<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>s462456a.txt
<DESCRIPTION>EXHIBIT (A)(III)
<TEXT>


                           THE GABELLI UTILITY TRUST

                           STATEMENT OF PREFERENCES

                                      OF

                   SERIES B AUCTION MARKET PREFERRED SHARES

         The Gabelli Utility Trust, a Delaware statutory trust, (the "Trust"),
hereby certifies that:

         FIRST: The Board of Trustees of the Trust, at a meeting duly convened
and held on February 19, 2003, pursuant to authority expressly vested in it by
Article III of the Agreement and Declaration of Trust, adopted resolutions
classifying and designating 5,000 authorized but unissued capital shares of
the Trust, par value $.001 per share, as "Series B Auction Market Preferred
Shares" and authorizing the issuance of up to 5,000 Series B Auction Market
Preferred Shares at such times as the Pricing Committee should determine.

         SECOND: The Pricing Committee, at a meeting duly convened and held on
July 22, 2003, pursuant to authority granted it by the Board of Trustees of
the Trust at its February 19, 2003 meeting, approved the issuance by the Trust
of up to 1000 Series B Auction Market Preferred Shares.

         THIRD: The preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the Series B Auction Market Preferred Shares, par value $.001
per share, as set by the Board of Trustees are as follows:

                                  DESIGNATION

         Series B Preferred Shares: A series of 5,000 preferred shares, par
value $0.001 per share, liquidation preference $25,000 per share, is hereby
designated "Series B Auction Market Preferred Shares" (the "Series B Preferred
Shares"). Each share of Series B Preferred Shares may be issued on a date to
be determined by the Board of Trustees of the Trust; have an initial dividend
rate stated as a rate per annum, an initial Dividend Period and an initial
Dividend Payment Date as shall be determined in advance of the issuance
thereof by the Board of Trustees of the Trust; and have such other
preferences, rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, in addition to those
required by applicable law or set forth in the Governing Documents applicable
to Preferred Shares of the Trust, as are set forth in this Statement of
Preferences. The Series B Preferred Shares shall constitute a separate series
of Preferred Shares.

         As used in this Statement of Preferences, unless the context requires
otherwise, each capitalized term shall have the meaning ascribed to it in
paragraph 13 of Part I and paragraph 1 of Part II of this Statement of
Preferences.

                    Part I: Series B Preferred Shares Terms

1.    Number of Shares; Ranking.

      (a) The initial number of authorized and classified shares constituting
the Series B Preferred Shares to be issued is 1,000. Additional authorized and
classified Series B Preferred Shares may be issued at any time upon resolution
by the Board of Trustees. No fractional Series B Preferred Shares shall be
issued.

      (b) Series B Preferred Shares which at any time have been redeemed or
purchased by the Trust shall, after such redemption or purchase, have the
status of authorized but unissued Preferred Shares.

      (c) The Series B Preferred Shares shall rank on a parity with any other
series of Preferred Shares as to the payment of dividends to which such share
is entitled.

      (d) No Holder of Series B Preferred Shares shall have, solely by reason
of being such a holder, any preemptive or other right to acquire, purchase or
subscribe for any Preferred Shares or Common Shares or other securities of the
Trust which it may hereafter issue or sell.

2.    Dividends.

      (a) The Holders of Series B Preferred Shares shall be entitled to
receive, when, as and if declared by the Board of Trustees, out of funds
legally available therefor, cumulative cash dividends on their Series B
Preferred Shares at the dividend rate determined by the Board of Trustees in
the manner described under "Designation" above during the period from and
after the date on which the initial Series B Preferred Shares are originally
issued up to and including the last day of the initial Dividend Period and,
thereafter, at the rate, determined as set forth in paragraph 2(c), and no
more, payable on the respective dates determined as set forth in paragraph
2(b). Dividends on the Outstanding Series B Preferred Shares shall accumulate
from the date on which such shares are originally issued.

          (i) Dividends shall be payable on the Series B Preferred Shares
when, as and if declared by the Board of Trustees following the initial
Dividend Payment Date, subject to paragraph 2(b)(ii), with respect to any
Dividend Period of 91 days or less, on the first Business Day following the
last day of such Dividend Period; provided, however, if the Dividend Period is
more than 91 days then monthly on the first Business Day of each calendar
month and on the first Business Day following the last day of such Dividend
Period.

          (ii) If a day for payment of dividends resulting from the
application of paragraph 2(b)(i) above is not a Business Day, then the
Dividend Payment Date shall be the first Business Day following such day for
payment of dividends.

          (iii) The Trust shall pay to the Paying Agent not later than 12:00
noon, New York City time, on the Business Day immediately preceding each
Dividend Payment Date for Series B Preferred Shares, an aggregate amount of
immediately available funds equal to the dividends to be paid to all Holders
of such Series B Preferred Shares on such Dividend Payment Date. The Trust
shall not be required to establish any reserves for the payment of dividends.

          (iv) All moneys paid to the Paying Agent for the payment of
dividends shall be held in trust for the payment of such dividends by the
Paying Agent for the benefit of the Holders specified in paragraph 2(b)(v).
Unless instructed by the Trust in writing the Paying Agent will hold such
moneys uninvested. Any moneys paid to the Paying Agent in accordance with the
foregoing but not applied by the Paying Agent to the payment of dividends,
including interest earned, if any, on such moneys, 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 to have been so applied.

          (v) Each dividend on Series B Preferred Shares shall be paid on the
Dividend Payment Date therefor to the Holders of Series B Preferred Shares as
their names appear on the stock ledger or ownership records of the Trust on
the Business Day immediately preceding such Dividend Payment Date; provided,
however, that if dividends are in arrears, they may be declared and paid at
any time to Holders as their names appear on the stock ledger or ownership
records of the Trust on such date not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board of Trustees. No interest will be
payable in respect of any dividend payment or payments which may be in
arrears.

     (c) (i) For each Dividend Period after the initial Dividend Period for
the Outstanding Series B Preferred Shares, the dividend rate shall be equal to
the rate (stated as a rate per annum) that results from an Auction (but the
rate set at the Auction will not exceed the Maximum Rate); provided, however,
that if an Auction for any subsequent Dividend Period is not held for any
reason (other than as provided in the immediately following sentence) or if
Sufficient Clearing Bids have not been made in an Auction (other than as a
result of all Series B Preferred Shares being the subject of Submitted Hold
Orders), then the dividend rate on each Outstanding share of Series B
Preferred Shares for any such Dividend Period shall be the Maximum Rate,
except as provided in 2(c)(ii) below. If an Auction is not held because an
unforeseen event or unforeseen events cause a day that otherwise would have
been an Auction Date not to be a Business Day, then the length of the then
current Dividend Period shall be extended by seven days (or a multiple thereof
if necessary because of such unforeseen event or events), the Applicable Rate
for such period shall be the Applicable Rate for the Dividend Period so
extended and the Dividend Payment Date for such Dividend Period shall be the
first Business Day immediately succeeding the end of such period.

          (ii) Subject to the cure provisions in paragraph 2(c)(iii) below, a
Default Period with respect to the Outstanding Series B Preferred Shares will
commence if the Trust fails to deposit irrevocably in trust in same-day funds,
with the Paying Agent by 12:00 noon, New York City time on the Business Day
immediately preceding the relevant Dividend Payment Date, the full amount of
any declared dividend on the Outstanding Series B Preferred Shares then
payable on that Dividend Payment Date (a "Dividend Default").

     Subject to the cure provisions of paragraph 2(c)(iii) below, a
Default Period with respect to a Dividend Default or a Redemption Default
shall end on the Business Day on which, by 12:00 noon, New York City time, all
unpaid dividends and any unpaid Redemption Price in respect of such Series B
Preferred Shares shall have been deposited irrevocably in trust in same-day
funds with the Paying Agent. In the case of a Default Period, the following
shall apply:

          A.    Each Dividend Period that commences during a Default Period
                will be a Standard Dividend Period.

          B.    The dividend rate for each Dividend Period that commences and
                concludes during a Default Period will be equal to the Default
                Rate.

          C.    In the event a Holder sells Series B Preferred Shares at an
                Auction that takes place on the day a Dividend Default occurs
                and the Default is not cured in accordance with paragraph
                2(c)(iii) below, such former Holder shall be entitled to
                receive the Default Rate with respect to the Series B
                Preferred Shares such Holder sold at the Auction for the
                Dividend Period with respect to which the Default occurred.

          D.    In the event a Dividend Period commences during a Default
                Period and such Dividend Period continues after such Default
                Period has ended, (a) the dividend rate for the portion of
                such Dividend Period that occurs during the Default Period
                will be the Default Rate and (b) the dividend rate for the
                portion of such Dividend Period that falls outside the Default
                Period will be (i) the Applicable Rate, in the case of the
                first Dividend Period following a Default, or (ii) the Maximum
                Rate, in the case of any other Dividend Period commencing
                during a Default Period.

          E.    The commencement of a Default Period will not by itself cause
                the commencement of a new Dividend Period.

          F.    No Auction will be held during an applicable Default Period;
                provided, however, that if a Default Period shall end prior to
                the end of a Standard Dividend Period that had commenced
                during such Default Period, an Auction will be held on the
                last day of such Standard Dividend Period.

          (iii) No Default Period with respect to a Dividend Default or
Redemption Default shall be deemed to have commenced, unless such default is
due solely to the willful failure of the Trust, if the amount of any dividend
or any Redemption Price due is deposited irrevocably in trust in same-day
funds with the Paying Agent by 12:00 noon, New York City time within three
Business Days after the applicable Dividend Payment Date or Redemption Date,
together with an amount in respect of such Series B Preferred Shares equal to
the Default Rate applied to the amount of such non-payment based on the actual
number of days that would otherwise have comprised the Default Period divided
by 360. The "Default Rate" shall be equal to the Reference Rate multiplied by
three (3).

          (iv) The amount of dividends per Series B Preferred Share payable
(if declared) on each Dividend Payment Date of each Dividend Period of less
than one year (or in respect of dividends on another date in connection with a
redemption during such Dividend Period) shall be computed by multiplying the
relevant Applicable Rate, Default Rate or Maximum Rate, as the case may be,
for such Dividend Period (or a portion thereof) by a fraction, the numerator
of which will be the number of days in such Dividend Period (or portion
thereof) that such Series B Preferred Share was Outstanding and for which the
Applicable Rate, Maximum Rate or the Default Rate was applicable (but in no
event shall the numerator exceed 360) and the denominator of which will be
360, multiplying the amount so obtained by $25,000, and rounding the amount so
obtained to the nearest cent. During any Dividend Period of one year or more,
the amount of dividends per Series B Preferred Share payable on any Dividend
Payment Date (or in respect of dividends on another date in connection with a
redemption during such Dividend Period) will be computed as described in the
preceding sentence except that the numerator, with respect to any full twelve
month period, will be 360.

      (d) Any dividend payment made on Series B Preferred Shares shall first
be credited against the earliest accumulated but unpaid dividends due with
respect to such shares.

      (e) For so long as the Series B Preferred Shares are Outstanding, except
as otherwise contemplated by Part I of this Statement of Preferences, the
Trust shall not pay any dividend or other distribution (other than a dividend
or distribution paid in shares of, or options, warrants or rights to subscribe
for or purchase, Common Shares or other shares, if any, ranking junior to the
Series B Preferred Shares as to dividends and upon liquidation) with respect
to Common Shares or any other capital shares of the Trust ranking junior to
the Series B Preferred Shares as to dividends or upon liquidation, or call for
redemption, redeem, purchase or otherwise acquire for consideration any Common
Shares or other capital shares ranking junior to the Series B Preferred Shares
(except by conversion into or exchange for shares of the Trust ranking junior
to the Series B Preferred Shares as to dividends and upon liquidation),
unless, in each case, (i) immediately after such transaction, the Trust would
have Eligible Assets with an aggregate Discounted Value at least equal to the
Basic Maintenance Amount and Asset Coverage would be achieved, (ii) all
cumulative and unpaid dividends due on or prior to the date of the transaction
have been declared and paid in full with respect to the Trust's Preferred
Shares, including the Series B Preferred Shares (or shall have been declared
and sufficient funds for the payment thereof deposited with the applicable
Paying Agent) and (iii) the Trust has redeemed the full number of Preferred
Shares to be redeemed mandatorily pursuant to any provision for mandatory
redemption contained herein, including, without limitation, any such provision
contained in paragraph 3(a)(ii).

      (f) No full dividends shall be declared or paid on the Series B
Preferred Shares for any Dividend Period or part thereof, unless full
cumulative dividends due through the most recent Dividend Payment Dates
therefor for all Outstanding series of Preferred Shares of the Trust ranking
on a parity with the Series B Preferred Shares as to the payment of dividends
have been or contemporaneously are declared and paid through the most recent
Dividend Payment Dates therefor. If full cumulative dividends due have not
been paid on all Outstanding Preferred Shares, any dividends being paid on
such Preferred Shares (including the Series B Preferred Shares) will be paid
as nearly pro rata as possible in proportion to the respective amounts of
dividends accumulated but unpaid on each such series of Preferred Shares then
Outstanding on the relevant Dividend Payment Date.

3.    Redemption.

      (i) Optional Redemption. After the initial Dividend Period, subject to
any Non-Call Period and the provisions of this paragraph 3, and to the extent
permitted under the 1940 Act and Delaware law, the Trust may, at its option,
redeem in whole or in part out of funds legally available therefor, Series B
Preferred Shares by delivering a notice of redemption not less than 7 calendar
days and not more than 40 calendar days prior to the Redemption Date at the
applicable Redemption Price. Notwithstanding the foregoing, the Trust shall
not give a notice of any redemption pursuant to this paragraph 3(a)(i) unless,
on the date on which the Trust gives such notice (x) the Trust reasonably
believes that, assuming the fulfillment of any conditions precedent specified
in such notice, it will be able to deposit with the Paying Agent when due
Deposit Assets with maturity or tender dates not later than the day preceding
the applicable Redemption Date and having a value not less than the Redemption
Price due to Holders of the Series B Preferred Shares to be redeemed on the
Redemption Date and (y) the Trust would have Eligible Assets with an aggregate
Discounted Value at least equal to the Basic Maintenance Amount and Asset
Coverage immediately subsequent to such redemption, if such redemption were to
occur on such date, it being understood that the provisions of paragraph 3(d)
shall be applicable in such circumstances in the event the Trust makes the
deposit and takes the other action required thereby.

      (ii) Mandatory Redemption. So long as Series B Preferred Shares are
Outstanding, if the Trust fails (A) as of any Valuation Date to meet the Basic
Maintenance Test and such failure is not cured by the Basic Maintenance Amount
Cure Date or (B) as of any Quarterly Valuation Date to meet Asset Coverage and
such failure is not cured by the Series B Asset Coverage Cure Date or (C) as
of any valuation or measuring date applicable to any other series of Preferred
Shares to meet any applicable maintenance amount test and such failure is not
cured by the relevant cure date (any such cure date, together with any Basic
Maintenance Amount Cure Date or Series B Asset Coverage Cure Date, a "Cure
Date"), Preferred Shares, which at the Trust's determination may include
Series B Preferred Shares, will be subject to mandatory redemption out of
funds legally available therefor. The series and number of Preferred Shares to
be redeemed in such circumstances will be determined by the Trust, subject to
the limitations of the 1940 Act and Delaware law, from among all series of
Preferred Shares then Outstanding and may include any proportion of Series B
Preferred Shares (or any other series of Preferred Shares). The amount of
Preferred Shares to be mandatorily redeemed under such circumstances shall, in
the aggregate, equal the lesser of (1) the minimum amount of Preferred Shares
(including the Series B Preferred Shares if so determined by the Trust) the
redemption of which, if deemed to have occurred immediately prior to the
opening of business on the relevant Cure Date, would result in the Trust
meeting, as the case may be, the Basic Maintenance Test, Asset Coverage and
any other then applicable maintenance amount test, in each case as of the
relevant Cure Date (provided that, if there is no such minimum amount of
Preferred Shares the redemption of which would have such result, all Series B
Preferred Shares then Outstanding will be redeemed), and (2) the maximum
amount of Preferred Shares that can be redeemed out of funds expected to be
available therefor on the Mandatory Redemption Date at the applicable
Redemption Price; provided, that in the event that Preferred Shares are
redeemed mandatorily pursuant to this paragraph 3, the Trust may, but is not
required to, redeem a sufficient amount of additional Series B Preferred
Shares, which when aggregated with other Preferred Shares redeemed by the
Trust, permits the Trust to have (x) Eligible Assets with Adjusted Value with
respect to the Preferred Shares remaining Outstanding of as great as 110% of
the Basic Maintenance Amount and (y) Asset Coverage with respect to the
Preferred Shares remaining Outstanding of as much as 220%.

      (iii) Subject to the Statement of Preferences establishing each series
of Preferred Shares and the 1940 Act, the Trust may determine the shares and
series of Preferred Shares to be redeemed in accordance with the paragraph
3(a)(ii) above, subject to the further provisions of this paragraph 3(a)(iii).
The Trust shall effect any mandatory redemption of Series B Preferred Shares
relating to: (A) a failure to meet the Basic Maintenance Test or a failure to
meet Asset Coverage, no later than 8 days following such Cure Date, provided,
that if such 8th day is not a Business Day, such redemption will occur not
later than the close of business on the next Business Day or (B) a failure to
meet any other then applicable maintenance amount test in accordance with the
requirements of such test (in each case the date specified for such redemption
being, the "Mandatory Redemption Date"), except that if the Trust does not
have funds legally available for the redemption of, or is not otherwise
legally permitted to redeem, the amount of Preferred Shares which would be
mandatorily redeemed by the Trust under subparagraph 3(a)(ii) if sufficient
funds were available, or the Trust otherwise is unable to effect such
redemption on or prior to the applicable Mandatory Redemption Date, the Trust
shall redeem on such redemption date the number of Series B Preferred Shares
and other Preferred Shares with respect to which it has given notice of
redemption as it shall have legally available funds, or is otherwise able, to
redeem ratably on the basis of Redemption Price from each holder whose shares
are to be redeemed, and the remainder of the Series B Preferred Shares and
other Preferred Shares which it was unable to redeem on the earliest
practicable date on which the Trust will have such funds available upon
notice, in the case of Series B Preferred Shares, pursuant to paragraph 3(b)
to Holders of the Series B Preferred Shares to be redeemed. The Trust will
deposit with the Paying Agent funds sufficient to redeem the specified number
of Series B Preferred Shares subject to a redemption under this paragraph 3(a)
by 12:00 noon, New York City time, of the Business Day immediately preceding
the redemption date. If fewer than all of the Outstanding Series B Preferred
Shares are to be redeemed, the number of Series B Preferred Shares to be
redeemed shall be redeemed pro rata from the Holders of such shares in
proportion to the number of Series B Preferred Shares held by such Holders, by
lot or by such other method as the Trust shall deem fair and equitable,
subject, however, to the terms of any applicable Specific Redemption
Provisions.

