preference  of  all
         Preferred  Shares of the  Trust  outstanding  after any such  issuance,
         exclusive  of  accumulated  and  unpaid   dividends,   may  not  exceed
         $90,000,000)  or (b)  amend,  alter or  repeal  the  provisions  of the
         Declaration  or the ByLaws,  including  this Section 12.1,  whether by
         merger,  consolidation  or otherwise,  so as to  materially  affect any
         preference, right or power of such shares of Municipal Preferred to the
         Holders  thereof;  provided,  however,  that  (i)  none of the  actions
         permitted  by the  exception to (a) above will be deemed to affect such
         preferences,  rights or powers, (ii) a division of a share of Municipal
         Preferred will be deemed to affect such  preferences,  rights or powers
         only if the terms of such  division  adversely  affect  the  Holders of
         shares of Municipal Preferred and (iii) the authorization, creation and
         issuance  of  classes or series of shares  ranking  junior to shares of
         Municipal  Preferred  with respect to the payment of dividends  and the
         distribution of assets upon  dissolution,  liquidation or winding up of
         the affairs of the Trust,  will be deemed to affect  such  preferences,
         rights  or  powers  only if  Moodys  or S&P is then  rating  shares of
         Municipal Preferred and such issuance would, at the time thereof, cause
         the  Trust  not to  satisfy  the 1940  Act  Municipal  Preferred  Asset
         Coverage or the Municipal  Preferred Basic Maintenance  Amount. So long
         as any shares of Municipal  Preferred are outstanding,  the Trust shall
         not, without the affirmative vote or consent of the Holders of at least
         66 2/3% of the shares of Municipal  Preferred  outstanding at the time,
         in person or by proxy,  either in writing or at a meeting,  voting as a
         separate class,  file a voluntary  application for relief under Federal
         bankruptcy law or any similar  application  under state law for so long
         as the Trust is solvent and does not foresee becoming insolvent. If any
         action set forth  above  would  adversely  affect the rights of one ore
         more series (the Affected Series) of Municipal  Preferred in a manner
         different from any other series of Municipal Preferred,  the Trust will
         not approve any such action without the affirmative  vote or consent of
         the Holders of at least a majority of the shares of each such  Affected
         Series  outstanding  at the time,  in  person  or by  proxy,  either in
         writing or at a meeting (each such Affected Series voting at a separate
         class).

(2)      1940 Act  Matters.  Unless a higher  percentage  is provided for in the
         Declaration or these Bylaws,  (A) the affirmative  vote of the Holders
         of at least a majority of the  Preferred  Shares,  including  Municipal
         Preferred,  outstanding at the time, voting as a separate class,  shall
         be required to approve any conversion of the Trust from a closedend to
         an  openend  investment  company and (B) the  affirmative  vote of the
         Holders of a majority of the outstanding  Preferred Shares, including
         Municipal  Preferred,  voting as a separate class, shall be required to
         approve  any plan of  reorganization  (as such term is used in the 1940
         Act)  adversely  affecting  such shares.  The  affirmative  vote of the
         Holders of a majority of the outstanding  Preferred Shares, including
         Municipal  Preferred,  voting as a separate class, shall be required to
         approve  any  action  not  described  in the  first  sentence  of  this
         paragraph  5(c)(ii)  requiring a vote of security  holders of the Trust
         under  Section  13(a) of the 1940 Act. For  purposes of the  foregoing,
         majority of the outstanding Preferred Shares means (i) 67% or more of
         such  shares  present at a meeting,  if the Holders of more than 50% of
         such shares are present or represented by proxy,  or (ii) more than 50%
         of such shares,  whichever  is less.  In the event a vote of Holders of
         Municipal  Preferred is required  pursuant to the provisions of Section
         13(a) of the 1940 Act,  the Trust  shall,  not later than ten  business
         Days  prior to the  date on  which  such  vote is to be  taken,  notify
         Moodys (if Moodys is then rating the shares of  Municipal  Preferred)
         and S&P (if S&P is then rating the shares of Municipal  Preferred) that
         such vote is to be taken and the nature of the action  with  respect to
         which  such vote is to be taken.  The Trust  shall,  not later than ten
         Business  Days  after  the date on which  such  vote is  taken,  notify
         Moodys (if Moodys is then rating the shares of  Municipal  Preferred)
         of the results of such vote.

(4) Board May Take Certain Actions Without  Shareholder  Approval.  The Board of
Trustees, without the vote or consent of the shareholders of the Trust, may from
time to time amend,  alter or repeal any or all of the  definitions of the terms
listed  below,  or any  provision of this Section 12.1 of the Bylaws  viewed by
Moodys or S&P as a predicate for any such  definition,  and any such amendment,
alteration  or repeal  will not be deemed to affect the  preferences,  rights or
powers  of shares of  Municipal  Preferred  or the  Holders  thereof;  provided,
however,  that the Board of Trustees receives written  confirmation from Moodys
(such  confirmation  being  required to be obtained only in the event Moodys is
rating the shares of Municipal  Preferred  and in no event being  required to be
obtained in the case of the  definitions of (x) Deposit  Securities,  Discounted
Value, Receivables for Municipal Obligations Sold and Other Issues as such terms
apply to S&P Eligible Asset and (y) S&P Discount Factor, S&P Eligible Asset, S&P
Exposure  Period,  S&P  Volatility  Factor)  and S&P  (such  confirmation  being
required to be obtained  only in the event S&P is rating the shares of Municipal
Preferred  and in no event  being  required  to be  obtained  in the case of the
definitions of (x) Discounted Value,  Receivables for Municipal Obligations Sold
and Other Issues as such terms apply to Moodys  Eligible Asset, and (y) Moodys
Discount  Factor,  Moodys  Eligible Asset,  Moodys Exposure Period and Moodys
Volatility  Factor)  that any such  amendment,  alteration  or repeal  would not
impair the  ratings  then  assigned  by  Moodys or S&P,  as the case may be, to
shares of Municipal Preferred:

         Deposit Securities           Moodys Exposure Period
         Discounted Value           Moodys Volatility Factor
         Escrowed Bonds             1940 Act Cure Date
         Market Value   1940 Act Municipal Preferred Asset Coverage
         Maximum Potential Grossup   Payment Liability  Other Issues
         Municipal Preferred Basic  Maintenance Amount
Receivables for Municipal    Obligations Sold
         Municipal Preferred Basic  Maintenance Cure Date   S&P Discount Factor
         Municipal Preferred Basic  Maintenance Report   S&P Eligible Asset
         Moodys Discount Factor                    S&P Exposure Period
         Moodys Eligible Asset                     S&P Volatility Factor
                                                    Valuation Date
                                                    Volatility Factor

         In  addition,  the Trust may change its policies to comply with changes
in rating  agency  requirements  upon  receiving  written  notification  of such
changes. Such changes will be subject to ratification by the Board of Trustees.

(5) Voting  Rights Set Forth  Herein Are Sole Voting  Rights.  Unless  otherwise
required by law, these Bylaws or by the  Declaration,  the Holders of shares of
Municipal  Preferred  shall not have any relative rights or preferences or other
special rights other than those specifically set forth herein.

(6)      No Preemptive Rights or Cumulative Voting.  The Holders of shares of
Municipal Preferred shall have no preemptive rights or

rights to cumulative voting.

(7) Voting for Trustees Sole Remedy for Trusts Failure to Pay Dividends. In the
event  that the Trust  fails to pay any  dividends  on the  shares of  Municipal
Preferred,  the  exclusive  remedy of the Holders shall be the right to vote for
Trustees pursuant to the provisions of this paragraph 5.

(8) Holders  Entitled to Vote.  For  purposes of  determining  any rights of the
Holders to vote on any  matter,  whether  such right is created by this  Section
12.1, by the other provisions of these Bylaws or the Declaration, by statute or
otherwise,  no Holder shall be entitled to vote any share of Municipal Preferred
and no share of Municipal  Preferred shall be deemed to be outstanding for the
purpose of voting or determining  the number of shares  required to constitute a
quorum if, prior to or  concurrently  with the time of  determination  of shares
entitled to vote or shares deemed  outstanding for quorum purposes,  as the case
may be, the  requisite  Notice of  Redemption  with respect to such shares shall
have  been  mailed  as  provided  in  paragraph  11(c)  of  this  Part I and the
Redemption  Price for the redemption of such shares shall have been deposited in
trust with the Auction Agent for that purpose.  No shares of Municipal Preferred
held by the Trust or any  affiliate  of the Trust  (except  for shares held by a
BrokerDealer  that  is an  affiliate  of  the  Trust  for  the  account  of its
customers)  shall  have any  voting  rights or be deemed to be  outstanding  for
voting or other purposes.

6.       1940 Act Municipal Preferred Asset Coverage.


         The Trust shall maintain,  as of the last Business Day of each month in
which any share of Municipal  Preferred is  outstanding,  the 1940 Act Municipal
Preferred Asset Coverage.

7.       Municipal Preferred Basic Maintenance Amount.


(1) So long as shares of Municipal  Preferred are  outstanding,  the Trust shall
maintain,  on each Valuation Date, and shall verify to its satisfaction  that it
is  maintaining  on such  Valuation  Date,  (i) S&P  Eligible  Assets  having an
aggregate  Discounted  Value equal to or greater  than the  Municipal  Preferred
Basic  Maintenance  Amount  (if S&P is  then  rating  the  shares  of  Municipal
Preferred) and (ii) Moodys Eligible Assets having an aggregate Discounted Value
equal to or greater than the Municipal  Preferred Basic  Maintenance  Amount (if
Moodys is then rating the shares of Municipal Preferred).