      (b) In the event of a redemption of Series B Preferred Shares pursuant
to paragraph 3(a) above, the Trust will have filed or will file a notice of
its intention to redeem with the Commission, in either case so as to provide
at least the minimum notice required under Rule 23c-2 under the 1940 Act or
any successor provision. In addition, the Trust shall deliver a notice of
redemption to the Auction Agent (the "Notice of Redemption") containing the
information set forth below (i) in the case of an optional redemption pursuant
to paragraph 3(a)(i) above, one Business Day prior to the giving of notice to
the Holders and (ii) in the case of a mandatory redemption pursuant to
paragraph 3(a)(ii) above, on or prior to the 7th day preceding the Mandatory
Redemption Date. The Auction Agent will use its reasonable efforts to provide
telephonic, electronic or written notice to each Holder of any Series B
Preferred Shares called for redemption not later than the close of business on
the Business Day immediately following the day on which the Trust determines
the shares to be redeemed (or, during a Default Period with respect to such
shares, not later than the close of business on the Business Day immediately
following the day on which the Auction Agent receives Notice of Redemption
from the Trust). The Auction Agent shall confirm a telephonic notice in
writing not later than the close of business on the third Business Day
preceding the date fixed for redemption by providing the Notice of Redemption
to each Holder of shares called for redemption, the Paying Agent (if different
from the Auction Agent) and the Securities Depository. The Notice of
Redemption will be addressed to the Holders of Series B Preferred Shares at
their addresses appearing on the share records of the Trust. Such Notice of
Redemption will set forth (s) the date fixed for redemption, (t) the number or
percentage of Series B Preferred Shares to be redeemed, (u) the CUSIP
number(s) of such shares, (v) the Redemption Price (specifying the amount of
accumulated dividends and any applicable redemption premium to be included
therein), (w) the place or places where such shares are to be redeemed, (x)
that dividends on the shares to be redeemed will cease to accumulate on such
date fixed for redemption, (y) the provision of this Statement of Preferences
under which redemption shall be made, and (z) in the case of a redemption
pursuant to paragraph 3(a)(i), any conditions precedent to such redemption. If
fewer than all the Outstanding Series B Preferred Shares held by any Holder
are to be redeemed, the Notice of Redemption mailed to such Holder shall also
specify the number or percentage of Series B Preferred Shares to be redeemed
from such Holder. No defect in the Notice of Redemption or in the transmittal
or mailing thereof will affect the validity of the redemption proceedings,
except as required by applicable law.

      (c) Notwithstanding the provisions of paragraph 3(a), the Trust shall
not redeem Preferred Shares unless all accumulated and unpaid dividends on all
Outstanding Series B Preferred Shares and other Preferred Shares ranking on a
parity with the Series B Preferred Shares with respect to dividends for all
applicable past Dividend Periods (whether or not earned or declared by the
Trust) have been or are contemporaneously paid or declared and Deposit Assets
for the payment of such dividends have been deposited with the Paying Agent;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of outstanding Preferred Shares pursuant to the successful
completion of an otherwise lawful purchase or exchange offer made on the same
terms to holders of all Outstanding Series B Preferred Shares.

      (d) Upon the deposit of funds sufficient to redeem Series B Preferred
Shares with the Paying Agent and the giving of the Notice of Redemption to the
Auction Agent under paragraph 3(b) above, such shares shall no longer be
deemed to be Outstanding for any purpose (including, without limitation, for
purposes of calculating whether the Trust has met the Basic Maintenance Test
or Asset Coverage), and all rights of the Holders of the Series B Preferred
Shares so called for redemption shall cease and terminate, except the right of
such Holder to receive the applicable Redemption Price, but without any
interest or other additional amount. Such Redemption Price shall be paid by
the Paying Agent to the nominee of the Securities Depository. The Trust shall
be entitled to receive from the Paying Agent, promptly after the date fixed
for redemption, any cash deposited with the Paying Agent in excess of (i) the
aggregate Redemption Price of the Series B Preferred Shares called for
redemption on such date and (ii) such other amounts, if any, to which Holders
of the Series B Preferred Shares called for redemption may be entitled. Any
funds so deposited that are unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be paid to the Trust,
after which time the Holders of Series B Preferred Shares so called for
redemption may look only to the Trust for payment of the Redemption Price and
all other amounts, if any, to which they may be entitled; provided, however,
that the Paying Agent shall notify all Holders whose funds are unclaimed by
placing a notice in The Wall Street Journal concerning the availability of
such funds for three consecutive weeks. The Trust shall be entitled to
receive, from time to time after the date fixed for redemption, any interest
earned on the funds so deposited.

      (e) A Default Period with respect to the Outstanding Series B Preferred
Shares will commence if the Trust fails to deposit irrevocably in trust in
same-day funds, with the Paying Agent by 12:00 noon, New York City time on the
Business Day preceding the redemption date specified in the Notice of
Redemption (the "Redemption Date") or on such later date as the Paying Agent
shall authorize, the full amount of any Redemption Price payable on such
Redemption Date (a "Redemption Default"); provided, that no Redemption Default
shall be deemed to have occurred in respect of Series B Preferred Shares when
the related redemption notice provides that the redemption of such Series B
Preferred Shares is subject to one or more conditions precedent and each such
condition precedent shall not have been satisfied at the time or times or in
the manner specified in such Notice of Redemption. To the extent a Redemption
Default occurs with respect to Series B Preferred Shares or that any
redemption for which Notice of Redemption has been given is otherwise
prohibited, such redemption shall be made as soon as practicable to the extent
such funds become legally available or such redemption is no longer otherwise
prohibited. Notwithstanding the fact that a Redemption Default has occurred
and is continuing or that the Trust has otherwise failed to redeem Series B
Preferred Shares for which a Notice of Redemption has been given, dividends
may be declared and if so declared will be paid on Series B Preferred Shares,
which shall include those Series B Preferred Shares for which Notice of
Redemption has been given but for which deposit of funds has not been made.

      (f) All moneys paid to the Paying Agent for payment of the Redemption
Price of Series B Preferred Shares called for redemption shall be held in
trust by the Paying Agent for the benefit of Holders of the Series B Preferred
Shares so to be redeemed. A Redemption Default will occur on account of the
Trust's failure to timely deposit any required Redemption Price with the
Paying Agent and any resulting Default Period will end in accordance with
paragraph 2(c)(ii).

      (g) So long as the Series B Preferred Shares are held of record by the
nominee of the Securities Depository, the Redemption Price for such shares
will be paid on the date fixed for redemption to the nominee of the Securities
Depository for distribution to agent members for distribution to the Persons
for whom they are acting as agent.

      (h) Except for the provisions described above, nothing contained in this
Statement of Preferences limits any right of the Trust to purchase or
otherwise acquire Series B Preferred Shares outside of an Auction at any
price, whether higher or lower than the price that would be paid in connection
with an optional or mandatory redemption, so long as, at the time of any such
purchase, there is no arrearage in the payment of dividends on, or the
Redemption Price with respect to, any Series B Preferred Shares for which
Notice of Redemption has been given, and the Trust meets Asset Coverage and
the Basic Maintenance Test after giving effect to such purchase or acquisition
on the date thereof. Any Series B Preferred Shares which are purchased,
redeemed or otherwise acquired by the Trust shall have no voting rights. If
fewer than all the Outstanding Series B Preferred Shares are redeemed or
otherwise acquired by the Trust, the Trust shall give notice of such
transaction to the Auction Agent.

      (i) In the case of any redemption pursuant to this paragraph 3, only
whole Series B Preferred Shares shall be redeemed, and in the event that any
provision of the Governing Documents would require redemption of a fractional
share, the Auction Agent shall be authorized to round up so that only whole
shares are redeemed.

      (j) Notwithstanding anything herein to the contrary, the Board of
Trustees may authorize, create or issue other series of Preferred Shares
ranking on a parity with the Series B Preferred Shares with respect to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Trust, to the extent permitted
by the 1940 Act, if upon issuance of any such series, either (i) the net
proceeds from the sale of such shares (or such portion thereof needed to
redeem or repurchase the Outstanding Series B Preferred Shares) are deposited
with the Auction Agent, Notice of Redemption as contemplated by paragraph 3(b)
has been delivered prior thereto or is sent promptly thereafter, and such
proceeds are used to redeem all Outstanding Series B Preferred Shares or (ii)
the Trust would meet Asset Coverage, the Basic Maintenance Test and the
requirements of paragraph 9 immediately following such issuance and any
redemption of Preferred Shares (which may include a portion of the Series B
Preferred Shares) to be effected with the proceeds of such issuance.

4.    Designation of Dividend Period.

      (a) The initial Dividend Period for the Series B Preferred Shares shall
be as determined in the manner under "Designation" above. The Trust shall
designate the duration of subsequent Dividend Periods of the Series B
Preferred Shares; provided, however, that no such designation shall be
necessary for a Standard Dividend Period and, provided further, that any
designation of a Special Dividend Period for the Series B Preferred shall be
effective only if (i) notice thereof shall have been given as provided herein,
(ii) any failure to pay in a timely manner to the Auction Agent the full
amount of any dividend on, or the Redemption Price of, the Series B Preferred
Shares shall have been cured as provided for herein, (iii) Sufficient Clearing
Orders shall have existed in an Auction held for the Series B Preferred Shares
on the Auction Date immediately preceding the first day of such proposed
Special Dividend Period, (iv) if the Trust shall have mailed a Notice of
Redemption with respect to any Series B Preferred Shares, the Redemption Price
with respect to such shares shall have been deposited with the Paying Agent,
and (v) the Trust has confirmed that as of the Auction Date next preceding the
first day of such Special Dividend Period, it has Eligible Assets with an
aggregate Discounted Value at least equal to the Basic Maintenance Amount, and
the Trust has consulted with the Broker-Dealers and has provided notice of
such designation and a Basic Maintenance Report for the most recent Valuation
Date to each Rating Agency.

      (b) If the Trust proposes to designate any Special Dividend Period, not
fewer than seven Business Days (or two Business Days in the event the duration
of the Dividend Period prior to such Special Dividend Period is fewer than ten
Business Days) nor more than 30 Business Days prior to the first day of such
Special Dividend Period, notice shall be (i) made by press release and (ii)
communicated by the Trust by telephonic or other means to the Auction Agent
and confirmed in writing promptly thereafter. Each such notice shall state (x)
that the Trust proposes to exercise its option to designate a succeeding
Special Dividend Period, specifying the first and last days thereof and (y)
that the Trust will by 3:00 P.M., New York City time, on the second Business
Day next preceding the first day of such Special Dividend Period, notify the
Auction Agent, who will promptly notify the Broker-Dealers, of either (A) its
determination, subject to certain conditions, to proceed with such Special
Dividend Period, subject to the terms of any Specific Redemption Provisions,
or (B) its determination not to proceed with such Special Dividend Period, in
which latter event the succeeding Dividend Period shall be a Standard Dividend
Period. No later than 3:00 P.M., New York City time, on the second Business
Day next preceding the first day of any proposed Special Dividend Period, the
Trust shall deliver to the Auction Agent, who will promptly deliver to the
Broker-Dealers and Existing Holders, either:

                   (1) a notice stating (a) that the Trust has determined to
designate the next succeeding Dividend Period as a Special Dividend Period,
(b) the first and last days thereof and (c) the terms of any Specific
Redemption Provisions; or

                   (2) a notice stating that the Trust has determined not to
exercise its option to designate a Special Dividend Period.

      If the Trust fails to deliver either such notice with respect to the
designation of any proposed Special Dividend Period to the Auction Agent or is
unable to make the confirmation provided in paragraph 4(a)(v) by 3:00 P.M.,
New York City time, on the second Business Day next preceding the first day of
such proposed Special Dividend Period, the Trust shall be deemed to have
delivered a notice to the Auction Agent with respect to such Dividend Period
to the effect set forth in clause (2) above, thereby resulting in a Standard
Dividend Period.

5.      Restrictions on Transfer.

      Series B Preferred Shares may be transferred only (a) pursuant to an
Order placed in an Auction, (b) to or through a Broker-Dealer or (c) to the
Trust or any Affiliate. Notwithstanding the foregoing, a transfer other than
pursuant to an Auction will not be effective unless the selling Existing
Holder or the Agent Member of such Existing Holder (in the case of an Existing
Holder whose shares are listed in its own name on the books of the Auction
Agent), or the Broker-Dealer or Agent Member of such Broker-Dealer (in the
case of a transfer between persons holding any Series B Preferred Shares
through different Broker-Dealers), advises the Auction Agent of such transfer.
Any certificates representing Series B Preferred Shares issued to the
Securities Depository will bear legends with respect to the restrictions
described above and stop-transfer instructions will be issued to the Transfer
Agent and/or Registrar.

6.   Voting Rights.

      (a) General.

      Except as otherwise provided in the Governing Documents or a resolution
of the Board of Trustees, or as required by applicable law, Holders of Series
B Preferred Shares shall have no power to vote on any matter except matters
submitted to a vote of the Common Shares. In any matter submitted to a vote of
the holders of the Common Shares, each Holder of Series B Preferred Shares
shall be entitled to one vote for each Series B Preferred Share held and the
Holders of Outstanding Preferred Shares and 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 the Series B Preferred Shares, shall be entitled,
as a class, to the exclusion of the holders of all other securities and
classes of capital shares of the Trust, to elect a number of the Trust's
trustees, such that following the election of trustees at the meeting of the
shareholders, the Trust's Board of Trustees shall contain two trustees elected
by the Holders of the Outstanding Preferred Shares as a class. Subject to
paragraph 6(b), the holders of outstanding capital shares of the Trust,
including the Holders of Outstanding Preferred Shares, including the Series B
Preferred Shares, voting as a single class, shall elect the balance of the
trustees.

      (b) Right to Elect Majority of Board of Trustees.

      During any period in which any one or more of the conditions described
below shall exist (such period being referred to herein as a "Voting Period"),
the number and/or composition of trustees constituting the Board of Trustees
shall be adjusted as necessary to permit the Holders of the Outstanding
Preferred Shares, including the Series B Preferred Shares, voting separately
as one class (to the exclusion of the holders of all other securities and
classes of capital shares of the Trust) to elect the number of trustees that,
when added to the two trustees elected exclusively by the Holders of Preferred
Shares pursuant to paragraph 6(a) above, would constitute a simple majority of
the Board of Trustees as so adjusted. The Trust and the Board of Trustees
shall take all necessary actions, including effecting the removal of trustees
or the amendment of the Trust's Declaration, to effect an adjustment of the
number and/or composition of trustees as described in the preceding sentence.
A Voting Period shall commence:

          (i) if at any time accumulated dividends (whether or not earned or
declared, and whether or not funds are then legally available in an amount
sufficient therefor) on the Outstanding Series B Preferred Shares equal to at
least two full years' dividends shall have become due and unpaid and
sufficient cash or specified securities shall not have been deposited with the
Paying Agent for the payment in full of such accumulated dividends; or

          (ii) if at any time Holders of any other Preferred Shares are
entitled to elect a majority of the trustees of the Trust under the 1940 Act
or the Statement of Preferences creating such shares.

          Upon the termination of a Voting Period, the voting rights described
in this paragraph 6(b) shall cease, subject always, however, to the reverting
of such voting rights in the holders of Preferred Shares upon the further
occurrence of any of the events described in this paragraph 6(b).

      (c) Right to Vote with Respect to Certain Other Matters.

      Subject to paragraph 1 of Part III of this Statement of Preferences, so
long as the Series B Preferred Shares are Outstanding, the Trust shall not,
without the affirmative vote of the Holders of a majority (as defined in the
1940 Act) of the Preferred Shares Outstanding at the time and present and
voting on such matter, voting separately as one class, amend, alter or repeal
the provisions of the Governing Documents so as to in the aggregate adversely
affect the rights and preferences set forth in any Statement of Preferences,
including the Series B Preferred Shares. To the extent permitted under the
1940 Act, in the event more than one series of Preferred Shares are
Outstanding, the Trust shall not effect any of the actions set forth in the
preceding sentence which in the aggregate adversely affects the rights and
preferences set forth in the Statement of Preferences for a series of
Preferred Shares differently than such rights and preferences for any other
series of Preferred Shares without the affirmative vote of the Holders of at
least a majority of the Preferred Shares Outstanding and present and voting on
such matter of each series adversely affected (each such adversely affected
series voting separately as a class to the extent its rights are affected
differently). The Holders of the Series B Preferred Shares shall not be
entitled to vote on any matter that affects the rights or interests of only
one or more other series of Preferred Shares. The Trust shall notify each
Rating Agency ten Business Days prior to any such vote described above. Unless
a higher percentage is required under the Governing Documents or applicable
provisions of the Delaware Statutory Trust Act or the 1940 Act, the
affirmative vote of the Holders of a majority of the Outstanding Preferred
Shares, including the Series B Preferred Shares, voting together as a single
class, will be required to approve any plan of reorganization adversely
affecting the Preferred Shares or any action requiring a vote of security
holders under Section 13(a) of the 1940 Act. For purposes of this paragraph
6(c), the phrase "vote of the Holders of a majority of the Outstanding
Preferred Shares" (or any like phrase) shall mean, in accordance with Section
2(a)(42) of the 1940 Act, the vote, at the annual or a special meeting of the
shareholders of the Trust duly called (i) of 67 percent or more of the
Preferred Shares present at such meeting, if the Holders of more than 50
percent of the Outstanding Preferred Shares are present or represented by
proxy; or (ii) of more than 50 percent of the Outstanding Preferred Shares,
whichever is less. The class vote of Holders of Preferred Shares described
above will in each case be in addition to a separate vote of the requisite
percentage of Common Shares and Preferred Shares, including the Series B
Preferred Shares, voting together as a single class, necessary to authorize
the action in question. An increase in the number of authorized Preferred
Shares pursuant to the Governing Documents or the issuance of additional
shares of any series of Preferred Shares (including the Series B Preferred
Shares) pursuant to the Governing Documents shall not in and of itself be
considered to adversely affect the rights and preferences of the Holders of
Preferred Shares.