(2) On or before 5:00 P.M.,  New York City time, on the third Business Day after
a Valuation  Date on which the Trust fails to satisfy  the  Municipal  Preferred
Basic  Maintenance  Amount,  and on the third  Business Day after the  Municipal
Preferred Basic  Maintenance  Cure Date with respect to such Valuation Date, the
Trust  shall  complete  and  deliver to S&P (if S&P is then rating the shares of
Municipal Preferred), Moodys (if Moodys is then rating the shares of Municipal
Preferred)  and the  Auction  Agent (if either S&P or Moodys is then rating the
shares of Municipal Preferred) a Municipal Preferred Basic Maintenance Report as
of the date of such failure or such Municipal  Preferred Basic  Maintenance Cure
Date,  as the case may be,  which will be deemed to have been  delivered  to the
Auction Agent if the Auction Agent  receives a copy of telecopy,  telex or other
electronic  transcription  thereof  and on the same day the  Trust  mails to the
Auction Agent for delivery on the next Business Day the full Municipal Preferred
Basic Maintenance Report.

         The Trust shall also deliver a Municipal  Preferred  Basic  Maintenance
Report to (i) the  Auction  Agent (if either  Moodys or S&P is then  rating the
shares of Municipal Preferred) as of (A) the fifteenth day of each month (or, if
such day is not a Business  Day, the next  succeeding  Business Day) and (B) the
last  Business Day of each month,  and (ii) S&P, if and when  requested  for any
Valuation  Date,  on or before  the third  Business  Day after such  request.  A
failure by the Trust to deliver a Municipal  Preferred Basic Maintenance  Report
pursuant to the preceding sentence shall be deemed to be delivery of a Municipal
Preferred  Basic  Maintenance  Report  indicating the  Discounted  Value for all
assets of the  Trust is less  than the  Municipal  Preferred  Basic  Maintenance
Amount, as of the relevant Valuation Date.

(3) As  frequently as requested by Moodys (if Moodys is then rating the shares
of  Municipal  Preferred)  or S&P (if S&P is then rating the shares of Municipal
Preferred),  the Trust  shall  cause the  Independent  Accountant  to confirm in
writing  to S&P (if S&P is then  rating  the  shares  of  Municipal  Preferred),
Moodys (if Moodys is then rating the shares of  Municipal  Preferred)  and the
Auction  Agent (if either S&P or Moodys is then rating the shares of  Municipal
Preferred) (i) the mathematical  accuracy of the calculations  reflected in such
Report and (ii) that, in such Report , the Trust  determined in accordance  with
this paragraph whether the Trust had, at the time of such request , S&P Eligible
Assets (if S&P is then rating the shares of Municipal Preferred) of an aggregate
Discounted  Value at least equal to the Municipal  Preferred  Basic  Maintenance
Amount and  Moodys  Eligible  Assets (if  Moodys is then  rating the shares of
Municipal  Preferred)  of an  aggregate  Discounted  Value at least equal to the
Municipal  Preferred Basic Maintenance  Amount (such  confirmation  being herein
called the Accountants Confirmation).

(4) Within ten Business Days after the date of delivery of a Municipal Preferred
Basic Maintenance Report in accordance with subparagraph (b) of this paragraph 7
relating  to any  Valuation  Date on which  the  Trust  failed  to  satisfy  the
Municipal  Preferred  Basic  Maintenance  Amount,  and relating to the Municipal
Preferred  Basic  Maintenance  Cure Date with respect to such failure to satisfy
the Municipal  Preferred  Basic  Maintenance  Amount,  the Trust shall cause the
Independent  Accountant  to provide to S&P (if S&P is then  rating the shares of
Municipal Preferred), Moodys (if Moodys is then rating the shares of Municipal
Preferred)  and the  Auction  Agent (if either S&P or Moodys is then rating the
shares of Municipal Preferred) an Accountants Confirmation as to such Municipal
Preferred Basic Maintenance Report.

(5) If any Accountants  Confirmation  delivered pursuant to subparagraph (c) or
(d) of this paragraph 7 shows that an error was made in the Municipal  Preferred
Basic  Maintenance  Report  for a  particular  Valuation  Date  for  which  such
Accountants  Confirmation  was required to be delivered,  or shows that a lower
aggregate  Discounted Value for the aggregate of all S&P Eligible Assets (if S&P
is then rating the shares of Municipal Preferred) or Moodys Eligible Assets (if
Moodys is then rating the shares of Municipal  Preferred),  as the case may be,
of the Trust was determined by the  Independent  Accountant,  the calculation or
determination made by such Independent  Accountant shall be final and conclusive
and shall be binding on the Trust,  and the Trust  shall  accordingly  amend and
deliver the Municipal  Preferred Basic Maintenance Report to S&P (if S&P is then
rating the shares of  Municipal  Preferred),  Moodys (if Moodys is then rating
the  shares of  Municipal  Preferred)  and the  Auction  Agent (if either S&P or
Moodys is then rating the shares of  Municipal  Preferred)  promptly  following
receipt by the Trust of such Accountants Confirmation.

(6) On or before 5:00 p.m.,  New York City time, on the first Business Day after
the Date of Original Issue of any shares of Municipal Preferred, the Trust shall
complete  and  deliver to S&P (if S&P is then  rating  the  shares of  Municipal
Preferred)  and  Moodys  (if  Moodys is then  rating  the shares of  Municipal
Preferred) a Municipal  Preferred  Basic  Maintenance  Report as of the close of
business on such Date of Original Issue.  Within five Business Days of such Date
of Original Issue,  the Trust shall cause the Independent  Accountant to confirm
in writing to S&P (if S&P is then rating the shares of Municipal  Preferred) (i)
the mathematical accuracy of the calculations  reflected in such Report and (ii)
that the Discounted  Value of S&P Eligible  Assets  reflected  thereon equals or
exceeds the Municipal Preferred Basic Maintenance Amount reflected thereon.

(7) On or before 5:00 p.m.,  New York City time, on the third Business Day after
either (i) the Trust shall have redeemed  Common Shares or (ii) the ratio of the
Discounted  Value of S&P  Eligible  Assets or the  Discounted  Value of  Moodys
Eligible Assets to the Municipal Preferred Basic Maintenance Amount is less than
or equal to 105%,  the Trust shall  complete  and deliver to S&P (if S&P is then
rating the shares of Municipal  Preferred) or Moodys (if Moodys is then rating
the shares of Municipal  Preferred),  as the case may be, a Municipal  Preferred
Basic Maintenance Report as of the date of either such event.

8.       [Reserved].


9.       Restrictions on Dividends and Other Distributions.


(1) Dividends on Preferred Shares Other Than Municipal Preferred.  Except as set
forth in the next sentence,  no dividends shall be declared or paid or set apart
for  payment  on the  shares of any  class or  series  of  shares of  beneficial
interest of the Trust ranking, as to the payment of dividends,  on a parity with
shares of Municipal  Preferred for any period unless full  cumulative  dividends
have  been or  contemporaneously  are  declared  and paid on the  shares of each
series of Municipal  Preferred  through its most recent  Dividend  Payment Date.
When  dividends are not paid in full upon the shares of each series of Municipal
Preferred  through its most recent  Dividend  Payment Date or upon the shares of
any other class or series of shares of beneficial  interest of the Trust ranking
on a parity as to the payment of dividends  with shares of  Municipal  Preferred
through  their most recent  respective  dividend  payment  dates,  all dividends
declared  upon shares of Municipal  Preferred and any other such class or series
of shares of  beneficial  interest  ranking  on a parity  as to the  payment  of
dividends with shares of Municipal  Preferred shall be declared pro rata so that
the amount of dividends declared per share on shares of Municipal  Preferred and
such other class or series of shares of beneficial  interest  shall in all cases
bear to each other the same ratio that  accumulated  dividends  per share on the
shares  of  Municipal  Preferred  and such  other  class or  series of shares of
beneficial  interest  bear to each other (for  purposes  of this  sentence,  the
amount of dividends declared per share of Municipal  Preferred shall be based on
the  Applicable  Rate for such  shares for the  Dividend  Periods  during  which
dividends were not paid in full).

(2)  Dividends and Other  Distributions  With Respect to Common Shares Under the
1940 Act.  The  Board of  Trustees  shall not  declare  any  dividend  (except a
dividend payable in Common Shares), or declare any other distribution,  upon the
Common  Shares,  or  purchase  Common  Shares,  unless  in every  such  case the
Preferred Shares have, at the time of any such declaration or purchase, an asset
coverage  (as  defined in and  determined  pursuant to the 1940 Act) of at least
200% (or such other asset coverage as may in the future be specified in or under
the 1940 Act as the  minimum  asset  coverage  for senior  securities  which are
shares or stock of a closedend  investment  company as a condition of declaring
dividends  on its common  shares or stock)  after  deducting  the amount of such
dividend, distribution or purchase price, as the case may be.

(3) Other Restrictions on Dividends and Other Distributions.  For so long as any
share  of  Municipal  Preferred  is  outstanding,  and  except  as set  forth in
subparagraph (a) of this paragraph 9 and paragraph 12(c) of this Part I, (A) the
Trust shall not  declare,  pay or set apart for  payment  any  dividend or other
distribution  (other  than a dividend or  distribution  paid in shares of, or in
options, warrants or rights to subscribe for or purchase, Common Shares or other
shares,  if any,  ranking junior to the shares of Municipal  Preferred as to the
payment  of  dividends  and  the   distribution  of  assets  upon   dissolution,
liquidation  or winding up) in respect of the Common  Shares or any other shares
of the Trust  ranking  junior  to or on a parity  with the  shares of  Municipal
Preferred  as to the payment of  dividends  or the  distribution  of assets upon
dissolution, liquidation or winding up, or call for redemption, redeem, purchase
or  otherwise  acquire  for  consideration  any Common  Shares or any other such
junior  shares  (except by  conversion  into or exchange for shares of the Trust
ranking  junior to the  shares  of  Municipal  Preferred  as to the  payment  of
dividends  and the  distribution  of assets  upon  dissolution,  liquidation  or
winding up), or any such parity shares  (except by  conversion  into or exchange
for  shares  of the  Trust  ranking  junior  to or on a  parity  with  Municipal
Preferred as to the payment of  dividends  and the  distribution  of assets upon
dissolution, liquidation or winding up), unless (i) full cumulative dividends on
shares of each series of Municipal  Preferred  through its most  recently  ended
Dividend  Period shall have been paid or shall have been declared and sufficient
funds for the payment  thereof  deposited  with the  Auction  Agent and (ii) the
Trust has redeemed the full number of shares of Municipal  Preferred required to
be redeemed by any provision for mandatory  redemption  pertaining thereto,  and
(B) the Trust shall not  declare,  pay or set apart for payment any  dividend or
other distribution  (other than a dividend or distribution paid in shares of, or
in options,  warrants or rights to subscribe  for or purchase,  Common Shares or
other shares, if any, ranking junior to shares of Municipal  Preferred as to the
payment  of  dividends  and  the   distribution  of  assets  upon   dissolution,
liquidation  or winding up) in respect of Common  Shares or any other  shares of
the Trust ranking  junior to shares of Municipal  Preferred as to the payment of
dividends or the distribution of assets upon dissolution, liquidation or winding
up,  or  call  for  redemption,   redeem,  purchase  or  otherwise  acquire  for
consideration  any Common  Shares or any other  such  junior  shares  (except by
conversion  into or exchange for shares of the Trust ranking junior to shares of
Municipal  Preferred  as to the payment of  dividends  and the  distribution  of
assets upon  dissolution,  liquidation or winding up), unless  immediately after
such  transaction the Discounted Value of Moodys Eligible Assets (if Moodys is
then rating the shares of Municipal  Preferred) and S&P Eligible  Assets (if S&P
is then rating the shares of Municipal  Preferred) would each at least equal the
Municipal Preferred Basic Maintenance Amount.