      (d)  Voting Procedures.

          (i) As soon as practicable after the accrual of any right of the
Holders of Preferred Shares, including the Series B Preferred Shares, to elect
additional trustees as described in paragraph 6(b), the Trust shall call a
special meeting of such Holders and instruct the Auction Agent to mail a
notice of such special meeting to the Holders of Series B Preferred Shares,
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 Trust 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 day on which such notice is mailed or such other day
as the Board of Trustees shall determine. At any such special meeting and at
each meeting held during a Voting Period, such Holders of Preferred Shares,
voting together as a class (to the exclusion of the holders of all other
securities and classes of capital shares of the Trust), shall be entitled to
elect the number of trustees prescribed in paragraph 6(b) on a
one-vote-per-share basis. At any such meeting, or adjournment thereof in the
absence of a quorum, a majority of the Holders of Preferred Shares, including
the Series B Preferred Shares, present in person or by proxy shall have the
power to adjourn the meeting without notice, other than an announcement at the
meeting, until a date not more than 120 days after the original record date.

          (ii) For purposes of determining any rights of the Holders of the
Preferred Shares, including the Series B Preferred Shares, to vote on any
matter, whether such right is created by this Statement of Preferences, by the
other provisions of the Governing Documents, by statute or otherwise, a share
of Series B Preferred Shares which is not Outstanding shall not be counted.

          (iii) The terms of office of all persons who are trustees of the
Trust at the time of a special meeting of Holders of Preferred Shares to elect
trustees and who remain trustees following such meeting shall continue,
notwithstanding the election at such meeting by such Holders of the number of
trustees that they are entitled to elect, and the persons so elected by such
Holders, together with the two incumbent trustees elected by the 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.

          (iv) Upon the expiration of a Voting Period, the terms of office of
the additional trustees elected by the Holders of Preferred Shares pursuant to
paragraph 6(b) above shall expire, and the remaining trustees shall constitute
the trustees of the Trust and the voting rights of such Holders of Preferred
Shares, including Series B Preferred Shares, to elect additional trustees
pursuant to paragraph 6(b) above shall cease, subject to the provisions of the
last sentence of paragraph 6(b). Upon the expiration of the terms of the
trustees elected by the holders of Preferred Shares pursuant to paragraph 6(b)
above, the number of trustees shall be automatically reduced to the number of
trustees on the Board immediately preceding such Voting Period.

      (e)  Exclusive Remedy.

           Unless otherwise required by law, the Holders of Series B
Preferred Shares shall not have any rights or preferences other than those
specifically set forth herein.  The Holders of Series B Preferred Shares shall
have no preemptive rights or rights to cumulative voting.  In the event that the
Trust fails to pay any dividends on the Series B Preferred Shares, the exclusive
remedy of the Holders shall be the right to vote for trustees pursuant to the
provisions of this paragraph 6.

      (f)  Notification to Rating Agency.

           In the event a vote of Holders of Preferred Shares is required
pursuant to the provisions of Section 13(a) of the 1940 Act, as long as the
Series B Preferred Shares are rated by a Rating Agency at the request of the
Trust, the Trust shall, not later than ten Business Days prior to the date on
which such vote is to be taken, notify each Rating Agency that such vote is to
be taken and the nature of the action with respect to which such vote is to be
taken and, not later than ten Business Days after the date on which such vote
is taken, notify each Rating Agency of the result of such vote.

7.    Liquidation Rights.

      (a) In the event of any liquidation, dissolution or winding up of the
affairs of the Trust, whether voluntary or involuntary, the Holders of Series
B Preferred Shares shall be entitled to receive out of the assets of the Trust
available for distribution to shareholders, after claims of creditors but
before any distribution or payment shall be made in respect of the Common
Shares or any other shares of the Trust ranking junior to the Series B
Preferred Shares as to liquidation payments, a liquidation distribution in the
amount of $25,000.00 per share (the "Liquidation Preference"), plus an amount
equal to all unpaid dividends accumulated to and including the date fixed for
such distribution or payment (whether or not earned or declared by the Trust,
but excluding interest thereon), and such Holders shall be entitled to no
further participation in any distribution or payment in connection with any
such liquidation, dissolution or winding up.

      (b) If, upon any liquidation, dissolution or winding up of the affairs
of the Trust, whether voluntary or involuntary, the assets of the Trust
available for distribution among the Holders of all Outstanding Series B
Preferred Shares, and any other Outstanding class or series of Preferred
Shares ranking on a parity with the Series B Preferred Shares as to payment
upon liquidation, shall be insufficient to permit the payment in full to such
Holders of Series B Preferred Shares of the Liquidation Preference plus
accumulated and unpaid dividends and the amounts due upon liquidation with
respect to such other Preferred Shares, then such available assets shall be
distributed among the Holders of Series B Preferred Shares and such other
Preferred Shares ratably in proportion to the respective preferential
liquidation amounts to which they are entitled. Unless and until the
Liquidation Preference plus accumulated and unpaid dividends has been paid in
full to the Holders of Series B Preferred Shares, no dividends or
distributions will be made to holders of Common Shares or any other shares of
the Trust ranking junior to the Series B Preferred Shares as to liquidation.

8.    Auction Agent.

      For so long as the Series B Preferred Shares 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 Series B Preferred Shares
are Outstanding, the Trust shall use its best efforts promptly thereafter to
appoint another qualified commercial bank, trust company or financial
institution to act as the Auction Agent.

9.    Coverage Tests.

      (a)   Determination of Compliance.

      For so long as the Series B Preferred Shares are Outstanding, the Trust
shall make the following determinations:

            (i)   Asset Coverage as follows:

                  (A) As of each Quarterly Valuation Date, the Trust shall
determine whether Asset Coverage is met as of that date. In the event the
Trust determines that it has failed to meet Asset Coverage as of such
Quarterly Valuation date, the Trust will notify each Rating Agency of such
failure in writing (which notification may be by facsimile or other electronic
means) on or before 5:00 P.M., New York City time, on the fifth Business Day
following the date of such determination.

                  (B) The Trust shall deliver to each Rating Agency an "Asset
Coverage Certificate" which sets forth the determination of paragraph
9(a)(i)(A) above (1) as of the Date of Original Issue and, thereafter, (2) as
of (x) each Quarterly Valuation Date and (y) a Business Day on or before any
Series B Asset Coverage Cure Date following a failure to meet Asset Coverage.
Such Asset Coverage Certificate shall be delivered in the case of clause (1)
on the Date of Original Issue and in the case of clause (2) on or before the
seventh Business Day following such Quarterly Valuation Date or the relevant
Cure Date, as the case may be.

          (ii)  Basic Maintenance Amount as follows:

                  (A) For so long as the Series B Preferred Shares are rated
by Moody's and/or S&P at the Trust's request, the Trust shall maintain, on
each Valuation Date, Eligible Assets having an Adjusted Value at least equal
to the Basic Maintenance Amount, as of such Valuation Date. Upon any failure
to maintain Eligible Assets having an Adjusted Value at least equal to the
Basic Maintenance Amount, the Trust shall use all commercially reasonable
efforts to re-attain Eligible Assets having an Adjusted Value at least equal
to the Basic Maintenance Amount on or prior to the Basic Maintenance Amount
Cure Date, by altering the composition of its portfolio or otherwise.

                  (B) On or before 5:00 P.M., New York City time, on the fifth
Business Day after a Valuation Date on which the Trust fails to satisfy the
Basic Maintenance Amount, and on the fifth Business Day after the Basic
Maintenance Amount Cure Date with respect to such Valuation Date, the Trust
shall complete and deliver to each Rating Agency a Basic Maintenance Report as
of the date of such failure or such Basic Maintenance Amount Cure Date, as the
case may be, which will be deemed to have been delivered to such Rating Agency
if such Rating Agency receives a copy or facsimile or other electronic
transcription or transmission thereof and on the same day the Trust mails or
sends to such Rating Agency for delivery on the next Business Day the full
Basic Maintenance Report. The Trust shall also deliver a Basic Maintenance
Report to each Rating Agency as of each Monthly Valuation Date, in each case
on or before the fifth Business Day after such day. A failure by the Trust to
deliver a Basic Maintenance Report pursuant to the preceding sentence shall be
deemed to be delivery of a Basic Maintenance Report indicating the Discounted
Value for all assets of the Trust is less than the Basic Maintenance Amount,
as of the relevant Valuation Date.

          (C) Within ten Business Days after the date of delivery of a Basic
Maintenance Report in accordance with paragraph 9(a)(ii)(B) relating to any
Annual Valuation Date, the Trust shall cause the Independent Accountant to
send an Accountant's Confirmation to each Rating Agency with respect to such
Basic Maintenance Report.

          (D) Within ten Business Days after the date of delivery of a Basic
Maintenance Report in accordance with paragraph 9(a)(ii)(B) relating to each,
if any, Valuation Date on which the Trust failed to satisfy the Basic
Maintenance Amount and the Basic Maintenance Amount Cure Date with respect to
such failure to satisfy the Basic Maintenance Amount, the Trust shall cause
the Independent Accountant to provide to each Rating Agency an Accountant's
Confirmation as to such Basic Maintenance Report.

          (E) If any Accountant's Confirmation delivered pursuant to paragraph
(C) or (D) of this paragraph 9(a)(ii) does not agree with the Trust's
calculation of the Basic Maintenance Report for a particular Valuation Date
for which such Accountant's Confirmation was required to be delivered, or
shows that a lower aggregate Discounted Value for the aggregate Eligible
Assets in respect of any Rating Agency than was determined by the Trust, 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 Basic Maintenance Report to the relevant
Rating Agency promptly following receipt by the Trust of such Accountant's
Confirmation.

          (F) On or before 5:00 p.m., New York City time, on the fifth
Business Day after the Date of Original Issue of Series B Preferred Shares,
the Trust shall complete and deliver to each Rating Agency a Basic Maintenance
Report as of the close of business on such Date of Original Issue.

          (G) On or before 5:00 p.m., New York City time, on the fifth
Business Day after either (1) the Trust shall have redeemed Series B Preferred
Shares or (2) the ratio of the Discounted Value of Eligible Assets in respect
of any Rating Agency to the Basic Maintenance Amount is less than or equal to
110%, the Trust shall complete and deliver to each Rating Agency, a Basic
Maintenance Report as of the date of either such event.

          (H) As for any Valuation Date for which the Trust's ratio of the
Discounted Value of Eligible Assets in respect of any Rating Agency to the
Basic Maintenance Amount is less than or equal to 110%, the Trust shall
deliver, by fax or email before 5:00 p.m. New York City time on the first
Business Day following such Valuation Date, notice of such ratio to each
Rating Agency.

      (b)  Failure to Meet Asset Coverage Requirements.

            If the Trust fails to have Asset Coverage as provided in paragraph
9(a)(i)(A) or to have Eligible Assets having an Adjusted Value at least equal
to the Basic Maintenance Amount as provided in paragraph 9(a)(ii)(A) and such
failure is not cured by the applicable Cure Date, Preferred Shares, which at
the Trust's determination (to the extent permitted by the 1940 Act and
Delaware law) may include any proportion of Series B Preferred Shares, will be
subject to mandatory redemption as set forth in paragraph 3.

      (c)   Status of Series B Preferred Shares Called for Redemption.

            For purposes of determining whether the requirements of paragraphs
9(a)(i)(A) and 9(a)(ii)(A) hereof are satisfied, (i) no Series B Preferred
Share or other Preferred Share shall be deemed to be Outstanding for purposes
of any computation if, prior to or concurrently with such determination,
sufficient Deposit Assets to pay the full Redemption Price for such share
shall have been deposited in trust with the Paying Agent (or applicable
dividend-disbursing agent) and the requisite Notice of Redemption shall have
been given, and (ii) such Deposit Assets deposited with the Paying Agent (or
dividend-disbursing agent) shall not be included.

      (d)   Certain Notifications Relating to Market Value.

            In the event the Market Value of an Eligible Asset is determined
pursuant to clause (a)(iii) of the definition of Market Value set forth in
paragraph 13, the Trust shall promptly inform each Rating Agency in writing
(which notice may be by facsimile or other electronic means) of the basis upon
which the Market Value of such Eligible Asset was determined.

10.   Certain Other Restrictions.

      (a) For so long as the Series B Preferred are rated by a Rating Agency
at the Trust's request, the Trust will not, and will cause the Adviser not to,
(i) knowingly and willfully purchase or sell any asset for the specific
purpose of causing, and with the actual knowledge that the effect of such
purchase or sale will be to cause, the Trust to have Eligible Assets having an
Adjusted Value as of the date of such purchase or sale to be less than the
Basic Maintenance Amount as of such date, (ii) in the event that, as of the
immediately preceding Valuation Date, the Adjusted Value of the Trust's
Eligible Assets exceeded the Basic Maintenance Amount by 5% or less, alter the
composition of the Trust's assets in a manner reasonably expected to reduce
the Adjusted Value of the Trust's Eligible Assets, unless the Trust shall have
confirmed that, after giving effect to such alteration, the Adjusted Value of
the Trust's Eligible Assets exceeded the Basic Maintenance Amount or (iii)
declare or pay any dividend or other distribution on any Common Shares or
repurchase any Common Shares, unless the Trust shall have confirmed that,
after giving effect to such declaration, other distribution or repurchase, the
Trust continued to satisfy the requirements of paragraph 9(a)(ii).

      (b) For so long as the Series B Preferred Shares are rated by any Rating
Agency at the Trust's request, unless the Trust shall have received written
confirmation from each such Rating Agency, the Trust may engage in the lending
of its portfolio securities only in an amount of up to 20% of the Trust's
total assets, provided that the Trust receives cash collateral for such loaned
securities that is maintained at all times in an amount equal to at least 100%
of the then current market value of the loaned securities and, if invested, is
invested only in Short-Term Money Market Instruments or in money market mutual
funds meeting the requirements of Rule 2a-7 under the 1940 Act that maintain a
constant $1.00 per share net asset value and treat the loaned securities
rather than the collateral as the assets of the Trust for purposes of
determining compliance with paragraph 9.

      (c) For so long as the Series B Preferred Shares are rated by any Rating
Agency at the Trust's request, the Trust shall not consolidate with, merge
into, sell or otherwise transfer all or substantially all of its assets to
another Person or adopt a plan of liquidation of the Trust, in each case
without providing prior written notification to each Rating Agency.

11.   Limitation on Incurrence of Additional Indebtedness, Certain
      Transactions and Issuance of Additional Preferred Shares

      (a) So long as the Series B Preferred Shares are Outstanding, the Trust
may issue and sell one or more series of a class of senior securities of the
Trust representing indebtedness under Section 18 of the 1940 Act and/or
otherwise create or incur indebtedness, provided that immediately after giving
effect to the incurrence of such indebtedness and to its receipt and
application of the proceeds thereof, the Trust shall have an "asset coverage"
for all senior securities representing indebtedness, as defined in Section
18(h) of the1940 Act, of at least 300% of the amount of all indebtedness of
the Trust then Outstanding and no such additional indebtedness shall have any
preference or priority over any other indebtedness of the Trust upon the
distribution of the assets of the Trust upon the distribution of the assets of
the Trust or in respect of the payment of interest. Any possible liability
resulting from lending and/or borrowing portfolio securities, entering into
reverse repurchase agreements, entering into futures contracts and writing
options, to the extent such transactions are made in accordance with the
investment restrictions of the Trust then in effect, shall not be considered
to be indebtedness limited by this paragraph 11(a).