10.      Rating Agency Restrictions.


         For so long as any shares of Municipal  Preferred are  outstanding  and
Moodys or S&P, or both, are rating such shares,  the Trust will not,  unless it
has received written  confirmation from Moodys or S&P, or both, as appropriate,
that any such action would not impair the ratings  then  assigned by such rating
agency to such shares, engage in any one or more of the following transactions:

(1)  purchase or sell  futures  contracts,  write,  purchase or sell  options on
futures  contracts  or write put options  (except  covered put  options) or call
options  (except covered call options) on portfolio  securities  except that the
Trust may purchase or sell futures  contracts  based on the Bond Buyer Municipal
Bond Index (the  Municipal  Index) or United  States  Treasury  Bonds or Notes
(Treasury  Bonds)  and write,  purchase  or sell put and call  options on such
contracts  (collectively,  Hedging  Transactions),  subject  to the  following
limitations:

(1)      the Trust  will not  engage  in any  Hedging  Transaction  based on the
         Municipal  Index  (other than  transactions  which  terminate a futures
         contract or option held by the Trust by the Trusts  taking an opposite
         position thereto (Closing Transactions)), which would cause the Trust
         at the time of such  transaction  to own or have  sold the least of (A)
         more than 1,000  outstanding  futures  contracts based on the Municipal
         Index, (B) outstanding  futures  contracts based on the Municipal Index
         exceeding  in number 25% of the  quotient  of the  Market  Value of the
         Trusts  total  assets  divided  by $1,000 or (C)  outstanding  futures
         contracts  based on the Municipal  Index exceeding in number 10% of the
         average number of daily open interest  futures  contracts  based on the
         Municipal  Index in the 30 days  preceding  the time of effecting  such
         transaction as reported by The Wall Street Journal.

(2)      the Trust will not engage in any Hedging  Transaction based on Treasury
         Bonds (other than Closing  Transactions) which would cause the Trust at
         the time of such  transaction  to own or have  sold the  lesser  of (A)
         outstanding  futures  contracts  based on Treasury  Bonds  exceeding in
         number 50% of the  quotient of the Market  Value of the  Trusts  total
         assets divided by $100,000 ($200,000 in the case of the twoyear United
         States  Treasury Note) or (B)  outstanding  futures  contracts based on
         Treasury  Bonds  exceeding in number 10% of the average number of daily
         traded  futures  contracts  based  on  Treasury  Bonds  in the 30  days
         preceding  the time of effecting  such  transaction  as reported by The
         Wall Street Journal;

(3)      the  Trust  will  engage  in  Closing  Transactions  to  close  out any
         outstanding  futures  contract  which the Trust owns or has sold or any
         outstanding  option  thereon  owned by the  Trust in the  event (A) the
         Trust does not have S&P Eligible Assets or Moodys Eligible Assets,  as
         the case may be, with an aggregate Discounted Value equal to or greater
         than  the  Municipal   Preferred  Basic   Maintenance   Amount  on  two
         consecutive  Valuation  Dates  and (B) the  Trust  is  required  to pay
         Variation Margin on the second such Valuation Date;

(4)      the  Trust  will  engage  in a  Closing  Transaction  to close  out any
         outstanding  futures  contract or option  thereon in the month prior to
         the delivery  month under the terms of such futures  contract or option
         thereon  unless the Trust holds the securities  deliverable  under such
         terms; and

(5)      when the Trust  writes a futures  contract or option  thereon,  it will
         either  maintain an amount of cash,  cash  equivalents or  fixedincome
         securities  rated BBB or better by S&P or  Moodys,  as the case may be
         for S&P  purposes  and any liquid  assets for  Moodys  purposes,  in a
         segregated  account with the Trusts  custodian,  so that the amount so
         segregated plus the amount of Initial Margin and Variation  Margin held
         in the  account of or on behalf of the Trusts  broker with  respect to
         such futures  contract or option equals the Market Value of the futures
         contract  or  option,  or,  in the  event  the  Trust  writes a futures
         contract or option  thereon  which  requires  delivery of an underlying
         security, it shall hold such underlying security in its portfolio.

         For purposes of determining  whether the Trust has S&P Eligible  Assets
or Moodys  Eligible  Assets,  as the case may be, with a Discounted  Value that
equals  or  exceeds  the  Municipal  Preferred  Basic  Maintenance  Amount,  the
Discounted Value of cash or securities held for the payment of Initial Margin or
Variation  Margin  shall  be zero  and the  aggregate  Discounted  Value  of S&P
Eligible Assets or Moodys Eligible Assets, as the case may be, shall be reduced
by an amount equal to (I) 30% of the aggregate  settlement  value,  as marked to
market, of any outstanding  futures contracts based on the Municipal Index which
are  owned by the Trust  plus (II) 25% of the  aggregate  settlement  value,  as
marked to market,  of any outstanding  futures contracts based on Treasury Bonds
which contracts are owned by the Trust.

(2) borrow  money,  except  that the Trust may,  without  obtaining  the written
confirmation   described  above,  borrow  money  for  the  purpose  of  clearing
securities  transactions if (i) the Municipal Preferred Basic Maintenance Amount
would  continue to be satisfied  after giving  effect to such  borrowing  (which
shall mean,  for purposes of the  calculation of the Municipal  Preferred  Basic
Maintenance Amount, adding the amount of the liability for such borrowing to the
calculation  of  the  Municipal   Preferred  Basic   Maintenance   Amount  under
subparagraph  (F) under the  definition  of that term in Part I of this  Section
12.1) and (ii) such  borrowing  (A) is privately  arranged  with a bank or other
person and is evidenced by a promissory  note or other evidence of  indebtedness
that  is not  intended  to be  publicly  distributed  or  (B) is for  temporary
purposes, is evidenced by a promissory  note or other evidence of  indebtedness
and is an amount not  exceeding 5 per centum of the value of the total assets of
the  Trust  at the  time  of  the  borrowing;  for  purposes  of the  foregoing,
temporary  purpose  means that the borrowing is to be repaid within sixty days
and is not to be extended or renewed;

(3) issue additional shares of any series of Municipal Preferred or any class or
series of  shares  ranking  prior to or on a parity  with  shares  of  Municipal
Preferred with respect to the payment of dividends or the distribution of assets
upon dissolution,  liquidation or winding up of the Trust, or reissue any shares
of Municipal Preferred previously purchased or redeemed by the Trust;

(4)      engage in any short sales of securities;

(5)      lend securities;

(6)      merge or consolidate into or with any corporation;

(7)      change the pricing service (currently both Muller Data Corporation
and Standard & Poors J.J. Kenny Evaluation Services are
used by the Trust) referred to in the definition of Market Value to a pricing
service other than Muller Data Corporation or Standard
& Poors J.J. Kenny Evaluation Services; or

(8)      enter into reverse repurchase agreements.

11.      Redemption.


(1)      Optional Redemption.


(1)      Subject to the provisions of subparagraph (v) of this subparagraph (a),
         shares of Municipal  Preferred  of any series may be  redeemed,  at the
         option of the  Trust,  as a whole or from time to time in part,  on the
         second  Business Day preceding any Dividend  Payment Date for shares of
         such series, out of funds legally available  therefor,  at a redemption
         price per share  equal to the sum of  $25,000  plus an amount  equal to
         accumulated  but unpaid  dividends  thereon  (whether  or not earned or
         declared)  to (but  not  including)  the  date  fixed  for  redemption;
         provided,  however,  that (1) shares of a series of Municipal Preferred
         may not be redeemed in part if after such partial redemption fewer than
         500 shares of such  series  remain  outstanding;  (2) unless  otherwise
         provided  herein,  shares  of  a  series  of  Municipal  Preferred  are
         redeemable by the Trust during the Initial Rate Period  thereof only on
         the second  Business Day next preceding the last Dividend  Payment Date
         for such Initial Rate Period;  and (3) subject to subparagraph  (ii) of
         this  paragraph,  (a) the Notice of Special  Rate Period  relating to a
         Special  Rate Period of shares of a series of Municipal  Preferred,  as
         delivered  to the  Auction  Agent and filed with the  Secretary  of the
         Trust,  may provide that shares of such series shall not be  redeemable
         during the whole or any part of such  Special  Rate  Period  (except as
         provided in  subparagraph  (iv) of this  subparagraph  (a)) or shall be
         redeemable  during the whole or any part of such  Special  Rate  Period
         only upon  payment of such  redemption  premium or premiums as shall be
         specified therein (Special Redemption Provisions).

(2)      A Notice  of  Special  Rate  Period  relating  to shares of a series of
         Municipal  Preferred  for a Special  Rate  Period  thereof  may contain
         Special  Redemption  Provisions  only if the Trusts Board of Trustees,
         after  consultation with the  BrokerDealer or BrokerDealers  for such
         Special  Rate  Period of shares of such  series,  determines  that such
         Special Redemption Provisions are in the best interest of the Trust.

(3)      If fewer than all of the  outstanding  shares of a series of  Municipal
         Preferred  are to be  redeemed  pursuant  to  subparagraph  (i) of this
         subparagraph  (a),  the number of shares of such  series to be redeemed
         shall be determined by the Board of Trustees,  and such shares shall be
         redeemed  pro  rata  from the  Holders  of  shares  of such  series  in
         proportion to the number of shares of such series held by such Holders.

(4)      Subject to the provisions of subparagraph (v) of this subparagraph (a),
         shares of any series of Municipal  Preferred  may be  redeemed,  at the
         option of the Trust,  as a whole but not in part,  out of funds legally
         available  therefor,  on the first day  following  any Dividend  Period
         thereof  included  in a Rate  Period  consisting  of more than 364 Rate
         Period Days if, on the date of determination of the Applicable Rate for
         shares  of such  series  for such Rate  Period,  such  Applicable  Rate
         equaled or exceeded on such date of  determination  the  Treasury  Note
         Rate for such Rate Period, at a redemption price per share equal to the
         sum of $25,000 plus an amount equal to accumulated but unpaid dividends
         thereon  (whether or not earned or declared) to (but not  including) to
         the date fixed for redemption.

(5)      The Trust may not on any date mail a Notice of  Redemption  pursuant to
         subparagraph  (c) of  this  paragraph  11 in  respect  of a  redemption
         contemplated to be effected pursuant to this subparagraph (a) unless on
         such date (a) the Trust has available Deposit  Securities with maturity
         or  tender  dates  not  later  than the day  preceding  the  applicable
         redemption date and having a value not less than the amount  (including
         any applicable premium) due to Holders of shares of Municipal Preferred
         by reason of the redemption of such shares on such  redemption date and
         (b) the Discounted Value of Moodys Eligible Assets (if Moodys is then
         rating the shares of Municipal  Preferred) and the Discounted  Value of
         S&P  Eligible  Assets (if S&P is then  rating  the shares of  Municipal
         Preferred)   each  at  least  equal  the  Municipal   Preferred   Basic
         Maintenance  Amount,  and would at least equal the Municipal  Preferred
         Basic Maintenance Amount  immediately  subsequent to such redemption if
         such redemption were to occur on such date. For purposes of determining
         in clause (b) of the preceding sentence whether the Discounted Value of
         Moodys  Eligible Assets at least equals the Municipal  Preferred Basic
         Maintenance  Amount, the Moodys Discount Factors applicable to Moodys
         Eligible  Assets shall be determined by reference to the first Exposure
         Period longer than the Exposure Period then applicable to the Trust, as
         described in the definition of Moodys Discount Factor herein.

(2) Mandatory Redemption. The Trust shall redeem, at a redemption price equal to
$25,000 per share plus accumulated but unpaid dividends  thereon (whether or not
earned  or  declared)  to (but not  including)  the date  fixed by the  Board of
Trustees for redemption,  certain of the shares of Municipal  Preferred,  if the
Trust fails to have either Moodys  Eligible Assets with a Discounted  Value, or
S&P  Eligible  Assets  with a  Discounted  Value,  greater  than or equal to the
Municipal  Preferred Basic Maintenance  Amount or fails to maintain the 1940 Act
Municipal  Preferred Asset Coverage,  in accordance with the requirements of the
rating  agency or agencies  then rating the shares of Municipal  Preferred,  and
such failure is not cured on or before the Municipal Preferred Basic Maintenance
Cure Date or the 1940 Act Cure Date, as the case may be (the Cure  Date).  The
number of shares of  Municipal  Preferred  to be redeemed  shall be equal to the
lesser of (i) the minimum number of shares of Municipal Preferred, together with
all other Preferred  Shares subject to redemption or retirement,  the redemption
of  which,  if deemed  to have  occurred  immediately  prior to the  opening  of
business  on the Cure Date,  would have  resulted  in the  Trusts  having  both
Moodys Eligible Assets with a Discounted  Value, and S&P Eligible Assets with a
Discounted  Value,  greater  than or  equal  to the  Municipal  Preferred  Basic
Maintenance  Amount  or  maintaining  the 1940  Act  Municipal  Preferred  Asset
Coverage,  as the case may be,  on such Cure Date  (provided,  however,  that if
there is no such  minimum  number  of shares of  Municipal  Preferred  and other
Preferred  Shares the  redemption  or  retirement  of which  would have had such
result, all shares of Municipal  Preferred and Preferred Shares then outstanding
shall  be  redeemed),  and  (ii) the  maximum  number  of  shares  of  Municipal
Preferred,  together with all other  Preferred  Shares  subject to redemption or
retirement,  that can be redeemed out of funds expected to be legally  available
therefor in accordance with the  Declaration,  these Bylaws and applicable law.
In  determining  the shares of  Municipal  Preferred  required to be redeemed in
accordance  with the foregoing,  the Trust shall allocate the number required to
be redeemed to satisfy the Municipal  Preferred Basic Maintenance  Amount or the
1940 Act Municipal Preferred Asset Coverage,  as the case may be, pro rata among
shares of Municipal  Preferred and other  Preferred  Shares (and,  then pro rata
among each series of Municipal  Preferred)  subject to redemption or retirement.
The Trust shall effect such  redemption on the date fixed by the Trust therefor,
which date  shall not be earlier  than 20 days nor later than 40 days after such
Cure Date,  except that if the Trust does not have funds  legally  available for
the  redemption of all of the required  number of shares of Municipal  Preferred
and other Preferred  Shares which are subject to redemption or retirement or the
Trust otherwise is unable to effect such redemption on or prior to 40 days after
such Cure Date,  the Trust shall redeem those shares of Municipal  Preferred and
other Preferred Shares which it was unable to redeem on the earliest practicable
date on which it is able to effect  such  redemption.  If fewer  than all of the
outstanding  shares  of a  series  of  Municipal  Preferred  are to be  redeemed
pursuant  to this  subparagraph  (b),  the number of shares of such series to be
redeemed shall be redeemed pro rata from the Holders of shares of such series in
proportion to the number of shares of such series held by such Holders.

(3) Notice of Redemption.  If the Trust shall determine or be required to redeem
shares of a series of Municipal Preferred pursuant to subparagraph (a) or (b) of
this  paragraph  11, it shall mail a Notice of  Redemption  with respect to such
redemption by first class mail, postage prepaid, to each Holder of the shares of
such series to be redeemed,  at such Holders address as the same appears on the
record  books of the  Trust  on the  record  date  established  by the  Board of
Trustees. Such Notice of Redemption shall be so mailed not less than 20 nor more
than 45 days  prior to the date  fixed  for  redemption.  Each  such  Notice  of
Redemption  shall state:  (i) the redemption  date; (ii) the number of shares of
Municipal  Preferred  to be  redeemed  and the series  thereof;  (iii) the CUSIP
number for shares of such series;  (iv) the Redemption  Price;  (v) the place or
places where the  certificate(s)  for such shares (properly endorsed or assigned
for  transfer,  if the Board of  Trustees  shall so  require  and the  Notice of
Redemption  shall so state) are to be surrendered  for payment of the Redemption
Price; (vi) that dividends on the shares to be redeemed will cease to accumulate
on such  redemption  date;  and (vii) the  provisions of this paragraph 11 under
which such redemption is made. If fewer than all shares of a series of Municipal
Preferred held by any Holder are to be redeemed, the Notice of Redemption mailed
to such  Holder  shall also  specify  the number of shares of such  series to be
redeemed  from such  Holder.  The Trust may provide in any Notice of  Redemption
relating  to an optional  redemption  contemplated  to be  effected  pursuant to
subparagraph  (a) of this paragraph 11 that such redemption is subject to one or
more  conditions  precedent  and that  the  Trust  shall  not be  required  such
redemption  unless each such condition  shall have been satisfied at the time or
times and in the manner specified in such Notice of Redemption.

(4) No Redemption Under Certain Circumstances. Notwithstanding the provisions of
subparagraphs  (a) or (b) of this  paragraph 11, if any dividends on shares of a
series  of  Municipal  Preferred  (whether  or not  earned or  declared)  are in
arrears,  no shares of such  series  shall be  redeemed  unless all  outstanding
shares of such  series  are  simultaneously  redeemed,  and the Trust  shall not
purchase or otherwise acquire any shares of such series; provided, however, that
the foregoing  shall not prevent the purchase or acquisition of all  outstanding
shares of such series  pursuant to the  successful  completion  of an  otherwise
lawful  purchase or exchange  offer made on the same terms to, and  accepted by,
Holders of all outstanding shares of such series.

(5) Absence of Funds Available for Redemption. To the extent that any redemption
for which  Notice  of  Redemption  has been  mailed is not made by reason of the
absence of legally  available funds therefor in accordance with the Declaration,
these  Bylaws and  applicable  law,  such  redemption  shall be made as soon as
practicable to the extent such funds become available.  Failure to redeem shares
of  Municipal  Preferred  shall be  deemed  to exist at any time  after the date
specified for  redemption  in a Notice of  Redemption  when the Trust shall have
failed,  for any reason  whatsoever,  to deposit in trust with the Auction Agent
the  Redemption  Price  with  respect  to any  shares  of which  such  Notice of
Redemption  has been mailed;  provided,  however,  that the foregoing  shall not
apply in the case of the  Trusts  failure to deposit in trust with the  Auction
Agent the  Redemption  Price with  respect to any shares where (1) the Notice of
Redemption relating to such redemption provided that such redemption was subject
to one or more conditions  precedent and (2) any such condition  precedent shall
not have been satisfied at the time or times and in the manner specified in such
Notice  of  Redemption.  Notwithstanding  the fact  that the  Trust may not have
redeemed shares of Municipal Preferred for which a Notice of Redemption has been
mailed,  dividends may be declared and paid on shares of Municipal Preferred and
shall  include  those  shares  of  Municipal  Preferred  for  which a Notice  of
Redemption has been mailed.

(6) Auction Agent as Trustee of Redemption Payments by Trust. All moneys paid to
the Auction  Agent for payment of the  Redemption  Price of shares of  Municipal
Preferred  called for redemption shall be held in trust by the Auction Agent for
the benefit of Holders of shares so to be redeemed.