      (b)  So long as any Series B Preferred Shares are Outstanding and S&P is
rating such Series B Preferred Shares at the Trust's request, the Trust will
not, unless it has received written confirmation that any such transaction
would not impair the rating then assigned by S&P to such Series B Preferred
Shares, engage in any one or more of the following transactions:

            (i) 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 securities owned by
the Trust (collectively, "S&P Hedging Transactions"), except subject to the
following limitations:

                  (A) for each net long or short position in S&P Hedging
Transactions, the Trust will maintain in a segregated account with the Trust's
custodian or with the counterparty to such S&P Hedging Transaction an amount
of cash or readily marketable securities having a value, when added to any
amounts on deposit with the Trust's futures commission merchants or brokers as
margin or premium for such position, at least equal to the market value of the
Trust's potential obligations on such position, marked-to-market on a daily
basis, in each case as and to the extent required by the applicable rules or
orders of the Commission or by interpretations of the Commission's staff;

                  (B) the Trust will not engage in any S&P Hedging Transaction
which would cause the Trust at the time of such transaction to own or have
sold the lesser of (1) outstanding futures contracts, in aggregate, based on
the Standard & Poor's 500 Index, the Dow Jones Industrial Average, the Russell
2000 Index, the Wilshire 5000 Index, the Nasdaq Composite Index and the New
York Stock Exchange Composite Index (or any component of any of the forgoing)
exceeding in number 50% of the market value of the Trust's total assets or (2)
outstanding futures contracts based on any of the aforementioned indices
exceeding in number 10% of the average number of daily traded futures
contracts based on such index in the 30 days preceding the time of effecting
such transaction as reported by The Wall Street Journal;

                  (C) 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 (1) the Trust does
not have S&P Eligible Assets with an aggregate Discounted Value equal to or
greater than the Series B Preferred Basic Maintenance Amount on two
consecutive Valuation Dates and (2) the Trust is required to pay variation
margin on the second such Valuation Date;

                  (D) the Trust will engage in a closing transaction to close
out any outstanding futures contract or option thereon at least one week prior
to the delivery date under the terms of the futures contract or option thereon
unless the Trust holds the securities deliverable under such terms; and

                  (E) when the Trust writes a futures contract or option
thereon, either the amount of margin posted by the Trust (in the case of a
futures contract) or the marked-to-market value of the Trust's obligation (in
the case of a put option written by the Trust) shall be treated as a liability
of the Trust for purposes of calculating the Series B Preferred Basic
Maintenance Amount, or, in the event the Trust writes a futures contract or
option thereon which requires delivery of an underlying security and the Trust
does not wish to treat its obligations with respect thereto as a liability for
purposes of calculating the Series B Preferred Basic Maintenance Amount, it
shall hold such underlying security in its portfolio and shall not include
such security to the extent of such contract or option as an S&P Eligible
Asset.

            (ii) borrow money, except for the purpose of clearing securities
transactions if (A) the Series B Preferred Basic Maintenance Amount would
continue to be satisfied after giving effect to such borrowing and (B) such
borrowing (1) is privately arranged with a bank or other person and is not
intended to be publicly distributed or (2) is for "temporary purposes," and is
in an amount not exceeding 5 percent of the market value of the total assets
of the Trust at the time of the borrowing; for purposes of the foregoing,
"temporary purposes" means that the borrowing is to be repaid within sixty
days and is not to be extended or renewed;

            (iii) engage in any short sales of equity securities (other than
short sales against the box) unless the Trust maintains in a segregated
account with the Trust's custodian an amount of cash or other readily
marketable securities having a market value, when added to any amounts on
deposit with the Trust's broker as collateral for its obligation to replace
the securities borrowed and sold short, at least equal to the current market
value of securities sold short, marked-to-market on a daily basis;

            (iv) utilize any pricing service other than a Pricing Service or
such other pricing service then permitted by S&P; or

            (v)  enter into any reverse repurchase agreement, other than with a
counterparty that is rated at least A-1+ by S&P.

      (c) So long as any Series B Preferred Shares are Outstanding, the Trust
may issue and sell shares of one or more other series of Preferred Stock
constituting a series of a class of senior securities of the Trust
representing stock under Section 18 of the 1940 Act in addition to the Series
B Preferred Shares and other Preferred Stock then Outstanding, provided that
(i) the Trust shall, immediately after giving effect to the issuance of such
additional Preferred Stock and to its receipt and application of the proceeds
thereof, have an "asset coverage" for all senior securities which are stock,
as defined in Section 18(h) of the 1940 Act, of at least 200% of the Series B
Preferred Shares and all other Preferred Stock of the Trust then Outstanding,
and (ii) no such additional Preferred Stock (including any additional Series B
Preferred Shares) shall have any preference or priority over any other
Preferred Stock of the Trust upon the distribution of the assets of the Trust
or in respect of the payment of dividends.

12.   Termination.

      In the event that no Series B Preferred Shares are Outstanding, all
rights and preferences of such shares established and designated hereunder shall
cease and terminate, and all obligations of the Trust under this Statement of
Preferences shall terminate.

13.   Definitions.

      Unless the context or use indicates another or different meaning or
intent, each of the following terms when used in this Statement of Preferences
shall have the meaning ascribed to it below, whether such term is used in the
singular or plural and regardless of tense:

      "ACCOUNTANT'S CONFIRMATION" means a letter from an Independent
Accountant delivered to each Rating Agency with respect to certain Basic
Maintenance Reports substantially to the effect that:

      (a) the Independent Accountant has read the Basic Maintenance Report or
Reports prepared by the Administrator during the referenced calendar year that
are referred to in such letter;

      (b) with respect to the issue size compliance, issuer diversification
and industry diversification calculations, such calculations and the resulting
Market Value of the relevant Eligible Assets included in the Reports and the
Adjusted Value of the such Eligible Assets included in the Reports are
numerically correct;

      (c) with respect to the excess or deficiency of the Adjusted Value of
the relevant Eligible Assets included in the Reports when compared to the
Basic Maintenance Amount calculated for such Rating Agency the results of the
calculation set forth in the Reports have been recalculated and are
numerically correct;

      (d) with respect to the Rating Agency ratings on corporate evidences of
indebtedness, convertible corporate evidences of indebtedness and preferred
stock listed in the Reports, that information has been traced and agrees with
the information provided directly or indirectly by the respective Rating
Agencies (in the event such information does not agree or such information is
not listed in the accounting records of the Trust, the Independent Accountants
will inquire of the Rating Agencies what such information is and provide a
listing in their letter of such differences, if any);

      (e) with respect to issuer name and coupon or dividend rate listed in
the Reports, that information has been traced and agrees with information
listed in the accounting records of the Trust;

      (f) with respect to issue size listed in the Reports, that information
has been traced and agrees with information provided by a Pricing Service or
such other services as the relevant Rating Agency may authorize from time to
time;

      (g) with respect to the prices (or alternative permissible factors used
in calculating the Market Value as provided by this Statement of Preferences)
provided by the Administrator of the Trust's assets for purposes of valuing
securities in the portfolio, the Independent Accountant has traced the price
used in the Reports to the price provided by such Administrator (in accordance
with the procedures provided in this Statement of Preferences) and verified
that such information agrees (in the event such information does not agree,
the Independent Accountants will provide a listing in their letter of such
differences); and

      (h) with respect to the description of each security included in the
Reports, the description of the relevant Eligible Assets has been compared to
the definition of such Rating Agency's Eligible Assets contained in this
Statement of Preferences, and the description as appearing in the Reports
agrees with the definition of such Rating Agency's Eligible Assets as
described in this Statement of Preferences.

      Each such letter may state that: (i) such Independent Accountant has
made no independent verification of the accuracy of the description of the
investment securities listed in the Reports or the Market Value of those
securities nor has it performed any procedures other than those specifically
outlined above for the purposes of issuing such letter; (ii) unless otherwise
stated in the letter, the procedures specified therein were limited to a
comparison of numbers or a verification of specified computations applicable
to numbers appearing in the Reports and the schedule(s) thereto; (iii) the
foregoing procedures do not constitute an examination in accordance with
generally accepted auditing standards and the Reports contained in the letter
do not extend to any of the Trust's financial statements taken as a whole;
(iv) such Independent Accountant does not express an opinion as to whether
such procedures would enable such Independent Accountant to determine that the
methods followed in the preparation of the Reports would correctly determine
the Market Value or Discounted Value of the investment portfolio; and (v)
accordingly, such Independent Accountant expresses no opinion as to the
information set forth in the Reports or in the schedule(s) thereto and makes
no representation as to the sufficiency of the procedures performed for the
purposes of this Statement of Preferences; and such other statements as are
acceptable to the Rating Agencies.

      Such letter shall also state that the Independent Accountant is an
"independent accountant" with respect to the Trust within the meaning of the
1933 Act and the related published rules and regulations thereunder.

      "ADJUSTED VALUE" of each Eligible Asset shall be computed as follows:

            (a) cash shall be valued at 100% of the face value thereof; and

            (b) all other Eligible Assets shall be valued at the applicable
Discounted Value thereof; and

            (c) each asset that is not an Eligible Asset shall be valued at
zero.

      "ADMINISTRATOR" means the other party to the Administration Agreement
with the Trust which shall initially be Gabelli Funds, LLC, a New York limited
liability company, and will include, as appropriate, any sub-administrator
appointed by the Administrator.

      "ADRS" means U.S. dollar-denominated American Depository Receipts.

      "ADVISER" means Gabelli Funds, LLC, a New York limited liability
company, or such other Person that is then serving as the investment adviser
of the Trust.

      "AFFILIATE" means, with respect to the Auction Agent, 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 Broker-Dealer 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 directors or
executive officers of which is a trustee of the Trust be deemed to be an
Affiliate solely because such trustee or executive officer is also a trustee
of the Trust.

      "ALL HOLD RATE" means 90% of the Reference Rate.

      "ANNUAL VALUATION DATE" means the Valuation Date each calendar year so
designated by the Trust, commencing in the calendar year 2003.

      "APPLICABLE RATE" means, with respect to the Series B Preferred Shares,
for each Dividend Period (i) if Sufficient Clearing Bids exist for the Auction
in respect thereof, the Winning Bid Rate, (ii) if Sufficient Clearing Orders
do not exist for the Auction in respect thereof, or an Auction does not take
place with respect to such Dividend Period because of the commencement of a
Default Period, the Maximum Rate and (iii) if all Series B Preferred Shares
are the subject of Submitted Hold Orders for the Auction in respect thereof,
the All Hold Rate.

      "ASSET COVERAGE" means asset coverage, as determined in accordance with
Section 18(h) of the 1940 Act, of at least 200% with respect to all
outstanding senior securities of the Trust which are stock, including all
Outstanding Series B Preferred Shares (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 stock of a closed-end investment company as a
condition of declaring dividends on its common stock), determined on the basis
of values calculated as of a time within 48 hours (not including Saturdays,
Sundays or holidays) next preceding the time of such determination.

      "ASSET COVERAGE CERTIFICATE" means the certificate required to be
delivered by the Trust pursuant to paragraph 9(a)(i)(B) of Part I of this
Statement of Preferences.

      "AUCTION" means each periodic operation of the Auction Procedures.

      "AUCTION AGENT" means The Bank of New York unless and until another
commercial bank, trust company, or other financial institution appointed by a
resolution of the Board of Trustees enters into an agreement with the Trust to
follow the Auction Procedures for the purpose of determining the Applicable
Rate.

      "AUCTION DATE" means the last day of the initial Dividend Period and
each seventh day after the immediately preceding Auction Date; provided,
however, that if any such seventh day is not a Business Day, such Auction Date
shall be the first preceding day that is a Business Day and the next Auction
Date, if for a Standard Dividend Period, shall (subject to the same
advancement procedure) be the seventh day after the date that the preceding
Auction Date would have been if not for the advancement procedure; provided
further, however, that the Auction Date for the Auction at the conclusion of
any Special Dividend Period shall be the last Business Day in such Special
Dividend Period and that no more than one Auction shall be held during any
Dividend Period; provided further, however, that the Auction Date following a
Default Period shall be the last Business Day in the Standard Dividend Period
that commenced during such Default Period. Notwithstanding the foregoing, in
the event an auction is not held because an unforeseen event or unforeseen
events cause a day that otherwise would have been an Auction Date not to be a
Business Day, then the length of the then current dividend period will be
extended by seven days (or a multiple thereof if necessary because of such
unforeseen event or events).

      "AUCTION PROCEDURES" means the procedures for conducting Auctions as set
forth in Part II of this Statement of Preferences.

      "BASIC MAINTENANCE AMOUNT" means, with respect to the Series B Preferred
Shares, as of any Valuation Date, the dollar amount equal to (a) the sum of
(i) the product of the number of shares of each class or series of Preferred
Shares Outstanding on such Valuation Date multiplied, in the case of each such
series or class, by the per share Liquidation Preference applicable to each
such series or class; (ii) to the extent not included in (i) the aggregate
amount of cash dividends (whether or not earned or declared) that will have
accumulated for each Outstanding Preferred Share from the most recent
applicable dividend payment date to which dividends have been paid or duly
provided for (or, in the event the Basic Maintenance Amount is calculated on a
date prior to the initial Dividend Payment Date with respect to a class or
series of the Preferred Shares, then from the Date of Original Issue of such
shares) through the Valuation Date plus all dividends to accumulate on the
Preferred Shares then Outstanding during the 31 days following such Valuation
Date or, if less, during the number of days following such Valuation Date that
the Preferred Shares called for redemption are scheduled to remain Outstanding
at the applicable rate or default rate then in effect with respect to such
shares; (iii) the Trust's other liabilities due and payable as of such
Valuation Date (except that dividends and other distributions payable by the
Trust on Common Shares shall not be included as a liability) and such
liabilities projected to become due and payable by the Trust during the 90
days following such Valuation Date (excluding liabilities for investments to
be purchased and for dividends and other distributions not declared as of such
Valuation Date); and (iv) any current liabilities of the Trust as of such
Valuation Date to the extent not reflected in (or specifically excluded by)
any of (a)(i) through (a)(iii) (including, without limitation, and immediately
upon determination, any amounts due and payable by the Trust pursuant to
reverse repurchase agreements and any payables for assets purchased as of such
Valuation Date) less (b) (i) the Adjusted Value of any of the Trust's assets
or (ii) the face value of any of the Trust's assets if, in the case of both
(b)(i) and (b)(ii), such assets are either cash or evidences of indebtedness
which mature prior to or on the date of redemption or repurchase of Preferred
Shares or payment of another liability and are either U.S. Government
Obligations or evidences of indebtedness which have a rating assigned by
Moody's of at least Aaa, P-1, VMIG-1 or MIG-1 or by S&P of at least AAA, SP-1+
or A-1+, and are irrevocably held by the Trust's custodian bank in a
segregated account or deposited by the Trust with the dividend-disbursing
agent or Paying Agent, as the case may be, for the payment of the amounts
needed to redeem or repurchase Preferred Shares subject to redemption or
repurchase or any of (a)(ii) through (a)(iv); and provided that in the event
the Trust has repurchased Preferred Shares and irrevocably segregated or
deposited assets as described above with its custodian bank, the
dividend-disbursing agent or Paying Agent for the payment of the repurchase
price the Trust may deduct 100% of the Liquidation Preference of such
Preferred Shares to be repurchased from (a) above. Basic Maintenance Amount
shall, for the purposes of this Statement of Preferences, have a correlative
meaning with respect to any other class or series of Preferred Shares.

      "BASIC MAINTENANCE AMOUNT CURE DATE" means, with respect to the Series B
Preferred Shares, 10 Business Days following a Valuation Date, such date being
the last day upon which the Trust's failure to comply with paragraph
9(a)(ii)(A) of Part I of this Statement of Preferences could be cured, and
shall, for the purposes of this Statement of Preferences, have a correlative
meaning with respect to any other class or series of Preferred Shares.

      "BASIC MAINTENANCE TEST" means, with respect to the Series B Preferred
Shares, a test which is met if the lower of the aggregate Discounted Values of
the Moody's Eligible Assets or the S&P Eligible Assets if both Moody's and S&P
are then rating the Series B Preferred Shares at the request of the Trust, or
the Eligible Assets of whichever of Moody's or S&P is then doing so if only
one of Moody's or S&P is then rating the Series B Preferred Shares at the
request of the Trust, meets or exceeds the Basic Maintenance Amount.

      "BASIC MAINTENANCE REPORT" or "REPORT" means, with respect to the Series
B Preferred Shares, a report prepared by the Administrator which sets forth,
as of the related Monthly Valuation Date, (i) Moody's Eligible Assets and S&P
Eligible Assets sufficient to meet or exceed the Basic Maintenance Amount,
(ii) the Market Value and Discounted Value thereof (seriatim and in the
aggregate), (iii) the Basic Maintenance Amount, and (iv) the net asset value
of the Trust. Such report will also include (A) the month-end closing price
for the Common Shares of the Trust (B) the monthly total-return per Common
Shares, which will be determined based upon month-end closing share prices,
assuming reinvestment of all dividends paid during such month and (C) the
total leverage position of the Trust. For the purposes of this Statement of
Preferences, "Basic Maintenance Report" or "Report" shall have a correlative
meaning with respect to any other class or series of Preferred Shares.

      "BENEFICIAL OWNER," with respect to the Series B Preferred Shares, means
a customer of a Broker-Dealer who is listed on the records of that
Broker-Dealer (or, if applicable, the Auction Agent) as a holder of Series B
Preferred Shares.

      "BID" has the meaning set forth in paragraph 2(a) of Part II of this
Statement of Preferences.

      "BIDDER" has the meaning set forth in paragraph 2(a) of Part II of this
Statement of Preferences, provided however that neither the Trust nor any
Affiliate shall be permitted to be Bidder in an Auction.

      "BOARD OF TRUSTEES" or "BOARD" means the Board of Trustees of the Trust
or any duly authorized committee thereof as permitted by applicable law.

      "BROKER-DEALER" means any broker-dealer or broker-dealers, or other
entity permitted by law to perform the functions required of a Broker-Dealer
by the Auction Procedures, that has been selected by the Trust and has entered
into a Broker-Dealer Agreement that remains effective.

      "BROKER-DEALER AGREEMENT" means an agreement between the Auction Agent
and a Broker-Dealer, pursuant to which such Broker-Dealer agrees to follow the
Auction Procedures.

      "BUSINESS DAY" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
The City of New York, New York are authorized or obligated by law to close.

      "BY-LAWS" means the By-Laws of the Trust, as amended from time to time.

      "COMMISSION" means the Securities and Exchange Commission.

      "COMMON SHARES" means the Trust's common shares, par value $.001 per
share.

      "CURE DATE" has the meaning set forth in paragraph 3(a)(ii) of Part I of
this Statement of Preferences.

      "DATE OF ORIGINAL ISSUE" means July 31, 2003, and, for the purposes of
this Statement of Preferences, shall have a correlative meaning with respect
to any other class or series of Preferred Shares.

      "DECLARATION" means the Agreement and Declaration of Trust of the Trust,
dated February 25, 1999, as amended and restated from time to time (including
by this Statement of Preferences or by way of any other supplement or
Statement of Preferences authorizing or creating a class of shares of
beneficial interest in the Trust).