(7)  Shares  for  Which  Notice  of  Redemption  Has Been  Given  Are No  Longer
Outstanding.  Provided  a Notice  of  Redemption  has been  mailed  pursuant  to
subparagraph  (c) of this  paragraph 11, upon the deposit with the Auction Agent
(on the Business Day next  preceding the date fixed for redemption  thereby,  in
funds  available on the next Business Day in The City of New York,  New York) of
funds  sufficient  to redeem  the  shares of  Municipal  Preferred  that are the
subject of such notice,  dividends on such shares shall cease to accumulate  and
such shares shall no longer be deemed to be outstanding for any purpose, and all
rights of the  Holders of the shares so called for  redemption  shall  cease and
terminate, except the right of such Holders to receive the Redemption Price, but
without  any  interest  or  other  additional  amount,  except  as  provided  in
paragraphs  2(e)(i) and 3 of this Part I. Upon surrender in accordance  with the
Notice of Redemption of the  certificates  for any shares so redeemed  (property
endorsed or assigned for transfer, if the Board of Trustees shall so require and
the Notice of Redemption shall so state),  the Redemption Price shall be paid by
the Auction  Agent to the Holders of shares of  Municipal  Preferred  subject to
redemption.  In the case that fewer than all of the  shares  represented  by any
such certificate are redeemed,  a new certificate shall be issued,  representing
the unredeemed  shares,  without cost to the Holder thereof.  The Trust shall be
entitled to receive from the Auction  Agent,  promptly  after the date fixed for
redemption,  any cash  deposited  with the  Auction  Agent in  excess of (i) the
aggregate  Redemption  Price of the  shares of  Municipal  Preferred  called for
redemption on such date and (ii) all other amounts to which Holders of shares of
Municipal  Preferred  called  for  redemption  may be  entitled.  Any  funds  so
deposited  that are  unclaimed at the end of 90 days from such  redemption  date
shall, to the extent permitted by law, be repaid to the Trust,  after which time
the Holders of shares of Municipal  Preferred so called for  redemption may look
only to the Trust for payment of the  Redemption  Price and all other amounts to
which they may be entitled. The Trust shall be entitled to receive, from time to
time  after  the  date  fixed  for  redemption,  any  interest  on the  funds so
deposited.

(8) Compliance With Applicable Law. In effecting any redemption pursuant to this
paragraph 11, the Trust shall use its best efforts to comply with all applicable
conditions  precedent to effecting  such  redemption  under the 1940 Act and any
applicable  StateMassachusetts  law,  but shall effect no  redemption  except in
accordance with the 1940 Act and any applicable StateplaceMassachusetts law.

(9) Only Whole Shares of Municipal Preferred May Be Redeemed. In the case of any
redemption  pursuant  to this  paragraph  11,  only  whole  shares of  Municipal
Preferred  shall  be  redeemed,  and in the  event  that  any  provision  of the
Declaration  or these Bylaws would require  redemption of a fractional  shares,
the Auction  Agent shall be authorized to round up so that only whole shares are
redeemed.

12.      Liquidation Rights.


(1)  Ranking.  The  shares of a series of  Municipal  Preferred  shall rank on a
parity with each other,  with shares of any other series of Municipal  Preferred
and with shares of any other series of Preferred  Shares as to the  distribution
of assets  upon  dissolution,  liquidation  or winding up of the  affairs of the
Trust.

(2) Distributions Upon Liquidation. Upon the dissolution, liquidation or winding
up of the affairs of the Trust, whether voluntary or involuntary, the Holders of
shares of Municipal  Preferred then outstanding shall be entitled to receive and
to be paid out of the  assets of the Trust  available  for  distribution  to its
shareholders,  before any  payment or  distribution  shall be made on the Common
Shares or on any  other  class of  shares  of the  Trust  ranking  junior to the
Municipal Preferred upon dissolution, liquidation or winding up, an amount equal
to the  Liquidation  Preference with respect to such shares plus an amount equal
to all dividends  thereon  (whether or not earned or declared)  accumulated  but
unpaid to (but not including) the date of final distributions in sameday funds,
together  with any payments  required to be made pursuant to paragraph 3 of this
Part I in connection with the liquidation of the Trust. After the payment to the
Holders of the shares of Municipal  Preferred of the full  preferential  amounts
provided for in this  subparagraph  (b),  the holders of Municipal  Preferred as
such shall have no right or claim to any of the remaining assets of the Trust.

(3) Pro Rata  Distributions.  In the event the assets of the Trust available for
distribution  to  the  Holders  of  shares  of  Municipal   Preferred  upon  any
dissolution,  liquidation,  or winding up of the  affairs of the Trust,  whether
voluntary or  involuntary,  shall be  insufficient to pay in full all amounts to
which such Holders are entitled  pursuant to subparagraph  (b) of this paragraph
12, no such  distribution  shall be made on  account  of any shares of any other
class or series of  Preferred  Shares  ranking  on a parity  with the  shares of
Municipal  Preferred  with  respect  to the  distribution  of  assets  upon such
dissolution, liquidation or winding up unless proportionate distributive amounts
shall be paid on account  of the  shares of  Municipal  Preferred,  ratably,  in
proportion  to the full  distributable  amounts  for which  holders  of all such
parity shares are respectively  entitled upon such  dissolution,  liquidation or
winding up.

(4) Rights of Junior  Shares.  Subject to the rights of the holders of shares of
any series or class or classes of shares  ranking on a parity with the shares of
Municipal Preferred with respect to the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Trust,  after payment shall have
been  made in full to the  Holders  of the  shares  of  Municipal  Preferred  as
provided in  subparagraph  (b) of this paragraph 12, but not prior thereto,  any
other  series or class or  classes  of shares  ranking  junior to the  shares of
Municipal Preferred with respect to the distribution of assets upon dissolution,
liquidation  or winding up of the  affairs  of the Trust  shall,  subject to the
respective  terms and  provisions  (if any)  applying  thereto,  be  entitled to
receive any and all assets remaining to be paid or distributed,  and the Holders
of the shares of Municipal Preferred shall not be entitled to share therein.

(5)  Certain  Events Not  Constituting  Liquidation.  Neither the sale of all or
substantially  all of the  property or business of the Trust,  nor the merger or
consolidation  of the Trust  into or with any  Massachusetts  business  trust or
corporation nor the merger or consolidation of any Massachusetts  business trust
or  corporation  into or with the Trust shall be a  dissolution,  liquidation or
winding up, whether voluntary or involuntary, for the purposes of this paragraph
12.

13.      Miscellaneous.


(1)  Amendment  of this Section 12.1 to Add  Additional  Series.  Subject to the
provisions  of  subparagraph  (c) of  paragraph  10 of this Part I, the Board of
Trustees may, by resolution duly adopted,  without shareholder  approval (except
as otherwise provided by this Section 12.1 or required by applicable law), amend
Section 12.1 to (1) reflect any amendment  hereto which the Board of Trustees is
entitled to adopt pursuant to the terms of this Section 12.1 without shareholder
approval or (2) add  additional  series of  Municipal  Preferred  or  additional
shares of a series of Municipal  Preferred (and terms  relating  thereto) to the
series and shares of Municipal  Preferred  theretofore  described thereon.  Each
such additional  series and all such additional  shares shall be governed by the
terms of this Section 12.1.

(2)      [Reserved]


(3) No Fractional  Shares. No fractional shares of Municipal  Preferred shall be
issued.

(4) Status of Shares of  Municipal  Preferred  Redeemed,  Exchanged or Otherwise
Acquired  by the  Trust.  Shares of  Municipal  Preferred  which  are  redeemed,
exchanged  or  otherwise  acquired  by the Trust  shall  return to the status of
authorized and unissued Preferred Shares without designation as to series.

(5) Board May Resolve  Ambiguities.  To the extent  permitted by applicable law,
the Board of Trustees  may  interpret or adjust the  provisions  of this Section
12.1 to resolve any  inconsistency  or ambiguity or to remedy any formal defect,
and may  amend  this  Section  12.1 with  respect  to any  series  of  Municipal
Preferred prior to this issuance of shares of such series.

(6) Headings Not Determinative.  The headings contained in this Section 12.1 are
for convenience of reference only and shall not

affect the meaning or interpretation of this Section 12.1.

(7) Notices.  All notices or communications,  unless otherwise  specified in the
ByLaws of the Trust or this Section  12.1,  shall be  sufficiently  given if in
writing and delivered in person or mailed by firstclass mail, postage prepaid.

                                     PART II

14.      Orders.


(1) Prior to the Submission Deadline on each Auction Date for shares of a series
of Municipal Preferred:
(1)  each  Beneficial  Owner  of  shares  of  such  series  may  submit  to  its
BrokerDealer by telephone or otherwise information as to:

(1)               the number of Outstanding  shares, if any, of such series held
                  by such Beneficial Owner which such Beneficial  Owners desires
                  to continue to hold without regard to the Applicable  Rate for
                  shares of such series for the next  succeeding  Rate Period of
                  such shares;

(2)               the number of Outstanding  shares, if any, of such series held
                  by such Beneficial Owner which such Beneficial Owner offers to
                  sell if the Applicable  Rate for shares of such series for the
                  next  succeeding Rate Period of shares of such series shall be
                  less  than the rate per  annum  specified  by such  Beneficial
                  Owner; and/or

(3)               the number of Outstanding  shares, if any, of such series held
                  by such Beneficial Owner which such Beneficial Owner offers to
                  sell without regard to the Applicable  Rate for shares of such
                  series for the next  succeeding  Rate Period of shares of such
                  series; and

(2)      one or more BrokerDealers, using lists of Potential Beneficial Owners,
         shall in good faith for the purpose of conducting a competitive Auction
         in a  commercially  reasonable  manner,  contact  Potential  Beneficial
         Owners (by  telephone  or  otherwise),  including  Persons that are not
         Beneficial  Owners, on such lists to determine the number of shares, if
         any, of such series which each such Potential  Beneficial  Owner offers
         to  purchase if the  Applicable  Rate for shares of such series for the
         next  succeeding Rate Period of shares of such series shall not be less
         than the rate per annum specified by such Potential Beneficial Owner.

For  purposes  hereof,  the  communication  by a  Beneficial  Owner or Potential
Beneficial Owner to a BrokerDealer, or by a BrokerDealer to the Auction Agent,
of information  referred to in clause (i)(a),  (i)(B),  (i)(C),  or (ii) of this
subparagraph  (a) is hereinafter  referred to as an Order and  collectively as
Orders and each Beneficial  Owner and each Potential  Beneficial Owner placing
an Order with a BrokerDealer,  and such BrokerDealer placing an Order with the
Auction Agent,  is  hereinafter  referred to as a Bidder and  collectively  as
Bidders;  an Order containing the information  referred to in clause (i)(A) of
this  subparagraph  (a)  is  hereinafter  referred  to  as a  Hold  Order  and
collectively as Hold Orders;  an Order containing the information  referred to
in clause (i)(B) or (ii) of this subparagraph (a) is hereinafter  referred to as
a Bid and  collectively  as Bids;  and an Order  containing the  information
referred to in clause (i)(C) of this subparagraph (a) is hereinafter referred to
as a Sell Order and collectively as Sell Orders.

(2) (i) A Bid by a Beneficial  Owner or an Existing Holder of shares of a series
of  Municipal  Preferred  subject  to an  Auction  on  any  Auction  Date  shall
constitute an irrevocable offer to sell:

(1)               the number of Outstanding  shares of such series  specified in
                  such Bid if the  Applicable  Rate for  shares  of such  series
                  determined  on such  Auction  Date shall be less than the rate
                  specified therein;

(2)               such number or a lesser number of  Outstanding  shares of such
                  series to be determined as set forth in paragraph  4(a)(iv) of
                  this Part II if the Applicable  Rate for shares of such series
                  determined  on such  Auction  Date  shall be equal to the rate
                  specified therein; or

(3)               the number of Outstanding  shares of such series  specified in
                  such Bid if the rate  specified  therein  shall be higher than
                  the Maximum Rate for shares of such series,  or such number or
                  a lesser  number of  Outstanding  shares of such  series to be
                  determined as set forth in paragraph 4(b)(iii) of this Part II
                  if the rate specified therein shall be higher than the Maximum
                  Rate for shares of such series and  Sufficient  Clearing  Bids
                  for shares of such series do not exist.

                  (ii) A Sell Order by a Beneficial  Owner or an Existing Holder
         of shares of a series of Municipal  Preferred  subject to an Auction on
         any Auction Date shall constitute an irrevocable offer to sell:

(A)  the number of Outstanding shares of such series specified in such
Sell Order; or

                           (B) such  number or a lesser  number  of  Outstanding
                  shares of such series as set forth in  paragraph  4(b)(iii) of
                  this Part II if  Sufficient  Clearing  Bids for shares of such
                  series do not exist;

         provided, however, that a BrokerDealer that is an Existing Holder with
         respect  to  shares  of a series of  Municipal  Preferred  shall not be
         liable to any Person for failing to sell such shares pursuant to a Sell
         Order described in the proviso to paragraph 2(c) of this Part II if (1)
         such shares were  transferred by the Beneficial  Owner thereof  without
         compliance by such Beneficial Owner or its transferee BrokerDealer (or
         other transferee person, if permitted by the Trust) with the provisions
         of paragraph 7 of this Part II or (2) such  BrokerDealer  has informed
         the Auction Agent pursuant to the terms of its BrokerDealer  Agreement
         that,  according to such  BrokerDealers  records,  such BrokerDealer
         believes it is not the Existing Holder of such shares.

                  (iii) A Bid by a  Potential  Beneficial  Holder or a Potential
         Holder  of  shares of a series of  Municipal  Preferred  subject  to an
         Auction on any Auction Date shall  constitute an  irrevocable  offer to
         purchase:

                           (A) the number of  Outstanding  shares of such series
                  specified  in such Bid if the  Applicable  Rate for  shares of
                  such series  determined  on such  Auction Date shall be higher
                  than the rate specified therein; or

                           (B) such  number or a lesser  number  of  Outstanding
                  shares of such  series as set forth in  paragraph  4(a)(v)  of
                  this Part II if the Applicable  Rate for shares of such series
                  determined  on such  Auction  Date  shall be equal to the rate
                  specified therein.

(3)      No Order for any number of shares of Municipal Preferred other than
whole shares shall be valid.

15.      Submission of Orders by BrokerDealers to Auction Agent.



(1) Each BrokerDealer shall submit in writing to the Auction Agent prior to the
Submission  Deadline  on each  Auction  Date all Orders for shares of  Municipal
Preferred of a series  subject to an Auction on such  Auction  Date  obtained by
such BrokerDealer, designating itself (unless otherwise permitted by the Trust)
as an Existing Holder in respect of shares subject to Orders submitted or deemed
submitted  to it by  Beneficial  Owners and as a Potential  Holder in respect of
shares subject to Orders  submitted to it by Potential  Beneficial  Owners,  and
shall specify with respect to each Order for such shares:

(1)      the name of the Bidder placing such Order (which shall be the
BrokerDealer unless otherwise permitted by the Trust);

(2) the aggregate number of shares of such series that
are the subject of such Order;

(3)      to the extent that such Bidder is an Existing Holder of
shares of such series:

(1)      the number of shares, if any, of such series subject to
any Hold Order of such Existing Holder;

(2)      the number of shares, if any, of such series subject to
any Bid of such Existing Holder and the rate specified in such Bid;
                  and

(3)      the number of shares, if any, of such series subject to
any Sell Order of such Existing Holder; and

(4)      to the extent such Bidder is a Potential Holder of shares
of such series, the rate and number of shares of such series
         specified in such Potential Holders Bid.

(2) If any rate  specified  in any Bid contains  more than three  figures to the
right of the decimal  point,  the Auction  Agent shall round such rate up to the
next highest one thousandth (.001) of 1%.

(3) If an Order or Orders  covering all of the  Outstanding  shares of Municipal
Preferred  of a series  held by any  Existing  Holder  is not  submitted  to the
Auction Agent prior to the Submission  Deadline,  the Auction Agent shall deem a
Hold  Order to have  been  submitted  by or on behalf  of such  Existing  Holder
covering the number of  Outstanding  shares of such series held by such Existing
Holder and not  subject to Orders  submitted  to the  Auction  Agent;  provided,
however,  that if an Order or Orders covering all of the  Outstanding  shares of
such series held by any Existing  Holder is not  submitted to the Auction  Agent
prior to the  Submission  Deadline  for an Auction  relating  to a Special  Rate
Period consisting of more than 28 Rate Period Days, the Auction Agent shall deem
a Sell  Order to have been  submitted  by or on behalf of such  Existing  Holder
covering the number of  outstanding  shares of such series held by such Existing
Holder and not subject to Orders submitted to the Auction Agent.

(4) If one or more  Orders of an  Existing  Holder is  submitted  to the Auction
Agent covering in the aggregate  more than the number of  Outstanding  shares of
Municipal  Preferred  of a series  subject to an Auction  held by such  Existing
Holder,  such  Orders  shall  be  considered  valid  in the  following  order of
priority:

(1)      all Hold Orders for shares of such series  shall be  considered  valid,
         but only up to and including in the aggregate the number of Outstanding
         shares of such series held by such Existing  Holder,  and if the number
         of shares of such series subject to such Hold Orders exceeds the number
         of Outstanding  shares of such series held by such Existing Holder, the
         number of shares  subject to each such Hold Order  shall be reduced pro
         rata to cover the number of  Outstanding  shares of such series held by
         such Existing Holder;

(2) (A) any Bid for shares of such series shall be considered valid up to and
                  including  the excess of the number of  Outstanding  shares of
                  such  series held by such  Existing  Holder over the number of
                  shares of such series  subject to any Hold Orders  referred to
                  in clause (i) above;

                           (B) subject to subclause (A), if more than one Bid of
                  an Existing  Holder for shares of such series is  submitted to
                  the  Auction  Agent  with the  same  rate  and the  number  of
                  Outstanding  shares  of such  series  subject  to such Bids is
                  greater than such excess,  such Bids shall be considered valid
                  up to and including the amount of such excess,  and the number
                  of shares  of such  series  subject  to each Bid with the same
                  rate shall be  reduced  pro rata to cover the number of shares
                  of such series equal to such excess;

                           (C) subject to  subclauses  (A) and (B), if more than
                  one Bid of an  Existing  Holder for  shares of such  series is
                  submitted to the Auction Agent with different rates, such Bids
                  shall  be  considered  valid in the  ascending  order of their
                  respective  rates  up to and  including  the  amount  of  such
                  excess; and

                           (D) in any such event,  the  number,  if any, of such
                  Outstanding  shares of such  series  subject to any portion of
                  Bids  considered  not  valid in whole  or in part  under  this
                  clause  (ii)  shall be  treated  as the  subject  of a Bid for
                  shares of such series by or on behalf of a Potential Holder at
                  the rate therein specified; and

(3)      all Sell Orders for shares of such series shall be considered  valid up
         to and including the excess of the number of Outstanding shares of such
         series  held by such  Existing  Holder  over the sum of  shares of such
         series subject to valid Hold Orders referred to in clause (i) above and
         valid Bids referred to in clause (ii) above.

(5) If  more  than  one Bid for one or more  shares  of a  series  of  Municipal
Preferred  is submitted  to the Auction  Agent by or on behalf of any  Potential
Holder, each such Bid submitted shall be a separate Bid with the rate and number
of shares therein specified.

(6) Any Order submitted by a Beneficial Owner or a Potential Beneficial Owner to
its  BrokerDealer,  or by a  BrokerDealer  to the Auction Agent,  prior to the
Submission Deadline on any Auction Date, shall be irrevocable.

16
Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable Rate.