      "DEFAULT" means a Dividend Default or a Redemption Default.

      "DEFAULT PERIOD" means a Dividend Default or a Redemption Default.

      "DEFAULT RATE" has the meaning set forth in paragraph 2(c)(iii) of Part
I of this Statement of Preferences.

      "DEPOSIT ASSETS" means cash, Short-Term Money Market Instruments and
U.S. Government Obligations. Except for determining whether the Trust has
Eligible Assets with an Adjusted Value equal to or greater than the Basic
Maintenance Amount, each Deposit Asset shall be deemed to have a value equal
to its principal or face amount payable at maturity plus any interest payable
thereon after delivery of such Deposit Asset but only if payable on or prior
to the applicable payment date in advance of which the relevant deposit is
made.

      "DISCOUNT FACTOR" means (a) so long as Moody's is rating the Series B
Preferred Shares at the Trust's request, the Moody's Discount Factor, (b) so
long as S&P is rating the Series B Preferred Shares at the Trust's request,
the S&P Discount Factor, and/or (c) any applicable discount factor established
by any Other Rating Agency, whichever is applicable.

      "DISCOUNTED VALUE" means, as applicable, (a) the quotient of the Market
Value of an Eligible Asset divided by the applicable Discount Factor or (b)
such other formula for determining the discounted value of an Eligible Asset
as may be established by an applicable Rating Agency, provided, in either case
that with respect to an Eligible Asset that is currently callable, Discounted
Value will be equal to the applicable quotient or product as calculated above
or the call price, whichever is lower, and that with respect to an Eligible
Asset that is prepayable, Discounted Value will be equal to the applicable
quotient or product as calculated above or the par value, whichever is lower.

      "DIVIDEND DEFAULT" has the meaning set forth in paragraph 2(c)(ii) of
Part I of this Statement of Preferences.

      "DIVIDEND PAYMENT DATE" means with respect to the Series B Preferred
Shares, any date on which dividends declared by the Board of Trustees thereon
are payable pursuant to the provisions of paragraph 2(b) of Part I of this
Statement of Preferences and shall for the purposes of this Statement of
Preferences have a correlative meaning with respect to any other class or
series of Preferred Shares.

      "DIVIDEND PERIOD" means, with respect to Series B Preferred Shares, the
initial period determined in the manner set forth under "Designation" above,
and thereafter, the period commencing on the Business Day following each
Auction Date and ending on the next Auction Date or, if such next Auction Date
is not immediately followed by a Business Day, on the latest day prior to the
next succeeding Business Day, and shall, for the purposes of this Statement of
Preferences, have a correlative meaning with respect to any other class or
series of Preferred Shares.

      "ELIGIBLE ASSETS" means Moody's Eligible Assets (if Moody's is then
rating the Series B Preferred Shares at the request of the Trust), S&P
Eligible Assets (if S&P is then rating the Series B Preferred Shares at the
request of the Trust), and/or Other Rating Agency Eligible Assets if any Other
Rating Agency is then rating the Series A Preferred or Series B AMPS,
whichever is applicable.

      "GOVERNING DOCUMENTS" means the Declaration and the By-Laws.

      "HOLDER" means, with respect to the Preferred Shares, including the
Series B Preferred Shares, the registered holder of such shares as the same
appears on the stock ledger or ownership records of the Trust or records of
the Auction Agent, as the case may be.

      "INDEPENDENT ACCOUNTANT" means 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 1933 Act.

      "INDUSTRY CLASSIFICATION" means a six-digit industry classification in
the Standard Industry Classification system published by the United States.

      "LIBOR DEALERS" means Merrill Lynch, Pierce, Fenner & Smith Incorporated
and such other dealer or dealers as the Trust may from time to time appoint,
or, in lieu of any thereof, their respective affiliates or successors.

      "LIBOR RATE," on any Auction Date, means (i) the rate for deposits in
U.S. dollars for the designated Dividend Period, which appears on display page
3750 of Moneyline's Telerate Service ("Telerate Page 3750") (or such other
page as may replace that page on that service, or such other service as may be
selected by the LIBOR Dealer or its successors that are LIBOR Dealers) as of
11:00 a.m., London time, on the day that is the London Business Day preceding
the Auction Date (the "LIBOR Determination Date"), or (ii) if such rate does
not appear on Telerate Page 3750 or such other page as may replace such
Telerate Page 3750, (A) the LIBOR Dealer shall determine the arithmetic mean
of the offered quotations of the Reference Banks to leading banks in the
London interbank market for deposits in U.S. dollars for the designated
Dividend Period in an amount determined by such LIBOR Dealer by reference to
requests for quotations as of approximately 11:00 a.m. (London time) on such
date made by such LIBOR Dealer to the Reference Banks, (B) if at least two of
the Reference Banks provide such quotations, LIBOR Rate shall equal such
arithmetic mean of such quotations, (C) if only one or none of the Reference
Banks provide such quotations, LIBOR Rate shall be deemed to be the arithmetic
mean of the offered quotations that leading banks in The City of New York
selected by the LIBOR Dealer (after obtaining the Trust's approval) are
quoting on the relevant LIBOR Determination Date for deposits in U.S. dollars
for the designated Dividend Period in an amount determined by the LIBOR Dealer
(after obtaining the Trust's approval) that is representative of a single
transaction in such market at such time by reference to the principal London
offices of leading banks in the London interbank market; provided, however,
that if one of the LIBOR Dealers does not quote a rate required to determine
the LIBOR Rate, the LIBOR Rate will be determined on the basis of the
quotation or quotations furnished by any Substitute LIBOR Dealer or Substitute
LIBOR Dealers selected by the Trust to provide such rate or rates not being
supplied by the LIBOR Dealer; provided further, that if the LIBOR Dealer and
Substitute LIBOR Dealers are required but unable to determine a rate in
accordance with at least one of the procedures provided above, LIBOR Rate
shall be LIBOR Rate as determined on the previous Auction Date. If the number
of Dividend Period days shall be (1) 7 or more but fewer than 21 days, such
rate shall be the seven-day LIBOR rate; (2) more than 21 but fewer than 49
days, such rate shall be one-month LIBOR rate; (3) 49 or more but fewer than
77 days, such rate shall be the two-month LIBOR rate; (4) 77 or more but fewer
than 112 days, such rate shall be the three-month LIBOR rate; (5) 112 or more
but fewer than 140 days, such rate shall be the four-month LIBOR rate; (6) 140
or more but fewer than 168 days, such rate shall be the five-month LIBOR rate;
(7) 168 or more but fewer than 189 days, such rate shall be the six-month
LIBOR rate; (8) 189 or more but fewer than 217 days, such rate shall be the
seven-month LIBOR rate; (9) 217 or more but fewer than 252 days, such rate
shall be the eight-month LIBOR rate; (10) 252 or more but fewer than 287 days,
such rate shall be the nine-month LIBOR rate; (11) 287 or more but fewer than
315 days, such rate shall be the ten-month LIBOR rate; (12) 315 or more but
fewer than 343 days, such rate shall be the eleven-month LIBOR rate; and (13)
343 or more but fewer than 365 days, such rate shall be the twelve-month LIBOR
rate.

      "LIQUIDATION PREFERENCE" shall, with respect to each share of Series B
Preferred Shares, have the meaning set forth in paragraph 7(a) of Part I of
this Statement of Preferences and shall, for the purposes of this Statement of
Preferences, have a correlative meaning with respect to any other class or
series of Preferred Shares.

      "LONDON BUSINESS DAY" means any day on which commercial banks are
generally open for business in London.

      "MANDATORY REDEMPTION DATE" has the meaning set forth in paragraph
3(a)(iii) of Part I of this Statement of Preferences.

      "MARKET VALUE" means the amount determined by the Trust with respect to
specific Eligible Assets in accordance with valuation policies adopted from
time to time by the Board of Trustees as being in compliance with the
requirements of the 1940 Act.

            Notwithstanding the foregoing, "Market Value" may, at the option
of the Trust with respect to any of its assets, mean the amount determined
with respect to specific Eligible Assets of the Trust in the manner set forth
below:

            (a) as to any common or preferred stock which is an Eligible
Asset, (i) if the stock is traded on a national securities exchange or quoted
on the Nasdaq System, the last sales price reported on the Valuation Date,
(ii) if there was no such reported sales price, the price reported by a
recognized pricing service or (iii) if there was no such pricing service
report, the lower of two bid prices for such stock provided to the
Administrator by two recognized securities dealers with minimum
capitalizations of $25,000,000 (or otherwise approved for such purpose by
Moody's and S&P), at least one of which shall be provided in writing or by
telecopy, telex, other electronic transcription, computer obtained quotation
reducible to written form or similar means, and in turn provided to the Trust
by any such means by such Administrator, or, if two bid prices cannot be
obtained, such Eligible Asset shall have a Market Value of zero;

            (b) as to any U.S. Government Obligation, Short-Term Money Market
Instrument (other than demand deposits, federal funds, bankers' acceptances
and next Business Day repurchase agreements) and commercial paper, with a
maturity of greater than 60 days, the product of (i) the principal amount
(accreted principal to the extent such instrument accretes interest) of such
instrument and (ii) the lower of the bid prices for the same kind of
instruments having, as nearly as practicable, comparable interest rates and
maturities provided by two recognized securities dealers having minimum
capitalization of $25,000,000 (or otherwise approved for such purpose by
Moody's and S&P) to the Administrator, at least one of which shall be provided
in writing or by telecopy, telex, other electronic transcription, computer
obtained quotation reducible to written form or similar means, and in turn
provided to the Trust by any such means by such Administrator, or, if two bid
prices cannot be obtained, such Eligible Asset will have a Market Value of
zero;

            (c) as to cash, demand or time deposits, federal funds, bankers'
acceptances and next Business Day repurchase agreements included in Short-Term
Money Market Instruments, the face value thereof;

            (d) as to any U.S. Government Obligation, Short-Term Money Market
Instrument or commercial paper with a maturity of 60 days or fewer, amortized
cost unless the Board of Trustees determines that such value does not
constitute fair value;

            (e) as to any other evidence of indebtedness which is an Eligible
Asset, (i) the product of (A) the unpaid principal balance of such
indebtedness as of the Valuation Date and (B)(1) if such indebtedness is
traded on a national securities exchange or quoted on the Nasdaq System, the
last sales price reported on the Valuation Date or (2) if there was no
reported sales price on the Valuation Date or if such indebtedness is not
traded on a national securities exchange or quoted on the Nasdaq System, the
lower of two bid prices for such indebtedness provided by two recognized
dealers with a minimum capitalization of $25,000,000 (or otherwise approved
for such purpose by Moody's and S&P) to the Administrator, at least one of
which shall be provided in writing or by telecopy, telex, other electronic
transcription, computer obtained quotation reducible to written form or
similar means, and in turn provided to the Trust by any such means by such
Administrator, plus (ii) accrued interest on such indebtedness.

            "MAXIMUM RATE" means, on any day on which the Applicable Rate is
determined, the greater of (as set forth in the table below) (i) the
applicable percentage of the Reference Rate or (ii) the applicable spread plus
the Reference Rate. The reference rate is the applicable LIBOR Rate (for a
dividend period or a special dividend period of fewer than 364 days), or the
applicable Treasury Index Rate (for a special dividend period of 364 days or
more). The applicable percentage and applicable spread will be determined
based on the lower of the credit ratings assigned to the Series B AMPS by
Moody's and S&P. If Moody's and S&P or both do not make such ratings
available, the rate will be determined by reference to equivalent ratings
issued by a substitute rating agency.


                                                Applicable   Applicable
   Moody's Credit Rating     S&P Credit Rating  Percentage     Spread
   ---------------------     -----------------  ----------   ----------
            Aaa                     AAA            125%       125 bps

        Aa3 to Aa1              AA- to AA+         150%       150 bps

         A3 to A1                A- to A+          200%       200 bps

       Baa3 to Baa1            BBB- to BBB+        250%       250 bps

        Below Baa3              Below BBB-         300%       300 bps


            "MONTHLY VALUATION DATE" means the last Valuation Date of each
calendar month.

            "MOODY'S" means Moody's Investors Service, Inc. and its successors
at law.

            "MOODY'S DISCOUNT FACTOR" means, with respect to a Moody's
Eligible Asset specified below, the following applicable number:

                                                                  Moody's
Type of Moody's Eligible Asset:                              Discount Factor:
------------------------------                               ----------------

Short Term Money Market Instruments (other than U.S.
Government Obligations set forth below) and other
commercial paper:

     U.S. Treasury Securities with final maturities            1.00
     that are less than or equal to 60 days............
     Demand or time deposits, certificates of deposit          1.00
     and bankers' acceptances includible in Moody's
     Short Term Money Market Instruments...............
     Commercial paper rated P-1 by Moody's maturing in         1.00
     30 days or less...................................
     Commercial paper rated P-1 by Moody's maturing in         1.15
     more than 30 days but in 270 days or less.........
     Commercial paper rated A-1+ by S&P maturing in 270        1.25
     days or less......................................
     Repurchase obligations includible in Moody's Short        1.00
     Term Money Market Instruments if term is less than
     30 days and counterparty is rated at least A2.....
     Other repurchase obligations......................    Discount Factor
                                                           applicable to the
                                                           underlying assets
     U.S. Common Stocks and Common Stocks of foreign
     issuers for which ADRs are traded.................
            Utility....................................        1.70
            Industrial.................................        2.64
            Financial  ................................        2.41
     Common Stocks of foreign issuers (in existence for
     at least five years) for which no ADRs are traded.        4.00
     Convertible Preferred Stocks......................        3.00
     Preferred stocks:
     Auction Market preferred stocks...................        3.50
     Other preferred stocks issued by issuers in the           2.09
     financial and industrial industries...............
     Other preferred stocks issued by issuers in the           1.55
     utilities industry................................
     U.S. Government Obligations (other than U.S.
     Treasury Securities Strips set forth below) with
     remaining terms to maturity of:
            1 year or less.............................        1.04
            2 years or less............................        1.09
            3 years or less............................        1.12
            4 years or less............................        1.15
            5 years or less............................        1.18
            7 years of less............................        1.21
            10 years or less...........................        1.24
            15 years or less ..........................        1.25
            20 years or less ..........................        1.26
            30 years or less...........................        1.26
     U.S. Treasury Securities Strips with remaining
     terms to maturity of:
            1 year or less.............................        1.04
            2 years or less............................        1.10
            3 years or less............................        1.14
            4 years or less............................        1.18
            5 years or less............................        1.21
            7 years or less............................        1.27
            10 years or less...........................        1.34
            15 years or less...........................        1.45
            20 years or less...........................        1.54
            30 years or less...........................        1.66
Corporate Debt:
Non-convertible corporate debt rated Aaa with remaining
     terms to maturity of:
            1 year or less.............................        1.09
            2 years or less............................        1.15
            3 years or less............................        1.20
            4 years or less............................        1.26
            5 years or less............................        1.32
            7 years or less............................        1.39
            10 years or less...........................        1.45
            15 years or less...........................        1.50
            20 years or less...........................        1.50
            30 years or less...........................        1.50
Non-convertible corporate debt rated at least Aa3 with
     remaining terms to maturity of:
            1 year or less.............................        1.12
            2 years of less............................        1.18
            3 years or less............................        1.23
            4 years or less............................        1.29
            5 years or less............................        1.35
            7 years or less............................        1.43
            10 years or less...........................        1.50
            15 years or less...........................        1.55
            20 years or less...........................        1.55
            30 years or less...........................        1.55
Non-convertible corporate debt rated at least A3 with
     remaining terms to maturity of:
            1 year or less.............................        1.15
            2 years or less............................        1.22
            3 years or less............................        1.27
            4 years or less............................        1.33
            5 years or less............................        1.39
            7 years or less............................        1.47
            10 years or less...........................        1.55
            15 years or less...........................        1.60
            20 years or less...........................        1.60
            30 years or less...........................        1.60
Non-convertible corporate debt rated at least Baa3 with
     remaining terms of maturity of:
            1 year or less.............................        1.18
            2 years or less............................        1.25
            3 years or less............................        1.31
            4 years or less............................        1.38
            5 years or less............................        1.44
            7 years or less............................        1.52
            10 years or less...........................        1.60
            15 years or less...........................        1.65
            20 years or less...........................        1.65
            30 years or less...........................        1.65
     Non-convertible corporate debt rated at least Ba3
     with remaining terms of maturity of:
         1 year or less................................        1.37
         2 years or less...............................        1.46
         3 years or less...............................        1.56
         4 years or less...............................        1.61
         5 years or less...............................        1.68
         7 years or less...............................        1.79
         10 years or less..............................        1.89
         15 years or less..............................        1.96
         20 years or less..............................        1.96
         30 years or less..............................        1.96
     Non-convertible corporate debt rated at least B1
     and B2 with remaining terms of maturity of:
         1 year or less................................        1.50
         2 years or less...............................        1.60
         3 years or less...............................        1.68
         4 years or less...............................        1.76
         5 years or less...............................        1.86
         7 years or less...............................        1.97
         10 years or less..............................        2.08
         15 years or less..............................        2.16
         20 years or less..............................        2.28
         30 years or less..............................        2.29
      Non-convertible unrated corporate debt of any
      maturity Convertible corporate debt securities
      rated at least Aa3 issued by the following
      type of issuers:                                             2.50
         Utility.......................................        1.62-1.67
         Industrial....................................        2.56-2.61
         Financial.....................................        2.33-2.38
         Transportation................................        2.50-2.65
     Convertible corporate debt securities rated at
     least A3 issued by the following type of issuers:
         Utility.......................................           1.72
         Industrial....................................           2.66
         Financial.....................................           2.43
         Transportation................................           2.75
     Convertible corporate debt securities rated at
     least Baa3 issued by the following type of issuers:
         Utility.......................................           1.88
         Industrial....................................           2.82
         Financial.....................................           2.59
         Transportation................................           2.85
     Convertible corporate debt securities rated at
     least Ba3 issued by the following type of issuers:
         Utility.......................................           1.95
         Industrial....................................           2.90
         Financial.....................................           2.65
         Transportation................................           2.90
     Convertible corporate debt securities rated at
     least B2 issued by the following type of issuers:
         Utility.......................................           1.99
         Industrial....................................           2.93
         Financial.....................................           2.70
         Transportation................................           2.95


         "MOODY'S ELIGIBLE ASSETS" means:

            (a) cash (including, for this purpose, receivables for investments
                sold to a counterparty whose senior debt securities are rated
                at least Baa3 by Moody's or a counterparty approved by Moody's
                and payable within five Business Days following such Valuation
                Date and dividends and interest receivable within 49 days on
                investments);

            (b) Short-Term Money Market Instruments;

            (c) commercial paper that is not includible as a Short-Term Money
                Market Instrument having on the Valuation Date a rating from
                Moody's of at least P-1 and maturing within 270 days;

            (d) preferred stocks (i) which either (A) are issued by issuers
                whose senior debt securities are rated at least Baa1 by
                Moody's or (B) are rated at least Baa3 by Moody's or (C) in
                the event an issuer's senior debt securities or preferred
                stock is not rated by Moody's, which either (1) are issued by
                an issuer whose senior debt securities are rated at least A-
                by S&P or (2) are rated at least A- by S&P and for this
                purpose have been assigned a Moody's equivalent rating of at
                least Baa3, (ii) of issuers which have (or, in the case of
                issuers which are special purpose corporations, whose parent
                companies have) common stock listed on the New York Stock
                Exchange, the American Stock Exchange or the Nasdaq National
                Market System, (iii) which have a minimum issue size (when
                taken together with other of the issuer's issues of similar
                tenor) of $50,000,000, (iv) which have paid cash dividends
                consistently during the preceding three-year period (or, in
                the case of new issues without a dividend history, are rated
                at least A1 by Moody's or, if not rated by Moody's, are rated
                at least AA- by S&P), (v) which pay cumulative cash dividends
                in U.S. dollars, (vi) which are not convertible into any other
                class of stock and do not have warrants attached, (vii) which
                are not issued by issuers in the transportation industry and
                (viii) in the case of auction rate preferred stocks, which are
                rated at least Aa3 by Moody's, or if not rated by Moody's, AAA
                by S&P, AAA by Fitch or are otherwise approved in writing by
                Moody's and have never had a failed auction; provided,
                however, that for this purpose the aggregate Market Value of
                the Trust's holdings of any single issue of auction rate
                preferred stock shall not be more than 1% of the Trust's total
                assets.