(1) Not earlier than the Submission  Deadline on each Auction Date for shares of
a series of  Municipal  Preferred,  the Auction  Agent shall  assemble all valid
Orders submitted or deemed submitted to it by the  BrokerDealers  in respect of
shares of such series  (each such Order as  submitted  or deemed  submitted by a
BrokerDealer  being  hereinafter  referred to individually as a Submitted Hold
Order, a Submitted Bid or a Submitted Sell Order, as the case may be, or as
a Submitted  Order, and  collectively as Submitted  Hold Orders,  Submitted
Bids or Submitted Sell Orders, as the case may be, or as Submitted  Orders)
and shall determine for such series:

(1)      the excess of the number of Outstanding  shares of such series over the
         number of  Outstanding  shares of such series subject to Submitted Hold
         Orders  (such excess being  hereinafter  referred to as the  Available
         Municipal Preferred of such series);

(2)      from the Submitted Orders for shares of such series whether:

(1)               the number of  Outstanding  shares of such  series  subject to
                  Submitted  Bids of Potential  Holders  specifying  one or more
                  rates  equal to or lower than the  Maximum  Rate for shares of
                  such series;

                  exceeds or is equal to the sum of:

(2)               the number of  Outstanding  shares of such  series  subject to
                  Submitted  Bids of  Existing  Holders  specifying  one or more
                  rates  higher than the Maximum Rate for shares of such series;
                  and

(3)the number of Outstanding shares of such series subject to
Submitted Sell Orders

                  (in the event such excess or such equality  exists (other than
                  because the number of shares of such series in subclauses  (B)
                  and (C) above is zero because all of the Outstanding shares of
                  such  series  are  subject to  Submitted  Hold  Orders),  such
                  Submitted  Bids  in  subclause  (A)  above  being  hereinafter
                  referred to  collectively  as  Sufficient  Clearing Bids for
                  shares of such series); and

(3)      if Sufficient Clearing Bids for shares of such series exist, the lowest
         rate  specified  in such  Submitted  Bids (the  Winning  Bid Rate for
         shares of such series) which if:

(1)               (I) each such  Submitted  Bid of Existing  Holders  specifying
                  such  lowest  rate and (II) all other such  Submitted  Bids of
                  Existing Holders  specifying  lower rates were rejected,  thus
                  entitling such Existing Holders to continue to hold the shares
                  of such series that are subject to such Submitted Bids; and

(2)               (I) each such  Submitted Bid of Potential  Holders  specifying
                  such  lowest  rate and (II) all other such  Submitted  Bids of
                  Potential Holders specifying lower rates were accepted;

         would result in such Existing Holders  described in subclause (A) above
         continuing to hold an aggregate  number of  Outstanding  shares of such
         series which,  when added to the number of  Outstanding  shares of such
         series to be purchased by such Potential Holders described in subclause
         (B) above, would equal not less than the Available  Municipal Preferred
         of such series.

(2) Promptly  after the Auction  Agent has made the  determinations  pursuant to
subparagraph  (a) of this  paragraph 3, the Auction Agent shall advise the Trust
of the Maximum Rate for shares of the series of Municipal Preferred for which an
Auction is being held on the Auction Date and, based on such determination,  the
Applicable  Rate for shares of such series for the next  succeeding  Rate Period
thereof as follows:

(1)      if Sufficient  Clearing Bids for shares of such series exist,  that the
         Applicable  Rate for all shares of such series for the next  succeeding
         Rate Period  thereof  shall be equal to the Winning Bid Rate for shares
         of such series so determined;

(2)      if  Sufficient  Clearing  Bids for  shares of such  series do not exist
         (other than  because all of the  Outstanding  shares of such series are
         subject to Submitted  Hold Orders),  that the  Applicable  Rate for all
         shares of such series for the next succeeding Rate Period thereof shall
         be equal to the Maximum Rate for shares of such series; or

(3)      if all of  the  Outstanding  shares  of  such  series  are  subject  to
         Submitted Hold Orders,  that the Applicable Rate for all shares of such
         series for the next  succeeding  Rate  Period  thereof  shall be as set
         forth in subparagraph (c) of this paragraph 3.

(3) For purposes of  subparagraph  (b)(iii) of this  paragraph 3, the Applicable
Rate for shares of such series for the next  succeeding Rate Period of shares of
such series shall be equal to the lesser of the Kenny Index (if such Rate Period
consists of fewer than 183 Rate Period  Days) or the product of (A) (I) the AA
Composite  Commercial  Paper Rate on such Auction Date for such Rate Period,  if
such Rate Period  consists of fewer than 183 Rate Period Days; (II) the Treasury
Bill  Rate on such  Auction  Date for such  Rate  Period,  if such  Rate  Period
consists  of more than 182 but fewer  than 365 Rate  Period  Days;  or (III) the
Treasury  Note  Rate on such  Auction  Date for such Rate  Period,  if such Rate
Period is more than 364 Rate Period Days (the rate  described  in the  foregoing
clause (A)(I),  (II) or (III),  as  applicable,  being referred to herein as the
Benchmark  Rate)  and  (B)  1  minus  the  maximum  marginal  regular  Federal
individual income tax rate applicable to ordinary income or the maximum marginal
regular  Federal  corporate  income  tax rate  applicable  to  ordinary  income,
whichever  is greater;  provided,  however,  that if the Trust has  notified the
Auction  Agent of its intent to  allocate  to shares of such series in such Rate
Period any net capital  gains or other  income  taxable  for Federal  income tax
purposes (Taxable  Income),  the Applicable Rate for shares of such series for
such Rate  Period will be (i) if the  Taxable  Yield Rate (as defined  below) is
greater than the Benchmark Rate, then the Benchmark Rate, or (ii) if the Taxable
Yield Rate is less than or equal to the Benchmark  Rate,  then the rate equal to
the sum of (x) the lesser of the Kenny  Index (if such Rate  Period  consists of
fewer than 183 Rate Period Days) or the product of the Benchmark Rate multiplied
by the factor set forth in the  preceding  clause (B) and (y) the product of the
maximum  marginal  regular  Federal  individual  income tax rate  applicable  to
ordinary income or the maximum  marginal  regular Federal  corporate  income tax
applicable to ordinary income,  whichever is greater,  multiplied by the Taxable
Yield Rate. For purposes of the  foregoing,  Taxable Yield Rate means the rate
determined  by  (a)  dividing  the  amount  of  Taxable  Income   available  for
distribution per such share of Municipal  Preferred by the number of days in the
Dividend  Period in respect of which such Taxable Income is  contemplated  to be
distributed,  (b) multiplying the amount  determined in (a) above by 365 (in the
case of a  Dividend  Period  of 7 Rate  Period  Days) or 360 (in the case of any
other Dividend  Period),  and (c) dividing the amount determined in (b) above by
$25,000.

17.  Acceptance  and Rejection of Submitted  Bids and Submitted  Sell Orders and
Allocation  of Shares.  Existing  Holders  shall  continue to hold the shares of
Municipal Preferred that are subject to Submitted Hold Orders, and, based on the
determinations made pursuant to subparagraph (a) of paragraph 3 of this Part II,
the Submitted  Bids and  Submitted  Sell Orders shall be accepted or rejected by
the  Auction  Agent and the Auction  Agent  shall take such other  action as set
forth below:

(1) If Sufficient  Clearing  Bids for shares of a series of Municipal  Preferred
have been made,  all Submitted Sell Orders with respect to shares of such series
shall be accepted and, subject to the provisions of subparagraphs (d) and (e) of
this  paragraph 4, Submitted Bids with respect to shares of such series shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids with respect to shares of such series shall be rejected:

(1)      Existing  Holders  Submitted Bids for shares of such series specifying
         any rate that is higher  than the  Winning  Bid Rate for shares of such
         series shall be accepted,  thus requiring each such Existing  Holder to
         sell the shares of Municipal Preferred subject to such Submitted Bids;

(2)      Existing  Holders  Submitted Bids for shares of such series specifying
         any rate that is lower  than the  Winning  Bid Rate for  shares of such
         series shall be rejected,  thus entitling each such Existing  Holder to
         continue  to hold the  shares of  Municipal  Preferred  subject to such
         Submitted Bids;

(3)      Potential Holders Submitted Bids for shares of such series
specifying any rate that is lower than the Winning Bid Rate for
         shares of such series shall be accepted;

(4)      each  Existing  Holders  Submitted  Bid  for  shares  of  such  series
         specifying  a rate that is equal to the  Winning Bid Rate for shares of
         such series shall be rejected,  thus entitling such Existing  Holder to
         continue  to hold the  share of  Municipal  Preferred  subject  to such
         Submitted  Bid,  unless the number of  Outstanding  shares of Municipal
         Preferred  subject to all such Submitted Bids shall be greater than the
         number of shares of  Municipal  Preferred  (remaining  shares) in the
         excess of the  Available  Municipal  Preferred  of such series over the
         number of shares of  Municipal  Preferred  subject  to  Submitted  Bids
         described in clauses (ii) and (iii) of this  subparagraph (a), in which
         event such  Submitted Bid of such Existing  Holder shall be rejected in
         part,  and such  Existing  Holder shall be entitled to continue to hold
         shares of Municipal  Preferred  subject to such Submitted Bid, but only
         in an amount  equal to the number of shares of  Municipal  Preferred of
         such series obtained by multiplying the number of remaining shares by a
         fraction,  the  numerator  of which shall be the number of  Outstanding
         shares of Municipal  Preferred held by such Existing  Holder subject to
         such Submitted Bid and the  denominator of which shall be the aggregate
         number of  Outstanding  shares of Municipal  Preferred  subject to such
         Submitted Bids made by all such Existing  Holders that specified a rate
         equal to the Winning Bid Rate for shares of such series; and

(5)      each  Potential  Holders  Submitted  Bid for  shares  of  such  series
         specifying  a rate that is equal to the  Winning  Bid Rate of shares of
         such series shall be accepted but only in an amount equal to the number
         of shares of such series  obtained by multiplying  the number of shares
         in the excess of the Available  Municipal Preferred of such series over
         the number of shares of Municipal  Preferred  subject to Submitted Bids
         described in clauses (ii)  through (iv) of this  subparagraph  (a) by a
         fraction,  the  numerator  of which shall be the number of  Outstanding
         shares of Municipal  Preferred  subject to such  Submitted Bids and the
         denominator  of which  shall be the  aggregate  number  of  Outstanding
         shares of Municipal  Preferred  subject to such  Submitted Bids made by
         all such  Potential  Holders that specified a rate equal to the Winning
         Bid Rate for shares of such series.