            (e) common stocks (i) (A) which are traded on a nationally
                recognized stock exchange or in the over-the-counter market,
                (B) if cash dividend paying, pay cash dividends in U.S.
                dollars and (C) which may be sold without restriction by the
                Trust; provided, however, that (y) common stock which, while a
                Moody's Eligible Asset owned by the Trust, ceases paying any
                regular cash dividend will no longer be considered a Moody's
                Eligible Asset until 71 days after the date of the
                announcement of such cessation, unless the issuer of the
                common stock has senior debt securities rated at least A3 by
                Moody's and (z) the aggregate Market Value of the Trust's
                holdings of the common stock of any issuer in excess of 4% in
                the case of utility common stock and 6% in the case of
                non-utility common stock of the aggregate Market Value of the
                Trust's holdings shall not be Moody's Eligible Assets, (ii)
                which are securities denominated in any currency other than
                the U.S. dollar or securities of issuers formed under the laws
                of jurisdictions other than the United States, its states and
                the District of Columbia for which there are ADRs or their
                equivalents which are traded in the United States on exchanges
                or over-the-counter and are issued by banks formed under the
                laws of the United States, its states or the District of
                Columbia or (iii) which are securities of issuers formed under
                the laws of jurisdictions other than the United States (and in
                existence for at least five years) for which no ADRs are
                traded; provided, however, that the aggregate Market Value of
                the Trust's holdings of securities denominated in currencies
                other than the U.S. dollar and ADRs in excess of (A) 6% of the
                aggregate Market Value of the Outstanding shares of common
                stock of such issuer thereof or (B) in excess of 10% of the
                Market Value of the Trust's Moody's Eligible Assets with
                respect to issuers formed under the laws of any single such
                non-U.S. jurisdiction other than Australia, Belgium, Canada,
                Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
                Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
                and the United Kingdom, shall not be a Moody's Eligible Asset;

            (f) ADR securities, based on the following guidelines: (i)
                Sponsored ADR program or (ii) Level II or Level III ADRs.
                Private placement Rule 144A ADRs are not eligible for
                collateral consideration. Global GDR programs will be
                evaluated on a case by case basis;

            (g) U.S. Government Obligations;

            (h) corporate evidences of indebtedness (i) which may be sold
                without restriction by the Trust which are rated at least B3
                (Caa subordinate) by Moody's (or, in the event the security is
                not rated by Moody's, the security is rated at least BB- by
                S&P and which for this purpose is assigned a Moody's
                equivalent rating of one full rating category lower), with
                such rating confirmed on each Valuation Date, (ii) which have
                a minimum issue size of at least (A) $100,000,000 if rated at
                least Baa3 or (B) $50,000,000 if rated B or Ba3, (iii) which
                are not convertible or exchangeable into equity of the issuing
                corporation and have a maturity of not more than 30 years and
                (iv) for which, if rated below Baa3 or not rated, the
                aggregate Market Value of the Trust's holdings do not exceed
                10% of the aggregate Market Value of any individual issue of
                corporate evidences of indebtedness calculated at the time of
                original issuance; and

            (i) convertible corporate evidences of indebtedness (i) which are
                issued by issuers whose senior debt securities are rated at
                least B2 by Moody's (or, in the event an issuer's senior debt
                securities are not rated by Moody's, which are issued by
                issuers whose senior debt securities are rated at least BB by
                S&P and which for this purpose is assigned a Moody's
                equivalent rating of one full rating category lower), (ii)
                which are convertible into common stocks which are traded on
                the New York Stock Exchange or the American Stock Exchange or
                are quoted on the Nasdaq National Market System and (iii)
                which, if cash dividend paying, pay cash dividends in U.S.
                dollars; provided, however, that once convertible corporate
                evidences of indebtedness have been converted into common
                stock, the common stock issued upon conversion must satisfy
                the criteria set forth in clause (e) above and other relevant
                criteria set forth in this definition in order to be a Moody's
                Eligible Asset; provided, however, that the Trust's
                investments in auction rate preferred stocks described in
                clause (d) above shall be included in Moody's Eligible Assets
                only to the extent that the aggregate Market Value of such
                stocks does not exceed 10% of the aggregate Market Value of
                all of the Trust's investments meeting the criteria set forth
                in clauses (a) through (g) above less the aggregate Market
                Value of those investments excluded from Moody's Eligible
                Assets pursuant to the paragraph appearing after clause (i)
                below; and

            (j) no assets which are subject to any lien or irrevocably
                deposited by the Trust for the payment of amounts needed to
                meet the obligations described in clauses (a)(i) through
                (a)(iv) of the definition of "Basic Maintenance Amount" may be
                includible in Moody's Eligible Assets.

         Notwithstanding anything to the contrary in the preceding clauses
     (a)-(j), the Trust's investment in preferred stock, common stock, corporate
     evidences of indebtedness and convertible corporate evidences of
     indebtedness shall not be treated as Moody's Eligible Assets except to the
     extent they satisfy the following diversification requirements (utilizing
     Moody's Industry and Sub-industry Categories) with respect to the Market
     Value of the Trust's holdings:

     Issuer:

                                         Non-Utility             Utility
                                       Maximum Single         Maximum Single
      Moody's Rating(1)(2)              Issuer(3)(4)           Issuer(3)(4)
      --------------------             --------------         --------------
      Aaa                                   100%                   100%
      Aa                                    20%                    20%
      A                                     10%                    10%
      CS/CB, Baa(5)                         6%                     4%
      Ba                                    4%                     4%
      B1/B2                                 3%                     3%
      B3 or below                           2%                     2%



     Industry and State:

                               Non-Utility        Utility         Utility
                                 Maximum          Maximum        Maximum
                                  Single        Single Sub-       Single
     Moody's Rating(1)         Industry(3)     Industry(3)(6)    State(3)
     ----------------          -----------     --------------    --------

     Aaa                          100%            100%            100%
     Aa                           60%             60%             20%
     A                            40%             50%             10%(7)
     CS/CB, Baa(5)                20%             50%             7%(7)
     Ba                           12%             12%             0%
     B1/B2                        8%              8%              0%
     B3 or below                  5%              5%              0%


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

(1) Unless conclusions regarding liquidity risk as well as estimates of both
    the probability and severity of default for the Trust's assets can be
    derived from other sources, securities rated below B by Moody's and unrated
    securities, which are securities rated by neither Moody's, S&P nor Fitch,
    are limited to 10% of Moody's Eligible Assets. If a corporate, municipal or
    other debt security is unrated by Moody's, S&P or Fitch, the Trust will use
    the percentage set forth under "Below B and Unrated" in this table. Ratings
    assigned by S&P or Fitch are generally accepted by Moody's at face value.
    However, adjustments to face value may be made to particular categories of
    credits for which the S&P and/or Fitch rating does not seem to approximate
    a Moody's rating equivalent

(2) Corporate evidences of indebtedness from issues ranging $50,000,000 to
    $100,000,000 are limited to 20% of Moody's Eligible Assets.

(3) The referenced percentages represent maximum cumulative totals only for the
    related Moody's rating category and each lower Moody's rating category.

(4) Issuers subject to common ownership of 25% or more are considered as one
    name.

(5) CS/CB refers to common stock and convertible corporate evidences of
    indebtedness, which are diversified independently from the rating level.

(6) In the case of utility common stock, utility preferred stock, utility
    evidences of indebtedness and utility convertible evidences of indebtedness,
    the definition of industry refers to sub-industries (electric, water, hydro
    power, gas, diversified).  Investments in other sub-industries are eligible
    only to the extent that the combined sum represents a percentage position of
    the Moody's Eligible Assets less than or equal to the percentage limits in
    the diversification tables above.

(7) Such percentage shall be 15% in the case of utilities regulated by
    California, New York and Texas.


         "MOODY'S HEDGING TRANSACTIONS" means purchases or sales of
     exchange-traded financial futures contracts based on any index approved by
     Moody's or Treasury Bonds, and purchases, writings or sales of
     exchange-traded put options on such financial futures contracts, any index
     approved by Moody's or Treasury Bonds, and purchases, writings or sales of
     exchange-traded call options on such financial futures contracts, any index
     approved by Moody's or Treasury Bonds, subject to the following
     limitations:

            (a)   the Trust will not engage in any Moody's Hedging Transaction
                  based on any index approved by Moody's (other than Closing
                  Transactions) that would cause the Trust at the time of such
                  transaction to own or have sold:

                  (i)   outstanding financial futures contracts based on such
                        index exceeding in number 10% of the average number of
                        daily traded financial futures contracts based on such
                        index in the 30 days preceding the time of effecting
                        such transaction as reported by The Wall Street
                        Journal; or

                  (ii)  outstanding financial futures contracts based on any
                        index approved by Moody's having a Market Value
                        exceeding 50% of the Market Value of all portfolio
                        securities of the Trust constituting Moody's Eligible
                        Assets owned by the Trust;

            (b)   The Trust will not engage in any Moody's Hedging Transaction
                  based on Treasury Bonds (other than Closing Transactions)
                  that would cause the Trust at the time of such transaction
                  to own or have sold:

                  (i)   outstanding financial futures contracts based on
                        Treasury Bonds with such contracts having an aggregate
                        Market Value exceeding 20% of the aggregate Market
                        Value of Moody's Eligible Assets owned by the Trust
                        and rated Aa by Moody's (or, if not rated by Moody's
                        but rated by S&P, rated AAA by S&P); or

                  (ii)  outstanding financial futures contracts based on
                        Treasury Bonds with such contracts having an aggregate
                        Market Value exceeding 50% of the aggregate Market
                        Value of all portfolio securities of the Trust
                        constituting Moody's Eligible Assets owned by the
                        Trust (other than Moody's Eligible Assets already
                        subject to a Moody's Hedging Transaction) and rated
                        Baa or A by Moody's (or, if not rated by Moody's but
                        rated by S&P, rated A or AA by S&P);

            (c)   The Trust will engage in Closing Transactions to close out
                  any outstanding financial futures contract based on any
                  index approved by Moody's if the amount of open interest in
                  such index as reported by The Wall Street Journal is less
                  than an amount to be mutually determined by Moody's and the
                  Trust;

            (d)   The Trust will engage in a Closing Transaction to close out
                  any outstanding financial futures contract by no later than
                  the fifth Business Day of the month in which such contract
                  expires and will engage in a Closing Transaction to close
                  out any outstanding option on a financial futures contract
                  by no later than the first Business Day of the month in
                  which such option expires;

            (e)   The Trust will engage in Moody's Hedging Transactions only
                  with respect to financial futures contracts or options
                  thereon having the next settlement date or the settlement
                  date immediately thereafter;

            (f)   The Trust (i) will not engage in options and futures
                  transactions for leveraging or speculative purposes, except
                  that an option or futures transaction shall not for these
                  purposes be considered a leveraged position or speculative
                  and (ii) will not write any call options or sell any
                  financial futures contracts for the purpose of hedging the
                  anticipated purchase of an asset prior to completion of such
                  purchase; and

            (g)   The Trust will not enter into an option or futures
                  transaction unless, after giving effect thereto, the Trust
                  would continue to have Moody's Eligible Assets with an
                  aggregate Discounted Value equal to or greater than the
                  Basic Maintenance Amount.

         "MOODY'S INDUSTRY CLASSIFICATIONS" means, for the purposes of
     determining Moody's Eligible Assets, each of the following industry
     classifications (or such other classifications as Moody's may from time to
     time approve for application to the Series B Preferred Shares).

         1.     Aerospace and Defense: Major Contractor, Subsystems, Research,
                Aircraft Manufacturing, Arms, Ammunition.

         2.     Automobile: Automobile Equipment, Auto-Manufacturing, Auto
                Parts Manufacturing, Personal Use Trailers, Motor Homes,
                Dealers.

         3.     Banking: Bank Holding, Savings and Loans, Consumer Credit,
                Small Loan, Agency, Factoring, Receivables.

         4.     Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines
                and Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery,
                Mill Sugar, Canned Foods, Corn Refiners, Dairy Products, Meat
                Products, Poultry Products, Snacks, Packaged Foods,
                Distributors, Candy, Gum, Seafood, Frozen Food, Cigarettes,
                Cigars, Leaf/Snuff, Vegetable Oil.

         5.     Buildings and Real Estate: Brick, Cement, Climate Controls,
                Contracting, Engineering, Construction, Hardware, Forest
                Products (building-related only), Plumbing, Roofing,
                Wallboard, Real Estate, Real Estate Development, REITs, Land
                Development.

         6.     Chemicals, Plastics and Rubber: Chemicals (non-agricultural),
                Industrial Gases, Sulphur, Plastics, Plastic Products,
                Abrasives, Coatings, Paints, Varnish, Fabricating Containers.

         7.     Packaging and Glass: Glass, Fiberglass, Containers made of:
                Glass, Metal, Paper, Plastic, Wood or Fiberglass.

         8.     Personal and Non-Durable Consumer Products (Manufacturing
                Only): Soaps, Perfumes, Cosmetics, Toiletries, Cleaning
                Supplies, School Supplies.

         9.     Diversified/Conglomerate Manufacturing.

         10.    Diversified/Conglomerate Service.

         11.    Diversified Natural Resources, Precious Metals and Minerals:
                Fabricating, Distribution.

         12.    Ecological: Pollution Control, Waste Removal, Waste Treatment
                and Waste Disposal.

         13.    Electronics: Computer Hardware, Electric Equipment,
                Components, Controllers, Motors, Household Appliances,
                Information Service Communication Systems, Radios, TVs, Tape
                Machines, Speakers, Printers, Drivers, Technology.

         14.    Finance: Investment Brokerage, Leasing, Syndication,
                Securities.

         15.    Farming and Agriculture: Livestock, Grains, Produce,
                Agriculture Chemicals, Agricultural Equipment, Fertilizers.

         16.    Grocery: Grocery Stores, Convenience Food Stores.

         17.    Healthcare, Education and Childcare: Ethical Drugs,
                Proprietary Drugs, Research, Health Care Centers, Nursing
                Homes, HMOs, Hospitals, Hospital Supplies, Medical Equipment.

         18.    Home and Office Furnishings, Housewares, and Durable Consumer
                Products: Carpets, Floor Coverings, Furniture, Cooking,
                Ranges.

         19.    Hotels, Motels, Inns and Gaming.

         20.    Insurance: Life, Property and Casualty, Broker, Agent, Surety.

         21.    Leisure, Amusement, Motion Pictures, Entertainment: Boating,
                Bowling, Billiards, Musical Instruments, Fishing, Photo
                Equipment, Records, Tapes, Sports, Outdoor Equipment
                (Camping), Tourism, Resorts, Games, Toy Manufacturing, Motion
                Picture Production Theaters, Motion Picture Distribution.

         22.    Machinery (Non-Agricultural, Non-Construction,
                Non-Electronic): Industrial, Machine Tools, Steam Generators.

         23.    Mining, Steel, Iron and Non-Precious Metals: Coal, Copper,
                Lead, Uranium, Zinc, Aluminum, Stainless Steel, Integrated
                Steel, Ore Production, Refractories, Steel Mill Machinery,
                Mini-Mills, Fabricating, Distribution and Sales of the
                foregoing.

         24.    Oil and Gas: Crude Producer, Retailer, Well Supply, Service
                and Drilling.

         25.    Printing, Publishing, and Broadcasting: Graphic Arts, Paper,
                Paper Products, Business Forms, Magazines, Books, Periodicals,
                Newspapers, Textbooks, Radio, T.V., Cable Broadcasting
                Equipment.