(2) If Sufficient  Clearing  Bids for shares of a series of Municipal  Preferred
have not been made (other than  because  all of the  Outstanding  shares of such
series are subject to  Submitted  Hold  Orders),  subject to the  provisions  of
subparagraph (d) of this paragraph 4, Submitted Orders for shares of such series
shall be accepted or rejected as follows in the following  order of priority and
all other Submitted Bids for shares of such series shall be rejected:

(1)      Existing  Holders  Submitted Bids for shares of such series specifying
         any rate that is equal to or lower than the Maximum  Rate for shares of
         such series shall be rejected,  thus entitling such Existing Holders to
         continue  to hold the  shares of  Municipal  Preferred  subject to such
         Submitted Bids;

(2)      Potential  Holders Submitted Bids for shares of such series specifying
         any rate that is equal to or lower than the Maximum  Rate for shares of
         such series shall be accepted; and

(3)      Each  Existing  Holders  Submitted  Bid  for  shares  of  such  series
         specifying  any rate that is higher than the Maximum Rate for shares of
         such series and the Submitted  Sell Orders for shares of such series of
         each Existing  Holder shall be accepted,  thus  entitling each Existing
         Holder  that  submitted  or on  whose  behalf  was  submitted  any such
         Submitted Bid or Submitted Sell Order to sell the shares of such series
         subject to such  Submitted  Bid or  Submitted  Sell Order,  but in both
         cases only in an amount  equal to the  number of shares of such  series
         obtained by multiplying  the number of shares of such series subject to
         Submitted Bids described in clause (ii) of this  subparagraph  (b) by a
         fraction,  the  numerator  of which shall be the number of  Outstanding
         shares of such  series  held by such  Existing  Holder  subject to such
         Submitted  Bid or  Submitted  Sell Order and the  denominator  of which
         shall be the  aggregate  number of  Outstanding  shares of such  series
         subject to all such Submitted Bids and Submitted Sell Orders.

(3) If all of the  Outstanding  shares of a series of  Municipal  Preferred  are
subject to Submitted  Hold Orders,  all Submitted Bids for shares of such series
shall be rejected.

(4) If,  as a  result  of the  procedures  described  in  clause  (iv) or (v) of
subparagraph  (a) or clause (iii) of  subparagraph  (b) of this paragraph 4, any
Existing  Holder would be entitled or required to sell, or any Potential  Holder
would be entitled or required to purchase,  a fraction of a share of a series of
Municipal Preferred on any Auction Date, the Auction Agent shall, in such manner
as it shall  determine  in its sole  discretion,  round up or down the number of
shares of  Municipal  Preferred  of such series to be  purchased  or sold by any
Existing  Holder or  Potential  Holder on such  Auction Date as a result of such
procedures  so that the number of shares so purchased  or sold by each  Existing
Holder  or  Potential  Holder  on such  Auction  Date  shall be whole  shares of
Municipal Preferred.

(5) If, as a result of the  procedures  described in clause (v) of paragraph (a)
of this  paragraph  4, any  Potential  Holder  would be  entitled or required to
purchase less than a whole share of series of Municipal Preferred on any Auction
Date, the Auction Agent shall,  in such manner as it shall determine in its sole
discretion,  allocate shares of Municipal  Preferred of such series for purchase
among Potential Holders so that only whole shares of Municipal Preferred of such
series are purchased on such Auction Date as a result of such  procedures by any
Potential  Holder,  even if such  allocation  results  in one or more  Potential
Holders not  purchasing  shares of  Municipal  Preferred  of such series on such
Auction Date.

(6) Based on the  results of each  Auction  for shares of a series of  Municipal
Preferred,  the Auction Agent shall determine the aggregate  number of shares of
such series to be purchased and the aggregate number of shares of such series to
be sold by  Potential  Holders and Existing  Holders  and,  with respect to each
Potential Holder and Existing  Holder,  to the extent that such aggregate number
of shares to be purchased and such aggregate number of shares to be sold differ,
determine to which other  Potential  Holder(s) or Existing  Holder(s) they shall
deliver,  or from which other  Potential  Holder(s) or Existing  Holder(s)  they
shall receive, as the case may be, shares of Municipal Preferred of such series.
Notwithstanding  any  provision  of the  Auction  Procedures  or the  Settlement
Procedures to the contrary,  in the event an Existing Holder or Beneficial Owner
of  shares  of  a  series  of  Municipal   Preferred  with  respect  to  whom  a
BrokerDealer  submitted  a Bid to the  Auction  Agent for such  shares that was
accepted in whole or in part, or submitted or is deemed to have submitted a Sell
Order for such shares that was  accepted in whole or in part,  fails to instruct
its Agent  Member to deliver  such  shares  against  payment  therefor,  partial
deliveries  of shares of Municipal  Preferred  that have been made in respect of
Potential Holders or Potential  Beneficial Owners Submitted Bids for shares of
such series that have been  accepted in whole or in part shall  constitute  good
delivery to such Potential Holders and Potential Beneficial Owners.

(7) Neither the Trust nor the Auction  Agent nor any  affiliate  of either shall
have any  responsibility or liability with respect to the failure of an Existing
Holder, a Potential Holder, a Benefit Owner, a Potential Beneficial Owner or its
respective  Agent Member to deliver shares of Municipal  Preferred of any series
or to pay for shares of  Municipal  Preferred  of any series  sold or  purchased
pursuant to the Auction Procedures or otherwise.

18.  Notification of Allocations.  Whenever the Trust intends to include any net
capital  gain or other  income  taxable for Federal  income tax  purposes in any
dividend on shares of Municipal  Preferred,  the Trust  shall,  in the case of a
Minimum  Rate  Period or a Special  Rate Period of 28 Rate Period Days or fewer,
and may, in the case of any other Special Rate Period,  notify the Auction Agent
of the amount to be so included  not later than the  Dividend  Payment Date next
preceding the Auction Date on which the Applicable  Rate for such dividend is to
be established.  Whenever the Auction Agent receives such notice from the Trust,
it will be required in turn to notify  each  BrokerDealer,  who, on or prior to
such Auction Date,  in  accordance  with its  BrokerDealer  Agreement,  will be
required to notify its  Beneficial  Owners and  Potential  Beneficial  Owners of
shares of Municipal  Preferred  believed by it to be interested in submitting an
Order in the Auction to be held on such Auction Date.

19.  Auction  Agent.  For so long  as any  shares  of  Municipal  Preferred  are
outstanding,  the Auction Agent, duly appointed by the Trust to so act, shall be
in each case a commercial  bank,  trust company or other  financial  institution
independent of the Trust and its affiliates  (which however,  may engage or have
engaged in business  transactions  with the Trust or its  affiliates)  and at no
time  shall  the  Trust or any of its  affiliates  act as the  Auction  Agent in
connection with the Auction Procedures.  If the Auction Agent resigns or for any
reason its  appointment  is  terminated  during  any  period  that any shares of
Municipal  Preferred are  outstanding,  the Board of Trustees shall use its best
efforts promptly thereafter to appoint another qualified  commercial bank, trust
company or  financial  institution  to act as the  Auction  Agent.  The  Auction
Agents  registry  of  Existing  Holders  of  shares  of a series  of  Municipal
Preferred shall be conclusive and binding on the BrokerDealers. A BrokerDealer
may inquire of the Auction Agent between 3:00 p.m. on the Business Day preceding
an Auction for shares of a series of  Municipal  Preferred  and 9:30 a.m. on the
Auction Date for such  Auction to ascertain  the number of shares of a series in
respect of which the Auction Agent has determined  such  BrokerDealer  to be an
Existing  Holder.  If such  BrokerDealer  believes it is the Existing Holder of
fewer shares of such series than  specified by the Auction  Agent in response to
such BrokerDealers inquiry, such BrokerDealer may so inform the Auction Agent
of that belief. Such BrokerDealer shall not, in its capacity as Existing Holder
of shares of such series,  submit Orders in such Auction in respect of shares of
such  series  covering in the  aggregate  more than the number of shares of such
series  specified  by the  Auction  Agent in  response  to such  BrokerDealers
inquiry.

20. Transfer of Shares of Municipal Preferred. Unless otherwise permitted by the
Trust, a Beneficial Owner or an Existing Holder may sell,  transfer or otherwise
dispose of shares of Municipal  Preferred only in whole shares and only pursuant
to a Bid or Sell Order  placed with the  Auction  Agent in  accordance  with the
procedures described in this Part II or to a BrokerDealer;  provided,  however,
that (a) a sale,  transfer or other disposition of shares of Municipal Preferred
from a  customer  of a  BrokerDealer  who is  listed  on the  records  of  that
BrokerDealer  as the  holder of such  shares to that  BrokerDealer  or another
customer  of that  BrokerDealer  shall not be deemed to be a sale,  transfer or
other disposition for purposes of this paragraph 7 if such BrokerDealer remains
the  Existing  Holder  of  the  shares  so  sold,  transferred  or  disposed  of
immediately after such sale,  transfer or disposition and (b) in the case of all
transfers other than pursuant to Auctions,  the  BrokerDealer (or other Person,
if  permitted  by the  Trust) to whom such  transfer  is made  shall  advise the
Auction Agent of such transfer.

21. Global Certificate. Prior to the commencement of a Voting Period, (i) all of
the  shares of a series of  Municipal  Preferred  outstanding  from time to time
shall be  represented  by one global  certificate  registered in the name of the
Securities  Depository  or its nominee and (ii) no  registration  of transfer of
shares  of a series  of  Municipal  Preferred  shall be made on the books of the
Trust to any Person other than the Securities Depository or its nominee.

                                                     Article 13.
                                   Amendments

         Except as  otherwise  expressly  stated  herein,  these  ByLaws may be
amended or repealed,  in whole or in part, by a majority of the Trustees then in
office at any meeting of the Trustees, or by one or more writings signed by such
a majority.