         26.    Cargo Transport: Rail, Shipping, Railroads, Rail-car Builders,
                Ship Builders, Containers, Container Builders, Parts,
                Overnight Mail, Trucking, Truck Manufacturing, Trailer
                Manufacturing, Air Cargo, Transport.

         27.    Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail
                Order Catalog, Showroom.

         28.    Telecommunications: Local, Long Distance, Independent,
                Telephone, Telegraph, Satellite, Equipment, Research,
                Cellular.

         29.    Textiles and Leather: Producer, Synthetic Fiber, Apparel
                Manufacturer, Leather Shoes.

         30.    Personal Transportation: Air, Bus, Rail, Car Rental.

         31.    Utilities: Electric, Water, Hydro Power, Gas.

         32.    Diversified Sovereigns: Semi-sovereigns, Canadian Provinces,
                Supra-national Agencies.

          The Trust will use SIC codes in determining which industry
classification is applicable to a particular investment in consultation with
the Independent Accountant and Moody's, to the extent the Trust considers
necessary.

         "1933 ACT" means the Securities Act of 1933, as amended, or any
     successor statute.

         "1940 ACT" means the Investment Company Act of 1940, as amended, or any
     successor statute.

         "NON-CALL PERIOD" means a period determined by the Board of Trustees
     after consultation with the Broker-Dealers, during which the Series B
     Preferred Shares subject to such Special Dividend Period is not subject to
     redemption at the option of the Trust but only to mandatory redemption.

         "NOTICE OF REDEMPTION" means any notice with respect to the redemption
     of Series B Preferred Shares pursuant to paragraph 3 of Part I of this
     Statement of Preferences.

         "OTHER RATING AGENCY" means any rating agency other than Moody's or S&P
     then providing a rating for the Series B Preferred Shares at the request of
     the Trust.

         "OTHER RATING AGENCY ELIGIBLE ASSETS" means assets of the Trust
     designated by any Other Rating Agency as eligible for inclusion in
     calculating the discounted value of the Trust's assets in connection with
     such Other Rating Agency's rating of the Series B Preferred Shares.

         "OUTSTANDING" means, as of any date, Preferred Shares theretofore
     issued by the Trust except:

            (a)   any such Preferred Share theretofore cancelled by the Trust
                  or delivered to the Trust for cancellation;

            (b)   any such Preferred Share other than an auction market
                  Preferred Share as to which a notice of redemption shall
                  have been given and for whose payment at the redemption
                  thereof Deposit Assets in the necessary amount are held by
                  the Trust in trust for, or have been irrevocably deposited
                  with the relevant disbursing agent for payment to, the
                  holder of such share pursuant to the Statement of
                  Preferences with respect thereto;

            (c)   in the case of an auction market Preferred Share, including
                  the Series B Preferred Shares, any such shares theretofore
                  delivered to the applicable auction agent for cancellation
                  or with respect to which the Trust has given notice of
                  redemption and irrevocably deposited with the applicable
                  paying agent sufficient funds to redeem such shares; and

            (d)   any such Preferred Share in exchange for or in lieu of which
                  other shares have been issued and delivered.

            Notwithstanding the foregoing, (i) for purposes of voting rights
     (including the determination of the number of shares required to
     constitute a quorum), any Preferred Shares as to which any subsidiary of
     the Trust is the holder or Existing Holder, as applicable, will be
     disregarded and deemed not Outstanding and (ii) in connection with any
     auction, any auction market Preferred Shares as to which any Person known
     to the auction agent to be a subsidiary of the Trust is the holder or
     Existing Holder, as applicable, will be disregarded and not deemed
     Outstanding.

            "PAYING AGENT" means The Bank of New York unless and until another
     entity appointed by a resolution of the Board of Trustees enters into an
     agreement with the Trust to serve as paying agent, which paying agent may
     be the same as the Auction Agent and, with respect to any other class or
     series of Preferred Shares, the Person appointed by the Trust as
     dividend-disbursing or paying agent with respect to such class or series.

            "PERSON" means and includes an individual, a partnership, the
     Trust, a trust, a corporation, a limited liability company, an
     unincorporated association, a joint venture or other entity or a
     government or any agency or political subdivision thereof.

            "PREFERRED SHARES" means the preferred shares, par value $.001 per
     share, of the Trust, and includes the Series B Preferred Shares.

            "PREMIUM CALL PERIOD" means a period consisting of a number of
     whole years as determined by the Board of Trustees after consultation
     with the Broker-Dealers, during each year of which the shares subject to
     such Special Dividend Period will be redeemable at the Trust's option at
     a price per share equal to the Liquidation Preference plus accumulated
     but unpaid dividends (whether or not earned or declared) plus a premium
     expressed as a percentage or percentages of the Liquidation Preference or
     expressed as a formula using specified variables as determined by the
     Board of Trustees after consultation with the Broker-Dealers.

            "PRICING SERVICE" means any of the following: Bloomberg Financial
     Service, Bridge Information Services, Data Resources Inc., FT
     Interactive, International Securities Market Association, Merrill Lynch
     Securities Pricing Service, Muller Data Corp., Reuters, S&P/J.J. Kenny,
     Telerate, Trepp Pricing and Wood Gundy.

            "QUARTERLY VALUATION DATE" means the last Business Day of each
     March, June, September and December of each year.

            "RATING AGENCY" means Moody's and S&P as long as such rating
     agency is then rating the Series B Preferred Shares at the Trust's
     request or any other rating agency then rating the Series B Preferred
     Shares at the Trust's request.

            "REDEMPTION DATE" has the meaning set forth in paragraph 3(e) of
     Part I of this Statement of Preferences.

            "REDEMPTION DEFAULT" has the meaning set forth in paragraph 3(e)
     of Part I of this Statement of Preferences.

            "REDEMPTION PRICE" shall mean, (a) with respect to a Dividend
     Period that is not a Premium Call Period, the Liquidation Preference plus
     an amount equal to accumulated but unpaid dividends thereon (whether or
     not earned or declared) to the Redemption Date, or, (b) with respect to a
     Dividend Period that is a Premium Call Period, the Liquidation Preference
     plus an amount equal to accumulated but unpaid dividends thereon (whether
     or not earned or declared) to the Redemption Date plus a redemption
     premium, if any, determined by the Board of Trustees after consultation
     with the Broker-Dealers and set forth in the notice describing any
     applicable Specific Redemption Provisions. For the purposes of this
     Statement of Preferences, "Redemption Price" shall have a correlative
     meaning with respect to any other class or series of Preferred Shares.

            "REFERENCE BANKS" means four major banks in the London interbank
     market selected by Merrill Lynch, Pierce, Fenner & Smith Incorporated or
     its affiliates or successors or such other party as the Trust may from
     time to time appoint.

            "REFERENCE RATE" means, with respect to the determination of the
     Default Rate, the applicable LIBOR Rate for a Dividend Period of 364 days
     or fewer or the applicable Treasury Index Rate for a Dividend Period of
     longer than 364 days and, with respect to the determination of the
     Maximum Rate, the LIBOR Rate or the Treasury Index Rate, as appropriate.

            "REGISTRAR" means The Bank of New York, unless and until another
     entity appointed by a resolution of the Board of Trustees enters into an
     agreement with the Trust to serve as registrar.

            "S&P" means Standard & Poor's Ratings Services, or its successors
     at law.

            "S&P DISCOUNT FACTOR" means, with respect to a S&P Eligible Asset
     specified below, the following applicable number:

     ASSET CLASS OBLIGOR        DISCOUNT FACTORS (1)
     (COLLATERAL)               --------------------
     -------------------

     Common Stock                      230.4%

     30-yr treasury notes              126.7%

     10-yr treasury notes              121.6%

     5-yr treasury notes               115.1%

     2-yr treasury notes               109.4%

     52 week treasury                  105.8%
     bills

     STMMI with                        112.7%
     maturities from
     181 to 360 days

     STMMI with                         104%
     maturities from 1
     to 180

     Non-rated 2a-7                     111%
     eligible money
     market funds used
     as sweep accounts

     Cash, receivables                  100%
     due within 5
     business days of a
     Valuation Date,
     demand deposits
     and STMMI with
     next day maturities
     held in
     'A-1+' rated
     institutions,
     'AAAm' rated money
     market funds &
     'A-1+' commercial
     paper with
     maturities of 30
     days or less

--------------
     (1)     For an S&P rating of AAA.

     "S&P ELIGIBLE ASSETS" means:

            (a)     Deposit Assets;

            (b)     common stocks that satisfy all of the following conditions:

                    (i)    such common stock (including the common stock of
                           any predecessor or constituent issuer) has been
                           traded on a recognized national securities exchange
                           or quoted on the National Market System (or any
                           equivalent or successor thereto) of Nasdaq for at
                           least 450 days,

                    (ii)   the Market Capitalization of such issuer of common
                           stock exceeds $100 million,

                    (iii)  the issuer of such common stock is not an entity
                           that is treated as a partnership for federal income
                           tax purposes,

                    (iv)   if such issuer is organized under the laws of any
                           jurisdiction other than the United States, any
                           state thereof, any possession or territory thereof
                           or the District of Columbia, the common stock of
                           such issuer held by the Corporation is traded on a
                           recognized national securities exchange or quoted
                           on the National Market System of Nasdaq either
                           directly or in the form of depository receipts, and

                    (v)    if such issuer is registered as an investment
                           company under the 1940 Act, such issuer does not
                           invest more than 25% of the value of its gross
                           assets in securities that are not S&P Eligible
                           Assets by reason of clause (iv) above;

        provided, however, that the Trust's holdings of the common stock of any
        single issuer that satisfies the conditions set forth in clauses (i)
        through (v) above shall be included in S&P Eligible Assets only to the
        extent that

                    (1)    restricted stocks (144a securities) or any pink
                           sheet stocks (generally, stock that are not carried
                           in daily over-the-counter newspaper listings) are
                           ineligible; and

                    (2)    the aggregate Market Value of the Trust's holdings
                           of any single issuer is not in excess of 4% of the
                           aggregate Market Value of the Trust's S&P Eligible
                           Assets.

            (c)     preferred stocks, on such basis as S&P may determine in
                    response to a request from the Trust.

Notwithstanding the foregoing, an asset will not be considered an S&P Eligible
Asset if it is held in a margin account, is subject to any material lien,
mortgage, pledge, security interest or security agreement of any kind or has
been deposited irrevocably for the payment of dividends, redemption payments
or any other payment or obligation under the Trust's Statement of Preferences.

      "S&P HEDGING TRANSACTIONS" has the meaning set forth in paragraph
11(b)(i) of Part I of this Statement of Preferences.

      "SECURITIES DEPOSITORY" means The Depository Trust Company and its
successors and assigns or any successor securities depository selected by the
Trust that agrees to follow the procedures required to be followed by such
securities depository in connection with the Series B Preferred Shares.

      "SERIES B ASSET COVERAGE CURE DATE" means, with respect to the failure
by the Trust to maintain Asset Coverage (as required by paragraph 9(a)(i)(A)
of Part I of this Statement of Preferences) as of an applicable Quarterly
Valuation Date, 10 Business Days following such Quarterly Valuation Date, and
shall, for the purposes of this Statement of Preferences, have a correlative
meaning with respect to any other class or series of Preferred Shares.

      "SERIES B PREFERRED SHARES" means the Trust's Series B Auction Market
Preferred Shares, par value $.001 per share, liquidation preference $25,000
per share.

      "SHORT-TERM MONEY MARKET INSTRUMENTS" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Trust, the remaining term to maturity thereof is not in excess of 180 days:

                (i)     commercial paper rated A-1 if such commercial paper
                        matures in 30 days, or A-1+ if such commercial paper
                        matures in over 30 days;

                (ii)    AAAm rated money market funds;

                (iii)   demand or time deposits in, and banker's acceptances
                        and certificates of deposit of (A) a depository
                        institution or trust company incorporated under the
                        laws of the United States of America or any state
                        thereof or the District of Columbia (B) a United
                        States branch office or agency of a foreign depository
                        institution (provided that such branch office or
                        agency is subject to banking regulation under the laws
                        of the United States, any state thereof or the
                        District of Columbia), or (C) A-1+ rated institutions;

                (iv)    overnight funds; and

                (v)     U.S. Government Obligations.

      "SPECIAL DIVIDEND PERIOD" means a Dividend Period that is not a Standard
Dividend Period.

      "SPECIFIC REDEMPTION PROVISIONS" means, with respect to any Special
Dividend Period of more than one year, either, or any combination of (i) a
Non-Call Period and (ii) a Premium Call Period.

      "STANDARD DIVIDEND PERIOD" means a Dividend Period of seven days,
subject to increase or decrease to the extent necessary for the next Auction
Date and Dividend Payment Date to each be Business Days.

      "SUBMISSION DEADLINE" means 1:30 p.m., New York City time, on any
Auction Date or such other time on any Auction Date by which Broker-Dealers
are required to submit Orders to the Auction Agent as specified by the Auction
Agent from time to time.

      "TRANSFER AGENT" means The Bank of New York, unless and until another
entity appointed by a resolution of the Board of Trustees enters into an
agreement with the Trust to serve as transfer agent.

      "TREASURY INDEX RATE" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities having the same
number of 30-day periods to maturity as the length of the applicable Dividend
Period, determined, to the extent necessary, by linear interpolation based
upon the yield for such securities having the next shorter and next longer
number of 30-day periods to maturity treating all Dividend Periods with a
length greater than the longest maturity for such securities as having a
length equal to such longest maturity, in all cases based upon data set forth
in the most recent weekly statistical release published by the Board of
Governors of the Federal Reserve System (currently in H.15 (519)); provided,
however, if the most recent such statistical release shall not have been
published during the 15 days preceding the date of computation, the foregoing
computations shall be based upon the average of comparable data as quoted to
the Trust by at least three recognized dealers in U.S. Government Obligations
selected by the Trust.

      "TRUST" means The Gabelli Utility Trust, a Delaware statutory trust.

      "U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the United
States or by its agencies or instrumentalities that are entitled to the full
faith and credit of the United States and that, other than United States
Treasury Bills, provide for the periodic payment of interest and the full
payment of principal at maturity or call for redemption.

      "VALUATION DATE" means the last Business Day of each week, or such other
date as the Trust and Rating Agencies may agree to for purposes of determining
the Basic Maintenance Amount.

      "VOTING PERIOD" has the meaning set forth in paragraph 6(b) of Part I of
this Statement of Preferences.

               14.    Interpretation.  References to sections, subsections,
clauses, sub-clauses, paragraphs and subparagraphs that do not reference a
specific Part of this Statement of Preferences or another document shall refer
to the Part of this Statement of Preferences in which the reference occurs,
unless the context otherwise requires.


                          Part II: Auction Procedures

         1. Certain Definitions. Unless the context or use indicates another
or different meaning or intent, each of the following terms when used in this
Statement of Preferences shall have the meaning ascribed to it below, whether
such term is used in the singular or plural and regardless of tense:

      "AGENT MEMBER" means a member of or participant in the Securities
Depository that will act on behalf of a Bidder.

      "AVAILABLE PREFERRED SHARES" has the meaning set forth in paragraph
4(a)(i) of Part II of this Statement of Preferences.

      "EXISTING HOLDER" means (a) a Person who beneficially owns those
Preferred Shares, including Series B Preferred Shares, listed in that Person's
name in the records of the Trust or Auction Agent, as the case may be, or (b)
the beneficial owner of those Series B Preferred Shares which are listed under
such person's Broker-Dealer's name in the records of the Auction Agent, which
Broker-Dealer shall have signed a Master Purchaser's Letter.

      "HOLD ORDER" has the meaning set forth in paragraph 2(a) of Part II of
this Statement of Preferences.

      "MASTER PURCHASER'S LETTER" means the letter which is required to be
executed by each prospective purchaser of Series B Preferred Shares or by the
Broker-Dealer through whom the shares will be held.

      "ORDER" has the meaning set forth in paragraph 2(a) of Part II of this
Statement of Preferences.

      "POTENTIAL HOLDER" means (a) any Existing Holder who may be interested
in acquiring additional Series B Preferred Shares or (b) any other Person who
may be interested in acquiring Series B Preferred Shares and who has signed a
Master Purchaser's Letter or whose shares will be listed under such person's
Broker-Dealer's name on the records of the Auction Agent which Broker-Dealer
shall have executed a Master Purchaser's Letter.

      "SELL ORDER" has the meaning set forth in paragraph 2(a) of Part II of
this Statement of Preferences.

      "SUBMITTED BID" has the meaning set forth in paragraph 4(a) of Part II
of this Statement of Preferences.

      "SUBMITTED HOLD ORDER" has the meaning set forth in paragraph 4(a) of
Part II of this Statement of Preferences.

      "SUBMITTED ORDER" has the meaning set forth in paragraph 4(a) of Part II
of this Statement of Preferences.

      "SUBMITTED SELL ORDER" has the meaning set forth in paragraph 4(a) of
Part II of this Statement of Preferences.

      "SUFFICIENT CLEARING BIDS" has the meaning set forth in paragraph
4(a)(ii) of Part II of this Statement of Preferences.

      "SUFFICIENT CLEARING ORDERS" means that all Series B Preferred Shares
are the subject of Submitted Hold Orders or that the number of Series B
Preferred Shares that are the subject of Submitted Bids by Potential Holders
specifying one or more rates equal to or less than the Maximum Rate exceeds or
equals the sum of (a) the number of Series B Preferred Shares that are subject
of Submitted Bids by Existing Holders specifying one or more rates higher than
the Maximum Rate and (b) the number of Series B Preferred Shares that are
subject to Submitted Sell Orders.

      "WINNING BID RATE" means the lowest rate specified in the Submitted Bids
which if:

               (a)  (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

               (b)  (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 Series B Preferred
Shares which, when added to the number of Outstanding Series B Preferred
Shares to be purchased by such Potential Holders described in subclause (b)
above, would equal not less than the Available Preferred Shares.

2.    Orders.

      (a)   On or prior to the Submission Deadline on each Auction Date for
Series B Preferred Shares:

            (i)   each Beneficial Owner of Series B Preferred Shares may submit
      to its Broker-Dealer by telephone or otherwise information as to:

                  (A) the number of Outstanding Series B Preferred Shares, if
            any, held by such Beneficial Owner which such Beneficial Owner
            desires to continue to hold without regard to the Applicable Rate
            for the next succeeding Dividend Period;

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

                  (C) the number of Outstanding Series B Preferred Shares, if
            any, held by such Beneficial Owner which such Beneficial Owner
            offers to sell without regard to the Applicable Rate for the next
            succeeding Dividend Period; and

            (ii) each Broker-Dealer, 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
      Series B Preferred Shares, if any, that each such potential Beneficial
      Owner offers to purchase if the Applicable Rate for the next succeeding
      Dividend Period shall not be less than the rate per annum specified by
      such potential Beneficial Owner.

For the purposes hereof, the communication by a Beneficial Owner or potential
Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the Auction
Agent, of information referred to in clauses (a)(i) or (a)(ii) of this
paragraph (2) 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 Broker-Dealer, and such Broker-Dealer 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
(a)(i)(A) of this paragraph (2) is hereinafter referred to as a d Order" and
collectively as "Hold Orders;" an Order containing the information referred to
in clauses (a)(i)(B) or (a)(ii) of this paragraph (2) is hereinafter referred
to as a "Bid" and collectively as "Bids;" and an Order containing the
information referred to in clause (a)(i)(C) of this paragraph (2) is
hereinafter referred to as a "Sell Order" and collectively as "Sell Orders."

            (i)   A Bid by a Beneficial Owner or an Existing Holder of Series B
      Preferred Shares subject to an Auction on any Auction Date shall
      constitute an irrevocable offer to sell:

                  (A) the number of Outstanding Series B Preferred Shares
            specified in such Bid if the Applicable Rate determined on such
            Auction Date shall be less than the rate specified therein;

                  (B) such number or a lesser number of Outstanding Series B
            Preferred Shares to be determined as set forth in paragraph
            5(a)(iv) if the Applicable Rate for Series B Preferred Shares
            determined on such Auction Date shall be equal to the rate
            specified therein; or

                  (C) the number of Outstanding Series B Preferred Shares
            specified in such Bid if the rate specified therein shall be
            higher than the Maximum Rate, or such number or a lesser number of
            Outstanding Series B Preferred Shares to be determined as set
            forth in paragraph 5(b)(iii) if the rate specified therein shall
            be higher than the Maximum Rate and Sufficient Clearing Bids do
            not exist.

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

                  (A) the number of Outstanding Series B Preferred Shares
            specified in such Sell Order; or

                  (B) such number or a lesser number of Outstanding Series B
            Preferred Shares as set forth in paragraph 5(b)(iii) if Sufficient
            Clearing Bids do not exist; provided, however, that a
            Broker-Dealer that is an Existing Holder with respect to Series B
            Preferred Shares shall not be liable to any Person for failing to
            sell such shares pursuant to a Sell Order described in the proviso
            to paragraph 3(c) if (1) such shares were transferred by the
            Beneficial Owner thereof without compliance by such Beneficial
            Owner or its transferee Broker-Dealer (or other transferee Person,
            if permitted by the Trust) with the provisions of paragraph 6 or
            (2) such Broker-Dealer has informed the Auction Agent pursuant to
            the terms of its Broker-Dealer Agreement that, according to such
            Broker-Dealer's records, such Broker-Dealer believes it is not the
            Existing Holder of such shares.

            (iii) A Bid by a Potential Holder of Series B Preferred Shares
      subject to an Auction on any Auction Date shall constitute an
      irrevocable offer to purchase:

                  (A) the number of Outstanding Series B Preferred Shares
            specified in such Bid if the Applicable Rate determined on such
            Auction Date shall be higher than the rate specified therein; or

                  (B) such number or a lesser number of Outstanding Series B
            Preferred Shares as set forth in paragraph 5(a)(v) if the
            Applicable Rate determined on such Auction Date shall be equal to
            the rate specified therein.

      (c) No Order for any number of Series B Preferred Shares other than
whole shares shall be valid.

3.   Submission of Orders by Broker-Dealers to Auction Agent.

      (a) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders for Series B
Preferred Shares subject to an Auction on such Auction Date obtained by such
Broker-Dealer, 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:

            (i) the name of the Bidder placing such Order (which shall be the
      Broker-Dealer unless otherwise permitted by the Trust);

            (ii) the aggregate number of Series B Preferred Shares that are
      the subject of such Order;

            (iii) to the extent that such Bidder is an Existing Holder of
      Series B Preferred Shares:

                  (A) the number of Series B Preferred Shares, if any, subject
            to any Hold Order of such Existing Holder;

                  (B) the number of Series B Preferred Shares, if any, subject
            to any Bid of such Existing Holder and the rate specified in such
            Bid; and

                  (C) the number of Series B Preferred Shares, if any, subject
            to any Sell Order of such Existing Holder; and

            (iv) to the extent such Bidder is a Potential Holder of Series B
      Preferred Shares, the rate and number of Series B Preferred Shares
      specified in such Potential Holder's Bid.

      (b) 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%.

      (c) If an Order or Orders covering all of the Outstanding Series B
Preferred Shares 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 Series B Preferred Shares 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 Series B
Preferred Shares held by any Existing Holder is not submitted to the Auction
Agent prior to the Submission Deadline for an Auction relating to a Special
Dividend Period consisting of more than 28 calendar 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 Series B Preferred Shares
held by such Existing Holder and not subject to Orders submitted to the
Auction Agent.

      (d) 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
Series B Preferred Shares subject to an Auction held by such Existing Holder,
such Orders shall be considered valid in the following order of priority:

            (i) all Hold Orders shall be considered valid, but only up to and
      including in the aggregate the number of Outstanding Series B Preferred
      Shares held by such Existing Holder, and if the number of shares subject
      to such Hold Orders exceeds the number of Outstanding Series B Preferred
      Shares 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 Series B Preferred Shares held by such Existing Holder;

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

                  (B) subject to subclause (d)(ii)(A), if more than one Bid of
            an Existing Holder for Series B Preferred Shares is submitted to
            the Auction Agent with the same rate and the number of Outstanding
            Series B Preferred Shares 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 Series B
            Preferred Stock subject to each Bid with the same rate shall be
            reduced pro rata to cover the number of shares equal to such
            excess;

                  (C) subject to subclauses (d)(ii)(A) and (B), if more than
            one Bid of an Existing Holder for Series B Preferred Shares 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 Series B Preferred Shares subject to any portion of
            Bids considered not valid in whole or in part under this paragraph
            3(d)(ii) shall be treated as the subject of a Bid by or on behalf
            of a Potential Holder at the rate specified therein; and

            (iii) all Sell Orders for Series B Preferred Shares shall be
      considered valid up to and including the excess of the number of
      Outstanding Series B Preferred Shares held by such Existing Holder over
      the sum of Outstanding Series B Preferred Shares subject to valid Hold
      Orders referred to in paragraph 3(d)(i) above and valid Bids referred to
      in paragraph 3(d)(ii) above.

      (e) If more than one Bid for Series B Preferred Shares 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.

      (f) Any Order submitted by a Beneficial Owner or a potential Beneficial
Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction Agent, prior
to the Submission Deadline on any Auction Date, shall be irrevocable.

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

      (a) Not earlier than the Submission Deadline on each Auction Date for
Series B Preferred Shares, the Auction Agent shall assemble all valid Orders
submitted or deemed submitted to it by the Broker-Dealers (each such Order as
submitted or deemed submitted by a Broker-Dealer 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:

            (i) the excess of the number of Outstanding Series B Preferred
      Shares over the number of Outstanding Series B Preferred Shares subject
      to Submitted Hold Orders (such excess being hereinafter referred to as
      the "Available Preferred Shares");

            (ii) from the Submitted Orders for Series B Preferred Shares
      whether:

                  (A) the number of Outstanding Series B Preferred Shares
            subject to Submitted Bids of Potential Holders specifying one or
            more rates equal to or lower than the Maximum Rate exceeds or is
            equal to the sum of

                  (B) the number of Outstanding Series B Preferred Shares
            subject to Submitted Bids of Existing Holders specifying one or
            more rates higher than the Maximum Rate; and

                  (C) the number of Outstanding Series B Preferred Shares
            subject to Submitted Sell Orders (in the event such excess or such
            equality exists (other than because the number of Series B
            Preferred Shares in clauses (a)(ii)(A) and (B) above is zero
            because all of the Outstanding Series B Preferred Shares are
            subject to Submitted Hold Orders), such Submitted Bids in clause
            (a)(ii)(A) above being hereinafter referred to collectively as
            "Sufficient Clearing Bids"); and

            (iii) if Sufficient Clearing Bids exist, the Winning Bid Rate.

      (b) Not later than 9:30 A.M., New York City time, on each Auction Date,
the Auction Agent shall advise the Trust of the Maximum Rate for the Series B
Preferred Shares for which an Auction is being held on the Auction Date and,
based on such determination, promptly after the Auction Agent has made the
determinations pursuant to paragraph 4(a), the Auction Agent shall advise the
Trust of the Applicable Rate for the next succeeding Dividend Period thereof
as follows:

            (i) if Sufficient Clearing Bids exist, that the Applicable Rate
      for the next succeeding Dividend Period thereof shall be equal to the
      Winning Bid Rate so determined;

            (ii) if Sufficient Clearing Bids 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 the next succeeding Dividend
      Period thereof shall be equal to the Maximum Rate; or

            (iii) if all of the Outstanding Series B Preferred Shares are
      subject to Submitted Hold Orders, that the Applicable Rate for the next
      succeeding Dividend Period thereof shall be the All Hold Rate.

5.    Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation.

      Existing Holders shall continue to hold the Series B Preferred Shares
that are subject to Submitted Hold Orders, and, based on the determinations
made pursuant to paragraph 4(a), 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:

      (a) If Sufficient Clearing Bids for Series B Preferred Shares have been
made, all Submitted Sell Orders shall be accepted and, subject to the
provisions of paragraphs 5(d) and 5(e), Submitted Bids shall be accepted or
rejected as follows in the following order of priority and all other Submitted
Bids shall be rejected:

            (i) Existing Holders' Submitted Bids for Series B Preferred Shares
      specifying any rate that is higher than the Winning Bid Rate shall be
      accepted, thus requiring each such Existing Holder to sell the Series B
      Preferred Shares subject to such Submitted Bids;

            (ii) Existing Holders' Submitted Bids for shares Series B
      Preferred Shares specifying any rate that is lower than the Winning Bid
      Rate shall be rejected, thus entitling each such Existing Holder to
      continue to hold the Series B Preferred Shares subject to such Submitted
      Bids;

            (iii) Potential Holders' Submitted Bids for Series B Preferred
      Shares specifying any rate that is lower than the Winning Bid Rate shall
      be accepted;

            (iv) each Existing Holder's Submitted Bid for Series B Preferred
      Shares specifying a rate that is equal to the Winning Bid Rate shall be
      rejected, thus entitling such Existing Holder to continue to hold the
      Series B Preferred Shares subject to such Submitted Bid, unless the
      number of Outstanding Series B Preferred Shares subject to all such
      Submitted Bids shall be greater than the number of Series B Preferred
      Shares ("remaining shares") in the excess of the Available Preferred
      Shares over the number of Series B Preferred Shares subject to Submitted
      Bids described in paragraphs 5(a)(ii) and 5(a)(iii), 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 Series B
      Preferred Shares subject to such Submitted Bid, but only in an amount
      equal to the Series B Preferred Shares obtained by multiplying the
      number of remaining shares by a fraction, the numerator of which shall
      be the number of Outstanding Series B Preferred Shares held by such
      Existing Holder subject to such Submitted Bid and the denominator of
      which shall be the aggregate number of Outstanding Series B Preferred
      Shares subject to such Submitted Bids made by all such Existing Holders
      that specified a rate equal to the Winning Bid Rate; and

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

      (b) If Sufficient Clearing Bids for Series B Preferred Shares have not
been made (other than because all of the Outstanding shares are subject to
Submitted Hold Orders), subject to the provisions of paragraph 5(d), Submitted
Orders shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids for Series B Preferred Shares shall be
rejected:

            (i) Existing Holders' Submitted Bids for Series B Preferred Shares
      specifying any rate that is equal to or lower than the Maximum Rate
      shall be rejected, thus entitling such Existing Holders to continue to
      hold the Series B Preferred Shares subject to such Submitted Bids;

            (ii) Potential Holders' Submitted Bids for Series B Preferred
      Shares specifying any rate that is equal to or lower than the Maximum
      Rate shall be accepted; and

            (iii) Each Existing Holder's Submitted Bid for Series B Preferred
      Shares specifying any rate that is higher than the Maximum Rate and the
      Submitted Sell Orders 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 Series
      B Preferred Shares subject to such Submitted Bid or Submitted Sell
      Order, but in both cases only in an amount equal to the number of Series
      B Preferred Shares obtained by multiplying the number of Series B
      Preferred Shares subject to Submitted Bids described in paragraph
      5(b)(ii) by a fraction, the numerator of which shall be the number of
      Outstanding Series B Preferred Shares 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 Series
      B Preferred Shares subject to all such Submitted Bids and Submitted Sell
      Orders.

      (c) If all of the Outstanding Series B Preferred Shares are subject to
Submitted Hold Orders, all Submitted Bids for such shares shall be rejected.

      (d) If, as a result of the procedures described in paragraph 5(a)(iv) or
(v) or paragraph 5(b)(iii), 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 Series B Preferred Shares 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 Series B Preferred Shares 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.

      (e) If, as a result of the procedures described in paragraph 5(a)(v) any
Potential Holder would be entitled or required to purchase less than a whole
share of Series B Preferred Shares on any Auction Date, the Auction Agent
shall, in such manner as it shall determine in its sole discretion, allocate
Series B Preferred Shares for purchase among Potential Holders so that only
whole shares 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 Series B Preferred Shares on such Auction
Date.

      (f) Based on the results of each Auction for Series B Preferred Shares,
the Auction Agent shall determine the aggregate number of such shares to be
purchased and the aggregate number of such shares 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, Series B Preferred Shares. Notwithstanding any provision
of the Auction Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner of Series B Preferred Shares with respect to whom a
Broker-Dealer 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 Series B Preferred Shares that have been made in respect
of Potential Holders' or Potential Beneficial Owners' Submitted Bids for
Series B Preferred Shares that have been accepted in whole or in part shall
constitute good delivery to such Potential Holders and Potential Beneficial
Owners.

      (g) 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 Beneficial Owner, a Potential
Beneficial Owner or its respective Agent Member to deliver Series B Preferred
Shares or to pay for Series B Preferred Shares sold or purchased pursuant to
the Auction Procedures or otherwise.

6.    Transfer of Series B Preferred Shares.

      Unless otherwise permitted by the Trust, a Beneficial Owner or an
Existing Holder may sell, transfer or otherwise dispose of Series B Preferred
Shares 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 Broker-Dealer; provided, however, that (a) a sale, transfer or
other disposition of Series B Preferred Shares from a customer of a
Broker-Dealer who is listed on the records of that Broker-Dealer as the Holder
of such shares to that Broker-Dealer or another customer of that Broker-Dealer
shall not be deemed to be a sale, transfer or other disposition for purposes
of this paragraph 6 if such Broker-Dealer 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 Broker-Dealer (or other Person, if permitted by the
Trust) to whom such transfer is made shall advise the Auction Agent of such
transfer.


                                   PART III

      ABILITY OF BOARD OF TRUSTEES TO MODIFY THE STATEMENT OF PREFERENCES

         1. Modification to Prevent Ratings Reduction or Withdrawal.

         The Board of Trustees, without further action by the shareholders,
may amend, alter, add to or repeal any provision of this Statement of
Preferences including provisions that have been adopted by the Trust pursuant
to Rating Agency guidelines, if the Board of Trustees determines that such
amendments or modifications are necessary to prevent a reduction in, or the
withdrawal of, a rating of the Preferred Shares and are in the aggregate in
the best interests of the Holders of the Preferred Shares.

         2. Other Modification.

         The Board of Trustees, without further action by the shareholders,
may amend, alter, add to or repeal any provision of this Statement of
Preferences including, without limitation, provisions that have been adopted
by the Trust pursuant to any rating agency guidelines, if the Board of
Trustees determines that such amendments or modifications will not in the
aggregate adversely affect the rights and preferences of any series of the
Preferred Shares, provided, that the Trust has received advice from each
applicable Rating Agency that such amendment or modification is not expected
to adversely affect such Rating Agency's then-current rating of such series of
the Trust's Preferred Shares.

         Notwithstanding the provisions of the preceding paragraph, to the
extent permitted by law, the Board of Trustees, without the vote of the
Holders of the Series B Preferred Shares or any other capital shares of the
Trust, may amend the provisions of this Statement of Preferences to resolve
any inconsistency or ambiguity or to remedy any formal defect so long as the
amendment does not in the aggregate adversely affect the rights and
preferences of the Series B Preferred Shares.

         IN WITNESS WHEREOF, The Gabelli Utility Trust has caused these
presents to be signed in its name and on its behalf by a duly authorized
officer, and its corporate seal to be hereunto affixed and attested by its
Secretary, and the said officers of the Trust further acknowledge said
instrument to be the corporate act of the Trust, and state that to the best of
their knowledge, information and belief under penalty of perjury the matters
and facts herein set forth with respect to approval are true in all material
respects, all on July 30, 2003.



                                            By  /s/ Bruce Alpert
                                              -------------------------------
                                              Name:  Bruce Alpert
                                              Title: President

Attest:

    /s/ James E. McKee
____________________________
Name:  James E. McKee
Title: Secretary

</TEXT>
</DOCUMENT>
